TWISTBOX
2006
STOCK INCENTIVE PLAN
TWISTBOX
2006
STOCK INCENTIVE PLAN
ARTICLE
I
PURPOSE
The
purpose of the Plan is to enhance the profitability and value of the Company
for
the benefit of its shareholder by enabling the Company to offer Eligible
Employees, Consultants and Non-Employee Directors stock options, restricted
stock and other stock-based awards, thereby creating a means to raise the level
of stock ownership by such individuals to attract, retain and reward such
individuals and strengthen the mutuality of interests between such individuals
and the Company's shareholders.
ARTICLE
II
DEFINITIONS
For
purposes of the Plan, the following terms shall have the following
meanings:
2.1.
“Acquisition
Events”
has the meaning set forth in Section 4.2(d).
2.2.
“Award”
means any award under the Plan of any Stock Option, Restricted Stock or Other
Stock-Based Award. All Awards shall be confirmed by, and subject to the terms
of, a written or electronic agreement executed by the Company and the
Participant. Any reference herein to an agreement in writing shall be deemed
to
include an electronic writing to the extent permitted by applicable
law.
2.3.
“Board”
means the Board of Directors of the Company.
2.4.
“Cause”
means, with respect to a Participant’s
Termination of Employment or Termination of Consultancy, the following: (a)
in
the case where there is no employment agreement, consulting agreement, change
in
control agreement or similar agreement in effect between the Company or a
Subsidiary and the Participant at the time of the grant of the Award (or where
there is such an agreement but it does not define “cause” (or words of like
import)), termination due to a Participant’s
insubordination, dishonesty, fraud, incompetence, moral turpitude, misconduct,
refusal to perform his or her duties or responsibilities for any reason other
than illness or incapacity or unsatisfactory performance of his or her duties
for the Company or a Subsidiary, as determined by the Committee in its sole
discretion; or (b) in the case where there is an employment agreement,
consulting agreement, change in control agreement or similar agreement in effect
between the Company or a Subsidiary and the Participant at the time of the
grant
of the Award or an Award agreement that defines “cause” (or words of like
import), “cause” as defined under such agreement; provided, that with regard to
any agreement under which the definition of “cause” only applies on occurrence
of a change in control, such definition of “cause” shall not apply until a
change in control actually takes
place
and
then
only with regard to a termination thereafter. With respect to a Participant’s
Termination of Directorship, “cause” means an act or failure to
act
that constitutes
cause for removal of a director
under applicable Delaware law.
2.5.
“Change
in Control”
has
the
meaning set forth in Section 10.2.
2.6.
“Code”
means the
Internal Revenue Code of 1986,
as
amended. Any reference
to any section of the Code shall also be a reference to any successor provision
and
any
Treasury Regulation promulgated thereunder.
2.7.
“Committee” means
(a)
prior to the Registration Date, a committee or subcommittee
of
the
Board appointed from time to time by the Board and (b) following the
Registration Date, a committee or subcommittee of the Board appointed from
time
to time
by
the Board that shall consist of two or more non-employee directors, each of
whom
is
intended to be, to the extent required by Rule 16b-3, a “non-employee director”
as
defined in Rule 16b-3
and
comply with
any
applicable stock
exchange
rules; provided, however, that if for any reason the appointed Committee does
not meet the requirements of Rule 16b-3 such noncompliance shall not affect
the
validity of grants, interpretations or
other
actions of the Committee. With respect to the application of the Plan to Non
-Employee
Directors, the Committee shall refer to the Board. Notwithstanding the
foregoing, if, and to the extent that no Committee exists that has the authority
to administer
the Plan, the functions of the Committee shall be exercised by the Board and
all
references herein to the Committee shall be deemed to be references to the
Board.
2.8.
“Common
Stock”
means the
common stock of the Company, $0.001 par value
per
share.
2.9.
“Company”
means
The WATT Corp., a California corporation, and its successors by operation of
law.
2.10.
“Consultant” means
any
natural person who is an advisor or consultant that provides bona fide services
to the Company or its Subsidiaries, provided that such services
are not
in
connection
with the offer or sale of securities in a capital raising transaction, and
do
not directly or indirectly promote or maintain a market for the Company's
or its Subsidiaries' securities.
