Document:

EXHBIT 10.2

 

THIRD AMENDED AND RESTATED BY-LAWS OF

AEP
INDUSTRIES INC.

 

ARTICLE I

 

Offices

 

The registered office of
the Corporation shall be in the City of Wilmington, County of New Castle, State
of Delaware.

 

The Corporation may also
have offices at such other places, both within and without the State of
Delaware, as may from time to time be designated by the Board of Directors.

 

ARTICLE II

 

Books

 

The books and records of
the Corporation may be kept (except as otherwise provided by the laws of the
State of Delaware) outside of the State of Delaware and at such place or places
as may from time to time be designated by the Board of Directors.

 

ARTICLE III

 

Stockholders

 

Section 1. Annual
Meetings. The annual meeting of the stockholders of the Corporation for the
election of Directors and the transaction of such other business as may
properly come before said meeting shall be held at the principal business
office of the Corporation or at such other place or places either within or
without the State of Delaware as may be designated by the Board of Directors
and stated in the notice of the meeting, on the second Tuesday of April in each
year, if not a legal holiday, and, if a legal holiday, then on the next day not
a legal holiday, at 10:00 o’clock in the forenoon, or at such other date or
time as the Board may designate.

 

At any annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of

 

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Directors, (ii) otherwise properly brought before the meeting by or at the direction of the Board, or (iii) otherwise properly brought before the meeting by a stockholder. In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary.
 
To be timely, a stockholder’s notice must be delivered to or mailed and received at the principal executive offices of the Corporation by the date that is the earlier of (i) the date that is ninety (90) days prior to the first anniversary date of the immediately preceding annual meeting of stockholders of the Corporation and (ii) the date specified in the proxy statement (if any) for such annual meeting. A stockholder’s notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting, (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (b) the name and address, as they appear on the Corporation’s books, of the stockholder proposing such business, (c) the number of shares of the Corporation which are beneficially owned by the stockholder,  (d) a representation  that the stockholder or a qualified representative of the stockholder intends to appear in person at the meeting to bring the proposed business before the annual meeting, and (e) any material interest of the stockholder in such business.
 
Notwithstanding anything in these By-Laws to the contrary, no business shall be conducted at the annual meeting of stockholders except in accordance with the procedures set forth in this Section; provided, however, that nothing in this Section shall be deemed to preclude discussion by any stockholder of any business properly brought before the annual meeting in accordance with said procedure.
 
The Chairman of any annual meeting of stockholders shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section, and if he should so determine, he shall so declare to the meeting, and any such business not properly brought before the meeting shall not be transacted.
 

Written notice of the
place designated for the annual meeting of the stockholders of the Corporation
shall be delivered personally or mailed to each stockholder entitled to vote
thereat not less than ten (10) and not more than sixty (60) days prior to said
meeting, but at any meeting at which all stockholders shall be

 

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present, or of which all
stockholders not present have waived notice in writing, the giving of notice as
above described may be dispensed with. If mailed, said notice shall be directed
to each stockholder at his address as the same appears on the stock ledger of
the Corporation unless he shall have filed with the Secretary of the
Corporation a written request that notices intended for him be mailed to some
other address, in which case it shall be mailed to the address designated in
such request.

 

Section 2. Special
Meetings. Special meetings of the stockholders of the Corporation may only
be held when called by resolution of the Board of Directors, by the Chairman of
the Board or by the President. Any such special meeting of stockholders may be
held at the principal business office of the Corporation or at such other place
or places, either within or without the State of Delaware, as may be specified
in the notice thereof. Business transacted at any special meeting of
stockholders of the Corporation shall be limited to the purposes stated in the
notice thereof.

 

Except as otherwise
expressly required by the laws of the State of Delaware, written notice of each
special meeting, stating the day, hour and place, and in general terms the
business to be transacted thereat, shall be delivered personally or mailed to
each stockholder entitled to vote thereat not less than ten (10) and not more
than sixty (60) days before the meeting. If mailed, said notice shall be
directed to each stockholder at his address as the same appears on the stock
ledger of the Corporation unless he shall have filed with the Secretary of the
Corporation a written request that notices intended for him be mailed to some
other address, in which case it shall be mailed to the address designated in
said request. At any special meeting at which all stockholders shall be
present, or of which all stockholders not present have waived notice in
writing, the giving of notice as above described may be dispensed with.

 

Section 3. List of
Stockholders. The officer of the Corporation who shall have charge of the
stock ledger of the Corporation shall prepare and make, at least ten (10) days
before every meeting of stockholders, a complete list of the stockholders
entitled to vote at said meeting, arranged in alphabetical order and showing
the address of each stockholder and the number of shares registered in the name
of each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours for a period of at least ten (10) days prior to the meeting, either at a
place 

 

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within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.

