Document:

EXHIBIT
      10.1 

    

    BIOPHAN
      TECHNOLOGIES, INC.

    2001
      STOCK OPTION PLAN

    

    (As
      Amended and Restated Effective July 27, 2005)

    

    1. Title
      and Purpose.
      The plan
      described herein shall be known as the "Biophan Technologies, Inc. 2001 Stock
      Option Plan" (the "Plan"). The purpose of the Plan is to advance the interests
      of Biophan Technologies, Inc. (the "Company") and its shareholders by
      strengthening the Company's ability to attract and retain individuals of
      training, experience, and ability as officers, key employees, directors and
      consultants and to furnish additional incentive to such key individuals to
      promote the Company's financial success by providing them with an equity
      ownership in the Company commensurate with Company performance, as reflected
      in
      increased shareholder value. It is the intent of the Company that such
      individuals be encouraged to obtain and retain an equity interest in the Company
      and each Participant will be specifically apprised of said intent.

    

    This
      July
      27, 2005 Restatement was adopted by the Board on June 9, 2005 to become
      effective on July 27, 2005 upon stockholder approval at the 2005 Annual Meeting.
      The purpose of this July 27, 2005 Restatement is to effect the following changes
      to the Plan:

    

    (i) revise
      the automatic grant program in effect for the Non-Employee Directors by
      increasing the maximum number of shares for which Awards may be made per
      Non-Employee Director each year, imposing a vesting schedule on each such Award,
      authorizing the Committee to determine whether the Awards are to be made in
      the
      form of Options, Restricted Stock or Restricted Stock Units and increasing
      the
      maximum term of any Option granted under such program from five (5) to ten
      (10)
      years and the post-service exercise period for such option from three (3) months
      to one year.

    

    (ii) eliminate
      the ability of the Committee as plan administrator to grant Options with an
      option price less than the Fair Market Value per share of Common Stock on the
      grant date;

    

    (iii) expand
      the class of individuals eligible to receive discretionary Awards under the
      Plan
      to include the Non-Employee Directors;

    

    (iv) provide
      the Committee with the authority as plan administrator to grant restricted
      stock
      units which provide for the vesting and issuance of the underlying shares of
      Common Stock following, the attainment of pre-established performance goals
      or
      the satisfaction of specified service requirements; 

     

    (v)
       
      include
      a series of performance criteria which the Committee as plan administrator
      may
      utilize in establishing specific targets to be attained as a condition to the
      vesting of one or more restricted stock or restricted stock unit awards under
      the Plan so as to qualify the compensation attributable to those awards as
      performance-based compensation under Code Section 162(m); and 

     

    (vi) effect
      a
      series of technical revisions to the Plan in order to facilitate the
      administration of the Plan and comply with recent changes in the laws and
      regulations applicable to the Plan and the Awards made hereunder.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    The
      changes effected by the July 17, 2005 shall not become effective unless and
      until approved by the Company’s stockholders at the 2005 Annual Stockholders
      Meeting and shall, upon such stockholder approval, apply only to Awards made
      on
      or after that date and shall not affect any previously granted Awards made
      the
      Plan.

     

    2. Definitions.
      As used
      herein, the following words or terms have the meaning set forth
      below.

    

       2.1 "Award"
      means an award granted to any key employee, officer, consultant, or Non-Employee
      Director in accordance with the provisions of the Plan in the form of Options,
      Restricted Stock or Restricted Stock Units.

    

       2.2 "Award
      Agreement" means the written agreement evidencing each Award of Restricted
      Stock
      or Restricted Stock Units made under the Plan.

    

       2.3 "Board"
      means the Board of Directors of the Company, except that, whenever action is
      to
      be taken under the Plan with respect to a Reporting Person, "Board" shall mean
      only such directors
      who are
      disinterested persons within the meaning of Rule 16b-3 under the Exchange Act
      or
      any successor rule.

    

       2.4 "Code"
      means the Internal Revenue Code of 1986, as amended from time to time, or any
      successor statute.

    

       2.5 "Committee"
      means the Compensation Committee of the Board and any other committee of one
      or
      more Board members as may be designated by the Board to administer the Plan
      with
      respect to eligible individuals other than Reporting Persons. Accordingly,
      the
      term “Committee” shall mean the Compensation Committee and such other committee,
      to the extent each such entity is acting within the scope of its administrative
      authority under the Plan. 

    

       2.6 "Common
      Stock" or "Stock” means
      the
      Company's $.005 par value Common Shares.

    

       2.7 "Company"
      means Biophan Technologies, Inc., a corporation established under the laws
      of
      the State of Nevada, and its subsidiaries; provided that with respect to
      Incentive Stock Options, “subsidiary” shall mean a “subsidiary corporation” as
      defined in Section 424(f) of the Code. 

    

       2.8 "Designated
      Beneficiary”
      means
      the
      beneficiary designated by a Participant, in a manner determined by the
      Committee, to receive amounts due or to exercise rights of the Participant
      in
      the event of the Participant's death. In the absence of an effective designation
      by a Participant, Designated Beneficiary shall mean the Participant's
      estate.

     

       2.9 "Disability
      means
      the inability of the Participant to engage in any substantial gainful activity
      by reason of any medically determinable physical or mental impairment which
      can
      be expected to result in death or which is or can be expected to last for a
      period of not less than twelve months, all as verified by a physician acceptable
      to, or selected by, the Company.  However,
      solely for purposes of the option grants made under Section 8 of the Plan,
      Disability shall mean the inability of the Non-Employee Director to perform
      his
      or her usual duties in such capacity by reason of any medically determinable
      physical or mental impairment expected to result in death or to be of continuous
      duration of twelve (12) months or more.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.10 "Disinterested
      Person" means a Non-Employee Director who satisfies the requirements set forth
      in Rule 16b-3(b)(3) promulgated by the Securities and Exchange Commission
      pursuant to its authority under the Exchange Act.

    

       2.11 "Exchange
      Act" means the Securities Exchange Act of 1934, as amended, or any successor
      statute.

     

    2.12
       "Fair
      Market Value" means the fair market value per share of Common Stock on a given
      date, which shall be (i) if the shares of Common Stock are listed on a national
      exchange, then the closing price per share of Common Stock on such stock
      exchange on such date, provided at least one sale of Common Stock took place
      on
      such exchange on such date, and, if not, then on the basis of the closing price
      on the last preceding date on which at least one sale on such exchange did
      occur, or (ii) if the shares of Common Stock are not listed on a national
      exchange, then the last reported sale price per share of Common Stock in the
      over-the-counter market on such date, as reported by the National Association
      of
      Securities Dealers, Inc.
      OTC
      Bulletin Board, the National Quotation Bureau Incorporated or any similar
      organization or agency reporting prices in the over-the-counter market,
or
      (iii)
      if the shares of Common Stock are not publicly traded, then the value as
      determined by the Board in good faith.

    

       2.13 "Incentive
      Stock Option" ("ISO") means an Option which is intended to satisfy the
      requirements of Section 422 of the Code or any successor provision.

    

       2.14 "Non-Employee
      Director" means a member of the Board who is not an employee of the
      Company.

    

       2.15
       "Nonstatutory
      Stock Option" ("NSO") means an Option which is not intended to qualify as an
      Incentive Stock Option.

    

       2.16
       "Option"
      means any Option granted under the Plan and includes an Incentive Stock Option
      and a Nonstatutory Stock Option.

    

       2.17
       "Option
      Agreement" means the written agreement evidencing each Option granted under
      the
      Plan.

    

       2.18
       "Option
      Price" means the purchase price per share of Common Stock upon the exercise
      of
      an Option.

    

       2.19
      "Outside Director" shall have the same meaning as defined or interpreted for
      purposes of Section 162(m) of the Code.

    

       2.20
       "Participant"
      means an individual who has been granted an Award under the Plan.

    

       2.21
       "Reporting
      Person" means a person required to file reports under Section 16(a) of the
      Exchange Act or any successor statute.

    

       2.22
       "Restricted
      Stock" means Stock awarded under Section 10 of the Plan which is subject to
      certain forfeiture provisions or restrictions on transfer.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    2.23 “Restricted
      Stock Units” mean the right to receive shares of Common Stock upon,
      or
      after the expiration of a designated time period following, the attainment
      of
      pre-established performance goals or the satisfaction of specified service
      requirements

    

       2.24
      "Retirement" means termination of employment with the Company if such
      termination of employment constitutes normal retirement, early retirement,
      disability retirement or other retirement as provided for at the time of such
      termination of employment under the applicable retirement program then
      maintained by the Company, provided that the Participant does not continue
      in
      the employment of the Company.

    

       2.25
       "Scientific
      Advisory Board" means the advisory board consisting of noted scientists who
      advise the Company on the development of its technology.

     

     3.
       Shares
      Subject to the Plan. Subject
      to adjustment as provided in Section 12 below, an aggregate of 13,000,000 shares
      of Common Stock shall be available for Awards under the Plan. Such shares may
      be
      authorized but previously unissued shares or shares reacquired by the Company,
      including shares purchased in the open market. In the event that any outstanding
      Option granted under the Plan for any reason expires or is terminated without
      having been exercised in full, or any shares of Restricted Stock or any
      Restricted Stock Units are forfeited, the shares allocable to the unexercised
      portion of such Option or subject to the forfeited Restricted Stock Units,
      together with any forfeited shares of such Restricted Stock, shall (unless
      the
      Plan shall have been terminated) become available for subsequent Awards under
      the Plan; provided that in no event may the number of shares issued hereunder
      exceed the total number of shares reserved for issuance. Subject
      to adjustment as provided in Section 12 below, no
      one
      person participating in the Plan may receive stock options, Restricted Stock
      or
      Restricted Stock Units for more than 2,000,000 shares of Common Stock in the
      aggregate per calendar year.

