Document:

INVIVO
THERAPEUTICS CORPORATION

    

    2007
EMPLOYEE, DIRECTOR AND CONSULTANT STOCK PLAN

    

    1.           DEFINITIONS.

    

    
      	
               
      

            	
              Unless
      otherwise specified or unless the context otherwise requires, the
      following terms, as used in this InVivo Therapeutics Corporation 2007
      Employee, Director and Consultant Stock Plan, have the following
      meanings:

            

    

    

    
      	
               
      

            	 	
              Administrator
      means the Board of Directors, unless it has delegated power to act on its
      behalf to the Committee, in which case the Administrator means the
      Committee.

            

    

    

    
      	
               
      

            	 	
              Affiliate means
      a corporation which, for purposes of Section 424 of the Code, is a parent
      or subsidiary of the Company, direct or
  indirect.

            

    

    

    
      	
               
      

            	
              Board of
      Directors means the Board of Directors of the
    Company.

            

    

    

    Change of Control
means the occurrence of any of the following events:

    

    
      	
               
      

            	
              (i)

            	
              Ownership.  Any
      “Person” (as such term is used in Sections 13(d) and 14(d) of the
      Securities Exchange Act of 1934, as amended (the “1934 Act”)) becomes the
      “Beneficial Owner” (as defined in Rule 13d-3 under said 1934 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; or

            

    

    

    
      	
               
      

            	
              (ii)

            	
              Merger/Sale
      of Assets.  A merger or consolidation of the Company whether or
      not approved by the Board of Directors, other than a merger or
      consolidation which would result in the voting securities of the Company
      outstanding immediately prior thereto continuing to represent (either by
      remaining outstanding or by being converted into voting securities of the
      surviving entity or the parent of such corporation) at least 50% of the
      total voting power represented by the voting securities of the Company or
      such surviving entity or parent of such corporation outstanding
      immediately after such merger or consolidation, or the stockholders of the
      Company approve an agreement for the sale or disposition by the Company of
      all or substantially all of the Company’s
  assets.

            

    

    

    
      	
               
      

            	
              Code means the
      United States Internal Revenue Code of 1986, as
  amended.

            

    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              Committee means
      the committee of the Board of Directors to which the Board of Directors
      has delegated power to act under or pursuant to the provisions of the
      Plan.

            

    

    

    
      	
               
      

            	
              Common Stock
      means shares of the Company’s common stock, $0.001 par value per
      share.

            

    

    

    
      	
               
      

            	
              Company means
      InVivo Therapeutics Corporation, a Delaware
  corporation.

            

    

    

    
      	
               
      

            	
              Disability or
      Disabled
      means permanent and total disability as defined in Section 22(e)(3) of the
      Code.

            

    

    

    
      	
               
      

            	
              Employee means
      any employee of the Company or of an Affiliate (including, without
      limitation, an employee who is also serving as an officer or director of
      the Company or of an Affiliate), designated by the Administrator to be
      eligible to be granted one or more Stock Rights under the
      Plan.

            

    

    

    
      	
               
      

            	
              Fair Market
      Value of a Share of Common Stock
means:

            

    

    

    
      (1)   
 If the
Common Stock is listed on a national securities exchange or traded in the
over-the-counter market and sales prices are regularly reported for the Common
Stock, the closing or last price of the Common Stock on the Composite Tape or
other comparable reporting system for the trading day immediately preceding the
applicable date;

    

    

    
      (2)     If the
Common Stock is not traded on a national securities exchange but is traded on
the over-the-counter market, if sales prices are not regularly reported for the
Common Stock for the trading day referred to in clause (1), and if bid and
asked prices for the Common Stock are regularly reported, the mean between the
bid and the asked price for the Common Stock at the close of trading in the
over-the-counter market for the trading day on which Common Stock was traded
immediately preceding the applicable date; and

    

    

    
      (3)     If the
Common Stock is neither listed on a national securities exchange nor traded in
the over-the-counter market, such value as the Administrator, in good faith,
shall determine.

    

    

    
      	
               
      

            	
              ISO means an
      option meant to qualify as an incentive stock option under
      Section 422 of the Code.

            

    

    

    
      	
               
      

            	
              Non-Qualified
      Option means an option which is not intended to qualify as an
      ISO.

            

    

    

    
      	
               
      

            	
              Option means an
      ISO or Non-Qualified Option granted under the
  Plan.

            

    

    

    
      	
               
      

            	
              Option
      Agreement means an agreement between the Company and a Participant
      delivered pursuant to the Plan, in such form as the Administrator shall
      approve.

            

    

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              Participant
      means an Employee, director or consultant of the Company or an Affiliate
      to whom one or more Stock Rights are granted under the Plan.  As
      used herein, “Participant” shall include “Participant’s Survivors” where
      the context requires.

            

    

    

    
      	
               
      

            	
              Plan means this
      InVivo Therapeutics Corporation 2007 Employee, Director and Consultant
      Stock Plan.

            

    

    

    
      	
               
      

            	
              Shares means
      shares of the Common Stock as to which Stock Rights have been or may be
      granted under the Plan or any shares of capital stock into which the
      Shares are changed or for which they are exchanged within the provisions
      of Paragraph 3 of the Plan.  The Shares issued under the
      Plan may be authorized and unissued shares or shares held by the Company
      in its treasury, or both.

            

    

    

    
      	
               
      

            	
              Stock
      Grant  means a grant by the Company of Shares under the
      Plan.

            

    

    

    
      	
               
      

            	
              Stock Grant
      Agreement means an agreement between the Company and a Participant
      delivered pursuant to the Plan, in such form as the Administrator shall
      approve.

            

    

    

    
      	
               
      

            	
              Stock Right
      means a right to Shares of the Company granted pursuant to the Plan — an
      ISO, a Non-Qualified Option or a Stock
Grant.

            

    

    

    
      	
               
      

            	
              Survivor means
      a deceased Participant’s legal representatives and/or any person or
      persons who acquired the Participant’s rights to a Stock Right by will or
      by the laws of descent and
distribution.

            

    

    

    2.           PURPOSES OF THE
PLAN.

    

    The Plan is intended to encourage
ownership of Shares by Employees and directors of and certain consultants to the
Company in order to attract such people, to induce them to work for the benefit
of the Company or of an Affiliate and to provide additional incentive for them
to promote the success of the Company or of an Affiliate.  The Plan
provides for the granting of ISOs, Non-Qualified Options and Stock
Grants.

    

    
      	
              3.

            	
              SHARES SUBJECT TO THE
      PLAN.

            

    

    

    (a)           The
number of Shares which may be issued from time to time pursuant to this Plan
shall be One Million (1,000,000) or the equivalent of such number of Shares
after the Administrator, in its sole discretion, has interpreted the effect of
any stock split, stock dividend, combination, recapitalization or similar
transaction in accordance with Paragraph 23 of the Plan.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    If an Option ceases to be
“outstanding”, in whole or in part, or if the Company shall reacquire any Shares
issued pursuant to a Stock Grant, the Shares which were subject to such Option
and any Shares so reacquired by the Company shall be available for the granting
of other Stock Rights under the Plan.  Any Option shall be treated as
“outstanding” until such Option is exercised in full, or terminates or expires
under the provisions of the Plan, or by agreement of the parties to the
pertinent Option Agreement.

    

    
      	
              4.

            	
              ADMINISTRATION OF THE
      PLAN.

            

    

    

    The Administrator of the Plan will be
the Board of Directors, except to the extent the Board of Directors delegates
its authority to the Committee, in which case the Committee shall be the
Administrator.  Subject to the provisions of the Plan, the
Administrator is authorized to:

    

    
      	
               
      

            	
              a.

            	
              Interpret
      the provisions of the Plan or of any Option or Stock Grant and to make all
      rules and determinations which it deems necessary or advisable for the
      administration of the Plan;

            

    

    

    
      	
               
      

            	
              b.

            	
              Determine
      which Employees, directors and consultants shall be granted Stock
      Rights;

            

    

    

    
      	
               
      

            	
              c.

            	
              Determine
      the number of Shares for which a Stock Right or Stock Rights shall be
      granted;

            

    

    

    
      	
               
      

            	
              d.

            	
              Specify
      the terms and conditions upon which a Stock Right or Stock Rights may be
      granted; and

            

    

    

    
      	
               
      

            	
              e.

            	
              Adopt
      any sub-plans applicable to residents of any specified jurisdiction as it
      deems necessary or appropriate in order to comply with or take advantage
      of any tax laws applicable to the Company or to Plan Participants or to
      otherwise facilitate the administration of the Plan, which sub-plans may
      include additional restrictions or conditions applicable to Options or
      Shares acquired upon exercise of
Options.

            

    

    

    provided,
however, that all such interpretations, rules, determinations, terms and
conditions shall be made and prescribed in the context of preserving the tax
status under Section 422 of the Code of those Options which are designated as
ISOs.  Subject to the foregoing, the interpretation and construction
by the Administrator of any provisions of the Plan or of any Stock Right granted
under it shall be final, unless otherwise determined by the Board of Directors,
if the Administrator is the Committee.  In addition, if the
Administrator is the Committee, the Board of Directors may take any action under
the Plan that would otherwise be the responsibility of the
Committee.

    

    If permissible under applicable law,
the Board of Directors or the Committee may allocate all or any portion of its
responsibilities and powers to any one or more of its members and may delegate
all or any portion of its responsibilities and powers to any other person
selected by it.  Any such allocation or delegation may be revoked by
the Board of Directors or the Committee at any time.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    5.           ELIGIBILITY FOR
PARTICIPATION.

    

    The Administrator will, in its sole
discretion, name the Participants in the Plan, provided, however, that each
Participant must be an Employee, director or consultant of the Company or of an
Affiliate at the time a Stock Right is granted.  Notwithstanding the
foregoing, the Administrator may authorize the grant of a Stock Right to a
person not then an Employee, director or consultant of the Company or of an
Affiliate; provided, however, that the actual grant of such Stock Right shall be
conditioned upon such person becoming eligible to become a Participant at or
prior to the time of the execution of the Agreement evidencing such Stock
Right.  ISOs may be granted only to
Employees.  Non-Qualified Options and Stock Grants may be granted to
any Employee, director or consultant of the Company or an
Affiliate.  The granting of any Stock Right to any individual shall
neither entitle that individual to, nor disqualify him or her from,
participation in any other grant of Stock Rights.

    

    6.           TERMS AND CONDITIONS OF
OPTIONS.

    

    Each Option shall be set forth in
writing in an Option Agreement, duly executed by the Company and, to the extent
required by law or requested by the Company, by the Participant.  The
Administrator may provide that Options be granted subject to such terms and
conditions, consistent with the terms and conditions specifically required under
this Plan, as the Administrator may deem appropriate including, without
limitation, subsequent approval by the shareholders of the Company of this Plan
or any amendments thereto.  The Option Agreements shall be subject to
at least the following terms and conditions:

    

    
      	
               
      

            	
              A.

            	
              Non-Qualified
      Options:  Each Option intended to be a Non-Qualified
      Option shall be subject to the terms and conditions which the
      Administrator determines to be appropriate and in the best interest of the
      Company, subject to the following minimum standards for any such
      Non-Qualified Option:

            

    

    

    
      	
               
      

            	
              a.

            	
              Option
      Price: Each Option Agreement shall state the option price (per share) of
      the Shares covered by each Option, which option price shall be determined
      by the Administrator but shall not be less than the par value per share of
      Common Stock.

            

    

    

    
      	
               
      

            	
              b.

            	
              Each
      Option Agreement shall state the number of Shares to which it
      pertains;

            

    

    

    
      	
               
      

            	
              c.

            	
              Each
      Option Agreement shall state the date or dates on which it first is
      exercisable and the date after which it may no longer be exercised, and
      may provide that the Option rights accrue or become exercisable in
      installments over a period of months or years, or upon the occurrence of
      certain conditions or the attainment of stated goals or events;
      and

            

    

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              d.