 

Section 4. Quorum.
At any meeting of the stockholders of the Corporation, except as otherwise
expressly provided by the laws of the State of Delaware, the Certificate of
Incorporation or these By-Laws, there must be present, either in person or by
proxy, in order to constitute a quorum, stockholders owning a majority of the
issued and outstanding shares of the capital stock of the Corporation entitled
to vote at said meeting. At any meeting of stockholders at which a quorum is
not present, the holders of, or proxies for, a majority of the stock which is
represented at such meeting, shall have power to adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented any business may be transacted which might have
been transacted at the meeting as originally noticed. If the adjournment is for
more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.

 

Section 5. Organization.
The Chairman of the Board, the President, or in their absence, any Executive
Vice President or any Vice President, shall call to order meetings of the
stockholders and shall act as chairman of such meetings. The Board of Directors
or the stockholders may appoint any stockholder or any Director or officer of
the Corporation to act as chairman of any meeting in the absence of the
Chairman of the Board, the President, the Executive Vice President and all of
the Vice Presidents.

 

The Secretary of the
Corporation shall act as secretary of all meetings of the stockholders, but in
the absence of the Secretary the presiding officer may appoint any other person
to act as secretary of any meeting.

 

Section 6. Voting.
Except as otherwise provided in the Certificate of Incorporation or these By-Laws,
each stockholder of record of the Corporation shall, at every meeting of the
stockholders of the Corporation, be entitled to one (1) vote for each share of
stock standing in his name on the books of the Corporation on any matter on
which he is entitled to vote, and such votes may be cast either in person or by

 

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proxy, appointed by an
instrument in writing, subscribed by such stockholder or by his duly authorized
attorney, and filed with the Secretary before being voted on, but no proxy
shall be voted after three (3) years from its date, unless said proxy provides
for a longer period. If the Certificate of Incorporation provides for more or
less than one (1) vote for any share of capital stock of the Corporation, on any
matter, then any and every reference in these By-Laws to a majority or other
proportion of capital stock shall refer to such majority or other proportion of
the votes of such stock.

 

All elections of
Directors shall be by ballot. The vote on any other matter at a meeting of
stockholders need not be by ballot unless demanded, in person or by proxy, by
the holders of a majority of the capital stock of the Corporation represented
in person or by proxy at such meeting and entitled to vote thereat.

 

When a quorum is present
at any meeting of the stockholders of the Corporation, the vote of the holders
of a majority of the capital stock entitled to vote at such meeting and present
in person or represented by proxy shall decide any question brought before such
meeting, unless the question is one upon which, under any provision of the laws
of the State of Delaware or of the Certificate of Incorporation, a different
vote is required in which case such provision shall govern and control the
decision of such question.

 

Section 7. Action By
Stockholders Without Meeting Not Permitted. No action shall be taken by the
stockholders except at an annual or special meeting of stockholders called in
accordance with the provisions of this Article. The power of the stockholders
to consent in writing without a meeting to the taking of any action is
specifically denied.

 

Section 8. Inspectors
of Election. At every meeting of the stockholders of the Corporation at
which a vote by ballot is taken, the polls shall be opened and closed, the
proxies and ballots shall be received and taken in charge, and all questions
touching the qualifications of voters, the validity of proxies and the
acceptance or rejection of votes shall be decided by one (1) or two (2)
inspectors of election. Said inspector or inspectors of election shall be
appointed by the Board of Directors before the meeting, or, if no such
appointment shall have been made, by the presiding officer of the meeting. If
for any reason any of the inspectors of election previously appointed shall
fail to attend or refuse or be unable to serve, inspectors of election in place
of any so failing to attend, or refusing or unable to serve, shall be appointed
in like manner.

 

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ARTICLE IV

 

Directors

 

Section 1. Number,
Election and Term of Office. The business and affairs of the Corporation
shall be managed by the Board of Directors. Subject to the terms of the
Governance Agreement, dated as of June 20, 1996, between Borden, Inc. and AEP
Industries Inc., as it may be amended and/or restated from time to time (the “Governance
Agreement”) during the time the terms thereof are applicable, the number of
Directors which shall constitute the whole Board shall be eight (8), ten (10)
or twelve (12). Within such limits, the number of Directors may be fixed from
time to time by vote of the Board of Directors, at any regular or special
meeting, subject to the Governance Agreement during the time the terms thereof
are applicable. Directors need not be stockholders. Directors shall be elected
at the annual meeting of the stockholders of the Corporation, subject to the
Governance Agreement during the time the terms thereof are applicable, except
as provided in Section 2 of this Article, to serve for terms in accordance with
the Governance Agreement and the Certificate of Incorporation and until their
respective successors are duly elected and have qualified.

 

In addition to the powers
by these By-Laws expressly conferred upon them, the Board may exercise all such
powers of the Corporation as are not by the laws of the State of Delaware, the
Certificate of Incorporation or these By-Laws required to be exercised or done
by the stockholders.