2
11.
“Disability” means,
with respect to
a
Participant’s
Termination, a
permanent
and total disability as defined in Section 22(e)(3) of the Code; provided,
that
for
Awards that are subject to Section 409A of the Code, Disability shall mean
that
a Participant
is disabled under Section 409A(a)(2)(C)(i) of the Code. A Disability shall
only
be
deemed to occur at the time of the determination by the Committee of the
Disability.
2.12.
“Effective
Date” means
the
effective date of the Plan as defined in Article XV.
2.13.
“Eligible
Employee”
means
each employee of the company or a
Subsidiary.
2.14.
“Exchange
Act”
means
the Securities Exchange
Act of 1934, as amended,
and all
rules and regulations promulgated thereunder. Any references to any section
of
the
Exchange Act shall also be a reference to any successor provision and all rules
and regulations promulgated thereunder.
2.15
“Fair
Market Value” means,
for purposes of the Plan, unless otherwise
required
by any applicable provision of the Code, as of any date and except as provided
below,
(a) if the Common
Stock is not readily tradable on an established securities market
as
determined under Section 409A of the Code or other guidance promulgated
thereunder, a value determined by the reasonable application of a reasonable
valuation method
in
accordance with Section 409A of the Code or other guidance promulgated
thereunder
or (b) if the Common Stock is readily tradable on an established securities
market as determined under Section 409A of the Code or other guidance
promulgated thereunder, a value based on the closing price reported for the
Common Stock on the trading day before the determination. Notwithstanding
anything herein to the contrary, for purposes of granting Incentive Stock
Options, “Fair Market Value” means the price for Common Stock set by the
Committee in good faith based on reasonable methods set forth under Section
422
of the
Code
including, without limitation, a method utilizing the average of prices of
the
Common Stock reported on the principal national securities exchange on which
it
is then traded during a reasonable period designated by the
Committee.
2.16.
“Family
Member”
means
“family member” as defined in Rule 701 under the
Securities Act or, following the filing of a Form S-8 pursuant to the Securities
Act with
respect
to the Plan, as in Section Al(5) of the general instructions of Form
S-8.
2.17. “Incentive
Stock Option”
means
any
Stock Option awarded to an Eligible
Employee under the Plan intended to be and designated as an “Incentive Stock
Option”
within the meaning of Section
422 of the
Code.
2.18.
“Listing
Date” means
the
first
date
upon
which any security of the Company
is listed (or approved for listing) upon notice of issuance on any securities
exchange or designated (or approved for designation) upon notice of issuance
as
a national
market security on an interdealer quotation
system
if
such securities exchange
or
interdealer
quotation system has been certified in accordance with the
provisions of Section
25100(o) of the California Corporate
Securities
Law of 1968.
2.19. “Non-Employee
Director”
means
a
“non-employee director” as defined
in
Rule
16b-3.
2.20. “Non-Qualified
Stock Option” means
any
Stock
Option awarded
under the
Plan
that is not an Incentive
Stock Option.
2.21.
“Other
Stock-Based Award” means
an
Award
of
Common Stock and other
awards (including
awards of cash, restricted stock
units and performance share awards)
made pursuant
to Article VIII that are valued in whole or in part by reference to, or are
payable in or otherwise based on, Common Stock, including, without limitation,
an Award valued by reference to a Subsidiary.
2.22.
“Parent” means
any
parent corporation of the Company within the meaning of Section 424(e) of the
Code.
2.23.
“Participant” means
any
Eligible Employee, Consultant or Non-Employee Director to whom an Award has
been
granted under the Plan.
2.24.
“Person” means
any
individual, corporation, partnership, limited liability company, firm, joint
venture, association, joint-stock company, trust, incorporated organization,
governmental or regulatory or other entity.
2.25.
“Plan”
means
The
WAAT
Corp.
2006 Stock Incentive Plan, as amended from
time
to time.
2.26.
“Registration Date” means
the
first date after the Effective Date (a) on which
the
Company sells its Common Stock in a bona fide, firm commitment underwriting
pursuant to a registration statement under the Securities Act or (b) any class
of common equity securities of the Company is required to be registered under
Section 12
of
the
Exchange Act.
2.27.