    

    4.
       Administration
      of the Plan.

    

       4.1
       The
      Plan
      shall be administered by the Compensation Committee of the Board. Except in
      instances where not otherwise administratively practicable, each individual
      appointed to the Compensation Committee shall be both a Disinterested Person
      and
      an Outside Director. The Board may appoint a secondary Committee of one or
      more
      Board members with separate but concurrent authority with the Compensation
      Committee to administer the Plan with respect to eligible individuals other
      than
      Reporting Persons. All automatic grants to Non-Employee Directors and Scientific
      Advisory Board Members under Sections 8 and 9 shall be made in strict accordance
      with the express terms and provisions of those sections of the Plan. Subject
      to
      the preceding sentence and the provisions set forth herein, each Committee
      acting within the scope of its administrative authority under the Plan shall
      have full authority to determine which eligible individuals are to be granted
      Awards under the Plan and the time or times at which those Awards are to be
      made, to determine the provisions of Awards, to interpret the terms of the
      Plan
      and of Awards made under the Plan, to adopt, amend and rescind rules and
      guidelines for the administration of the Plan and for its own acts and
      proceedings and to decide all questions and settle all controversies and
      disputes which may arise in connection with the Plan. The Committee shall report
      any action taken by it to the meeting of the Board next following such action.
      

    

       4.2
       The
      decision of the Committee on any matter as to which the Committee is given
      authority shall be final and binding on all persons concerned. No member of
      the
      Committee shall be liable for any action or determination made in good faith
      with respect to the Plan or any Award made under it.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    4.3 Any
      Award
      made to a member of the Compensation Committee other than pursuant to the
      automatic grants made pursuant to Section 8 of the Plan must be approved by
      a
      disinterested majority of the Board.

    

     5.
       Indemnification
      of the Committee.
      In
      addition to such other rights of indemnification as they may have as directors
      of the Company or as members of the Committee or otherwise, the members of
      the
      Committee shall be indemnified by the Company as and to the fullest extent
      permitted by law, including without limitation, indemnification against the
      reasonable expenses, including attorneys' 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 Awards granted hereunder, 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
      in any such action, suit or proceeding except in relation to matters as to
      which
      it shall be adjudged in such action, suit or proceeding that such Committee
      member is liable for negligence, bad faith or misconduct in the performance
      of
      his duties; provided that within 60 days after institution of 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.

    

     6.
       Types
      of Awards Under the Plan.
      Awards
      under the Plan may be in the form of any one or more of the
      following:

    

       Incentive
      Stock Options (ISOs)

       Nonstatutory
      Stock Options (NSOs)

       Restricted
      Stock

    Restricted
      Stock Units

    

    All
      Awards shall be subject to the terms and conditions set forth herein and to
      such
      other terms and conditions as may be established by the Committee.
      Determinations by the Committee under the Plan (including
      without limitation, determinations
      of the Participants, the form, amount and timing of Awards, the terms and
      provisions of Awards, and the agreements evidencing Awards
      need not
      be uniform and may be made selectively among Participants who receive, or are
      eligible to receive, Awards hereunder, whether or not such Participants are
      similarly situated. Except as otherwise provided by the Plan or a particular
      Award, any determination with respect to an Award may be made by the Committee
      at the time of grant of the Award or any time thereafter.

    

     7.
       Incentive
      Stock Options and Nonstatutory Stock Options.

    

       7.1
       Eligibility.
      The
      persons eligible to receive Options under the Plan are as follows:

    

    (i) officers
      and key employees of the Company or any Subsidiary,

    

    (ii) the
      Non-Employee Directors and the non-employee members of the board of directors
      of
      any Subsidiary, and

    

    (iii)
       consultants
      and other independent advisors (including, without limitation, members of the
      Scientific Advisory Board) who provide services to the Company or any
      Subsidiary.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    An
      employee owning stock possessing more than 10% of the total combined voting
      power or value of all classes of stock of the Company or any parent or
      subsidiary corporation ("Ten Percent Stockholder") is not eligible to receive
      an
      ISO unless the option price is at least 110% of the Fair Market Value of the
      Common Stock at the time the ISO is granted and the ISO option by its terms
      is
      not exercisable more than five years from the date it is granted. Restricted
      Stock and Common Stock which a grantee may purchase under outstanding Options
      or
      which is subject to an outstanding Restricted Stock Units awarded to such
      grantee shall be treated as stock owned by such grantee for purposes of this
      calculation. The Committee also may authorize the granting of ISOs and NSOs
      to
      prospective employees. In the case of a prospective employee, the grant of
      an
      ISO or NSO shall be on the condition of employment by the Company in a key
      position, and the date of the grant of the ISO or NSO shall be the date such
      employment begins or such later date as the Committee may have specified when
      authorizing the grant.

    

       7.2
       Grant
      of
      ISOs and NSOs

    

       7.2.1 From
      time
      to time while the Plan is in effect, the Committee may, in its absolute
      discretion, select from among persons eligible to receive ISOs and NSOs
      (including persons to whom ISOs and NSOs were previously granted) those persons
      to whom ISOs and NSOs are to be granted.

    

       7.2.2 The
      Committee shall, in its absolute discretion, determine the number of shares
      of
      Common Stock to be subject to each ISO and NSO made by it under the
      Plan.

    

       7.2.3 The
      Committee shall determine at the time of each grant hereunder whether the option
      is an ISO or NSO. The terms and conditions of ISOs shall be subject to and
      comply with Section 422 of the Code or any successor provision, and any
      regulations thereunder.

    

       7.3
       Option
      Price. The option price per share of Common Stock with respect to each ISO
      and
      NSO shall not be less than 100% of the Fair Market Value per share at the time
      the ISO or NSO is granted. 

    

       7.4
       Period
      of
      Options. An ISO and NSO shall be exercisable during such period of time as
      the
      Committee may specify, subject, in the case of ISOs, to any limitation required
      by the Code. No ISO or NSO shall be exercisable after the expiration of 10
      years
      from the date the ISO or NSO is granted.

    

       7.5
       Vesting
      of Options. Each ISO and NSO shall be exercisable at such time or times as
      the
      Committee shall determine. In the case of an ISO or NSO exercisable in
      installments, the Committee may later determine to accelerate the time at which
      one or more of such installments may be exercised. The Committee may impose
      such
      conditions with respect to the exercise of ISOs and NSOs, including conditions
      relating to the attainment of specific pre-determined stock price goals or
      other
      performance criteria or conditions relating to applicable federal or state
      tax
      or securities laws, as it considers necessary or advisable and such conditions
      may differ with respect to each Participant.

    

       7.6
       Limitation
      on Grant of ISOs. The aggregate Fair Market Value (determined as of the date
      the
      ISO is granted) of the shares with respect to which ISOs are exercisable for
      the
      first time by a grantee during any calendar year (under all such plans of the
      Company) shall not exceed $100,000.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

       7.7
       Options
      Non-Transferable. No ISO or NSO granted under the Plan shall be transferable
      other than by will or by the laws of descent and distribution. No interest
      of a
      Participant under an ISO or NSO or the Plan shall be subject to the attachment,
      execution, garnishment, sequestration, the laws of bankruptcy or any other
      legal
      equitable process. During the lifetime of the Participant, ISOs and NSOs shall
      be exercisable only by the Participant who received them.

    

    7.8
       Termination
      of Employment.

    

       7.8.1 Death
      During or After Employment. If a Participant dies during employment or within
      three (3) months after terminating employment, and at a time when the
      Participant is entitled to exercise an ISO or NSO, then at any time or times
      within one year after death (or such greater or lesser period after death as
      the
      Committee may authorize for inclusion in the documentation evidencing the ISO
      or
      NSO) such ISO or NSO may be exercised, but only as to any or all of those shares
      which the Participant was entitled to purchase immediately prior to the
      Participant's death (unless the Committee within thirty (30) days after the
      Participant's death shall have accelerated the vesting of the ISO or NSO).
      ISOs
      or NSOs exercisable after death may be exercised by the Participant's Designated
      Beneficiary, and except as so exercised, shall expire at the end of the
      specified post-death exercise period. In no event, however, may any ISO or
      NSO
      granted under the Plan be exercised after the expiration date of the maximum
      term established for the ISO or NSO at the time of grant.

    

       7.8.2 Retirement
      or Disability. In the event of a Participant's Retirement or Disability at
      a
      time when the Participant is entitled to exercise an ISO or NSO, then within
      three months after Retirement or one year after Disability (or such greater
      or
      lesser period after Retirement or Disability as the Committee may authorize
      for
      inclusion in the documentation evidencing the ISO or NSO) the Participant may
      exercise such ISO or NSO only as to those shares which the Participant was
      entitled to purchase immediately prior to such Retirement or Disability (unless
      the Committee within thirty (30) days after the Participant's Retirement or
      Disability shall have accelerated the vesting of the ISO or NSO). If the
      Participant dies within the specified post-Retirement or post-Disability
      exercise period, the Participant's ISO or NSO may be exercised by the
      Participant's Designated Beneficiary, to the same extent as if the deceased
      Participant had survived, during the greater of (i) one year from the date
      of
      his death or, if a post-Retirement or post-Disability exercise period greater
      than three months or one year,
      respectively,
      was
      specified in the ISO or NSO documentation, (ii) the remainder of that longer
      period.