            	
              Exercise
      of any Option may be conditioned upon the Participant’s execution of a
      Share purchase agreement in form satisfactory to the Administrator
      providing for certain protections for the Company and its other
      shareholders, including requirements
that:

            

    

    

    
      	
               
      

            	
              i.

            	
              The
      Participant’s or the Participant’s Survivors’ right to sell or transfer
      the Shares may be restricted; and

            

    

    

    
      	
               
      

            	
              ii.

            	
              The
      Participant or the Participant’s Survivors may be required to execute
      letters of investment intent and must also acknowledge that the Shares
      will bear legends noting any applicable
  restrictions.

            

    

    

    
      	
               
      

            	
              B.

            	
              ISOs:  Each
      Option intended to be an ISO shall be issued only to an Employee and be
      subject to the following terms and conditions, with such additional
      restrictions or changes as the Administrator determines are appropriate
      but not in conflict with Section 422 of the Code and relevant regulations
      and rulings of the Internal Revenue
Service:

            

    

    

    
      	
               
      

            	
              a.

            	
              Minimum
      standards:  The ISO shall meet the minimum standards required of
      Non-Qualified Options, as described in Paragraph 6(A) above, except clause
      (a) thereunder.

            

    

    

    
      	
               
      

            	
              b.

            	
              Option
      Price:  Immediately before the ISO is granted, if the
      Participant owns, directly or by reason of the applicable attribution
      rules in Section 424(d) of the
Code:

            

    

    

    
      	
               
      

            	
              i.

            	
              10%
      or less
      of the total combined voting power of all classes of stock of the Company
      or an Affiliate, the Option price per share of the Shares covered by each
      ISO shall not be less than 100% of the Fair Market Value per share of the
      Shares on the date of the grant of the Option;
  or

            

    

    

    
      	
               
      

            	
              ii.

            	
              More
      than 10% of the total combined voting power of all classes of stock of the
      Company or an Affiliate, the Option price per share of the Shares covered
      by each ISO shall not be less than 110% of the said Fair Market Value on
      the date of grant.

            

    

    

    
      	
               
      

            	
              c.

            	
              Term
      of Option:  For Participants who
own:

            

    

    

    
      	
               
      

            	
              i.

            	
              10%
      or less
      of the total combined voting power of all classes of stock of the Company
      or an Affiliate, each ISO shall terminate not more than ten years from the
      date of the grant or at such earlier time as the Option Agreement may
      provide; or

            

    

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              ii.

            	
              More
      than 10% of the total combined voting power of all classes of stock of the
      Company or an Affiliate, each ISO shall terminate not more than five years
      from the date of the grant or at such earlier time as the Option Agreement
      may provide.

            

    

    

    
      	
               
      

            	
              d.

            	
              Limitation
      on Yearly Exercise:  The Option Agreements shall restrict the
      amount of ISOs which may become exercisable in any calendar year (under
      this or any other ISO plan of the Company or an Affiliate) so that the
      aggregate Fair Market Value (determined at the time each ISO is granted)
      of the stock with respect to which ISOs are exercisable for the first time
      by the Participant in any calendar year does not exceed
      $100,000.

            

    

    

    
      	
              7.

            	
              TERMS AND CONDITIONS
      OF STOCK GRANTS.

            

    

    

    Each offer of a Stock Grant to a
Participant shall state the date prior to which the Stock Grant must be accepted
by the Participant, and the principal terms of each Stock Grant shall be set
forth in a Stock Grant Agreement, duly executed by the Company and, to the
extent required by law or requested by the Company, by the
Participant.  The Stock Grant Agreement shall be in a form approved by
the Administrator and shall contain terms and conditions which the Administrator
determines to be appropriate and in the best interest of the Company, subject to
the following minimum standards:

    

    
      	
               
      

            	
              (a)

            	
              Each
      Stock Grant Agreement shall state the purchase price (per share), if any,
      of the Shares covered by each Stock Grant, which purchase price shall be
      determined by the Administrator but shall not be less than the minimum
      consideration required by the Delaware General Corporation Law on the date
      of the grant of the Stock Grant;

            

    

    

    
      	
               
      

            	
              (b)

            	
              Each
      Stock Grant Agreement shall state the number of Shares to which the Stock
      Grant pertains; and

            

    

    

    
      	
               
      

            	
              (c)

            	
              Each
      Stock Grant Agreement shall include the terms of any right of the Company
      to restrict or reacquire the Shares subject to the Stock Grant, including
      the time and events upon which such reacquisition rights shall accrue and
      the purchase price therefor, if
any.

            

    

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    8.           EXERCISE OF OPTIONS AND
ISSUE OF SHARES.

    

    An Option (or any part or installment
thereof) shall be exercised by giving written notice to the Company or its
designee, together with provision for payment of the full purchase price in
accordance with this Paragraph for the Shares as to which the Option is being
exercised, and upon compliance with any other condition(s) set forth in the
Option Agreement.  Such notice shall be signed by the person
exercising the Option, shall state the number of Shares with respect to which
the Option is being exercised and shall contain any representation required by
the Plan or the Option Agreement.  Payment of the purchase price for
the Shares as to which such Option is being exercised shall be made (a) in
United States dollars in cash or by check, or (b) at the discretion of the
Administrator, through delivery of shares of Common Stock having a Fair Market
Value equal as of the date of the exercise to the cash exercise price of the
Option, or (c)  at the discretion of the Administrator, by delivery of the
grantee’s personal note, for full, partial or no recourse, bearing interest
payable not less than annually at market rate on the date of exercise and at no
less than 100% of the applicable Federal rate, as defined in
Section 1274(d) of the Code, with or without the pledge of such Shares as
collateral, or (d) at the discretion of the Administrator, in accordance
with a cashless exercise program established with a securities brokerage firm,
and approved by the Administrator, or (e) at the discretion of the
Administrator, by any combination of (a), (b), (c) and (d) above.
Notwithstanding the foregoing, the Administrator shall accept only such payment
on exercise of an ISO as is permitted by Section 422 of the Code.

    

    The Company shall then reasonably
promptly deliver the Shares as to which such Option was exercised to the
Participant (or to the Participant’s Survivors, as the case may
be).  In determining what constitutes “reasonably promptly,” it is
expressly understood that the issuance and delivery of the Shares may be delayed
by the Company in order to comply with any law or regulation (including, without
limitation, state securities or “blue sky” laws) which requires the Company to
take any action with respect to the Shares prior to their
issuance.  The Shares shall, upon delivery, be fully paid,
non-assessable Shares.

    

    The Administrator shall have the right
to accelerate the date of exercise of any installment of any Option; provided
that the Administrator shall not accelerate the exercise date of any installment
of any Option granted to an Employee as an ISO (and not previously converted
into a Non-Qualified Option pursuant to Paragraph 26) if such acceleration would
violate the annual vesting limitation contained in Section 422(d) of the Code,
as described in Paragraph 6.B.d.

    

    The Administrator may, in its
discretion, amend any term or condition of an outstanding Option provided (i)
such term or condition as amended is permitted by the Plan, (ii) any such
amendment shall be made only with the consent of the Participant to whom the
Option was granted, or in the event of the death of the Participant, the
Participant’s Survivors, if the amendment is adverse to the Participant, and
(iii) any such amendment of any ISO shall be made only after the Administrator
determines whether such amendment would constitute a “modification” of any
Option which is an ISO (as that term is defined in Section 424(h) of the Code)
or would cause any adverse tax consequences for the holder of such
ISO.

    

    
      	
              9.

            	
              ACCEPTANCE OF STOCK
      GRANT AND ISSUE OF SHARES.

            

    

    

    A Stock Grant (or any part or
installment thereof) shall be accepted by executing the Stock Grant Agreement
and delivering it to the Company or its designee, together with provision for
payment of the full purchase price, if any, in accordance with this Paragraph
for the Shares as to which such Stock Grant is being accepted, and upon
compliance with any other conditions set forth in the Stock Grant
Agreement.  Payment of the purchase price for the Shares as to which
such Stock Grant is being accepted shall be made (a) in United States dollars in
cash or by check, or (b) at the discretion of the Administrator, through
delivery of shares of Common Stock held for at least six months and having a
Fair Market Value equal as of the date of acceptance of the Stock Grant to the
purchase price of the Stock Grant, or (c) at the discretion of the
Administrator, by delivery of the grantee’s personal note, for full or partial
recourse as determined by the Administrator, bearing interest payable not less
than annually at no less than 100% of the applicable Federal rate, as defined in
Section 1274(d) of the Code, or (d) at the discretion of the Administrator, by
any combination of (a), (b) and (c) above.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    The Company shall then reasonably
promptly deliver the Shares as to which such Stock Grant was accepted to the
Participant (or to the Participant’s Survivors, as the case may be), subject to
any escrow provision set forth in the Stock Grant Agreement.  In
determining what constitutes “reasonably promptly,” it is expressly understood
that the issuance and delivery of the Shares may be delayed by the Company in
order to comply with any law or regulation (including, without limitation, state
securities or “blue sky” laws) which requires the Company to take any action
with respect to the Shares prior to their issuance.

    

    The Administrator may, in its
discretion, amend any term or condition of an outstanding Stock Grant or Stock
Grant Agreement provided (i) such term or condition as amended is permitted by
the Plan, and (ii) any such amendment shall be made only with the consent of the
Participant to whom the Stock Grant was made, if the amendment is adverse to the
Participant.

    

    
      	
              10.

            	
              RIGHTS AS A
      SHAREHOLDER.

            

    

    

    No Participant to whom a Stock Right
has been granted shall have rights as a shareholder with respect to any Shares
covered by such Stock Right, except after due exercise of the Option or
acceptance of the Stock Grant and tender of the full purchase price, if any, for
the Shares being purchased pursuant to such exercise or acceptance and
registration of the Shares in the Company’s share register in the name of the
Participant.

    

    
      	
              11.

            	
              ASSIGNABILITY AND
      TRANSFERABILITY OF STOCK
RIGHTS.

            

    

    

    By its terms, a Stock Right granted to
a Participant shall not be transferable by the Participant other than (i) by
will or by the laws of descent and distribution, or (ii) as approved by the
Administrator in its discretion and set forth in the applicable Option Agreement
or Stock Grant Agreement.  Notwithstanding the foregoing, an ISO
transferred except in compliance with clause (i) above shall no longer qualify
as an ISO.  The designation of a beneficiary of a Stock Right by a
Participant, with the prior approval of the Administrator and in such form as
the Administrator shall prescribe, shall not be deemed a transfer prohibited by
this Paragraph.  Except as provided above, a Stock Right shall only be
exercisable or may only be accepted, during the Participant’s lifetime, only by
such Participant (or by his or her legal representative) and shall not be
assigned, pledged or hypothecated in any way (whether by operation of law or
otherwise) and shall not be subject to execution, attachment or similar
process.  Any attempted transfer, assignment, pledge, hypothecation or
other disposition of any Stock Right or of any rights granted thereunder
contrary to the provisions of this Plan, or the levy of any attachment or
similar process upon a Stock Right, shall be null and void.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    
      	
              12.

            	
              EFFECT ON OPTIONS OF
      TERMINATION OF SERVICE OTHER THAN “FOR CAUSE” OR DEATH OR
      DISABILITY.

            

    

    

    Except as otherwise provided in a
Participant’s Option Agreement, in the event of a termination of service
(whether as an employee, director or consultant) with the Company or an
Affiliate before the Participant has exercised an Option, the following rules
apply:

    

    
      	
               
      

            	
              a.

            	
              A
      Participant who ceases to be an employee, director or consultant of the
      Company or of an Affiliate (for any reason other than termination “for
      cause”, Disability, or death for which events there are special rules in
      Paragraphs 13, 14, and 15, respectively) may exercise any Option granted
      to him or her to the extent that the Option is exercisable on the date of
      such termination of service, but only within such term as the
      Administrator has designated in a Participant’s Option
      Agreement.