 

Section 2. Nomination of Directors. Only persons who are nominated in accordance with the following procedures shall be eligible for election as Directors. Nominations of persons for election to the Board of Directors of the Corporation at a meeting of stockholders may be made (i) by or at the direction of the Board of Directors by any nominating committee or person appointed by the Board or (ii) by any stockholder of the Corporation entitled to vote for the election of Directors at the meeting and who complies with the notice procedures set forth in this Section. Nominations, other than those made by or at the direction of the Board, shall be made pursuant to timely notice in writing to the Secretary. To be timely, a stockholder’s notice shall be delivered to or mailed and received at the principal executive offices of the Corporation (a) with respect to an election to be held at the annual meeting of stockholders, not less than ninety (90) days prior to the first anniversary date of the immediately preceding annual meeting of stockholders of the Corporation and (b) with

 

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respect to an election to be held at a special meeting of stockholders, not later than the close of business on the tenth (10th) day following the day on which notice of the date of the special meeting was mailed to stockholders or public disclosure of the date of the special meeting was made, whichever first occurs. Such stockholder’s notice to the Secretary shall set forth (x) as to each person whom the stockholder proposes to nominate for election or re-election as a Director, (i) the name, age, business address and residence address of the person (including such person’s written consent to being named in the proxy statement as a nominee and to serve as a Director, if elected), (ii) the principal occupation or employment of the person, (iii) the class and number of shares of capital stock of the Corporation which are beneficially owned, directly or indirectly, by the person, and (iv) all other information relating to the person that is required to be disclosed in solicitations for proxies for election of Directors, or is otherwise required, pursuant to Regulation 14A under the Securities Exchange Act of 1934 as amended; and (y) as to the stockholder giving the notice (i) the name and address, as they appear on the Corporation’s books, of such stockholder and (ii) the class and number of shares of capital stock of the Corporation which are beneficially owned, directly or indirectly, by the stockholder. The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation’s Nominating Committee to determine the eligibility of such proposed nominee to serve as Director of the Corporation. Other than Directors chosen pursuant to the provisions of Section 13, no person shall be eligible for election as a Director of the Corporation unless nominated in accordance with the procedures set forth herein.
 

The Chairman of the
annual meeting of stockholders shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.

 

Section 3. Vacancies
and Newly Created Directorships. Except as hereinafter provided and,
subject to the Governance Agreement during the time the terms thereof are
applicable and the Certificate of Incorporation, any vacancy in the office of a
Director occurring for any reason other than the removal of a Director pursuant
to Section 3 of this Article, and any newly created Directorship resulting from
any increase in the authorized number of Directors, may be filled by a majority
of the Directors then in office, though less than a 

 

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quorum, or by a sole
remaining Director. Subject to the Governance Agreement during the time the
terms thereof are applicable, in the event that any vacancy in the office of a
Director occurs as a result of the removal of a Director pursuant to Section 4
of this Article, or in the event that vacancies occur contemporaneously in the
offices of all of the Directors, such vacancy or vacancies shall be filled by a
vote of the stockholders of the Corporation at the next annual or special meeting
of stockholders. Directors chosen or elected as aforesaid shall hold office for
a term in accordance with the Governance Agreement during the time the terms
thereof are applicable, and the Certificate of Incorporation and until their
respective successors are duly elected and qualified or until their earlier
resignation or renewal.

 

Section 4. Removals.
Subject to the Governance Agreement during the time the terms thereof are
applicable, at any meeting of stockholders of the Corporation called for the purpose,
the stockholders may remove from office, with cause, any or all of the
Directors.

 

Section 5. Regular
Meetings. Subject to the Governance Agreement during the time the terms
thereof are applicable, regular meetings of the Board of Directors may be held
without notice at such time and place, either within or without the State of
Delaware, as shall from time to time be determined by resolution of the Board.

 

Section 6. Special
Meetings. Special meetings of the Board of Directors may be called by the
Chairman of the Board, the President or a majority of the Directors on notice
given to each Director, and such meetings shall be held at the principal
business office of the Corporation or at such other place or places, either
within or without the State of Delaware, as shall be specified in the notices
thereof.

 

Section 7. Annual
Meetings. The first meeting of each newly elected Board of Directors shall
be held as soon as practicable after each annual election of Directors and on
the same day, at the same place at which regular meetings of the Board of
Directors are held, or at such other time and place as may be provided by
resolution of the Board. Such meeting may be held at any other time or place
which shall be specified in a notice given, as hereinafter provided, for
special meetings of the Board of Directors.

 

Section 8. Notice.
Notice of any meeting of the Board of Directors requiring notice shall be given
to each Director by mailing the same at least forty-eight (48) hours, or by
telegraphing, telexing, 

 

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telecopying or use of any
other form of facsimile transmission the same at least twelve (12) hours,
before the time fixed for the meeting. Attendance of a Director at a meeting
shall constitute waiver of notice of such meeting, except when such Director
attends such meeting for the express purpose of objecting, at the beginning of
such, meeting, to the transaction of any business because such meeting is not
lawfully called or convened.