“Restricted
Stock” means
a
share of Common Stock issued under the Plan that is subject to restrictions
under Article VII.
2.28.
“Restriction
Period” has
the
meaning set forth in Section 7.1.
2.29.
“Retirement” means
a
Termination of Employment or Termination of Consultancy
for any reason other than for Cause at or after age 65 or such earlier date
after age 50 as may be approved by the Committee with regard to such
Participant. With
respect
to a Participant’s
Termination of Directorship, Retirement means the failure to stand
for
reelection (other than a Termination for Cause) on or after a Participant has
attained age 65 or, with the consent of the Board, before age 65 but after
age
50.
2.30.
“Rule 16b-3”
means Rule 16b-3 under Section 16(b) of the Exchange Act as
then
in effect or any successor provision.
2.31.
“Securities
Act” means
the
Securities Act of 1933, as amended and all rules and regulations promulgated
thereunder. Any reference to any section of the Securities Act shall also be
a
reference to any successor provision and all rules and regulations
promulgated thereunder.
2.32.
“Shareholders
Agreement”
means
the
Shareholders Agreement dated December 16, 2005 entered into by and among the
Company and certain individuals set forth
therein, as amended from time to time in accordance with the terms
thereof.
2.33.
“Stock
Option” or “Option”
means
any option to purchase shares of Common
Stock granted to Eligible Employees, Non-Employee Directors or Consultants
under
Article VI.
2.34.
“Subsidiary” means
any
subsidiary corporation of the Company within the meaning of Section 424(f)
of
the Code.
2.35.“Ten
Percent Stockholder”
means a
person owning stock
possessing rare than 10% of the total combined voting power of all classes
of
stock of the Company,
its Subsidiaries or its Parent.
2.36.
“Termination”
means
a
Termination of Consultancy, Termination of Directorship or Termination of
Employment, as applicable.
2.37.
“Termination
of Consultancy”
means:
(a)
that
the
Consultant is no longer
acting as a consultant to the Company or a Subsidiary; or (b) when an entity
that is retaining a Participant as a Consultant ceases to be a Subsidiary unless
the Participant otherwise is, or thereupon becomes, a Consultant to the Company
or a Subsidiary at the time
the
entity ceases to be a Subsidiary. In the event that a Consultant becomes an
Eligible
Employee or a Non-Employee Director upon the termination of his or her
consultancy,
unless otherwise determined by the Committee, in its sole discretion, no
Termination of Consultancy shall be deemed to occur until such time as such
Consultant is
no
longer a Consultant, Eligible Employee or Non-Employee Director. Notwithstanding
the foregoing, the Committee may otherwise define Termination of Consultancy
in
the Award agreement or, if no rights of a Participant are reduced, may otherwise
define Termination of Consultancy thereafter.
2.38.
“Termination
of Directorship” means
that the Non-Employee Director has
ceased to the a director of the Company; except that if a Non-Employee Director
becomes
an Eligible Employee or a Consultant upon the termination of his or her
directorship, his or her ceasing to be a director of the Company shall not
be
treated as a Termination of Directorship unless and until the Participant has
a
Termination of Employment
or Termination of Consultancy, as the case may be.
2.39.
“Termination
of Employment” means:
(a) a termination of employment
(for reasons other than a military or approved personal
leave
of
absence) of a Participant from the Company and its Subsidiaries; or (b) when
an
entity that is employing a
Participant
ceases to be a Subsidiary, unless the Participant otherwise is, or thereupon
becomes,
employed by the Company or a Subsidiary at the time the entity ceases to be
a
Subsidiary.
In the event that an Eligible Employee becomes a Consultant or Non-Employee
Director upon the termination of his or her employment, unless otherwise
determined
by the Committee, in its sole discretion, no Termination of Employment shall
be
deemed to occur until such time as such Eligible Employee is no longer an
Eligible Employee, Consultant or Non-Employee Director. Notwithstanding the
foregoing, the Committee
may otherwise define Termination of Employment in the Award agreement
or,
if no
rights of a Participant are reduced, may otherwise define Termination of
Employment
thereafter.