            

    

    

    
      	
               
      

            	
              b.

            	
              Except
      as provided in Subparagraph (c) below, or Paragraph 14 or 15, in no event
      may an Option intended to be an ISO, be exercised later than three months
      after the Participant’s termination of
  employment.

            

    

    

    
      	
               
      

            	
              c.

            	
              The
      provisions of this Paragraph, and not the provisions of Paragraph 14 or
      15, shall apply to a Participant who subsequently becomes Disabled or dies
      after the termination of employment, director status or consultancy,
      provided, however, in the case of a Participant’s Disability or death
      within three months after the termination of employment, director status
      or consultancy, the Participant or the Participant’s Survivors may
      exercise the Option within one year after the date of the Participant’s
      termination of service, but in no event after the date of expiration of
      the term of the Option.

            

    

    

    
      	
               
      

            	
              d.

            	
              Notwithstanding
      anything herein to the contrary, if subsequent to a Participant’s
      termination of employment, termination of director status or termination
      of consultancy, but prior to the exercise of an Option, the Board of
      Directors determines that, either prior or subsequent to the Participant’s
      termination, the Participant engaged in conduct which would constitute
      “cause”, then such Participant shall forthwith cease to have any right to
      exercise any Option.

            

    

    

    
      	
               
      

            	
              e.

            	
              A
      Participant to whom an Option has been granted under the Plan who is
      absent from work with the Company or with an Affiliate because of
      temporary disability (any disability other than a permanent and total
      Disability as defined in Paragraph 1 hereof), or who is on leave of
      absence for any purpose, shall not, during the period of any such absence,
      be deemed, by virtue of such absence alone, to have terminated such
      Participant’s employment, director status or consultancy with the Company
      or with an Affiliate, except as the Administrator may otherwise expressly
      provide.

            

    

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              f.

            	
              Except
      as required by law or as set forth in a Participant’s Option Agreement,
      Options granted under the Plan shall not be affected by any change of a
      Participant’s status within or among the Company and any Affiliates, so
      long as the Participant continues to be an employee, director or
      consultant of the Company or any
Affiliate.

            

    

    

    
      	
              13.

            	
              EFFECT ON OPTIONS OF
      TERMINATION OF SERVICE “FOR
CAUSE”.

            

    

    

    Except as otherwise provided in a
Participant’s Option Agreement, the following rules apply if the Participant’s
service (whether as an employee, director or consultant) with the Company or an
Affiliate is terminated “for cause” prior to the time that all his or her
outstanding Options have been exercised:

    

    
      	
               
      

            	
              a.

            	
              All
      outstanding and unexercised Options as of the time the Participant is
      notified his or her service is terminated “for cause” will immediately be
      forfeited.

            

    

    

    
      	
               
      

            	
              b.

            	
              For
      purposes of this Plan, “cause” shall include (and is not limited to)
      dishonesty with respect to the Company or any Affiliate, insubordination,
      substantial malfeasance or non-feasance of duty, unauthorized disclosure
      of confidential information, breach by the Participant of any provision of
      any employment, consulting, advisory, nondisclosure, non-competition or
      similar agreement between the Participant and the Company, and conduct
      substantially prejudicial to the business of the Company or any
      Affiliate.  The determination of the Administrator as to the
      existence of “cause” will be conclusive on the Participant and the
      Company.

            

    

    

    
      	
               
      

            	
              c.

            	
              “Cause”
      is not limited to events which have occurred prior to a Participant’s
      termination of service, nor is it necessary that the Administrator’s
      finding of “cause” occur prior to termination.  If the
      Administrator determines, subsequent to a Participant’s termination of
      service but prior to the exercise of an Option, that either prior or
      subsequent to the Participant’s termination the Participant engaged in
      conduct which would constitute “cause”, then the right to exercise any
      Option is forfeited.

            

    

    

    
      	
               
      

            	
              d.

            	
              Any
      definition in an agreement between the Participant and the Company or an
      Affiliate, which contains a conflicting definition of “cause” for
      termination and which is in effect at the time of such termination, shall
      supersede the definition in this Plan with respect to that
      Participant.

            

    

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    
      	
              14.

            	
              EFFECT ON OPTIONS OF
      TERMINATION OF SERVICE FOR
DISABILITY.

            

    

    

    Except as otherwise provided in a
Participant’s Option Agreement, a Participant who ceases to be an employee,
director or consultant of the Company or of an Affiliate by reason of Disability
may exercise any Option granted to such Participant:

    

    
      	
               
      

            	
              a.

            	
              To
      the extent that the Option has become exercisable but has not been
      exercised on the date of Disability;
and

            

    

    

    
      	
               
      

            	
              b.

            	
              In
      the event rights to exercise the Option accrue periodically, to the extent
      of a pro rata portion through the date of Disability of any additional
      vesting rights that would have accrued on the next vesting date had the
      Participant not become Disabled.  The proration shall be based
      upon the number of days accrued in the current vesting period prior to the
      date of Disability.

            

    

    

    A Disabled Participant may exercise
such rights only within the period ending one year after the date of the
Participant’s termination of employment, directorship or consultancy, as the
case may be, notwithstanding that the Participant might have been able to
exercise the Option as to some or all of the Shares on a later date if the
Participant had not become Disabled and had continued to be an employee,
director or consultant or, if earlier, within the originally prescribed term of
the Option.

    

    The Administrator shall make the
determination both of whether Disability has occurred and the date of its
occurrence (unless a procedure for such determination is set forth in another
agreement between the Company and such Participant, in which case such procedure
shall be used for such determination).  If requested, the Participant
shall be examined by a physician selected or approved by the Administrator, the
cost of which examination shall be paid for by the Company.

    

    
      	
              15.

            	
              EFFECT ON OPTIONS OF
      DEATH WHILE AN EMPLOYEE, DIRECTOR OR
  CONSULTANT.

            

    

    

    Except as otherwise provided in a
Participant’s Option Agreement, in the event of the death of a Participant while
the Participant is an employee, director or consultant of the Company or of an
Affiliate, such Option may be exercised by the Participant’s
Survivors:

    

    
      	
               
      

            	
              a.

            	
              To
      the extent that the Option has become exercisable but has not been
      exercised on the date of death; and

            

    

    

    
      	
               
      

            	
              b.

            	
              In
      the event rights to exercise the Option accrue periodically, to the extent
      of a pro rata portion through the date of death of any additional vesting
      rights that would have accrued on the next vesting date had the
      Participant not died.  The proration shall be based upon the
      number of days accrued in the current vesting period prior to the
      Participant’s date of death.

            

    

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    If the Participant’s Survivors wish to
exercise the Option, they must take all necessary steps to exercise the Option
within one year after the date of death of such Participant, notwithstanding
that the decedent might have been able to exercise the Option as to some or all
of the Shares on a later date if he or she had not died and had continued to be
an employee, director or consultant or, if earlier, within the originally
prescribed term of the Option.

    

    
      	
              16.

            	
              EFFECT OF TERMINATION
      OF SERVICE ON STOCK GRANTS.

            

    

    

    In the event of a termination of
service (whether as an employee, director or consultant) with the Company or an
Affiliate for any reason before the Participant has accepted a Stock Grant, such
offer shall terminate.

    

    For purposes of this Paragraph 16 and
Paragraph 17 below, a Participant to whom a Stock Grant has been offered and
accepted under the Plan who is absent from work with the Company or with an
Affiliate because of temporary disability (any disability other than a permanent
and total Disability as defined in Paragraph 1 hereof), or who is on leave of
absence for any purpose, shall not, during the period of any such absence, be
deemed, by virtue of such absence alone, to have terminated such Participant’s
employment, director status or consultancy with the Company or with an
Affiliate, except as the Administrator may otherwise expressly
provide.

    

    In addition, for purposes of this
Paragraph 16 and Paragraph 17 below, any change of employment or other service
within or among the Company and any Affiliates shall not be treated as a
termination of employment, director status or consultancy so long as the
Participant continues to be an employee, director or consultant of the Company
or any Affiliate.

    

    
      	
              17.

            	
              EFFECT ON STOCK GRANTS
      OF TERMINATION OF SERVICE OTHER THAN “FOR CAUSE” OR DEATH OR
      DISABILITY.

            

    

    

    Except as otherwise provided in a
Participant’s Stock Grant Agreement, in the event of a termination of service
(whether as an employee, director or consultant), other than termination “for
cause,” Disability, or death for which events there are special rules in
Paragraphs 18, 19, and 20, respectively, before all Company rights of repurchase
shall have lapsed, then the Company shall have the right to repurchase that
number of Shares subject to a Stock Grant as to which the Company’s repurchase
rights have not lapsed.

    

    
      	
              18.

            	
              EFFECT ON STOCK GRANTS
      OF TERMINATION OF SERVICE “FOR
CAUSE”.

            

    

    

    Except as otherwise provided in a
Participant’s Stock Grant Agreement, the following rules apply if the
Participant’s service (whether as an employee, director or consultant) with the
Company or an Affiliate is terminated “for cause”:

    

    
      	
               
      

            	
              a.

            	
              All
      Shares subject to any Stock Grant shall be immediately subject to
      repurchase by the Company at $.01, if any,
  thereof.

            

    

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              b.

            	
              For
      purposes of this Plan, “cause” shall include (and is not limited to)
      dishonesty with respect to the employer, insubordination, substantial
      malfeasance or non-feasance of duty, unauthorized disclosure of
      confidential information, breach by the Participant of any provision of
      any employment, consulting, advisory, nondisclosure, non-competition or
      similar agreement between the Participant and the Company, and conduct
      substantially prejudicial to the business of the Company or any
      Affiliate.  The determination of the Administrator as to the
      existence of “cause” will be conclusive on the Participant and the
      Company.

            

    

    

    
      	
               
      

            	
              c.

            	
              “Cause”
      is not limited to events which have occurred prior to a Participant’s
      termination of service, nor is it necessary that the Administrator’s
      finding of “cause” occur prior to termination.  If the
      Administrator determines, subsequent to a Participant’s termination of
      service, that either prior or subsequent to the Participant’s termination
      the Participant engaged in conduct which would constitute “cause,” then
      the Company’s right to repurchase all of such Participant’s Shares shall
      apply.

            

    

    

    
      	
               
      

            	
              d.

            	
              Any
      definition in an agreement between the Participant and the Company or an
      Affiliate, which contains a conflicting definition of “cause” for
      termination and which is in effect at the time of such termination, shall
      supersede the definition in this Plan with respect to that
      Participant.

            

    

    

    
      	
              19.

            	
              EFFECT ON STOCK GRANTS
      OF TERMINATION OF SERVICE FOR
DISABILITY.

            

    

    

    Except as otherwise provided in a
Participant’s Stock Grant Agreement, the following rules apply if a Participant
ceases to be an employee, director or consultant of the Company or of an
Affiliate by reason of Disability:  to the extent the Company’s rights
of repurchase have not lapsed on the date of Disability, they shall be
exercisable; provided, however, that in the event such rights of repurchase
lapse periodically, such rights shall lapse to the extent of a pro rata portion
of the Shares subject to such Stock Grant through the date of Disability as
would have lapsed had the Participant not become Disabled.  The
proration shall be based upon the number of days accrued prior to the date of
Disability.

    

    The Administrator shall make the
determination both of whether Disability has occurred and the date of its
occurrence (unless a procedure for such determination is set forth in another
agreement between the Company and such Participant, in which case such procedure
shall be used for such determination).  If requested, the Participant
shall be examined by a physician selected or approved by the Administrator, the
cost of which examination shall be paid for by the Company.

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    
      	
              20.

            	
              EFFECT ON STOCK GRANTS
      OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR
  CONSULTANT.