    

    Except
      as
      exercised within the applicable period described above, each ISO or NSO shall
      expire at the end of such period. In no event, however, may any ISO or NSO
      granted under the Plan be exercised after the expiration date of the maximum
      term established for the ISO or NSO at the time of grant.

    

       7.8.3 Other
      Terminations of Employment. If the employment of a Participant is terminated
      for
      cause, the Participant's option rights, both accrued and future, under any
      then
      outstanding ISO or NSO shall be forfeited and terminated immediately and may
      not
      thereafter be exercised to any extent.

    

    If
      the
      employment of a Participant is terminated for any reason other than cause,
      death, Retirement or Disability at a time when the Participant is entitled
      to
      exercise an ISO or NSO, then within three months after such termination of
      employment (or such greater or lesser period after termination of employment
      as
      the Committee may authorized for inclusion in the documentation evidencing
      the
      ISO or NSO), the Participant may exercise such ISO or NSO only as to those
      shares which the Participant was entitled to purchase immediately prior to
      such
      termination of employment (unless the Committee within thirty (30) days after
      the Participant's termination of employment shall have accelerated the vesting
      of the ISO or NSO). If the Participant dies within the specified
      post-termination of employment exercise period, the Participant's ISO or NSO
      may
      be exercised by the Participant's Designated Beneficiary, to the same extent
      as
      if the deceased Participant had survived, during a period equal to the greater
      of one year from the date of the Participant's death or the remainder of such
      specified post-termination of employment exercise period. In no event, however,
      may any ISO or NSO granted under the Plan be exercised after the expiration
      date
      of the maximum term established for the ISO or NSO at the time of
      grant.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    If
      the
      Committee so decides, an ISO or NSO may provide that a leave of absence granted
      by the Company is not a termination of employment for the purpose of this
      subsection 7.8.3 and, in the absence of such a provision, the Committee may,
      in
      any particular case, determine that such a leave of absence is not a termination
      of employment for such purpose.

    

       7.8.4 Notwithstanding
      the terms and provisions of Sections 7.8.1, 7.8.2, and 7.8.3, the Committee,
      at
      any time, may establish such other terms and provisions with respect to the
      exercise of an ISO or NSO by a Participant upon the death, Disability, or other
      termination of employment of such person as it, in its sole discretion, deems
      advisable.

    

    7.9 Discretionary
      Authority to Effect Certain Changes. The
      Committee shall
      have complete discretion, exercisable either at the time while an Option granted
      under this Section 7 remains
      outstanding, to effect any or all of the following changes to that
      Option:

     

    (i)
       extend
      the period of time for which the Option is to remain exercisable following
      the
      Participant’s termination of employment from the limited exercise period
      otherwise in effect for that Option to such greater period of time as the
      Committee Administrator shall deem appropriate, but in no event beyond the
      expiration of the option term, 

     

    (ii) include
      an automatic extension provision whereby the specified post-employment exercise
      period in effect for the Option shall automatically be extended by an additional
      period of time equal in duration to any interval within the specified
      post-employment exercise period during which the exercise of that Option or
      the
      immediate sale of the shares acquired under such Option could not be effected
      in
      compliance with applicable federal and state securities laws, but in no event
      shall such an extension result in the continuation of such Option beyond the
      expiration date of the term of that Option, and/or 

    

    (iii) accelerate
      the vesting and exercisability of the Option in whole or in part. 

    

    8. Non-Employee
      Director Stock Options.

    

    8.1 Restatement
      of Automatic Grant Program. The provisions of this amended and restated Section
      8 automatic grant program for the Non-Employee Directors shall become effective
      upon stockholder approval of the July 27, 2005 restatement of the Plan at the
      2005 Stockholders Meeting, and the initial grants under the amended and restated
      program will be made at the 2005 Stockholder Meeting if the restatement is
      approved by the stockholders. All Options previously granted under the Plan
      to
      the Non-Employee Directors, whether pursuant to Section 8 as in effect prior
      to
      the July 27, 2005 restatement or any other provision of the Plan, which are
      outstanding under that Plan on date of the 2005 Annual Stockholders Meeting
      shall continue in full force and effect in accordance with their terms, and
      no
      provision of the July 27, 2005 restatement of the Plan shall be deemed to affect
      or otherwise modify the rights or obligations of the holders of those Options
      with respect to their acquisition of shares of Common Stock
      thereunder.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    8.2 Automatic
      Grants. On the date of each annual stockholders meeting, beginning with the
      2005
      Annual Meeting, each individual who is to continue to serve as a Non-Employee
      Director, whether or not that individual is standing for re-election to the
      Board at that particular annual meeting, shall automatically be granted a NSO
      to
      purchase not more than fifty thousand (50,000) shares of Common Stock, provided
      such individual has not otherwise received an Award under the Plan within the
      preceding six (6) months. There shall be no limit on the number of such annual
      Option grants any one continuing Non-Employee Director may receive over his
      or
      her period of Board service. The actual number of shares for which such annual
      Option grants are made to each continuing Non-Employee Director shall (subject
      to the 50,000-share limit) be determined by the Committee on or before the
      date
      of the annual stockholders meeting at which those grants are to be
      made.

     

    8.3
       Option
      Price. The option price per share shall be equal to one hundred percent (100%)
      of the Fair Market Value per share of Common Stock on the option grant
      date.

    

    8.4 Option
      Term. Each Option shall have a maximum term of ten (10) years measured from
      the
      option grant date, subject to earlier termination following the Non-Employee
      Director’s cessation of service as a Board member.

    

    8.5 Vesting.
      Each Option shall vest and become exercisable for all the option shares upon
      the
earlier
      of (i)
      the Non-Employee Director’s completion of the one (1)-year period of service as
      Board member measured from the grant date or (ii) his or her continuation in
      such Board service through the day immediately preceding the next annual
      stockholders meeting following such grant date.

    

       8.6 Options
      Non-Transferable. No Option granted under this Section 8 shall be transferable
      other than by will or by the laws of descent and distribution. No interest
      of a
      Non-Employee Director under such Option or the Plan shall be subject to
      attachment, execution, garnishment, sequestration, the laws of bankruptcy or
      any
      other legal or equitable process. During the lifetime of the Non-Employee
      Director, the Options under this Section 8 shall be exercisable only by the
      Non-Employee Director who received them.

    

    8.7
       Termination
      of Board Service. The following provisions shall govern the exercise of any
      Options granted to a Non-Employee Director under this Section 8 and outstanding
      at the time of his or her cessation of Board service:

    

    (i)
       The
      Non-Employee Director (or, in the event of the Non-Employee Director’s death
      while holding the Option, the personal representative of his or her estate
      or
      his or her Designated Beneficiary) shall have a twelve (12)-month period
      following the date of his or her cessation of Board service in which to exercise
      such Option.

    

    (ii) During
      the twelve (12)-month exercise period, the Option may not be exercised in the
      aggregate for more than the number of shares of Common Stock for which the
      Option is exercisable at the time of the Non-Employee Director’s cessation of
      Board service. However, should the Non-Employee Director cease to serve as
      a
      Board member by reason of death or Disability, then the Option shall immediately
      become exercisable for all of the option shares, and such Option may, during
      the
      twelve (12)-month exercise period following such cessation of Board service,
      be
      exercised for any or all of those shares as fully vested shares of Common
      Stock.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (iii) In
      no
      event shall the Option remain exercisable after the expiration of the option
      term. Upon the expiration of the twelve (12)-month exercise period or (if
      earlier) upon the expiration of the option term, the Option shall terminate
      and
      cease to be outstanding for any shares for which the Option has not been
      exercised. However, the Option shall, immediately upon the Non-Employee
      Director’s cessation of Board service for any reason (other than cessation of
      Board service by reason of death or Disability), terminate and cease to be
      outstanding to the extent the Option is not otherwise at that time exercisable
      for one or more of the option shares.

    

    8.8
       Remaining
      Terms. The remaining terms of each grant shall be the same as the terms in
      effect for all other NSO grants made under the Plan, including (without
      limitation) the vesting acceleration provisions of Section 12.2.

    

    8.9 Alternative
      Awards. The Committee shall have full power and authority to award, in lieu
      of
      one or more annual automatic Option grants under this Section 8, shares of
      Restricted Stock or Restricted Stock Units which in each instance have an
      aggregate Fair Market Value substantially equal to the fair value (as determined
      for financial reporting purposes in accordance with Financial Accounting
      Standard 123R or any successor standard) of the automatic Option grant which
      such award replaces. Any such alternative award shall be made at the same time
      the automatic Option grant which it replaces would have been made, and the
      vesting provisions (including vesting acceleration in accordance with Section
      12.2) applicable to such award shall be substantially the same as in effect
      for
      the automatic Option grant so replaced. 

    

    9. Scientific
      Advisory Board Member Stock Options.

    

    9.1 Restatement
      of Automatic Grant Program. The provisions of this amended and restated Section
      9 automatic grant program for the Scientific Advisory Board Members shall become
      effective upon stockholder approval of the July 27, 2005 restatement of the
      Plan
      at the 2005 Stockholders Meeting, and the initial grants under the amended
      and
      restated program will be made on February 1, 2006 if the restatement is approved
      by the stockholders. All Options previously granted under the Plan to the
      Scientific Advisory Board Members which are outstanding under that Plan on
      date
      of the 2005 Annual Stockholders Meeting shall continue in full force and effect
      in accordance with their terms, and no provision of the July 27, 2005
      restatement of the Plan shall be deemed to affect or otherwise modify the rights
      or obligations of the holders of those Options with respect to their acquisition
      of shares of Common Stock thereunder.