 

Section 9. Quorum.
At all meetings of the Board of Directors, the presence of a majority of the
Directors then in office shall constitute a quorum for the transaction of
business. Except as may be otherwise specifically provided by the laws of the
State of Delaware, the Governance Agreement during the time the terms thereof
are applicable, the Certificate of Incorporation or these By-Laws, the
affirmative vote of a majority of the Directors present at the time of such
vote shall be the act of the Board of Directors if a quorum is present. If a
quorum shall not be present at any meeting of the Board of Directors the
Directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.

 

 Section 10. Consent. Unless otherwise
restricted by the Certificate of Incorporation or these By-Laws, any action
required or permitted to be taken at any meeting of the Board of Directors may
be taken without a meeting, if all members of the Board consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board.

 

Section 11. Telephonic
Meetings. Unless otherwise restricted by the Certificate of Incorporation
or these By-Laws, members of the Board of Directors may participate in a
meeting of the Board by means of conference telephone or similar communications
equipment by means of which all persons participating in such meeting can hear
each other, and participation in a meeting pursuant to this Section 10 shall constitute
presence in person at such meeting.

 

Section 12. Compensation
of Directors. Directors, as such, shall not receive any stated salary for
their services, but, by resolution of the Board, a fixed sum and expenses of
attendance, if any, may be allowed for service and for attendance at each
regular or special meeting of the Board, provided that nothing herein contained
shall be construed to preclude any Director from serving the Corporation in any
other capacity and receiving compensation therefor.

 

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Section 13. Resignations.
Any Director of the Corporation may resign at any time by giving written notice
to the Board of Directors or to the President or the Secretary of the
Corporation. Any such resignation shall take effect at the time specified
therein, or, if the time be not specified, upon receipt thereof; and unless
otherwise specified therein, acceptance of such resignation shall not be
necessary to make it effective.

 

ARTICLE V

 

Committees

 

Section 1. Committees.
The Board of Directors shall designate the committees provided for in the
Governance Agreement during the time the terms thereof are applicable, which
committees shall have the members provided for in the Governance Agreement, and
may, by resolution passed by a majority of the whole Board of Directors,
designate, subject to the Governance Agreement during the time the terms
thereof are applicable, one or more additional committees, each committee to
consist of one or more of the Directors of the Corporation. The Board of
Directors may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. In the absence or disqualification of a member of the committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors, subject to the Governance Agreement
during the time the terms thereof are applicable, to act at the meeting in
place of any such absent or disqualified member. Any such committee, to the
extent provided in the resolution of the Board of Directors, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation, and may authorize
the seal of the Corporation to be affixed to all papers which may require it,
but no such committee shall have power or authority in reference to amending
the Certificate of Incorporation of the Corporation, adopting an agreement of
merger or consolidation, recommending to the stockholders the sale, lease, or
exchange of all or substantially all of the Corporation’s property and assets,
recommending to the stockholders a dissolution of the Corporation or a
revocation of such a dissolution, or amending these By-Laws, and, unless the
resolution expressly so provides, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock.

 

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Section 2. Executive
Committee. Subject to the Governance Agreement during the time the terms
thereof are applicable, the Board, by resolution adopted by the affirmative
vote of a majority of the entire Board, may designate two (2) or more of its
members to constitute an Executive Committee, which, during the intervals
between the meetings of the Board, shall have, and may exercise, all the powers
of the Board in the management of the business, affairs and property of the
Corporation.

 

At all meetings of the
Executive Committee, the presence of the lesser of a majority or one (1), if
there are two or fewer members, of the members thereof shall be necessary to
constitute a quorum and to transact business. Meetings of the Executive
Committee may be called by any member thereof, by the Chairman of the Board,
the President or by the Secretary of the Corporation. Written or oral notice of
each such meeting shall be given to each member of the Executive Committee not
later than the close of the business day next preceding the date of such
meeting.

 

The Board shall have the
power, by resolution adopted by the affirmative vote of a majority of the
entire Board at any time to change the members of the Executive Committee, to
fill vacancies thereon, and to discharge the Executive Committee or any member
thereof. All action of the Executive Committee shall be reported to the Board
at its next meeting.

 

The Board may, by
ordinary resolution, designate one of the members of the Executive Committee as
Chairman of the Executive Committee.

 

Section 3. Committees
Generally. Subject to the Governance Agreement during the time the terms
thereof are applicable, the Board, by resolution, may from time to time
designate members of the Board to constitute other committees, which shall
consist of such persons and shall have such powers as the Board may determine
and specify in the respective resolutions effecting such designations. The
Board shall have the power, by resolution, at any time, with respect to any
committee created pursuant to Section 1 and this Section 3, to change the
members of any such committee, to fill vacancies on any such committee and to
discharge any such committee.