            

    

    

    Except as otherwise provided in a
Participant’s Stock Grant Agreement, the following rules apply in the event of
the death of a Participant while the Participant is an employee, director or
consultant of the Company or of an Affiliate:  to the extent the
Company’s rights of repurchase have not lapsed on the date of death, they shall
be exercisable; provided, however, that in the event such rights of repurchase
lapse periodically, such rights shall lapse to the extent of a pro rata portion
of the Shares subject to such Stock Grant through the date of death as would
have lapsed had the Participant not died.  The proration shall be
based upon the number of days accrued prior to the Participant’s
death.

    

    
      	
              21.

            	
              PURCHASE FOR
      INVESTMENT.

            

    

    

    Unless the offering and sale of the
Shares to be issued upon the particular exercise or acceptance of a Stock Right
shall have been effectively registered under the Securities Act of 1933, as now
in force or hereafter amended (the “1933 Act”), the Company shall be under no
obligation to issue the Shares covered by such exercise unless and until the
following conditions have been fulfilled:

    

    
      	
               
      

            	
              a.

            	
              The
      person(s) who exercise(s) or accept(s) such Stock Right shall warrant to
      the Company, prior to the receipt of such Shares, that such person(s) are
      acquiring such Shares for their own respective accounts, for investment,
      and not with a view to, or for sale in connection with, the distribution
      of any such Shares, in which event the person(s) acquiring such Shares
      shall be bound by the provisions of the following legend which shall be
      endorsed upon the certificate(s) evidencing their Shares issued pursuant
      to such exercise or such grant:

            

    

    

    
      	
               
      

            	
              “The
      shares represented by this certificate have been taken for investment and
      they may not be sold or otherwise transferred by any person, including a
      pledgee, unless (1) either (a) a Registration Statement with respect to
      such shares shall be effective under the Securities Act of 1933, as
      amended, or (b) the Company shall have received an opinion of counsel
      satisfactory to it that an exemption from registration under such Act is
      then available, and (2) there shall have been compliance with all
      applicable state securities laws.”

            

    

    

    
      	
               
      

            	
              b.

            	
              At
      the discretion of the Administrator, the Company shall have received an
      opinion of its counsel that the Shares may be issued upon such particular
      exercise or acceptance in compliance with the 1933 Act without
      registration thereunder.

            

    

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    
      	
              22.

            	
              DISSOLUTION OR
      LIQUIDATION OF THE COMPANY.

            

    

    

    Upon the dissolution or liquidation of
the Company, all Options granted under this Plan which as of such date shall not
have been exercised and all Stock Grants which have not been accepted will
terminate and become null and void; provided, however, that if the rights of a
Participant or a Participant’s Survivors have not otherwise terminated and
expired, the Participant or the Participant’s Survivors will have the right
immediately prior to such dissolution or liquidation to exercise or accept any
Stock Right to the extent that the Stock Right is exercisable or subject to
acceptance as of the date immediately prior to such dissolution or
liquidation.

    

    
      	
              23.

            	
              ADJUSTMENTS.

            

    

    

    Upon the occurrence of any of the
following events, a Participant’s rights with respect to any Stock Right granted
to him or her hereunder shall be adjusted as hereinafter provided, unless
otherwise specifically provided in a Participant’s Option Agreement or Stock
Grant Agreement:

    

    A.           Stock Dividends and Stock
Splits.  If (i) the shares of Common Stock shall be
subdivided or combined into a greater or smaller number of shares or if the
Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, or (ii) additional shares or new or different
shares or other securities of the Company or other non-cash assets are
distributed with respect to such shares of Common Stock, the number of shares of
Common Stock deliverable upon the exercise or acceptance of such Stock Right may
be appropriately increased or decreased proportionately, and appropriate
adjustments may be made including, in the purchase price per share, to reflect
such events.

    

    B.           Corporate
Transactions.  If the Company is to be consolidated with or
acquired by another entity in a merger, sale of all or substantially all of the
Company’s assets other than a transaction to merely change the state of
incorporation (a “Corporate Transaction”), the Administrator or the board of
directors of any entity assuming the obligations of the Company hereunder (the
“Successor Board”), shall, as to outstanding Options, either (i) make
appropriate provision for the continuation of such Options by substituting on an
equitable basis for the Shares then subject to such Options either the
consideration payable with respect to the outstanding shares of Common Stock in
connection with the Corporate Transaction or securities of any successor or
acquiring entity; or (ii) upon written notice to the Participants, provide that
all Options must be exercised (either to the extent then exercisable or, at the
discretion of the Administrator, or, upon a change of control of the Company,
all Options being made fully exercisable for purposes of this Subparagraph),
within a specified number of days of the date of such notice, at the end of
which period the Options shall terminate; or (iii) terminate all Options in
exchange for a cash payment equal to the excess of the Fair Market Value of the
Shares subject to such Options (either to the extent then exercisable or, at the
discretion of the Administrator, all Options being made fully exercisable for
purposes of this Subparagraph) over the exercise price thereof.

    

    Notwithstanding
the foregoing, in the event the Corporate Transaction also constitutes a Change
of Control, then all Options outstanding on the date of the Corporate
Transaction shall accelerate and automatically be vested and
exercisable.

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    With respect to outstanding Stock
Grants, the Administrator or the Successor Board, shall either (i) make
appropriate provisions for the continuation of such Stock Grants by substituting
on an equitable basis for the Shares then subject to such Stock Grants either
the consideration payable with respect to the outstanding Shares of Common Stock
in connection with the Corporate Transaction or securities of any successor or
acquiring entity; or (ii) upon written notice to the Participants, provide that
all Stock Grants must be accepted (to the extent then subject to acceptance)
within a specified number of days of the date of such notice, at the end of
which period the offer of the Stock Grants shall terminate; or (iii) terminate
all Stock Grants in exchange for a cash payment equal to the excess of the Fair
Market Value of the Shares subject to such Stock Grants over the purchase price
thereof, if any.  In addition, in the event of a Corporate
Transaction, the Administrator may waive any or all Company repurchase rights
with respect to outstanding Stock Grants.

    

    C.           Recapitalization or
Reorganization.  In the event of a recapitalization or
reorganization of the Company other than a Corporate Transaction pursuant to
which securities of the Company or of another corporation are issued with
respect to the outstanding shares of Common Stock, a Participant upon exercising
or accepting a Stock Right after the recapitalization or reorganization shall be
entitled to receive for the purchase price paid upon such exercise or acceptance
the number of replacement securities which would have been received if such
Stock Right had been exercised or accepted prior to such recapitalization or
reorganization.

    

    D.           Modification of
ISOs.  Notwithstanding the foregoing, any adjustments made
pursuant to Subparagraph A, B or C above with respect to ISOs shall be made only
after the Administrator determines whether such adjustments would constitute a
“modification” of such ISOs (as that term is defined in Section 424(h) of
the Code) or would cause any adverse tax consequences for the holders of such
ISOs.  If the Administrator determines that such adjustments made with
respect to ISOs would constitute a modification of such ISOs, it may refrain
from making such adjustments, unless the holder of an ISO specifically requests
in writing that such adjustment be made and such writing indicates that the
holder has full knowledge of the consequences of such “modification” on his or
her income tax treatment with respect to the ISO.

    

    
      	
              24.

            	
              ISSUANCES OF
      SECURITIES.

            

    

    

    Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
subject to Stock Rights.  Except as expressly provided herein, no
adjustments shall be made for dividends paid in cash or in property (including
without limitation, securities) of the Company prior to any issuance of Shares
pursuant to a Stock Right.

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    
      	
              25.

            	
              FRACTIONAL
      SHARES.

            

    

    

    No fractional shares shall be issued
under the Plan and the person exercising a Stock Right shall receive from the
Company cash in lieu of such fractional shares equal to the Fair Market Value
thereof.

    

    
      	
              26.

            	
              CONVERSION OF ISOs
      INTO NON-QUALIFIED OPTIONS; TERMINATION OF
  ISOs.

            

    

    

    The Administrator, at the written
request of any Participant, may in its discretion take such actions as may be
necessary to convert such Participant’s ISOs (or any portions thereof) that have
not been exercised on the date of conversion into Non-Qualified Options at any
time prior to the expiration of such ISOs, regardless of whether the Participant
is an employee of the Company or an Affiliate at the time of such
conversion.  At the time of such conversion, the Administrator (with
the consent of the Participant) may impose such conditions on the exercise of
the resulting Non-Qualified Options as the Administrator in its discretion may
determine, provided that such conditions shall not be inconsistent with this
Plan.  Nothing in the Plan shall be deemed to give any Participant the
right to have such Participant’s ISOs converted into Non-Qualified Options, and
no such conversion shall occur until and unless the Administrator takes
appropriate action.  The Administrator, with the consent of the
Participant, may also terminate any portion of any ISO that has not been
exercised at the time of such conversion.

    

    
      	
              27.

            	
              WITHHOLDING.

            

    

    

    In the event that any federal, state,
or local income taxes, employment taxes, Federal Insurance Contributions Act
(“F.I.C.A.”) withholdings or other amounts are required by applicable law or
governmental regulation to be withheld from the Participant’s salary, wages or
other remuneration in connection with the exercise or acceptance of a Stock
Right or in connection with a Disqualifying Disposition (as defined in Paragraph
28) or upon the lapsing of any right of repurchase, the Company may withhold
from the Participant’s compensation, if any, or may require that the Participant
advance in cash to the Company, or to any Affiliate of the Company which employs
or employed the Participant, the statutory minimum amount of such withholdings
unless a different withholding arrangement, including the use of shares of the
Company’s Common Stock or a promissory note, is authorized by the Administrator
(and permitted by law).  For purposes hereof, the fair market value of
the shares withheld for purposes of payroll withholding shall be determined in
the manner provided in Paragraph 1 above, as of the most recent practicable date
prior to the date of exercise.  If the fair market value of the shares
withheld is less than the amount of payroll withholdings required, the
Participant may be required to advance the difference in cash to the Company or
the Affiliate employer.  The Administrator in its discretion may
condition the exercise of an Option for less than the then Fair Market Value on
the Participant’s payment of such additional withholding.

     

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    
      	
              28.

            	
              NOTICE TO COMPANY OF
      DISQUALIFYING DISPOSITION.

            

    

    

    Each Employee who receives an ISO must
agree to notify the Company in writing immediately after the Employee makes a
Disqualifying Disposition of any shares acquired pursuant to the exercise of an
ISO.  A Disqualifying Disposition is defined in Section 424(c) of the
Code and includes any disposition (including any sale or gift) of such shares
before the later of (a) two years after the date the Employee was granted the
ISO, or (b) one year after the date the Employee acquired Shares by exercising
the ISO, except as otherwise provided in Section 424(c) of the
Code.  If the Employee has died before such stock is sold, these
holding period requirements do not apply and no Disqualifying Disposition can
occur thereafter.

    

    
      	
              29.

            	
              TERMINATION OF THE
      PLAN.

            

    

    

    The Plan will terminate on the date
which is ten years from the earlier of the date
of its adoption by the Board of Directors and the date of its approval by the
shareholders.  The Plan may be terminated at an earlier date by vote
of the shareholders or the Board of Directors of the Company; provided, however,
that any such earlier termination shall not affect any Option Agreements or
Stock Grant Agreements executed prior to the effective date of such
termination.

    

    
      	
              30.

            	
              AMENDMENT OF THE PLAN
      AND AGREEMENTS.

            

    

    

    The Plan may be amended by the
shareholders of the Company.  The Plan may also be amended by the
Administrator, including, without limitation, to the extent necessary to qualify
any or all outstanding Stock Rights granted under the Plan or Stock Rights to be
granted under the Plan for favorable federal income tax treatment (including
deferral of taxation upon exercise) as may be afforded incentive stock options
under Section 422 of the Code, and to the extent necessary to qualify the shares
issuable upon exercise or acceptance of any outstanding Stock Rights granted, or
Stock Rights to be granted, under the Plan for listing on any national
securities exchange or quotation in any national automated quotation system of
securities dealers.  Any amendment approved by the Administrator which
the Administrator determines is of a scope that requires shareholder approval
shall be subject to obtaining such shareholder approval.  Any
modification or amendment of the Plan shall not, without the consent of a
Participant, adversely affect his or her rights under a Stock Right previously
granted to him or her.  With the consent of the Participant affected,
the Administrator may amend outstanding Option Agreements and Stock Grant
Agreements in a manner which may be adverse to the Participant but which is not
inconsistent with the Plan.  In the discretion of the Administrator,
outstanding Option Agreements and Stock Grant Agreements may be amended by the
Administrator in a manner which is not adverse to the Participant.