    

    9.2 Automatic
      Grants. On the first business day in February each year, beginning February
      1,
      2006, each individual who is to continue to serve as a Scientific Advisory
      Board
      Member shall automatically be granted a NSO to purchase eight thousand three
      hundred thirty three (8,333) shares of Common Stock. However, if such individual
      has not been a Scientific Advisory Board Member for the entire twelve (12)-month
      period ending immediately prior to the grant date, then the number of shares
      subject to the grant shall be pro-rated to reflect the portion of such period
      during which such individual actually served in that capacity. There shall
      be no
      limit on the number of such annual share Option grants any one continuing
      Scientific Advisory Board Member receive over his or her period of service
      in
      such capacity. 

    

    9.3
       Option
      Price. The option price per share shall be equal to one hundred percent (100%)
      of the Fair Market Value per share of Common Stock on the option grant
      date.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    9.4 Option
      Term. Each Option shall have a maximum term of ten (10) years measured from
      the
      option grant date, subject to earlier termination following the Scientific
      Advisory Board Member’s cessation of service in such capacity.

    

    9.5 Vesting.
      Each Option granted under this Section 9 to a Scientific Advisory Board Member
      shall be fully vested and immediately exercisable for any or all of the option
      shares. 

    

       9.6 Options
      Non-Transferable. No Option granted under this Section 9 shall be transferable
      other than by will or by the laws of descent and distribution. No interest
      of a
Scientific
      Advisory Board Member
      under
      such Option or the Plan shall be subject to attachment, execution, garnishment,
      sequestration, the laws of bankruptcy or any other legal or equitable process.
      During the lifetime of the Scientific
      Advisory Board Member,
      the
      Options under this Section 9 shall be exercisable only by the Scientific
      Advisory Board Member
      who
      received them.

    

    9.7
       Termination
      of Service. The following provisions shall govern the exercise of any Options
      granted to a Scientific Advisory Board Member under this Section 9 and
      outstanding at the time of his or her cessation of service in such
      capacity:

    

    (i)
       Should
      the Scientific Advisory Board Member cease service in such capacity for any
      reason (other than for cause), then such Scientific Advisory Board Member (or,
      in the event of the Scientific Advisory Board Member’s death while holding the
      option, the personal representative of his or her estate or his or her
      Designated Beneficiary) shall have a twelve (12)-month period following the
      date
      of such cessation of service in which to exercise such Option.

    

    (ii)
       In
      no
      event shall the Option remain exercisable after the expiration of the option
      term. Upon the expiration of the applicable twelve (12)-month exercise period
      or
      (if earlier) upon the expiration of the option term, the Option shall terminate
      and cease to be outstanding for any shares for which the Option has not been
      exercised. 

    

    (iii)
       Should
      the Scientific Advisory Board Member be discharged from service for cause,
      then
      all Options granted to such individual shall immediately terminate and cease
      to
      be exercisable for any of the option shares.

    

    9.8
       Remaining
      Terms. The remaining terms of each grant shall be the same as the terms in
      effect for all other NSO grants made under the Plan, including (without
      limitation) the vesting acceleration provisions of Section 12.2.

     

    10. General
      Provisions Applicable to All Options.

    

       10.1
       Exercise
      of Options; Payment of Option Price. Options may be exercised (in full or in
      part) only by written notice of exercise delivered to the Company at its
      principal executive office, accompanied by payment equal to the full Option
      Price for the shares of Stock which are exercised, unless the Option is to
      be
      exercised pursuant to the same day exercise and sale procedure described in
      the
      next sentence. The Option Price of each share of Common Stock purchased upon
      exercise of an Option shall be paid in full in cash at the time of exercise;
      by
      delivery to the Company shares of Common Stock owned by the Participant, by
      delivering to the Company (i) irrevocable instructions to deliver the stock
      certificates representing the shares of Stock for which the Option is being
      exercised, directly to a broker, and (ii) instructions to the broker to sell
      such shares of Stock and deliver to the Company on the settlement date the
      portion of the proceeds equal to the total Option Price; or in any combination
      thereof. For purposes of making payment in shares of Common Stock, such shares
      shall be valued at their Fair Market Value on the date of exercise of the Option
      and shall have been held by the Participant for the requisite period (if any)
      necessary to avoid any
      resulting charge to the Company’s earnings for financial reporting
      purposes. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

       10.2
       Documentation
      of Options. Each
      Option Agreement shall specify the terms and conditions of the Option and
      contain such other terms and conditions not inconsistent with the provisions
      of
      the Plan as the Committee considers necessary or advisable to achieve the
      purposes of the Plan or comply with applicable tax and regulatory laws and
      accounting principles. The Option Agreement with respect to ISOs shall provide,
      among other things, that the Participant shall advise the Company immediately
      upon any sale or transfer of shares of Common Stock received upon exercise
      of
      the Option to the extent such sale or transfer takes place prior to the later
      of
      two (2) years from the date of grant or one (1) year from the date of
      exercise.

    

       10.3
       Tax
      Withholding. The Committee shall require, on such terms as it deems necessary,
      that the Participant pay to the Company or make other satisfactory provision
      for
      payment of, any federal, state or local taxes required by law to be withheld
      in
      respect to Options under the Plan. In the Committee's discretion, such tax
      withholding obligations may be paid in whole or in part in shares of Common
      Stock, including shares retained from the Option creating the withholding tax
      obligation, valued at their Fair Market Value on the date of delivery. The
      Company may, to the extent permitted by law, deduct any such withholding tax
      obligations from any payment of any kind otherwise due to the
      Participant.

    

       10.4
       Amendment
      of Options. The Committee may modify or amend any outstanding Option if it
      determines, in its sole discretion, that amendment is necessary or advisable
      in
      the light of any addition to or change in the Code or in the regulations issued
      thereunder, or any federal or state securities laws or other law or regulation,
      which change occurs after the date of grant of the Option and by its terms
      applies to the Option. In addition, subject to the terms and conditions and
      within the limitations of the Plan, the Committee may modify, amend, extend
      or
      renew outstanding Options granted under the Plan, or accept the surrender of
      outstanding Options under the Plan or under any other stock option plan of
      the
      Company (to the extent not theretofore exercised) and authorize the granting
      of
      new Options under the Plan in substitution therefor (to the extent not
      theretofore exercised). No amendment of an outstanding Option, however, may,
      without the consent of the Participant, make any changes which would adversely
      affect the rights of such Participant.

    

      11.
       Restricted
      Stock.

    

       11.1 The
      Committee may, in its discretion, make Awards of Restricted Stock or Restricted
      Stock Units to such officers, key employees, Non-Employee Directors, Scientific
      Advisory Board Members and any other individuals eligible to receive ISO or
      NSO
      grants under Section 7.1 of the Plan, with such Awards to made in the manner
      provided in Section 6 of this Plan. Such Awards shall be evidenced by an Award
      Agreement in such form, and containing such terms and conditions as are not
      inconsistent with this Plan, as the Committee shall, from time to time,
      determine. Restricted Stock awarded hereunder shall be subject to such
      restrictions as may be determined by the Committee and set out in the Award
      Agreement.

    

       11.2
       Restricted
      Stock shall be subject to a restriction period (after which restrictions will
      lapse) which shall mean a period commencing on the date the Award is granted
      and
      ending on such date as the Committee shall determine (the "Restriction Period").
      The Committee may provide for the lapse of restrictions in installments where
      deemed appropriate.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

      

    11.3 Except
      when the Committee determines otherwise pursuant to Section 11.5, 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 the restriction shall be forfeited by the Participant and shall
      be
      reacquired by the Company.

    

       11.5
       Except
      as
      otherwise provided in this Section 11, no shares of Restricted Stock received
      by
      a Participant shall be sold, exchanged, transferred, pledged, hypothecated
      or
      otherwise disposed of during the Restriction Period.

    

       11.5
       In
      cases
      of death, Disability or Retirement or in cases of special circumstances, the
      Committee may, in its sole discretion when it finds that a waiver would be
      in
      the best interests of the Company, elect to waive any or all remaining
      restrictions with respect to such Participant's Restricted Stock. However,
      no vesting requirements tied to the attainment of performance goals may be
      waived with respect to Restricted Stock Awards which were intended, at the
      time
      those Awards were made, to qualify as performance-based compensation under
      Code
      Section 162(m), except otherwise provided in Section 12.2.

    

       11.6
       The
      Committee may require, under such terms and conditions as it deems appropriate
      or desirable, that the certificates for the shares of Restricted Stock delivered
      under the Plan may be held in custody by a bank or other institution, or that
      the Company may itself hold such shares in custody until the Restriction Period
      expires or until restrictions thereon otherwise lapse, and may require, as
      a
      condition of any Award of Restricted Stock that the Participant shall have
      delivered a stock power endorsed in blank relating to the Restricted
      Stock.

    

       11.7
       Subject
      to Section 11.6, each Participant entitled to receive shares of Restricted
      Stock
      under the Plan shall be issued a certificate for those shares. Such certificate
      shall be registered in the name of the Participant and shall bear an appropriate
      legend reciting the terms, conditions and restrictions, if any, applicable
      to
      such Award and shall be subject to appropriate stop-transfer
      orders.

    

       11.8
       The
      restrictions imposed under this Section 11 shall apply as well to all shares
      or
      other securities issued in respect of the Restricted Stock in connection with
      any stock split, stock dividend, recapitalization, reclassification, merger,
      consolidation or reorganization, but such restrictions shall expire or terminate
      at such time or times as may be specified therefor in the Award
      Agreement.