 

Section 4. Meetings.
Unless the Governance Agreement during the time the terms thereof are
applicable, or the Board of Directors otherwise provides, a majority of the
members of each committee shall 

 

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determine its acts. Each
committee may adopt such rules and regulations for the conduct of its meetings
as it deems proper and as are not inconsistent with any statute, the Governance
Agreement during the time the terms thereof are applicable, the Certificate of
Incorporation or the By-Laws of this Corporation.

 

ARTICLE VI

 

Officers

 

Section 1. Number,
Election and Term of Office. The officers of the Corporation shall be a
Chairman of the Board, a President, one or more Executive Vice Presidents, one
or more Vice Presidents, a Secretary and a Treasurer, and may at the discretion
of the Board of Directors include one or more Assistant Treasurers and
Assistant Secretaries. The officers of the Corporation shall be elected
annually by the Board of Directors subject to the Governance Agreement at its
meeting held immediately after the annual meeting of the stockholders, and
shall hold their respective offices until their successors are duly elected and
have qualified. Any number of offices may be held by the same person. The Board
of Directors may from time to time appoint such other officers and agents as
the interest of the Corporation may require and may fix their duties and terms
of office.

 

Section 2. Chairman of
the Board. The Chairman of the Board, if present, shall preside at all
meetings of the stockholders and of the Board of Directors of the Corporation. In
addition, he shall have such other powers and duties as shall from time to time
be assigned to him by the Board of Directors.

 

Section 3. President.
The President shall be a Director, and shall be the chief executive officer of
the Corporation and shall have general and active management of the business of
the Corporation, and shall see that all orders and resolutions of the Board are
carried into effect. He shall ensure that the books, reports, statements,
certificates and other records of the Corporation are kept, made or filed in
accordance with the laws of the State of Delaware. In the absence of the
Chairman of the Board, he shall preside at all meetings of the Board of Directors
and at all meetings of the stockholders. He shall cause to be called regular
and special meetings of the stockholders and of the Board of Directors in
accordance with these By-Laws. He may sign, execute and deliver in the name of
the Corporation all deeds, mortgages, bonds, contracts or other instruments
authorized by the Board of Directors, except in cases where the signing,
execution or delivery thereof shall be 

 

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expressly delegated by
the Board of Directors or by these By-Laws to some other officer or agent of
the Corporation or where any of them shall be required by law otherwise to be
signed, executed or delivered. He may sign, with the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary, certificates of stock of
the Corporation. He shall appoint and remove, employ and discharge, and fix the
compensation of all servants, agents, employees and clerks of the Corporation
other than the duly elected or appointed officers, subject to the approval of
the Board of Directors. He shall have the right to initiate and approve all
changes in compensation, including the award of and amount of bonuses for all
executive officers of the Corporation other than the President. In addition to
the powers and duties expressly conferred upon him by these By-Laws, he shall,
except as otherwise specifically provided by the laws of the State of Delaware,
have such other powers and duties as shall from time to time be assigned to him
by the Board of Directors.

 

Section 4. Executive
Vice Presidents. The Executive Vice Presidents shall have such powers and
duties as may be assigned to them by the Board of Directors, the Chairman of
the Board and/or the President, or as may be provided in these By-Laws. An
Executive Vice President designated by the Board of Directors shall, during the
absence or incapacity of the President, assume his powers and perform his
duties.

 

Section 5. Vice
Presidents. The Vice Presidents shall have such powers and duties as may be
assigned to them by the Chairman of the Board and/or President, the Executive
Vice President or the Board of Directors. Any Vice President shall, during the
absence or incapacity of the Executive Vice President, assume and perform his
duties.

 

Section 6. Secretary.
The Secretary may sign all certificates of stock of the Corporation. He shall
record all the proceedings of the meetings of the Board of Directors and of the
stockholders of the Corporation in books to be kept for that purpose. He shall
have custody of the seal of the Corporation and may affix the same to any
instrument requiring such seal when authorized by the Board of Directors, and
when so affixed he may attest the same by his signature. He shall keep the
transfer books, in which all transfers of the capital stock of the Corporation
shall be registered, and the stock books, which shall contain the names and
addresses of all holders of the capital stock of the Corporation and the number
of shares held by each; and he shall keep such stock and transfer books open
daily during business hours to the inspection of every stockholder 

 

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and for transfer of stock.
He shall notify the Directors and stockholders of their respective meetings as
required by law or by these By-Laws, and shall perform such other duties as may
be required by law or by these By-Laws, or which may be assigned to him from
time to time by the Board of Directors.

 

Section 7. Assistant
Secretaries. The Assistant Secretaries shall, during the absence or
incapacity of the Secretary, assume and perform all functions and duties which
the Secretary might lawfully do if present and not under any incapacity.

 

Section 8. Treasurer.
The Treasurer shall have charge of the funds and securities of the Corporation.
He may sign all certificates of stock. He shall keep full and accurate accounts
of all receipts and disbursements of the Corporation in books belonging to the
Corporation and shall deposit all monies and other valuable effects in the name
and to the credit of the Corporation in such depositories as may be designated
by the Board of Directors. He shall disburse the funds of the Corporation as
may be ordered by the Board, and shall render to the Chairman of the Board
and/or the President or the Directors, whenever they may require it, an account
of all his transactions as Treasurer and an account of the business and
financial position of the Corporation.