    

    
      	
              31.

            	
              EMPLOYMENT OR OTHER
      RELATIONSHIP.

            

    

    

    Nothing in this Plan or any Option
Agreement or Stock Grant Agreement shall be deemed to prevent the Company or an
Affiliate from terminating the employment, consultancy or director status of a
Participant, nor to prevent a Participant from terminating his or her own
employment, consultancy or director status or to give any Participant a right to
be retained in employment or other service by the Company or any Affiliate for
any period of time.

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    
      	
              32.

            	
              GOVERNING
      LAW.

            

    

    

    This Plan shall be construed and
enforced in accordance with the law of The State of Delaware.

    
      
         

      

      
        20INVIVO
THERAPEUTICS HOLDINGS CORP.

     

    2010
EQUITY INCENTIVE PLAN

     

    
      	
              1.

            	
              Purposes of the
      Plan.  The purposes of this Plan
  are:

            

    

     

    
      	
               
      

            	
              ·

            	
              to
      attract and retain the best available personnel for positions of
      substantial responsibility,

            

    

     

    
      	
               
      

            	
              ·

            	
              to
      provide incentives to individuals who perform services for the Company,
      and

            

    

     

    
      	
               
      

            	
              ·

            	
              to
      promote the success of the Company’s
business.

            

    

     

    The Plan
permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Stock
Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance
Units, Performance Shares and other stock or cash awards as the Administrator
may determine.

     

    
      	
              2.

            	
              Definitions.  As
      used herein, the following definitions will
  apply:

            

    

     

    (a)           “Administrator” means
the Board or any of its Committees as will be administering the Plan, in
accordance with Section 4 hereof.

     

    (b)           “Affiliate” means any
corporation or any other entity (including, but not limited to, partnerships and
joint ventures) controlling, controlled by, or under common control with the
Company.

     

    (c)           “Applicable Laws”
means the requirements relating to the administration of equity-based awards
under U.S. federal and state corporate laws, U.S. federal and state securities
laws, the Code, any stock exchange or quotation system on which the Common Stock
is listed or quoted and the applicable laws of any foreign country or
jurisdiction where Awards are, or will be, granted under the Plan.

     

    (d)           “Award” means,
individually or collectively, a grant under the Plan of Options, Stock
Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance
Units, Performance Shares and other stock or cash awards as the Administrator
may determine.

     

    (e)           “Award Agreement”
means the written or electronic agreement setting forth the terms and provisions
applicable to each Award granted under the Plan.  The Award Agreement
is subject to the terms and conditions of the Plan.

     

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

     

    (g)           “Change in Control”
means the occurrence of any of the following events:

    
      
         

      

      
         

        
          

        

      

      
         

      

    
 

    
      	
               
      

            	
              (i)

            	
              A
      change in the ownership of the Company which occurs on
      the date that any one person, or more than one person acting as a group
      (“Person”),
      acquires ownership of stock in the Company that, together with the stock
      already held by such Person, constitutes more than 50% of the total voting
      power of the stock of the Company; provided, however, that for purposes of
      this subsection (i), the acquisition of additional stock by any Person who
      is considered to own more than 50% of the total voting power of the stock
      of the Company before the acquisition will not be considered a Change in
      Control; or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              A
      change in the effective control of the Company, which occurs on the date
      that a majority of the members of the Board are replaced during any twelve
      (12) month period by Directors whose appointment or election is not
      endorsed by a majority of the members of the Board prior to the date of
      the appointment or election.  For purposes of this
      subsection (ii), if any Person is considered to effectively control
      the Company, the acquisition of additional control of the Company by the
      same Person will not be considered a Change in Control;
  or

            

    

     

    
      	
               
      

            	
              (iii)

            	
              A
      change in the ownership of a substantial portion of the Company’s assets,
      which occurs on the date that any Person acquires (or has acquired during
      the twelve (12) month period ending on the date of the most recent
      acquisition by such Person) assets from the Company that have a total
      gross fair market value equal to or more than 50% of the total gross fair
      market value of all of the assets of the Company immediately prior to such
      acquisition or acquisitions; provided, however, that for purposes of this
      subsection (iii), the following will not constitute a change in the
      ownership of a substantial portion of the Company’s assets or a Change in
      Control: (A) a transfer to an entity that is controlled by the Company’s
      stockholders immediately after the transfer, or (B) a transfer of assets
      by the Company to: (1) a stockholder of the Company (immediately before
      the asset transfer) in exchange for or with respect to the Company’s
      stock, (2) an entity, 50% or more of the total value or voting power of
      which is owned, directly or indirectly, by the Company, (3) a Person that
      owns, directly or indirectly, 50% or more of the total value or voting
      power of all the outstanding stock of the Company, or (4) an entity, at
      least 50% of the total equity or voting power of which is owned, directly
      or indirectly, by a Person described in subsection (iii)(B)(3)
      above.  For purposes of this subsection (iii), gross fair market
      value means the value of the assets of the Company, or the value of the
      assets being disposed of, determined without regard to any liabilities
      associated with such assets.

            

    

     

    Notwithstanding
the foregoing, as to any Award under the Plan that consists of deferred
compensation subject to Section 409A of the Code, the definition of “Change in
Control” shall be deemed modified to the extent necessary to comply with Section
409A of the Code.

     

    For
purposes of this Section 2(g), persons will be considered to be acting as a
group if they are owners of a corporation or other entity that enters into a
merger, consolidation, purchase or acquisition of stock, or similar business
transaction with the Company.

     

    (h)           “Code” means the
Internal Revenue Code of 1986, as amended.  Any reference to a section
of the Code herein will be a reference to any successor or amended section of
the Code.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (i)        
   “Committee” means a
committee of Directors or of other individuals satisfying Applicable Laws
appointed by the Board in accordance with Section 4 hereof.

     

    (j)       
    “Common Stock” means
the common stock, par value $0.00001 per share, of the Company.

     

    (k)           “Company” means InVivo
Therapeutics Holdings Corp., a Nevada corporation, or any successor
thereto.

     

    (l)      
     “Consultant” means any
person, including an advisor, engaged by the Company or a Parent, Subsidiary or
Affiliate to render services to such entity.

     

    (m)          “Determination Date”
means the latest possible date that will not jeopardize the qualification of an
Award granted under the Plan as “performance-based compensation” under Section
162(m) of the Code.

     

    (n)           “Director” means a
member of the Board.

     

    (o)           “Disability” means
permanent and total disability as defined in Section 22(e)(3) of the Code,
provided that in the case of Awards other than Incentive Stock Options, the
Administrator in its discretion may determine whether a permanent and total
disability exists in accordance with uniform and non-discriminatory standards
adopted by the Administrator from time to time.

     

    (p)           “Employee” means any
person, including Officers and Directors, employed by the Company or any Parent,
Subsidiary or Affiliate of the Company.  Neither service as a Director
nor payment of a director’s fee by the Company will be sufficient to constitute
“employment” by the Company.

     

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

     

    (r)           “Exchange Program”
means a program under which (i) outstanding Awards are surrendered or cancelled
in exchange for Awards of the same type (which may have lower exercise prices
and different terms), Awards of a different type, and/or cash, (ii) Participants
would have the opportunity to transfer any outstanding Awards to a financial
institution or other person or entity selected by the Administrator, and/or
(iii) the exercise price of an outstanding Award is reduced.  The
Administrator will determine the terms and conditions of any Exchange Program in
its sole discretion.

     

    (s)           “Fair Market Value”
means, as of any date, the value of the Common Stock as the Administrator may
determine in good faith, by reference to the closing price of such stock on any
established stock exchange or on a national market system on the day of
determination, if the Common Stock is so listed on any established stock
exchange or on a national market system.  If the Common Stock is not
listed on any established stock exchange or on a national market system, the
value of the Common Stock will be determined as the Administrator may determine
in good faith.

     

    (t)           “Fiscal Year” means
the fiscal year of the Company.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    (u)           “Incentive Stock
Option” means an Option that by its terms qualifies and is otherwise
intended to qualify as an incentive stock option within the meaning of
Section 422 of the Code and the regulations promulgated
thereunder.

     

    (v)           “Nonstatutory Stock
Option” means an Option that by its terms does not qualify or is not
intended to qualify as an Incentive Stock Option.

     

    (w)           “Officer” means a
person who is an officer of the Company within the meaning of Section 16 of
the Exchange Act and the rules and regulations promulgated
thereunder.

     

    (x)           “Option” means a stock
option granted pursuant to Section 6 hereof.

     

    (y)           “Parent” means a
“parent corporation,” whether now or hereafter existing, as defined in
Section 424(e) of the Code.

     

    (z)           “Participant” means
the holder of an outstanding Award.

     

    (aa)         “Performance Goals”
will have the meaning set forth in Section 11 hereof.

     

    (bb)         “Performance Period”
means any Fiscal Year of the Company or such other period as determined by the
Administrator in its sole discretion.

     

    (cc)         “Performance Share”
means an Award denominated in Shares which may be earned in whole or in part
upon attainment of Performance Goals or other vesting criteria as the
Administrator may determine pursuant to Section 10 hereof.

     

    (dd)         “Performance Unit”
means an Award which may be earned in whole or in part upon attainment of
Performance Goals or other vesting criteria as the Administrator may determine
and which may be settled for cash, Shares or other securities or a combination
of the foregoing pursuant to Section 10 hereof.

     

    (ee)         “Period of
Restriction” means the period during which transfers of Shares of
Restricted Stock are subject to restrictions and, therefore, the Shares are
subject to a substantial risk of forfeiture.  Such restrictions may be
based on the passage of time, the achievement of target levels of performance,
or the occurrence of other events as determined by the
Administrator.

     

    (ff)          “Plan” means this 2010
Equity Incentive Plan.

     

    (gg)         “Restricted Stock”
means Shares issued pursuant to an Award of Restricted Stock under
Section 8 hereof, or issued pursuant to the early exercise of an
Option.

     

    (hh)         “Restricted Stock
Unit” means a bookkeeping entry representing an amount equal to the Fair
Market Value of one Share, granted pursuant to Section 9
hereof.  Each Restricted Stock Unit represents an unfunded and
unsecured obligation of the Company.

     

    (ii)           “Rule 16b-3” means
Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when
discretion is being exercised with respect to the Plan.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    (jj)           “Section 16(b)”
means Section 16(b) of the Exchange Act.

     

    (kk)         “Service Provider”
means an Employee, Director, or Consultant.

     

    (ll)           “Share” means a share
of the Common Stock, as adjusted in accordance with Section 14
hereof.

     

    (mm)       “Stock Appreciation
Right” means an Award, granted alone or in connection with an Option,
that pursuant to Section 7 is designated as a Stock Appreciation
Right.

     

    (nn)        “Subsidiary” means a
“subsidiary corporation,” whether now or hereafter existing, as defined in
Section 424(f) of the Code.

     

    
      	
              3.

            	
              Stock Subject to the Plan.

            

    

     

    (a)           Subject
to the provisions of Section 14 hereof, the maximum aggregate number of
Shares that may be awarded and sold under the Plan is 3,500,000 Shares. The
Shares may be authorized, but unissued, or reacquired Common Stock.