    

    11.9
      Shares
      of
      Common Stock may also be issued under this Section 11 pursuant to Restricted
      Stock Units which entitle the recipients to receive the shares underlying those
      units upon the attainment of designated performance goals or the satisfaction
      of
      specified service requirements or upon the expiration of a designated time
      period following the vesting of those units.

     

    11.10
      Outstanding Restricted Stock Units shall automatically terminate, and no shares
      of Common Stock shall actually be issued in satisfaction of those units, if
      the
      performance goals or service requirements established for such units are not
      attained or satisfied. The Committee, however, shall have the discretionary
      authority to issue vested shares of Common Stock under one or more outstanding
      Restricted Stock Units as to which the designated performance goals or service
      requirements have not been attained or satisfied. However, no vesting
      requirements tied to the attainment of performance goals may be waived with
      respect to Restricted Stock Units which were intended, at the time those units
      were granted, to qualify as performance-based compensation under Code Section
      162(m), except otherwise provided in Section 12.2

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    11.11
      The
      Committee shall also have the discretionary authority, consistent with Code
      Section 162(m), to structure one or more Awards of Restrict Stock or Restricted
      Stock Units so that the shares of Common Stock subject to those Awards shall
      vest (or vest and become issuable) upon the achievement of certain
      pre-established corporate performance goals based on one or more of the
      following criteria: (1) return on total stockholder equity; (2) earnings per
      share of Common Stock; (3) net income (before or after taxes); (4) earnings
      before interest, taxes, depreciation and amortization; (5) sales or revenue
      targets; (6) return on assets, capital or investment; (7) cash flow; (8) market
      share; (9) cost reduction goals; (10) budget comparisons; (11) measures of
      customer satisfaction; (12) any combination of, or a specified increase in,
      any
      of the foregoing; (13) implementation or completion of projects or processes
      strategic or critical to the Company’s business operations; (14) achievement of
      advances in research; new product development; development of products to
      pre-clinical phase; commencement, advancement or completion of clinical trials
      for a product; FDA or other regulatory body approval for commercialization
      of
      products; (15) the listing of shares of the Company’s common stock for trading
      on a national securities exchange or national securities association; and (16)
      the formation of joint ventures, research or development collaborations, the
      execution of strategic licensing arrangements, the consummation of a major
      financing transaction or the completion of other corporate transactions intended
      to enhance the Company’s revenue or profitability or expand its customer
      base.
      In
      addition, such performance goals may be based upon the attainment of specified
      levels of the Company’s performance under one or more of the measures described
      above relative to the performance of other entities and may also be based on
      the
      performance of any of the Company’s business units or divisions or any
      Subsidiary. Performance goals may include a minimum threshold level of
      performance below which no award will be earned, levels of performance at which
      specified portions of an award will be earned and a maximum level of performance
      at which an award will be fully earned.

    

      12.
       Adjustment
      Upon Changes in Capitalization; Changes in Control.

    

       12.1
       If
      any
      change is made to the Common Stock by reason of any stock split, stock dividend,
      recapitalization, combination of shares, exchange of shares or other change
      affecting the outstanding Common Stock as a class without the Company’s receipt
      of consideration, appropriate adjustments shall be made by the Compensation
      Committee to (i) the maximum number and/or class of securities issuable under
      the Plan, (ii) the maximum number and/or class of securities for which any
      one
      person may be granted Options, Restricted Stock and Restricted Stock Units
      under
      the Plan per calendar year, (iii) the maximum number and/or class of securities
      for which grants may subsequently be made under Section 8 to continuing
      Non-Employee Directors, (iv) the number and/or class of securities for which
      grants may subsequently be made under Section 9 to continuing Scientific
      Advisory Board Members, (v) the number and/or class of securities and the option
      price per share in effect under each outstanding Option under the Plan and
      (vi)
      the number and/or class of securities subject to each outstanding Restricted
      Stock or Restricted Stock Unit Award under the Plan and the issue price (if
      any)
      payable per share. Such adjustments to the outstanding Options and Restricted
      Stock and Restricted Stock Unit Awards are to be effected in a manner which
      shall preclude the enlargement or dilution of rights and benefits under those
      Options and Awards. The adjustments determined by the Compensation Committee
      shall be final, binding and conclusive.

    

       12.2
       Notwithstanding
      any provisions contained in this Plan or in an Option Agreement deferring the
      rights of a Participant to exercise the Option, the Option shall become fully
      vested and the Participant shall be entitled to exercise such Option, in whole
      or in part, (i) immediately following the first purchase of Common Stock
      pursuant to a tender offer or exchange offer (other than an offer by the
      Company) for all, or any part of, the Common Stock; or (ii) commencing on the
      date of approval by the shareholders of the Company of an agreement for (a)
      a
      merger or consolidation or similar transaction in which the Company is not
      the
      surviving corporation or (b) a sale or exchange or other disposition of all
      or
      substantially all of the Company's assets; or (iii) immediately following a
      "change of control" of the Company (as such term is defined in Section 12.3
      hereinafter); provided, however, that the Option may be cancelled by the Company
      as of the effective day of any such reorganization, merger, consolidation,
      plan
      of exchange or of any dissolution or liquidation of the Company by giving notice
      to the Participant of its intention to do so and by permitting the purchase
      of
      all of the Shares then subject to the Option, for a period of approximately
      thirty (30) days thereafter.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

       12.3
      For
      the purposes of this Plan, a "change in control" of the Company shall be deemed
      to have occurred if (i) any "person" (as that term is used in Sections 12(d)
      and
      14(d)(2) of the Exchange Act) is or becomes the "beneficial owner" (as that
      term
      is defined by the Securities and Exchange Commission for purposes of Section
      13(d) of the Exchange Act), directly or indirectly, of more than 50% of the
      outstanding voting securities of the Company or its successors; or (ii) during
      any period of two consecutive years a majority of the Board of Directors no
      longer consists of individuals who were members of the Board of Directors at
      the
      beginning of such period, unless the election of each director who was not
      a
      director at the beginning of the period was approved by a vote of at least
      two-thirds of the directors still in office who were directors at the beginning
      of the period.

    

       12.4
       The
      restrictions applicable to outstanding Awards of Restricted Stock issued
      pursuant to Section 11 shall lapse, and the shares of Common Stock subject
      to
      outstanding Restricted Stock Units shall vest and become immediately issuable,
      upon the occurrence of an event specified in Section 12.2, and the Company
      shall
      issue stock certificates for such vested shares without a restrictive
      legend.

    

    13.
       Miscellaneous.

    

       13.1
       No
      Right
      to Employment. No person shall have any claim or right to be granted an Award,
      and the grant of an Award shall not be construed as giving a Participant the
      right to continued employment. The Company expressly reserves the right at
      any
      time to terminate the employment of a Participant, free from any liability
      or
      claim under the Plan except as may be expressly provided in the applicable
      Award.

    

       13.2
       No
      Right
      to Continue as a Director or Advisor. The granting of any Award under the Plan
      shall not constitute or be evidence of any agreement or understanding, express
      or implied, that the Company will retain a Non-Employee Director or Scientific
      Advisory Board Member for any period of time.

    

       13.3
       No
      Rights
      as Shareholder. Subject to the provisions of the applicable Option or other
      Award, no Participant or Designated Beneficiary shall have any rights as a
      shareholder with respect to any shares of Common Stock to be distributed under
      the Plan until such person becomes the holder thereof.

    

       13.4
       No
      Fractional Shares. No fractional shares of Common Stock shall be issued under
      the Plan, and cash shall be paid in lieu of any fractional shares in settlement
      of Options or other Awards granted under the Plan.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

       13.5
       Unfunded
      Plan. The Plan shall be unfunded, shall not create (or be construed to create)
      a
      trust or a separate fund or funds, and shall not establish any fiduciary
      relationship between the Company and any Participant or other
      person.

    

       13.6
       Successors
      and Assigns. The Plan shall be binding on all successors and assigns of the
      Participant, including without limitation the Participant's Designated
      Beneficiary or any receiver or trustee in bankruptcy or representative of the
      Participant's creditors.

    

       13.7
       Compliance
      With Other Laws and Regulations. The Plan, the grant and exercise of Awards
      under the Plan, and the obligation of the Company to transfer shares under
      such
      Awards shall be subject to all applicable federal and state laws, rules and
      regulations, including those related to disclosure of financial and other
      information to Participants, and to any approvals by any government or
      regulatory agency as may be required. The Company shall not be required to
      issue
      or deliver any certificates for shares of Common Stock prior to (a) the listing
      of such shares on any stock exchange on which the Common Stock may then be
      listed, where such listing is required under the rules or regulations of such
      exchange, and (b) the compliance with applicable federal and state securities
      laws and regulations relating to the issuance and delivery of such certificates;
      provided, however, that the Company shall make all reasonable efforts to so
      list
      such shares and to comply with such laws and regulations.

    

       13.8
       Compliance
      with Rule 16b-3. With respect to persons subject to Section 16 of the Exchange
      Act, transactions under this Plan are intended to comply with all applicable
      conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent
      any provision of the Plan or action by the Committee fails to so comply, it
      shall be deemed null and void, to the extent permitted by law and deemed
      advisable by the Committee.

    

       13.9
       Amendment
      of Plan. The
      Board
      shall have complete and exclusive power and authority to amend or modify the
      Plan in any or all respects. However, no such amendment or modification shall
      adversely affect the rights and obligations with respect to Options and other
      Awards at the time outstanding under the Plan unless the affected Participant
      consents to such amendment or modification. In addition, amendments to the
      Plan
      will be subject to stockholder approval to the extent required under applicable
      law or regulation or pursuant to the listing standards of the stock exchange
      (or
      the Nasdaq National Market) on which the Common Stock is at the time primarily
      traded. 