2.40. “Transfer”
means: (a) when used as a noun, any direct or indirect transfer, sale,
assignment, pledge, hypothecation, encumbrance or other disposition (including
the issuance of equity in a Person), whether for value or no value and whether
voluntary or involuntary (including by operation of law), and (b) when used
as a
verb, to directly or indirectly
transfer, sell, assign, pledge, encumber, charge, hypothecate or otherwise
dispose
of (including the issuance of equity in a Person) whether for value or for
no
value and whether voluntarily or involuntarily (including by operation of law).
“Transferred”
and
“Transferable” shall have a correlative meaning.
ARTICLE
III
ADMINISTRATION
3.1. The
Committee. The
Plan
shall be administered and interpreted by the Committee.
3.2. Grants
of Awards. The
Committee shall have full authority to grant Awards to Eligible Employees,
Consultants and Non-Employee Directors pursuant to the terms of the Plan. All
Awards shall be granted by, confirmed by, and subject to the terms of,
a
written agreement executed by the Company and the Participant. In
particular, the Committee
shall have the authority:
(a) to
select
the Eligible Employees, Consultants and Non-Employee Directors
to whom Awards may from time to time be granted hereunder;
(b) to
determine whether and to what extent Awards are to be granted hereunder
to one or more Eligible Employees, Consultants and Non-Employee Directors;
(c) to
determine, in accordance with the terms of the Plan, the number of
shares
of Common Stock to be covered by each Award granted hereunder;
(d) to
determine the terms and conditions, not inconsistent with the terms
of
the Plan, of any Award granted hereunder (including, but not limited to,
the
exercise or purchase price (if any), any restriction or limitation, any vesting
schedule
or acceleration thereof and any forfeiture restrictions or waiver thereof,
regarding any Award and the shares of Common Stock relating thereto, based
on
such
factors, if any, as the Committee shall determine, in its sole
discretion);
(e) to
determine whether and under what circumstances a
Stock
Option
may be settled in cash, Common Stock and/or Restricted Stock
under Section
6.3(d);
(f) to
determine whether, to what extent and under what circumstances to
provide loans (which may be on a recourse basis and shall bear interest at
the
rate
the
Committee shall provide) to Participants in order to exercise Awards or to
purchase
or pay for shares of Common Stock issuable pursuant to Awards,
provided
that on and after the Registration Date executive officers and directors
are
not
eligible to receive such loans, and provided further, that all outstanding
loans
shall be repaid before the Registration Date;
(g) to
determine whether a Stock Option is an Incentive Stock Option or
Non-Qualified Stock Option;
(h) to
determine whether to require an Eligible Employee,
Non-Employee
Director or Consultant, as a condition of the granting of any Award,
not
to
sell or otherwise dispose of shares of Common Stock acquired pursuant to
the
Award
for a period of time as determined by the Committee, in
its
sole discretion, following the date of the Award;
(i) to
modify, extend or renew an Award, subject to Article XI herein, provided,
however, that if a Stock Option is modified, extended or renewed and
thereby
deemed to be the issuance of a new Stock Option under the Code or the
applicable
accounting rules, the exercise price of a Stock Option may continue to
be
the
original exercise price even if less than the Fair Market Value of
the
Common
Stock at the time of such modification, extension or renewal; and
(j) to
offer
to buy out a Stock Option previously granted, based on such
terms and conditions as the Committee shall establish and communicate to
the
Participant at the time such offer is made.
3.3. Guidelines. Subject
to Article XI hereof, the Committee shall have the authority to adopt, alter
and
repeal such administrative rules, guidelines and practices governing the Plan
and perform all acts, including the delegation of its administrative
responsibilities to the extent permitted by applicable law and applicable stock
exchange rules,
as
it shall, from time to time, deem advisable; to construe and interpret the
terms
and
provisions of the Plan and any Award granted under the Plan (and any agreements
relating
thereto); and to otherwise supervise the administration of the Plan.
The
Committee
may correct any defect, supply any omission or reconcile any inconsistency
in
the
Plan
or in any agreement relating thereto in the manner and to the extent it shall
deem necessary to effectuate the purpose and intent of the Plan. The
Committee may adopt special
guidelines and provisions for persons who are residing in or employed in, or
subject to, the taxes of, any domestic or foreign jurisdictions to comply with
applicable tax
and
securities laws and may impose any limitations and restrictions that it deems
necessary
to comply with the applicable tax and securities laws of such domestic or
foreign jurisdictions. To the extent applicable, the Plan is intended to comply
with the applicable requirements of Rule 16b-3 and shall be limited, construed
and interpreted in a manner
so
as to comply therewith.