     

    (b)           Lapsed
Awards.  If an Award expires or becomes unexercisable without
having been exercised in full, or, with respect to Restricted Stock, Restricted
Stock Units, Performance Shares or Performance Units, is forfeited to or
repurchased by the Company, the unpurchased Shares (or for Awards other than
Options and Stock Appreciation Rights, the forfeited or repurchased Shares)
which were subject thereto will become available for future grant or sale under
the Plan (unless the Plan has terminated).  Upon exercise of a Stock
Appreciation Right settled in Shares, the gross number of Shares covered by the
portion of the Award so exercised will cease to be available under the
Plan.  Shares that have actually been issued under the Plan under any
Award will not be returned to the Plan and will not become available for future
distribution under the Plan; provided, however, that if unvested Shares of
Restricted Stock, Restricted Stock Units, Performance Shares or Performance
Units are repurchased by the Company or are forfeited to the Company, such
Shares will become available for future grant under the Plan.  Shares
used to pay the tax and/or exercise price of an Award will become available for
future grant or sale under the Plan.  To the extent an Award under the
Plan is paid out in cash rather than Shares, such cash payment will not result
in reducing the number of Shares available for issuance under the
Plan.  Notwithstanding the foregoing provisions of this Section 3(b),
subject to adjustment provided in Section 14 hereof, the maximum number of
Shares that may be issued upon the exercise of Incentive Stock Options will
equal the aggregate Share number stated in Section 3(a) above, plus, to the
extent allowable under Section 422 of the Code, any Shares that become
available for issuance under the Plan under this Section 3(b).

     

    (c)           Share
Reserve.  The Company, during the term of this Plan, will at
all times reserve and keep available such number of Shares as will be sufficient
to satisfy the requirements of the Plan.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    
      	
              4.

            	
              Administration of the
      Plan.

            

    

     

    (a)          Procedure.

     

    
      	
               
      

            	
              (i)

            	
              Multiple
      Administrative Bodies.  Different Committees with respect
      to different groups of Service Providers may administer the
      Plan.

            

    

     

    
      	
               
      

            	
              (ii)

            	
              Section 162(m).  To
      the extent that the Administrator determines it to be desirable to qualify
      Awards granted hereunder as “performance-based compensation” within the
      meaning of Section 162(m) of the Code, the Plan will be administered
      by a Committee of two (2) or more “outside directors” within the meaning
      of Section 162(m) of the Code.

            

    

     

    
      	
               
      

            	
              (iii)

            	
              Rule
      16b-3.  To the extent desirable to qualify transactions
      hereunder as exempt under Rule 16b-3, the transactions contemplated
      hereunder will be structured to satisfy the requirements for exemption
      under Rule 16b-3.

            

    

     

    
      	
               
      

            	
              (iv)

            	
              Other
      Administration.  Other than as provided above, the Plan
      will be administered by (A) the Board or (B) a Committee, which
      committee will be constituted to satisfy Applicable
  Laws.

            

    

     

    (b)           Powers of the
Administrator.  Subject to the provisions of the Plan, and in
the case of a Committee, subject to the specific duties delegated by the Board
to such Committee, the Administrator will have the authority, in its
discretion:

     

    
      	
               
      

            	
              (i)

            	
              to
      determine the Fair Market Value;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              to
      select the Service Providers to whom Awards may be granted
      hereunder;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              to
      determine the terms and condition, not inconsistent with the terms of the
      Plan, of any Award granted
hereunder;

            

    

     

    
      	
               
      

            	
              (iv)

            	
              to
      institute an Exchange Program and to determine the terms and conditions,
      not inconsistent with the terms of the Plan, for (1) the surrender or
      cancellation of outstanding Awards in exchange for Awards of the same
      type, Awards of a different type, and/or cash, (2) the transfer of
      outstanding Awards to a financial institution or other person or entity,
      or (3) the reduction of the exercise price of outstanding
      Awards;

            

    

     

    
      	
               
      

            	
              (v)

            	
              to
      construe and interpret the terms of the Plan and Awards granted pursuant
      to the Plan;

            

    

     

    
      	
               
      

            	
              (vi)

            	
              to
      prescribe, amend and rescind rules and regulations relating to the Plan,
      including rules and regulations relating to sub-plans established for the
      purpose of satisfying applicable foreign
laws;

            

    

     

    
      	
               
      

            	
              (vii)

            	
              to
      modify or amend each Award (subject to Section 19(c)
      hereof);

            

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (viii)

            	
              to
      authorize any person to execute on behalf of the Company any instrument
      required to effect the grant of an Award previously granted by the
      Administrator;

            

    

     

    
      	
               
      

            	
              (ix)

            	
              to
      allow a Participant to defer the receipt of the payment of cash or the
      delivery of Shares that would otherwise be due to such Participant under
      an Award pursuant to such procedures as the Administrator may determine;
      and

            

    

     

    
      	
               
      

            	
              (x)

            	
              to
      make all other determinations deemed necessary or advisable for
      administering the Plan.

            

    

     

    (c)           Effect of
Administrator’s Decision.  The Administrator’s decisions,
determinations, and interpretations will be final and binding on all
Participants and any other holders of Awards.

     

    5.           Eligibility.  Nonstatutory
Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation
Rights, Performance Units, Performance Shares, and such other cash or stock
awards as the Administrator determines may be granted to Service
Providers.  Incentive Stock Options may be granted only to
Employees.

     

    6.           Stock Options.

     

    (a)           Limitations.

     

    
      	
               
      

            	
              (i)

            	
              Each
      Option will be designated in the Award Agreement as either an Incentive
      Stock Option or a Nonstatutory Stock Option.  However,
      notwithstanding such designation, to the extent that the aggregate Fair
      Market Value of the Shares with respect to which Incentive Stock Options
      are exercisable for the first time by the Participant during any calendar
      year (under all plans of the Company and any Parent or Subsidiary) exceeds
      $100,000 (U.S.), such Options will be treated as Nonstatutory Stock
      Options.  For purposes of this Section 6(a), Incentive
      Stock Options will be taken into account in the order in which they were
      granted.  The Fair Market Value of the Shares will be determined
      as of the time the Option with respect to such Shares is
      granted.

            

    

     

    
      	
               
      

            	
              (ii)

            	
              The
      Administrator will have complete discretion to determine the number of
      Shares subject to an Option granted to any
  Participant.

            

    

     

    (b)           Term of
Option.  The Administrator will determine the term of each
Option in its sole discretion; provided, however, that the term will be no more
than ten (10) years from the date of grant thereof.  Moreover, in the
case of an Incentive Stock Option granted to a Participant who, at the time the
Incentive Stock Option is granted, owns stock representing more than 10% of the
total combined voting power of all classes of stock of the Company or any Parent
or Subsidiary, the term of the Incentive Stock Option will be five (5) years
from the date of grant or such shorter term as may be provided in the Award
Agreement.

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    (c)           Option Exercise Price and
Consideration.

     

    
      	
               
      

            	
              (i)

            	
              Exercise
      Price.  The per share exercise price for the Shares to be
      issued pursuant to exercise of an Option will be determined by the
      Administrator, but will be no less than 100% of the Fair Market Value per
      Share on the date of grant.  In addition, in the case of an
      Incentive Stock Option granted to an Employee who, at the time the
      Incentive Stock Option is granted, owns stock representing more than 10%
      of the voting power of all classes of stock of the Company or any Parent
      or Subsidiary, the per Share exercise price will be no less than 110% of
      the Fair Market Value per Share on the date of
      grant.  Notwithstanding the foregoing provisions of this Section
      6(c), Options may be granted with a per Share exercise price of less than
      100% of the Fair Market Value per Share on the date of grant pursuant to a
      transaction described in, and in a manner consistent with,
      Section 424(a) of the Code.

            

    

     

    
      	
               
      

            	
              (ii)

            	
              Waiting Period and
      Exercise Dates.  At the time an Option is granted, the
      Administrator will fix the period within which the Option may be exercised
      and will determine any conditions that must be satisfied before the Option
      may be exercised.

            

    

     

    
      	
               
      

            	
              (iii)

            	
              Form of
      Consideration.  The Administrator will determine the
      acceptable form(s) of consideration for exercising an Option, including
      the method of payment, to the extent permitted by Applicable
      Laws.

            

    

     

    (d)          Exercise of
Option.

     

    
      	
               
      

            	
              (i)

            	
              Procedure for
      Exercise; Rights as a Stockholder.  Any Option granted
      hereunder will be exercisable according to the terms of the Plan and at
      such times and under such conditions as determined by the Administrator
      and set forth in the Award Agreement.  An Option may not be
      exercised for a fraction of a
Share.

            

    

     

    An Option
will be deemed exercised when the Company receives: (i) notice of exercise
(in such form as the Administrator specifies from time to time) from the person
entitled to exercise the Option, and (ii) full payment for the Shares with
respect to which the Option is exercised (together with any applicable
withholding taxes).  No adjustment will be made for a dividend or
other right for which the record date is prior to the date the Shares are
issued, except as provided in Section 14 hereof.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (ii)

            	
              Termination of
      Relationship as a Service Provider.  If a Participant
      ceases to be a Service Provider, other than upon the Participant’s
      termination as the result of the Participant’s death or Disability, the
      Participant may exercise his or her Option within such period of time as
      is specified in the Award Agreement to the extent that the Option is
      vested on the date of termination (but in no event later than the
      expiration of the term of such Option as set forth in the Award
      Agreement).  In the absence of a specified time in the Award
      Agreement, the Option will remain exercisable for three (3) months
      following the Participant’s termination.  Unless otherwise
      provided by the Administrator, if on the date of termination the
      Participant is not vested as to his or her entire Option, the Shares
      covered by the unvested portion of the Option will revert to the
      Plan.  If after termination the Participant does not exercise
      his or her Option within the time specified by the Administrator, the
      Option will terminate, and the Shares covered by such Option will revert
      to the Plan.

            

    

     

    
      	
               
      

            	
              (iii)

            	
              Disability of
      Participant.  If a Participant ceases to be a Service
      Provider as a result of the Participant’s Disability, the Participant may
      exercise his or her Option within such period of time as is specified in
      the Award Agreement to the extent the Option is vested on the date of
      termination (but in no event later than the expiration of the term of such
      Option as set forth in the Award Agreement).  In the absence of
      a specified time in the Award Agreement, the Option will remain
      exercisable for six (6) months following the Participant’s
      termination.  Unless otherwise provided by the Administrator, if
      on the date of termination the Participant is not vested as to his or her
      entire Option, the Shares covered by the unvested portion of the Option
      will revert to the Plan.  If after termination the Participant
      does not exercise his or her Option within the time specified herein, the
      Option will terminate, and the Shares covered by such Option will revert
      to the Plan.

            

    

     

    
      	
               
      

            	
              (iv)

            	
              Death of
      Participant.  If a Participant dies while a Service
      Provider, the Option may be exercised within such period of time as is
      specified in the Award Agreement to the extent that the Option is vested
      on the date of death (but in no event may the option be exercised later
      than the expiration of the term of such Option as set forth in the Award
      Agreement), by the Participant’s designated beneficiary, provided such
      beneficiary has been designated prior to Participant’s death in a form
      acceptable to the Administrator.  If no such beneficiary has
      been designated by the Participant, then such Option may be exercised by
      the personal representative of the Participant’s estate or by the
      person(s) to whom the Option is transferred pursuant to the Participant’s
      will or in accordance with the laws of descent and
      distribution.  In the absence of a specified time in the Award
      Agreement, the Option will remain exercisable for six (6) months following
      Participant’s death.  Unless otherwise provided by the
      Administrator, if at the time of death Participant is not vested as to his
      or her entire Option, the Shares covered by the unvested portion of the
      Option will continue to vest in accordance with the Award
      Agreement.  If the Option is not so exercised within the time
      specified herein, the Option will terminate, and the Shares covered by
      such Option will revert to the
Plan.

            

    

     

    
      	
              7.

            	
              Stock Appreciation
      Rights.