    

       13.10 Governing
      Law. To the extent not superseded by federal law, the provisions of the Plan
      shall be governed by and interpreted in accordance with the laws of the State
      of
      New York.

    

    13.
       Effective
      Date of Plan; Term of Plan.
      The June
      27, 2005 restatement of the Plan shall become effective upon stockholder
      approval at the 2005 Annual Stockholders Meeting. The Plan shall terminate
      on
      June 1, 2011, and no Awards shall be granted under the Plan after that date,
      provided, however, that the Plan and all Awards granted under the Plan prior
      to
      such date shall remain in effect until such Awards have been satisfied or
      terminated in accordance with the Plan and the terms of such
      Awards.

    

      
        	
                Date
                  Plan adopted by Board of Directors:

              	
                June
                  22, 2001

              
	 	 
	
                Date
                  Plan approved by Shareholders:

              	
                July
                  19, 2001

              
	 	 
	
                Date
                  First Amendment to the Plan approved by Board of
                  Directors:

              	
                July
                  14, 2003

              
	 	 
	
                Date
                  First Amendment to the Plan approved by Shareholders:

              	
                August
                  20, 2003

              
	 	 
	
                Date
                  Second Amendment to Plan approved by Board of Directors:

              	
                May
                  10, 2004

              
	 	 
	
                Date
                  Second Amendment to the Plan approved by Shareholders:

              	
                July
                  13, 2004

              
	 	 
	
                Date
                  Amended and Restated Plan approved by Board of
                  Directors

              	
                June
                  9, 2005

              
	 	 
	
                Date
                  Amended and Restated Plan approved by Shareholders

              	
                June
                  27, 2005Unassociated Document

    DELTATHREE,
      INC.

    AMENDED
      AND RESTATED 2006 NON-EMPLOYEE DIRECTOR STOCK PLAN

     

    
      	1.	
              Purposes

            

    

    

    The
      purpose of the deltathree, Inc. Amended and Restated 2006 Non-Employee Director
      Stock Plan (the “Plan”) is to enable deltathree, Inc. (the “Company”) to
      attract, retain and motivate the best qualified directors and to enhance a
      long-term mutuality of interest between the directors and stockholders of the
      Company by granting them Restricted Stock. On the Effective Date, this Plan
      shall replace the original deltathree, Inc. 2006 Non-Employee Director Stock
      Plan. The original deltathree, Inc. 2006 Non-Employee Director Stock Plan
      replaced the deltathree, Inc. 2004 Non-Employee Director Stock Option Plan,
      as
      amended, which was terminated except with respect to any outstanding Options
      previously granted thereunder.

    

    
      	2.	
              Definitions

            

    

    

    Unless
      the context requires otherwise, the following words as used in the Plan shall
      have the meanings ascribed to each below, it being understood that masculine,
      feminine and neuter pronouns are used interchangeably, and that each encompasses
      the others.

    

        "Affiliate"
      shall mean a corporation which is a parent or subsidiary of the Company, direct
      or indirect.

    

        "Award"
      shall
      mean any shares of Restricted Stock awarded under the Plan.

    

        "Board"
      shall
      mean the Board of Directors of the Company.

    

        "Class
      A
      Common Stock" shall mean the Class A common shares of the Company, par value
      $.001 per share.

    

        "Code"
      shall
      mean the Internal Revenue Code of 1986, as amended.

    

        "Company"
      shall mean deltathree, Inc., a Delaware corporation, and any successor
      thereto.

    

        “Effective
      Date” shall have the meaning ascribed to it in Section 3 hereunder.  

    

        "Eligible
      Director" shall mean the Chairman of the Board (so long as such person receives
      no compensation for his services to the Company or any of its subsidiaries
      other
      than as a non-executive Chairman) and any director of the Company who is not
      an
      employee of the Company or any of its subsidiaries.

    

        "Guidelines
      for Board Service" shall mean the description of duties that each Eligible
      Director must perform during his or her term of service as a member of the
      Board. Such Guidelines will be proposed, and updated from time to time, by
      the
      Board prior to the annual meeting of stockholders each year.

    

        “Option”
      shall mean the right to purchase Shares at a stated price for a specified period
      of time. 

    

        “Restricted
      Period” shall mean the period during which a grant of Restricted Stock is
      subject to forfeiture.

    

        “Restricted
      Stock” shall mean any
      Award
      of Class A Common Stock granted under the Plan which becomes vested and
      nonforfeitable, in whole or in part, upon the completion of such period of
      service as described in this Plan.

    

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

    

       

        “Share”
shall
      mean a share of Class A Common Stock.

    

    
      	3.	
              Effective
                Date

            

    

    

    The
      effective date of the Plan (the "Effective Date") shall be the date on which
      the
      Plan is approved by the stockholders of the Company.

    

    
      	4.	
              Administration

            

    

    

        (a)
      Powers of
      the Board. This Plan shall be administered by the Board.

    The
      Board
      may delegate its powers and functions hereunder to a duly appointed committee
      of
      the Board. The Board shall have full authority to interpret this Plan; to
      establish, amend and rescind rules for carrying out this Plan; to administer
      this Plan; to incorporate in any Restricted Stock agreement such terms and
      conditions, not inconsistent with this Plan, as it deems appropriate; to
      construe the respective Restricted Stock agreements and this Plan; and to make
      all other determinations and to take such steps in connection with this Plan
      as
      the Board, in its discretion, deems necessary or desirable for administering
      this Plan. All expenses incurred in the administration of the Plan, including,
      but not limited to, for the engagement of any counsel, consultant or agent,
      shall be paid by the Company.

    

        (b)
      Disinterested Status. Notwithstanding the foregoing, neither the Board, any
      committee thereof nor any person designated pursuant to (c) below shall take
      any
      action that would cause any director who is a "Non-Employee Director" for
      purposes of Rule 16b-3 promulgated under the Securities Exchange Act of 1934,
      as
      amended, as then in effect or any successor provisions ("Rule 16b-3"), to cease
      to be a "Non-Employee Director," with regard to this Plan or any
      other
      stock option or other equity plan of the Company. In particular, neither the
      Board nor any committee thereof shall have any discretion as to

    

            (i)
      the selection of
      Eligible Directors as eligible to receive awards pursuant to the Plan;
      or

    

            (ii)
      the number of
      shares of Restricted Stock to be awarded pursuant to Section 6.

    

        (c)
      Delegation. The Board may designate the Secretary of the Company, other officers
      or employees of the Company or competent professional advisors to assist the
      Board in the administration of this Plan, and may grant authority to such
      persons to execute agreements or other documents on its behalf.

    

        (d)
      Agents
      and Indemnification. The Board may employ such legal counsel, consultants and
      agents as it may deem desirable for the administration of this Plan, and may
      rely upon any opinion received from any such counsel or consultant and any
      computation received from any such consultant or agent. No member or former
      member of the Board or any committee thereof or any person designated pursuant
      to paragraph (c) above shall be liable for any action or determination made
      in
      good faith with respect to this Plan. To the maximum extent permitted by
      applicable law and the Company's Certificate of Incorporation and Bylaws, each
      member or former member of the Board or any committee thereof or any person
      designated pursuant to (c) above shall be indemnified and held harmless by
      the
      Company against any cost or expense (including counsel fees, which shall be
      paid
      by the Company when incurred) or liability (including any sum paid in settlement
      of a claim with the approval of the Company) arising out of any act or omission
      to act in connection with this Plan, unless arising out of such person's own
      fraud or bad faith. Such indemnification shall be in addition to any rights
      of
      indemnification the person may have as a director, officer or employee or under
      the Certificate of Incorporation of the Company or the Bylaws of the
      Company.

    

    
      	5.	
              Shares;
                Adjustment upon Certain Events 

            

    

    

        (a)
      Shares
      Available. Shares to be issued under this Plan shall be made available, at
      the
      discretion of the Board, either from authorized but unissued Shares or from
      issued Shares reacquired by the Company. The aggregate number of Shares that
      may
      be issued under this Plan, from time to time, shall be 500,000 Shares, subject
      to any adjustments provided hereunder. If the Company shall reacquire (at not
      more than its original issuance price) any Shares issued pursuant to an Award,
      or if any Shares of an Award are forfeited, or otherwise cancelled or
      terminated, such Shares which were subject to such Award shall again be
      available for issuance from time to time pursuant to this Plan. 

    

    
      
        
        

      

      
        A-2

        
          

        

      

      
        
        

      

       

    

        (b)
      No Limit
      on Corporate Action. The existence of this Plan and shares of Restricted Stock
      granted hereunder shall not affect in any way the right or power of the Board
      or
      the stockholders of the Company to make or authorize any adjustment,
      recapitalization, reorganization or other change in the Company's
      capital
      structure or its business, any merger or consolidation of the Company, any
      issue
      of bonds, debentures, preferred or prior preference shares ahead of or affecting
      common shares, the dissolution or liquidation of the Company or any sale or
      transfer of all or part of its assets or business, or any other corporate act
      or
      proceeding.

    

        (c)
      Adjustments upon Certain Events. In the event of any Share dividend or Share
      split, recapitalization (including, without limitation, the payment of an
      extraordinary dividend), merger, consolidation, combination, spin-off,
      distribution of assets to stockholders, exchange of shares, or other similar
      corporate change, the aggregate number of Shares available for Awards of
      Restricted Stock under Section 5(a), the number of shares of Restricted Stock
      underlying any outstanding Awards or future Awards pursuant to Section 6 shall
      be appropriately adjusted.