 

Section 9. Assistant
Treasurers. The Assistant Treasurers shall, during the absence or
incapacity of the Treasurer, assume and perform all functions and duties which
the Treasurer might lawfully do if present and not under any incapacity.

 

Section 10. Treasurer’s
Bond. The Treasurer and Assistant Treasurers shall, if required so to do by
the Board of Directors, each give a bond (which shall be renewed every six (6)
years) in such sum and with such surety or sureties as the Board of Directors
may require.

 

Section 11. Transfer
of Duties. The Board of Directors in its absolute discretion may transfer
the power and duties, in whole or in part, of any officer to any other officer,
or persons, notwithstanding the provisions of these By-Laws, except as
otherwise provided by the laws of the State of Delaware.

 

Section 12. Vacancies.
Subject to the Governance Agreement, if the office of Chairman of the Board,
President, Executive Vice President, Vice President, Secretary or Treasurer, or
of any other officer or 

 

14

 

agent becomes vacant for
any reason, the Board of Directors may choose a successor to hold office for
the unexpired term.

 

Section 13. Removals.
At any meeting of the Board of Directors called for the purpose, any officer or
agent of the Corporation may be removed from office, with or without cause, by
the affirmative vote of a majority of the entire Board of Directors.

 

Section 14. Compensation
of Officers. The officers shall receive such salary or compensation as may
be determined by the Board of Directors.

 

Section 15. Resignations.
Any officer or agent of the Corporation may resign at any time by giving
written notice to the Board of Directors or to the Chairman of the Board and/or
the President or the Secretary of the Corporation. Any such resignation shall
take effect at the time specified therein or, if the time be not specified,
upon receipt thereof; and unless otherwise specified therein, acceptance of
such resignation shall not be necessary to make it effective.

 

ARTICLE VII

 

Contracts, Checks
and Notes

 

Section 1. Contracts.
Unless the Board of Directors shall otherwise specifically direct, all
contracts of the Corporation shall be executed in the name of the Corporation
by the Chairman of the Board, the President, the Executive Vice President or a
Vice President.

 

Section 2. Checks and
Notes. All checks, drafts, bills of exchange and promissory notes and other
negotiable instruments of the Corporation shall be signed by such officers or
agents of the Corporation as may be designated by the Board of Directors.

 

ARTICLE VIII

 

Stock

 

Section 1. Certificates
of Stock. The shares of the Corporation shall be represented by
certificates in such form approved by the Board of Directors, provided that the
Board of Directors may provide by resolution that some or all of any or all
classes or series of the Corporation’s stock shall be uncertificated shares. Any
such resolution shall not apply to shares represented by a certificate until
such certificate is 

 

15

 

surrendered to the
Corporation. Within a reasonable time after the issuance or transfer of
uncertificated shares, the Corporation shall send to the registered owners
thereof a written notice containing the information required to be set forth or
stated on certificates pursuant to Delaware General Corporation Law.

 

Notwithstanding the
adoption of such a resolution by the Board of Directors, every holder of stock
represented by certificates and upon request every holder of uncertificated
shares shall be entitled to have a certificate signed by, or in the name of the
Corporation, by the Chairman of the Board, the President, an Executive Vice
President or a Vice President, and by the Treasurer, an Assistant Treasurer,
the Secretary or an Assistant Secretary, representing the number of shares owned
by such person and the date of issue; and no certificate shall be valid unless
so signed. All certificates shall be consecutively numbered and shall be
entered in the books of the Corporation as they are issued. Any or all
signatures on the certificate may be a facsimile. In case any officer, transfer
agent or registrar who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, such certificate may be issued by
the Corporation with the same effect as if such person was an officer, transfer
agent or registrar at the date of issue.

 

Section 2. Transfer of
Stock. Upon surrender to the Corporation or the transfer agent of the
Corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, the Corporation
shall cancel the old certificate, issue a new certificate or evidence the
issuance of uncertified shares to the person entitled thereto, and record the
transaction upon its books. Upon receipt of proper transfer instructions from
the registered owner of uncertificated shares, the Corporation shall cancel
such uncertificated shares, issue a new certificate to the person entitled
thereto, if requested, and record the transaction upon its books.

 

The Board may prescribe
such additional requirements as it may deem appropriate related to the issue,
transfer and registration of shares of the Corporation, subject to the Certificate
of Incorporation, these By-Laws, and Delaware General Corporation Law.

 

16

 

ARTICLE IX

 

Registered
Stockholders

 

The Corporation shall be
entitled to treat the holder of record of any share or shares of stock as the
holder in fact thereof and, accordingly, shall not be bound to recognize any
equitable or other claim to, or interest in, such share or shares on the part
of any other person, whether or not it shall have express or other notice
thereof, save as expressly provided by the laws of the State of Delaware or the
Certificate of Incorporation.