            

    

     

    (a)           Grant of Stock Appreciation
Rights.  Subject to the terms and conditions of the Plan, a
Stock Appreciation Right may be granted to Service Providers at any time and
from time to time as will be determined by the Administrator, in its sole
discretion.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    (b)           Number of
Shares.  The Administrator will have complete discretion to
determine the number of Stock Appreciation Rights granted to any
Participant.

     

    (c)           Exercise Price and Other
Terms.  The Administrator, subject to the provisions of the
Plan, will have complete discretion to determine the terms and conditions of
Stock Appreciation Rights granted under the Plan; provided, however, that the
exercise price will be not less than 100% of the Fair Market Value of a Share on
the date of grant.

     

    (d)           Stock Appreciation Rights
Agreement.  Each Stock Appreciation Right grant will be
evidenced by an Award Agreement that will specify the exercise price, the term
of the Stock Appreciation Right, the conditions of exercise, and such other
terms and conditions as the Administrator, in its sole discretion, will
determine.

     

    (e)           Expiration of Stock
Appreciation Rights.  A Stock Appreciation Right granted under
the Plan will expire upon the date determined by the Administrator, in its sole
discretion, and set forth in the Award Agreement; provided, however, that the
term will be no more than ten (10) years from the date of grant
thereof.  Notwithstanding the foregoing, the rules of
Section 6(d) above also will apply to Stock Appreciation
Rights.

     

    (f)           Payment of Stock
Appreciation Right Amount.  Upon exercise of a Stock
Appreciation Right, a Participant will be entitled to receive payment from the
Company in an amount determined by multiplying:

     

    
      	
               
      

            	
              (i)

            	
              The
      difference between the Fair Market Value of a Share on the date of
      exercise over the exercise price;
times

            

    

     

    
      	
               
      

            	
              (ii)

            	
              The
      number of Shares with respect to which the Stock Appreciation Right is
      exercised.

            

    

     

    At the
discretion of the Administrator, the payment upon Stock Appreciation Right
exercise may be in cash, in Shares of equivalent value, or in some combination
thereof.

     

    
      	
              8.

            	
              Restricted
      Stock.

            

    

     

    (a)           Grant of Restricted
Stock.  Subject to the terms and provisions of the Plan, the
Administrator, at any time and from time to time, may grant Shares of Restricted
Stock to Service Providers in such amounts as the Administrator, in its sole
discretion, will determine.

     

    (b)           Restricted Stock
Agreement.  Each Award of Restricted Stock will be evidenced by
an Award Agreement that will specify the Period of Restriction, the number of
Shares granted, and such other terms and conditions as the Administrator, in its
sole discretion, will determine.

     

    (c)           Transferability.  Except
as provided in this Section 8, Shares of Restricted Stock may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated until the
end of the applicable Period of Restriction.

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    (d)           Other
Restrictions.  The Administrator, in its sole discretion, may
impose such other restrictions on Shares of Restricted Stock as it may deem
advisable or appropriate.

     

    (e)           Removal of
Restrictions.  Except as otherwise provided in this Section 8,
Shares of Restricted Stock covered by each Restricted Stock grant made under the
Plan will be released from escrow as soon as practicable after the last day of
the Period of Restriction.  The Administrator, in its discretion, may
accelerate the time at which any restrictions will lapse or be
removed.

     

    (f)           Voting
Rights.  During the Period of Restriction, Service Providers
holding Shares of Restricted Stock granted hereunder may exercise full voting
rights with respect to those Shares, unless the Administrator determines
otherwise.

     

    (g)           Dividends and Other
Distributions.  During the Period of Restriction, Service
Providers holding Shares of Restricted Stock will be entitled to receive all
dividends and other distributions paid with respect to such Shares unless
otherwise provided in the Award Agreement.  If any such dividends or
distributions are paid in Shares, the Shares will be subject to the same
restrictions on transferability and forfeitability as the Shares of Restricted
Stock with respect to which they were paid.

     

    (h)           Return of Restricted Stock
to Company.  On the date set forth in the Award Agreement, the
Restricted Stock for which restrictions have not lapsed will revert to the
Company and again will become available for grant under the Plan.

     

    (i) 
          Section 162(m) Performance
Restrictions.  For purposes of qualifying grants of Restricted
Stock as “performance-based compensation” under Section 162(m) of the Code,
the Administrator, in its discretion, may set restrictions based upon the
achievement of Performance Goals.  The Performance Goals will be set
by the Administrator on or before the Determination Date.  In granting
Restricted Stock which is intended to qualify under Section 162(m) of the
Code, the Administrator will follow any procedures determined by it from time to
time to be necessary or appropriate to ensure qualification of the Award under
Section 162(m) of the Code (e.g., in determining the Performance
Goals).

     

    
      	
              9.

            	
              Restricted Stock
      Units.

            

    

     

    (a)           Grant.  Restricted
Stock Units may be granted at any time and from time to time as determined by
the Administrator.  Each Restricted Stock Unit grant will be evidenced
by an Award Agreement that will specify such other terms and conditions as the
Administrator, in its sole discretion, will determine, including all terms,
conditions, and restrictions related to the grant, the number of Restricted
Stock Units and the form of payout, which, subject to Section 9(d) hereof,
may be left to the discretion of the Administrator.

     

    (b)           Vesting Criteria and Other
Terms.  The Administrator will set vesting criteria in its
discretion, which, depending on the extent to which the criteria are met, will
determine the number of Restricted Stock Units that will be paid out to the
Participant.  After the grant of Restricted Stock Units, the
Administrator, in its sole discretion, may reduce or waive any restrictions for
such Restricted Stock Units.  Each Award of Restricted Stock Units
will be evidenced by an Award Agreement that will specify the vesting criteria,
and such other terms and conditions as the Administrator, in its sole discretion
will determine.  The Administrator, in its discretion, may accelerate
the time at which any restrictions will lapse or be removed.

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    (c)           Earning Restricted Stock
Units.  Upon meeting the applicable vesting criteria, the
Participant will be entitled to receive a payout as specified in the Award
Agreement.

     

    (d)           Form and Timing of
Payment.  Payment of earned Restricted Stock Units will be made
as soon as practicable after the date(s) set forth in the Award
Agreement.  The Administrator, in its sole discretion, may pay earned
Restricted Stock Units in cash, Shares, or a combination
thereof.  Shares represented by Restricted Stock Units that are fully
paid in cash again will be available for grant under the Plan.

     

    (e)           Cancellation.  On
the date set forth in the Award Agreement, all unearned Restricted Stock Units
will be forfeited to the Company.

     

    (f)           Section 162(m) Performance
Restrictions.  For purposes of qualifying grants of Restricted
Stock Units as “performance-based compensation” under Section 162(m) of the
Code, the Administrator, in its discretion, may set restrictions based upon the
achievement of Performance Goals.  The Performance Goals will be set
by the Administrator on or before the Determination Date.  In granting
Restricted Stock Units which are intended to qualify under Section 162(m)
of the Code, the Administrator will follow any procedures determined by it from
time to time to be necessary or appropriate to ensure qualification of the Award
under Section 162(m) of the Code (e.g., in determining the Performance
Goals).

     

    
      	
              10.

            	
              Performance Units and
      Performance Shares.

            

    

     

    (a)           Grant of Performance
Units/Shares.  Performance Units and Performance Shares may be
granted to Service Providers at any time and from time to time, as will be
determined by the Administrator, in its sole discretion.  The
Administrator will have complete discretion in determining the number of
Performance Units/Shares granted to each Participant.

     

    (b)           Value of Performance
Units/Shares.  Each Performance Unit will have an initial value
that is established by the Administrator on or before the date of
grant.  Each Performance Share will have an initial value equal to the
Fair Market Value of a Share on the date of grant.

     

    (c)           Performance Objectives and
Other Terms.  The Administrator will set performance objectives
or other vesting provisions.  The Administrator may set vesting
criteria based upon the achievement of Company-wide, business unit, or
individual goals (including, but not limited to, continued employment), or any
other basis determined by the Administrator in its discretion.  Each
Award of Performance Units/Shares will be evidenced by an Award Agreement that
will specify the Performance Period, and such other terms and conditions as the
Administrator, in its sole discretion, will determine.

     

    (d)           Earning of Performance
Units/Shares.  After the applicable Performance Period has
ended, the holder of Performance Units/Shares will be entitled to receive a
payout of the number of Performance Units/Shares earned by the Participant over
the Performance Period, to be determined as a function of the extent to which
the corresponding performance objectives or other vesting provisions have been
achieved.  After the grant of a Performance Unit/Share, the
Administrator, in its sole discretion, may reduce or waive any performance
objectives or other vesting provisions for such Performance
Unit/Share.

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    (e)           Form and Timing of Payment
of Performance Units/Shares.  Payment of earned Performance
Units/Shares will be made as soon as practicable after the expiration of the
applicable Performance Period.  The Administrator, in its sole
discretion, may pay earned Performance Units/Shares in the form of cash, in
Shares (which have an aggregate Fair Market Value equal to the value of the
earned Performance Units/Shares at the close of the applicable Performance
Period) or in a combination thereof.

     

    (f)           Cancellation of Performance
Units/Shares.  On the date set forth in the Award Agreement,
all unearned or unvested Performance Units/Shares will be forfeited to the
Company, and again will be available for grant under the Plan.

     

    (g)           Section 162(m) Performance
Restrictions.  For purposes of qualifying grants of Performance
Units/Shares as “performance-based compensation” under Section 162(m) of
the Code, the Administrator, in its discretion, may set restrictions based upon
the achievement of Performance Goals.  The Performance Goals will be
set by the Administrator on or before the Determination Date.  In
granting Performance Units/Shares which are intended to qualify under
Section 162(m) of the Code, the Administrator will follow any procedures
determined by it from time to time to be necessary or appropriate to ensure
qualification of the Award under Section 162(m) of the Code (e.g., in
determining the Performance Goals).

     

    
      	
              11.

            	
              Performance-Based Compensation
      Under Code Section 162(m).

            

    

     

    (a)           General.  If
the Administrator, in its discretion, decides to grant an Award intended to
qualify as “performance-based compensation” under Code Section 162(m), the
provisions of this Section 11 will control over any contrary provision in the
Plan; provided, however, that the Administrator may in its discretion grant
Awards that are not intended to qualify as “performance-based compensation”
under Section 162(m) of the Code to such Participants that are based on
Performance Goals or other specific criteria or goals but that do not satisfy
the requirements of this Section 11.

     

    (b)           Performance
Goals.  The granting and/or vesting of Awards of Restricted
Stock, Restricted Stock Units, Performance Shares and Performance Units and
other incentives under the Plan may be made subject to the attainment of
performance goals relating to one or more business criteria within the meaning
of Code Section 162(m) and may provide for a targeted level or levels of
achievement (“Performance Goals”)
including (i) earnings per Share, (ii) operating cash flow,
(iii) operating income, (iv) profit after-tax, (v) profit
before-tax, (vi) return on assets, (vii) return on equity,
(viii) return on sales, (ix) revenue, and (x) total shareholder
return.  Any Performance Goals may be used to measure the performance
of the Company as a whole or a business unit of the Company and may be measured
relative to a peer group or index.  The Performance Goals may differ
from Participant to Participant and from Award to Award.  Prior to the
Determination Date, the Administrator will determine whether any significant
element(s) will be included in or excluded from the calculation of any
Performance Goal with respect to any Participant.

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    (c)           Procedures.  To
the extent necessary to comply with the performance-based compensation
provisions of Code Section 162(m), with respect to any Award granted subject to
Performance Goals, within the first twenty-five percent (25%) of the Performance
Period, but in no event more than ninety (90) days following the commencement of
any Performance Period (or such other time as may be required or permitted by
Code Section 162(m)), the Administrator will, in writing, (i) designate one or
more Participants to whom an Award will be made, (ii) select the Performance
Goals applicable to the Performance Period, (iii) establish the Performance
Goals, and amounts of such Awards, as applicable, which may be earned for such
Performance Period, and (iv) specify the relationship between Performance
Goals and the amounts of such Awards, as applicable, to be earned by each
Participant for such Performance Period.  Following the completion of
each Performance Period, the Administrator will certify in writing whether the
applicable Performance Goals have been achieved for such Performance
Period.  In determining the amounts earned by a Participant, the
Administrator will have the right to reduce or eliminate (but not to increase)
the amount payable at a given level of performance to take into account
additional factors that the Administrator may deem relevant to the assessment of
individual or corporate performance for the Performance Period.  A
Participant will be eligible to receive payment pursuant to an Award for a
Performance Period only if the Performance Goals for such period are
achieved.