    

        (d)
      No
      Adjustment If Value Received. Except as hereinbefore expressly provided, the
      issuance by the Company of shares of stock of any class or securities
      convertible into shares of stock of any class, for cash, property, labor or
      services, upon direct sale, upon the exercise of rights or warrants to subscribe
      therefor, or upon conversion of shares or other securities, and in any case
      whether or not for fair value, shall not affect, and no adjustment by reason
      thereof shall be made with respect to the number of shares of Restricted Stock
      or future Awards of shares of Restricted Stock pursuant to Section
      6.

     

    
      	6.	
              Awards

            

    

    

    (a)
      Initial Awards. Each individual who becomes an Eligible Director after the
      Effective Date shall be automatically granted eight thousand (8,000) shares
      of
      Restricted Stock (“Initial Award”) on the date such Eligible Director joins the
      Board. 

    

        (b)
      Subsequent Awards. On the first business day after each annual meeting of
      stockholders of the Company occurring during the term of the Plan commencing
      with the annual meeting of stockholders in 2007, each Eligible Director who
      meets the Guidelines for Board Service and who continues to be an Eligible
      Director following such annual meeting shall automatically be granted
      eight thousand (8,000) shares of Restricted Stock (a “Subsequent Award”);
      provided that no Subsequent Award shall be made to any Eligible Director who
      has
      not served as a director of the Company, as of the time of such annual meeting,
      for at least six (6) months.

    

        (c)
      Committee
      Chairman Awards.

    

            (i)
      Each Eligible
      Director who is appointed as chairman of a standing committee of the Board
      after
      the Effective Date (and has not served as the chairman of such committee
      immediately prior to the appointment) shall be automatically granted six
      thousand (6,000) shares of Restricted Stock ("Initial Committee Chairman Award")
      on the date of such appointment.

    

            (ii)
      Each Eligible
      Director who continues to serve as a chairman of a standing committee of the
      Board other than the audit committee and who meets the Guidelines for Board
      Service immediately following each annual meeting of the Company's stockholders,
      commencing with the annual meeting of the Company's stockholders in 2007, shall
      be granted an additional six thousand (6,000) shares of Restricted Stock (a
      "Committee Chairman Award"); provided that: (1) no Committee Chairman Award
      shall be made to any Eligible Director who has not served as a director of
      the
      Company, as of the time of such annual meeting, for at least six (6) months,
      and
      (2) no Committee Chairman Award shall be made to any Eligible Director who
      has
      received a Committee Chairman Award for such service on the same committee
      within the past six (6) months. Each such Committee Chairman Award shall be
      made
      on the first business day after each annual stockholders' meeting in
      question.

    

    
      
        
        

      

      
        A-3

        
          

        

      

      
        
        

      

       

    

        (d)
      Audit
      Committee Service Awards.

    

            (i)
      Each Eligible
      Director who is appointed as a member of the audit committee of the Board after
      the Effective Date (and has not served as a member of the audit committee
      immediately prior to the appointment) shall be automatically granted six
      thousand (6,000) shares of Restricted Stock ("Initial Audit Committee Award")
      on
      the date of such appointment.

    

            (ii)
      Each Eligible
      Director who continues to serve as a member of the audit committee of the Board
      and who meets the Guidelines for Board Service immediately following each annual
      meeting of the Company's stockholders, commencing with the annual meeting of
      the
      Company’s stockholders in 2007, shall be granted six thousand (6,000) shares of
      Restricted Stock (an "Audit Committee Service Award"); provided that: (1) no
      Audit Committee Service Award shall be made to any Eligible Director who has
      not
      served as a director of the Company, as of the time of such annual meeting,
      for
      at least six (6) months, and (2) no Audit Committee Award shall be made to
      any
      Eligible Director who has received an Audit Committee award for such service
      within the past six (6) months. In addition, the chairman of the audit committee
      of the Board shall be granted an additional two thousand (2,000) shares of
      Restricted Stock (an "Audit Committee Chairman Award"). Each such Audit
      Committee Service Award and Audit Committee Chairman Award shall be made on
      the
      first business day after each annual stockholders' meeting in
      question.

    

        (e)
      Chairman
      of the Board Award.

     

            (i)
      An Eligible
      Director who is appointed as the chairman of the full Board after the Effective
      Date (and has not served as the chairman immediately prior to the appointment)
      shall be automatically granted ten thousand (10,000) shares of restricted Stock
      ("Initial Chairman of the Board Award") on the date of such
      appointment.

     

            (ii)
      An Eligible
      Director who continues to serve as the chairman of the full Board and who meets
      the Guidelines for Board Service immediately following each annual meeting
      of
      the Company's stockholders, commencing with the annual meeting of the Company’s
      stockholders in 2007, shall be granted ten thousand (10,000) shares of
      Restricted Stock (a "Chairman of the Board Award"); provided that: (1) no
      Chairman of the Board Award shall be made to any Eligible Director who has
      not
      served as a director of the Company, as of the time of such annual meeting,
      for
      at least six (6) months; and (2) no Chairman of the Board Award shall be made
      to
      any Eligible Director who has received a Chairman of the Board Award for such
      service within the past six (6) months. Each such Chairman of the Board Award
      shall be made on the first business day after each annual stockholders' meeting
      in question.

    

        (f)
      Restricted Stock Agreement. The Award or Restricted Stock shall be evidenced
      by
      a written or electronic agreement containing the terms of this Section 6 and
      any
      other terms as required by law.

    

        (g)
      Restricted
      Period and Procedure. The Restricted Period applicable to any Award of
      Restricted Stock granted under this Plan shall lapse, and the shares related
      to
      such award shall become freely transferable and fully vested on the first
      anniversary of the date of grant. Any certificates issued in respect of
      Restricted Stock shall be registered in the name of the Eligible Director and
      deposited by such Eligible Director, together with a stock power endorsed in
      blank, with the Company. At the expiration of the Restricted Period with respect
      to any award of Restricted Stock, unless otherwise forfeited, the Company shall
      deliver such certificates to the Eligible Director or to the Eligible Director's
      legal representative. 

    

        (h)
      Delivery
      of Shares. Upon the expiration or termination of the Restricted Period, the
      restrictions applicable to the Restricted Stock shall lapse and a stock
      certificate for the number of shares of Common Stock with respect to which
      the
      restrictions have lapsed shall be delivered, free of all such restrictions,
      except any that may be imposed by law, to the Eligible Director or the Eligible
      Director's beneficiary or estate, as the case may be. No payment will be
      required to be made by the Eligible Director upon the delivery of such shares
      of
      Common Stock, except as otherwise provided in Section 12(e) of the Plan. The
      stock certificates may bear such legend or legends as the Board, in its
      discretion, determines to be necessary or appropriate to prevent a violation
      of,
      or to perfect an exemption from, the registration requirements of the Securities
      Act of 1933, as amended, or to implement the provisions of any agreements
      between the Company and the Eligible Director with respect to such
      shares.

    

    
      
        
        

      

      
        A-4

        
          

        

      

      
        
        

      

       

    

        (i)
      Termination of Director Status. If
      an
      Eligible Director ceases to serve as a member of the Board for any reason
      (including, resignation, failure to stand for re-election or failure to be
      re-elected), any award of Restricted Stock shall become vested and
      nonforfeitable as to that number of shares which is equal to the number of
      shares of Class A Common Stock subject to such Award times a fraction, the
      numerator of which is the number of days actually served as an Eligible Director
      during the Restricted Period and the denominator of which is the total number
      of
      days during the Restricted Period. Any portion of any Restricted Stock that
      has
      not become nonforfeitable at the date of an Eligible Director's termination
      of
      service shall be forfeited as of such date.

    

        (j)
      Change in
      Control. Notwithstanding anything to the contrary in the Plan, any Restricted
      Period applicable to shares of Restricted Stock shall lapse and any shares
      underlying the Restricted Stock shall become vested in full upon a “change in
      control.” For purposes of this Section, a "change in control" shall arise if, at
      any time while the Eligible Director is a member of the Company's Board of
      Directors any one or more of the following events occurs:

    

            (i)
      The Company is
      merged, consolidated or reorganized into or with another corporation, or other
      entity and, as a result thereof, less than 50% of the outstanding stock or
      other
      capital interests of the surviving, resulting or acquiring corporation, person,
      or other entity is owned, in the aggregate, by the stockholder or stockholders
      of the Company immediately prior to such merger, consolidation or
      reorganization; or

    

            (ii)
      The Company
      sells all or substantially all of its business or assets (or both) to any other
      corporation, person, or other entity, less than 50% of the outstanding, voting
      stock or other capital
      interests of which are owned, in the aggregate, by the stockholders of the
      Company, directly or indirectly, immediately prior to or after such
      sale.

    

            (iii)
      Any "Person"
      (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange
      Act
      of 1934, as amended) other than a Person who is an Affiliate as of the Effective
      Date becomes the "Beneficial Owner" (as defined in Rule 13d-3 under said Act),
      directly or indirectly, of securities of the Company representing 50% or more
      of
      the total voting power represented by the Company's then outstanding voting
      securities (excluding for this purpose the Company or its Affiliates or any
      employee benefit plan of the Company) pursuant to a transaction or a series
      of
      related transactions which the Board of Directors does not approve.