 

ARTICLE X

 

Lost, Stolen or
Destroyed Certificates

 

Any person claiming a
certificate of stock to be lost, stolen or destroyed, shall make an affidavit
or affirmation of the fact in such manner as the Corporation requires, and the
Corporation, in its discretion, may require the owner of the lost, stolen or
destroyed certificate, or such owner’s legal representative, to give the
Corporation a bond in a sum sufficient to indemnify the Corporation against any
claim that may be made against it on account of the alleged loss, theft or
destruction of any such certificate or the issuance of such new certificate or
uncertificated shares.

 

ARTICLE XI

 

Fixing of Record Date

 

In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or to express consent to corporate action in writing without a
meeting, or to receive payment of any dividend or other distribution or
allotment of any rights, or to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix, in advance, a record date, which shall not be
more than sixty (60) nor less than ten (10) days before the date of such
meeting, nor more than sixty (60) days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for
the adjourned meeting.

 

17

 

ARTICLE XII

 

Dividends

 

Subject to the relevant
provisions of the Certificate of Incorporation, dividends upon the capital
stock of the Corporation may be declared by the Board of Directors at any
regular or special meeting, pursuant to law. Dividends may be paid in cash, in
property, or in shares of the capital stock of the Corporation, subject to the
provisions of the Certificate of Incorporation.

 

Before payment of any
dividend, there may be set aside out of any funds of the Corporation available
for dividends such sums as the Directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for such other purpose as the Directors shall think conducive
to the interest of the Corporation, and the Directors may modify or abolish any
such reserve in the manner in which it was created.

 

ARTICLE XIII

 

Waiver of Notice

 

Whenever any notice
whatever is required to be given by statute or under the provisions of the Certificate
of Incorporation or these By-Laws, a waiver thereof in writing signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be equivalent thereto.

 

ARTICLE XIV

 

Seal

 

The corporate seal of the
Corporation shall have inscribed thereon the name of the Corporation, the year
of its organization and the words “Corporate Seal, Delaware.”

 

ARTICLE XV

 

Amendments

 

Subject to the Governance
Agreement during the time the terms thereof are applicable and the provisions
of the Certificate of Incorporation, these By-Laws may be altered, amended or
repealed or new By-Laws may be adopted by the stockholders or by the Board of
Directors, at any annual meeting of the

 

18

 

stockholders or regular
meeting of the Board of Directors or at any special meeting of the stockholders
or of the Board of Directors if notice of such alteration, amendment or repeal
of the By-Laws or of adoption of new By-Laws be contained in the notice of such
special meeting. Any amendment of these By-Laws by the stockholders of the
Corporation shall be made by a vote of not less than eighty percent (80%) of
the capital stock of the Corporation.

 

ARTICLE XVI

 

Resolution of
Conflicting Terms

 

Notwithstanding any other
provision of these By-Laws and at such time as the Governance Agreement is
operative, any conflict between (a) any action taken by the Corporation or the
Board of Directors, or any provision of these By-laws, as they may be amended
and/or restated from time to time, on the one hand, and (b) the terms of the
Governance Agreement, on the other, shall be resolved in favor of the terms of
the Governance Agreement unless otherwise agreed to in writing by Borden, Inc.

 

19Exhibit 10.34

 

RIGEL PHARMACEUTICALS, INC.

 

2000 NON-EMPLOYEE
DIRECTORS’ STOCK OPTION PLAN

 

ADOPTED AUGUST 18, 2000

APPROVED BY STOCKHOLDERS
SEPTEMBER 11, 2000

EFFECTIVE DATE: DECEMBER
4, 2000

AMENDED AND RESTATED APRIL
24, 2003

AMENDED AND RESTATED JUNE
20, 2003

APPROVED BY STOCKHOLDERS JUNE 20, 2003

AMENDED AND RESTATED APRIL 22, 2005

APPROVED BY STOCKHOLDERS JUNE 2, 2005

AMENDED AND RESTATED JANUARY 31, 2007

APPROVED BY STOCKHOLDERS MAY 31, 2007

AMENDED AND RESTATED
SEPTEMBER 18, 2007

 

1.                                      PURPOSES.

 

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

 

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

 

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

 

2.                                      DEFINITIONS.

 

(a)                                  “Affiliate”
means any parent corporation or subsidiary corporation of the Company, whether
now or hereafter existing, as those terms are defined in Sections 424(e) and
(f), respectively, of the Code.

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

(s)                                  “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.