     

    (d)           Additional
Limitations.  Notwithstanding any other provision of the Plan,
any Award which is granted to a Participant and is intended to constitute
qualified performance based compensation under Code Section 162(m) will be
subject to any additional limitations set forth in the Code (including any
amendment to Section 162(m)) or any regulations and ruling issued thereunder
that are requirements for qualification as qualified performance-based
compensation as described in Section 162(m) of the Code, and the Plan will be
deemed amended to the extent necessary to conform to such
requirements.

     

    12.          Leaves of
Absence.  Unless the Administrator provides otherwise, vesting
of Awards granted hereunder will be suspended during any unpaid leave of
absence.  A Service Provider will not cease to be an Employee in the
case of (i) any leave of absence approved by the Company, or
(ii) transfers between locations of the Company or between the Company, its
Parent, or any Subsidiary.  For purposes of Incentive Stock Options,
no such leave may exceed three (3) months, unless reemployment upon expiration
of such leave is guaranteed by statute or contract.  If reemployment
upon expiration of a leave of absence approved by the Company is not so
guaranteed, then six (6) months and one day following the commencement of such
leave any Incentive Stock Option held by the Participant will cease to be
treated as an Incentive Stock Option and will be treated for tax purposes as a
Nonstatutory Stock Option.

     

    13.          Transferability of
Awards.  Unless determined otherwise by the Administrator, an
Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed
of in any manner other than by will or by the laws of descent or distribution
and may be exercised, during the lifetime of the Participant, only by the
Participant.  If the Administrator makes an Award transferable, such
Award may only be transferred (i) by will, (ii) by the laws of descent and
distribution, (iii) to a revocable trust, or (iii) as permitted by Rule 701 of
the Securities Act of 1933, as amended.

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

    14.          Adjustments; Dissolution or
Liquidation; Merger or Change in Control.

     

    (a)           Adjustments.  In
the event that any dividend or other distribution (whether in the form of cash,
Shares, other securities, or other property), recapitalization, stock split,
reverse stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, or exchange of Shares or other securities of the
Company, or other change in the corporate structure of the Company affecting the
Shares occurs, the Administrator, in order to prevent diminution or enlargement
of the benefits or potential benefits intended to be made available under the
Plan, will adjust the number and class of Shares that may be delivered under the
Plan and/or the number, class, and price of Shares covered by each outstanding
Award, and the numerical Share limits set forth in Sections 3, 6, 7, 8, 9
and 10 hereof.

     

    (b)           Dissolution or
Liquidation.  In the event of the proposed dissolution or
liquidation of the Company, the Administrator will notify each Participant as
soon as practicable prior to the effective date of such proposed
transaction.  To the extent it has not been previously exercised, an
Award will terminate immediately prior to the consummation of such proposed
action.

     

    (c)           Change in
Control.  In the event of a merger or Change in Control, each
outstanding Award will be treated as the Administrator determines, including,
without limitation, that each Award will be assumed or an equivalent option or
right substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation (the “Successor
Corporation”).  The Administrator will not be required to treat
all Awards similarly in the transaction.

     

    In the
event that the Successor Corporation does not assume or substitute for the
Award, the Participant will fully vest in and have the right to exercise all of
his or her outstanding Options and Stock Appreciation Rights, including Shares
as to which such Awards would not otherwise be vested or exercisable, all
restrictions on Restricted Stock will lapse, and, with respect to Restricted
Stock Units, Performance Shares and Performance Units, all Performance Goals or
other vesting criteria will be deemed achieved at target levels and all other
terms and conditions met.  In addition, if an Option or Stock
Appreciation Right is not assumed or substituted for in the event of a Change in
Control, the Administrator will notify the Participant in writing or
electronically that the Option or Stock Appreciation Right will be fully vested
and exercisable for a period of time determined by the Administrator in its sole
discretion, and the Option or Stock Appreciation Right will terminate upon the
expiration of such period.

     

    For the
purposes of this subsection (c), an Award will be considered assumed if,
following the Change in Control, the Award confers the right to purchase or
receive, for each Share subject to the Award immediately prior to the Change in
Control, the consideration (whether stock, cash, or other securities or
property) or, in the case of a Stock Appreciation Right upon the exercise of
which the Administrator determines to pay cash or a Performance Share or
Performance Unit which the Administrator can determine to pay in cash, the fair
market value of the consideration received in the merger or Change in Control by
holders of Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the Change in Control
is not solely common stock of the Successor Corporation, the Administrator may,
with the consent of the Successor Corporation, provide for the consideration to
be received upon the exercise of an Option or Stock Appreciation Right or upon
the payout of a Performance Share or Performance Unit, for each Share subject to
such Award (or in the case of Performance Units, the number of implied shares
determined by dividing the value of the Performance Units by the per share
consideration received by holders of Common Stock in the Change in Control), to
be solely common stock of the Successor Corporation equal in fair market value
to the per share consideration received by holders of Common Stock in the Change
in Control.

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    Notwithstanding
anything in this Section 14(c) to the contrary, an Award that vests, is earned
or paid-out upon the satisfaction of one or more Performance Goals will not be
considered assumed if the Company or its successor modifies any of such
Performance Goals without the Participant’s consent; provided, however, a
modification to such Performance Goals only to reflect the Successor
Corporation’s post-Change in Control corporate structure will not be deemed to
invalidate an otherwise valid Award assumption. In the case of an Award
providing for the payment of deferred compensation subject to Section 409A of
the Code, any payment of such deferred compensation by reason of a Change in
Control shall be made only if the Change in Control is one described in
subsection (a)(2)(A)(v) of Section 409A and the guidance thereunder and shall be
paid consistent with the requirements of Section 409A. If any deferred
compensation that would otherwise be payable by reason of a Change in Control
cannot be paid by reason of the immediately preceding sentence, it shall be paid
as soon as practicable thereafter consistent with the requirements of Section
409A, as determined by the Administrator.

     

    
      	
              15.

            	
              Tax
      Withholding.

            

    

     

    (a)           Withholding
Requirements.  Prior to the delivery of any Shares or cash
pursuant to an Award (or exercise thereof), the Company will have the power and
the right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy federal, state, local, foreign or other
taxes (including the Participant’s FICA obligation) required to be withheld with
respect to such Award (or exercise thereof).

     

    (b)           Withholding
Arrangements.  The Administrator, in its sole discretion and
pursuant to such procedures as it may specify from time to time, may permit a
Participant to satisfy such tax withholding obligation, in whole or in part by
(without limitation) (i) paying cash, (ii) electing to have the Company
withhold otherwise deliverable cash or Shares having a Fair Market Value equal
to the minimum amount required to be withheld, (iii) delivering to the Company
already-owned Shares having a Fair Market Value equal to the amount required to
be withheld, or (iv) selling a sufficient number of Shares otherwise
deliverable to the Participant through such means as the Administrator may
determine in its sole discretion (whether through a broker or otherwise) equal
to the amount required to be withheld.  The amount of the withholding
requirement will be deemed to include any amount which the Administrator agrees
may be withheld at the time the election is made, not to exceed the amount
determined by using the maximum federal, state or local marginal income tax
rates applicable to the Participant with respect to the Award on the date that
the amount of tax to be withheld is to be determined.  The Fair Market
Value of the Shares to be withheld or delivered will be determined as of the
date that the taxes are required to be withheld.

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    16.          No Effect on Employment or
Service.  Neither the Plan nor any Award will confer upon a
Participant any right with respect to continuing the Participant’s relationship
as a Service Provider with the Company, nor will they interfere in any way with
the Participant’s right or the Company’s right to terminate such relationship at
any time, with or without cause, to the extent permitted by Applicable
Laws.

     

    17.          Date of Grant.  The
date of grant of an Award will be, for all purposes, the date on which the
Administrator makes the determination granting such Award, or such other later
date as is determined by the Administrator.  Notice of the
determination will be provided to each Participant within a reasonable time
after the date of such grant.

     

    18.          Term of
Plan.  Subject to Section 22 hereof, the Plan will
become effective upon its adoption by the Board.  It will continue in
effect for a term of ten (10) years unless terminated earlier under
Section 19 hereof.

     

    19.          Amendment and Termination of the
Plan.

     

    (a)           Amendment and
Termination.  The Administrator may at any time amend, alter,
suspend or terminate the Plan.

     

    (b)           Stockholder
Approval.  The Company will obtain stockholder approval of any
Plan amendment to the extent necessary and desirable to comply with Applicable
Laws.

     

    (c)           Effect of Amendment or
Termination.  No amendment, alteration, suspension, or
termination of the Plan will impair the rights of any Participant, unless
mutually agreed otherwise between the Participant and the Administrator, which
agreement must be in writing and signed by the Participant and the
Company.  Termination of the Plan will not affect the Administrator’s
ability to exercise the powers granted to it hereunder with respect to Awards
granted under the Plan prior to the date of such termination.

     

    20.          Conditions Upon Issuance of
Shares.

     

    (a)           Legal
Compliance.  Shares will not be issued pursuant to the exercise
of an Award unless the exercise of such Award and the issuance and delivery of
such Shares will comply with Applicable Laws and will be further subject to the
approval of counsel for the Company with respect to such
compliance.

     

    (b)           Investment
Representations.  As a condition to the exercise of an Award,
the Company may require the person exercising such Award to represent and
warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation is
required.

     

    (c)           Restrictive
Legends.  All Award Agreements and all securities of the
Company issued pursuant thereto shall bear such legends regarding restrictions
on transfer and such other legends as the appropriate officer of the Corporation
shall determine to be necessary or advisable to comply with applicable
securities and other laws.

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

     

    21.          Inability to Obtain
Authority.  The inability of the Company to obtain authority
from any regulatory body having jurisdiction, which authority is deemed by the
Company’s counsel to be necessary to the lawful issuance and sale of any Shares
hereunder, will relieve the Company of any liability in respect of the failure
to issue or sell such Shares as to which such requisite authority will not have
been obtained.

     

    22.          Stockholder
Approval.  The Plan will be subject to approval by the
stockholders of the Company within twelve (12) months after the date the Plan is
adopted by the Board.  Such stockholder approval will be obtained in
the manner and to the degree required under Applicable Laws. In the event that
stockholder approval is not obtained within twelve (12) months after the date
the Plan is adopted by the Board, the Plan and all Awards granted hereunder
shall be void ab initio and of no effect. Notwithstanding any other provisions
of the Plan, no Awards shall be exercisable until the date of such stockholder
approval.

     

    23.          Notification of Election Under
Section 83(b) of the Code.  If any Service Provider shall, in
connection with the acquisition of Shares under the Plan, make the election
permitted under Section 83(b) of the Code, such Service Provider shall notify
the Company of such election within ten (10) days of filing notice of the
election with the Internal Revenue Service and provide the Company with a copy
thereof, in addition to any filing and a notification required pursuant to
regulations issued under the authority of Section 83(b) of the Code. A Service
Provider shall not be permitted to make a Section 83(b) election with respect to
an Award of a Restricted Stock Unit.

     

    24.          Notification Upon Disqualifying
Disposition Under Section 421(b) of the Code.  Each Service
Provider shall notify the Company of any disposition of Shares issued pursuant
to the exercise of an Incentive Stock Option under the circumstances described
in Section 421(b) of the Code (relating to certain disqualifying dispositions),
within ten (10) days of such disposition.

    
      
         

      

      
        18

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