    

    
      	7.	
              Transferability
                of Awards

            

    

    

    Unless
      the Restricted Period has expired, no Award shall be transferable by the
      Eligible Director otherwise than by will or under the applicable laws of descent
      and distribution, unless such transfer shall be (a) acceptable under Rule 16b-3
      and is approved by the Board or its authorized delegate or (b) if the agreement
      pursuant to which an Award is made so provides, by gift or domestic relations
      order, to (i) the spouse, children or grandchildren of such Eligible Director
      (collectively, "Family Members"), (ii) a trust or trusts for the exclusive
      benefit of such Family Members, or (iii) a partnership or limited liability
      company in which such Family Members and trusts for the exclusive benefit of
      such Family Members are the only partners or members, as the case may be. In
      addition, no Award shall be assigned, negotiated, pledged or hypothecated in
      any
      way (whether by operation of law or otherwise) and no Award shall be subject
      to
      execution, attachment or similar process. Upon any attempt to transfer, assign,
      negotiate, pledge or hypothecate any Award, or in the event of any levy upon
      any
      Award by reason of any attachment or similar process, in either case contrary
      to
      the provisions hereof, such Award shall immediately become null and
      void.

     

    
      
        
        

      

      
        A-5

        
          

        

      

      
        
        

      

    

     

    
      	8.	
              Rights
                as a Stockholder; Dividend
                Equivalents.

            

    

    

    Eligible
      Directors granted shares of Restricted Stock shall be entitled to receive,
      either currently or at a future date, as specified by the Board, all dividends
      and other distributions paid with respect to those shares, provided that if
      any
      such dividends or distributions are paid in shares of Common Stock or other
      property (other than cash), such shares and other property shall be subject
      to
      the same forfeiture restrictions and restrictions on transferability as apply
      to
      the shares of Restricted Stock with respect to which they were paid.

    

    
      	9.	
              Determinations

            

    

    

    Each
      determination, interpretation or other action made or taken pursuant to the
      provisions of this Plan by the Board shall be final and binding for all purposes
      and upon all persons, including, without limitation, the Company, the directors,
      officers and other employees of the Company, the Eligible Director and the
      respective heirs, executors, administrators, personal representatives and other
      successors in interest of such persons.

     

    
      	10.	
              Termination,
                Amendment and Modification

            

    

    

        (a)
      Termination and Amendment. This Plan shall terminate at the close of business
      on
      September 23, 2014, unless sooner terminated by action of the Board or
      stockholders of the Company, and no Awards shall be granted under this Plan
      thereafter. The Board at any time or from time to time may amend this Plan
      to
      effect (i) amendments necessary or desirable in order that this Plan and the
      Awards shall conform to all applicable laws and regulations and (ii) any other
      amendments deemed appropriate. Notwithstanding the foregoing, (i) the provisions
      of the Plan relating to (A) the number of shares of Restricted Stock to be
      granted under the Plan to any Eligible Director, (B) the timing of any Award
      and
      (C) the material terms of any such Award (including, without limitation, the
      time of any such grant) may not be amended without the approval of the Company's
      stockholders and (ii) the Board may not effect any amendment that would require
      the approval of the stockholders of the Company under any applicable laws or
      the
      listing requirements of The Nasdaq Stock Market (if applicable to the Company
      at
      the time such amendment is adopted or will be effective) unless such approval
      is
      obtained.

    

        (b)
      No Effect
      on Existing Rights. Except as otherwise required by law, no termination,
      amendment or modification of this Plan may, without the consent of an Eligible
      Director or the permitted transferee of an Award, alter or impair the rights
      and
      obligations arising under any then outstanding Award held by such Eligible
      Director or the permitted transferee.

    

    
      	11.	
              Non-Exclusivity

            

    

    

    Neither
      the adoption of this Plan by the Board nor the submission of this Plan to the
      stockholders of the Company for approval shall be construed as creating any
      limitations on the power of the Board to adopt such other compensatory
      arrangements as it may deem desirable, including, without limitation, payments
      of cash amounts related to the tax liabilities arising directly or indirectly
      from the issuance of shares in respect of an Award granted to an Eligible
      Director hereunder.

    

    
      	12.	
              General
                Provisions

            

    

    

        (a)
      No Right
      to Serve as a Director. This Plan shall not impose any obligations on the
      Company to retain any Eligible Director as a director nor shall it impose any
      obligation on the part of any Eligible Director to remain as a director of
      the
      Company, provided that each Eligible Director by accepting each Award shall
      represent to the Company that it is his good faith intention to continue to
      serve as a director of the Company until the next annual meeting of stockholders
      and that he agrees to do so unless a change in circumstances
      arises.

    

    
      
        
        

      

      
        A-6

        
          

        

      

      
        
        

      

    

     

        (b)
      No Right
      to Particular Assets. Nothing contained in this Plan and no action taken
      pursuant to this Plan shall create or be construed to create a trust of any
      kind
      or any fiduciary relationship between the Company and any Eligible Director,
      the
      executor, administrator or other personal representative or designated
      beneficiary of such Eligible Director, or any other persons. Any reserves that
      may be established by the Company in connection with this Plan shall continue
      to
      be part of the general funds of the Company, and no individual or entity other
      than the Company shall have any interest in such funds until paid to an Eligible
      Director. To the extent that any Eligible Director or his executor,
      administrator, or other personal representative, as the case may be,
      acquires
      a right to receive any payment from the Company pursuant to this Plan, such
      right shall be no greater than the right of an unsecured general creditor of
      the
      Company.

    

        (c)
      Beneficiary Designation. Each Eligible Director under the Plan may from time
      to
      time name any beneficiary or beneficiaries (who may be named contingently or
      successively) to whom any benefit under the Plan is to be paid or by whom any
      right under the Plan is to be exercised in case of his death. Each designation
      will revoke all prior designations by the same Eligible Director, shall be
      in a
      form prescribed by the Company, and will be effective only when filed by the
      Eligible Director in writing with the Company during his lifetime. In the
      absence of any such designation, benefits remaining unpaid at the Eligible
      Director's death shall be paid to or exercised by the Eligible Director's
      surviving spouse, if any, or otherwise to or by his estate.

    

        (d)
      Listing
      of Shares and Related Matters. The Plan, the granting and exercising of Awards
      thereunder, and the other obligations of the Company under the Plan, shall
      be
      subject to all applicable federal and state laws, rules, and regulations, and
      to
      such approvals by any regulatory or governmental agency as may be required.
      If
      at any time the Board shall determine in its discretion that the listing,
      registration or qualification of the Shares covered by this Plan upon any
      national securities exchange or under any United States or non-United States
      federal, state or other law, or the consent or approval of any governmental
      regulatory body, is necessary or desirable as a condition of, or in connection
      with, the delivery of Shares under this Plan, no Shares will be delivered unless
      and until such listing, registration, qualification, consent or approval shall
      have been effected or obtained, or otherwise provided for, free of any
      conditions not acceptable to the Board. The Company, in its discretion, may
      require an Eligible Director to make such representations and furnish such
      information as it may consider appropriate in connection with the issuance
      or
      delivery of Shares in compliance with applicable laws, rules, and regulations.
      The Company shall not be obligated by virtue of any provision of the Plan to
      recognize the exercise of any Award or to otherwise sell or issue Shares
      in

    violation
      of any such laws, rules, or regulations; and any postponement of the exercise
      or
      settlement of any Award under this provision shall not extend the term of such
      Awards, and neither the Company nor its directors or officers shall have any
      obligation or liability to any person with respect to any Award (or Shares
      issuable thereunder) that shall lapse because of such postponement.

    

        (e)
      Withholding Taxes. The Company shall have the right to make such provisions
      as
      it deems necessary or appropriate to satisfy any obligations it may have to
      withhold federal, state or local income or other taxes incurred by reason of
      the
      issuance of Shares under the Plan, including requiring an Eligible
      Director
      to reimburse the Company for any taxes required to be withheld or otherwise
      deducted and paid by the Company in respect of the issuance of
      Shares.

    

        (f)
      Notices.
      Each Eligible Director shall be responsible for furnishing the Board with the
      current and proper address for the mailing of notices and delivery of agreements
      and Shares. Any notices required or permitted to be given shall be deemed given
      if directed to the person to whom addressed at such address and mailed by
      regular United States mail, first-class and prepaid. If any item mailed to
      such
      address is returned as undeliverable to the addressee, mailing will be suspended
      until the Eligible Director furnishes the proper address.

    

    
      
        
        

      

      
        A-7

        
          

        

      

      
        
        

      

    

        

        (g)
      Severability of Provisions. If any provision of this Plan shall be held invalid
      or unenforceable, such invalidity or unenforceability shall not affect any
      other
      provisions hereof, and this Plan shall be construed and enforced as if such
      provision had not been included.

    

        (h)
      Incapacity. Any benefit payable to or for the benefit of a minor, an incompetent
      person or other person incapable of receipting therefor shall be deemed paid
      when paid to such person's guardian or to the party providing or reasonably
      appearing to provide for the care of such person, and such payment shall fully
      discharge the Board, the Company and other parties with respect
      thereto.

    

        (i)
      Headings
      and Captions. The headings and captions herein are provided for reference and
      convenience only, shall not be considered part of this Plan, and shall not
      be
      employed in the construction of this Plan.

    

        (j)
      Gender
      and Number. Except when otherwise indicated by the context, words in the
      masculine gender used in the Plan shall include the feminine gender, the
      singular shall include the plural, and the plural shall include the
      singular.

    

        (k)
      Governing
      Law. This Plan shall be construed and enforced according to the laws of the
      State of New York.

     

    
      
        
        

      

      
        A-8

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