 

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

 

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

 

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

 

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

 

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

 

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

 

3.                                      ADMINISTRATION.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

4.                                      SHARES
SUBJECT TO THE PLAN.

 

(a)                                  Share Reserve. Subject to the provisions of Section 11
relating to adjustments upon changes in the Common Stock, the Common Stock that
may be issued pursuant to Options shall not exceed in the aggregate 435,000 shares of Common Stock, which number
consists of (i) 33,333 shares of Common stock initially reserved for issuance
under the Plan plus (ii) 66,667 shares of Common stock approved by the Board in
April 2003 and subsequently approved by the Company’s stockholders plus (iii)
225,000 shares of Common Stock approved by the Board in April 2005 and
subsequently approved by the Company’s stockholders plus (iv) 110,000 shares of
Common Stock approved by the Board in January 2007 and subsequently approved by
the Company’s stockholders.

 

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

 

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

 

5.                                      ELIGIBILITY.

 

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

 

6.                                      NON-DISCRETIONARY
GRANTS.

 

(a)                                  Initial Grants. Without any further action of the Board,
each person who is elected or appointed for the first time to be a Non-Employee
Director after the IPO Date automatically shall, upon the date of his or her
initial election or appointment to be a Non-Employee Director by the Board or
stockholders of the Company, be granted an Initial Grant to purchase twenty
thousand (20,000) shares of Common Stock on the terms and conditions set forth
herein.

 

(b)                                  Annual Grants. Without any further action of the Board,
a Non-Employee Director shall be granted an Annual Grant as follows: On the day
following each Annual Meeting commencing with the Annual Meeting in 2001, each
person who is then a Non-Employee Director automatically shall be granted an
Annual Grant to purchase ten thousand (10,000) shares of Common Stock on the
terms and 

 

 

conditions set forth
herein; provided, however, that if the person
has not been serving as a Non-Employee Director for the entire period since the
preceding Annual Meeting, then the number of shares subject to the Annual Grant
shall be reduced pro rata for each full quarter prior to the date of grant
during which such person did not serve as a Non-Employee Director.

 

7.                                      OPTION
PROVISIONS.

 

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

 

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

 

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

 

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

 

(i)                                    By cash or check.

 

(ii)                                Provided that at
the time of exercise the Common Stock is publicly traded and quoted regularly
in The Wall Street Journal, by delivery of
already-owned shares of Common Stock either that the Optionholder has held for more than six (6) months (or
such longer or shorter period of time required to avoid a charge to earnings
for financial accounting purposes) or that
the Optionholder did not acquire, directly or indirectly from the Company, that
are owned free and clear of any liens, claims, encumbrances or security
interests, and that are valued at Fair Market Value on the date of exercise. “Delivery”
for these purposes shall include delivery to the Company of the Optionholder’s
attestation of ownership of such shares of Common Stock in a form approved by
the Company. Notwithstanding the foregoing, the Optionholder may not exercise
the Option by tender to the Company of Common Stock to the extent such tender
would violate the provisions of any law, regulation or agreement restricting
the redemption of the Company’s stock.

 

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

 

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

 

 

not be exercisable
thereafter to the extent that (i) shares are used to pay the exercise price
pursuant to the “net exercise,” (ii) shares are delivered to the Optionholder
as a result of such exercise, and (iii) shares are withheld to satisfy tax
withholding obligations.

 

(d)                                  Transferability. An
Option is transferable by will or by the laws of descent and distribution. An
Option also is transferable (i) by instrument to an inter vivos or testamentary
trust, in a form accepted by the Company, in which the Option is to be passed to beneficiaries upon the death of
the trustor (settlor) and (ii) by gift, in a form accepted by the
Company, to a member of the “immediate
family” of the Optionholder as that term is defined in 17 C.F.R. 240.16a-1(e). An
Option shall be exercisable during the lifetime of the Optionholder only
by the Optionholder and a permitted
transferee as provided herein. However, the Optionholder may, by
delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option.

 

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

 

(f)                                    Vesting Schedule.

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

8.                                      COVENANTS
OF THE COMPANY.

 

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

 

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

 

9.                                      USE OF
PROCEEDS FROM STOCK.

 

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

 

10.                               MISCELLANEOUS.

 

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

 

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

 

 

(iii) the service of a
Director pursuant to the Bylaws of the Company or an Affiliate, and any
applicable provisions of the corporate law of the state in which the Company or
the Affiliate is incorporated, as the case may be.

 

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

 

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

 

11.                               ADJUSTMENTS
UPON CHANGES IN STOCK.

 

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

 

(b)                                  Dissolution or Liquidation. In the event of a dissolution or
liquidation of the Company, then all outstanding Options shall terminate
immediately prior to such event.

 

 

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

 

12.                               AMENDMENT
OF THE PLAN AND OPTIONS.

 

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

 

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

 

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

 

(d)                                  Amendment of Options. The Board at any time, and from time to
time, may amend the terms of any one or more Options; provided, however, that
the rights under any Option shall not be impaired by any such amendment unless
(i) the Company requests the consent of the Optionholder and (ii) the
Optionholder consents in writing.

 

13.                               TERMINATION
OR SUSPENSION OF THE PLAN.

 

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

 

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

 

14.                               EFFECTIVE
DATE OF PLAN.

 

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

 

15.                               CHOICE OF
LAW.

 

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

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