3.4. Decisions
Final.
Any
decision, interpretation or other action made or taken
in
good faith by or at the direction of the Company, the Board or the Committee
(or
any of its members) arising out of or in connection with the Plan shall be
within the absolute discretion of all and each of them, as the case may be,
and
shall be final, binding and conclusive on the Company and all employees and
Participants and their respective heirs,
executors, administrators, successors and assigns.
3.5. Reliance
on
Counsel. The
Company, the
Board
or the Committee may consult
with legal counsel, who
may be
counsel for the Company or other counsel, with respect
to its obligations or duties hereunder, or with respect to any action or
proceeding or any question of law, and shall not be liable with respect to
any
action taken or omitted by it in good faith pursuant to the advice of such
counsel.
3.6. Procedures.
If the
Committee is appointed, the Board shall designate one of
the
members of the Committee as chairman and the Committee shall hold meetings,
subject
to the By-Laws of the Company, at such times and places as it shall deem
advisable,
including, without limitation, by telephone conference or by written consent
to
the
extent permitted by applicable law. A majority of the Committee members shall
constitute
a quorum. All determinations of the Committee shall be made by a majority of
its
members. Any decision or determination reduced to writing and signed by all
the
Committee
members in accordance with the By-Laws of the Company, shall be fully as
effective
as if it had been made by vote at a meeting duly called and held. The
Committee
shall keep minutes of its meetings and shall make such rules and regulations
for
the conduct of its business as it shall deem advisable.
3.7. Designation
of Consultants/Liability. (a)
The
Committee may designate employees
of the Company and professional advisors to assist the Committee in the
administration of the Plan (to the extent permitted by applicable law and
applicable stock exchange
rules) and may grant authority to officers to execute agreements or other
documents on behalf of the Committee.
(b) The
Committee may employ such legal counsel, consultants and agents
as
it may deem desirable for the administration of the Plan and may rely upon
any
opinion received from any such counsel
or consultant and any computation received from any such consultant or agent.
Expenses
incurred by the
Committee or the Board in the engagement of any such counsel, consultant or
agent
shall be paid by the Company.
The
Committee, its members and any person designated
pursuant to this Section 3.7 above shall not be liable for any action or
determination
made in good faith with respect to the Plan. To
the
maximum extent
permitted by applicable law, no officer of the Company or member or
former
member of the Committee or of the Board shall be liable for any action or
determination made in good faith with respect to the Plan or any Award granted
under it.
3.8. Indemnification. To
the
maximum extent permitted by applicable law and the Certificate of Incorporation
and By-Laws
of the Company and to the extent not covered
by insurance directly insuring
such person,
each officer and member or former member
of
the Committee or the Board shall be indemnified and held harmless by the Company
against any cost or expense (including reasonable fees of counsel reasonably
acceptable to the Committee) or liability (including any sum paid in settlement
of a claim with the approval of the Committee), and advanced amounts
necessary
to pay the foregoing
at the earliest time and to the fullest extent permitted, arising out of any
act
or omission to act in connection with the administration of the Plan, except
to
the extent arising
out of such officer’s, member’s or former member’s own fraud or bad faith.
Such
indemnification
shall be in addition to any rights of indemnification the employees, officers,
directors or members or former officers, directors or members may have under
applicable law or under the Certificate of Incorporation or By-Laws of the
Company or any Subsidiary. Notwithstanding anything else herein, this
indemnification will not apply to the actions or determinations made by an
individual with regard to Awards granted to him or her under the
Plan.
3.9.
Shareholders
Agreement. Notwithstanding
anything herein to the contrary, the Plan and the operation and administration
of the Plan (including any action taken by the Committee) shall be subject
to
the terms and conditions set forth in the Shareholders Agreement to the greatest
extent permissible under applicable law.
ARTICLE
IV
SHARE
AND
OTHER LIMITATIONS
4.1.
Shares.
The
aggregate number of shares of Common Stock that may be issued or used for
reference purposes under the Plan or with respect to which Awards may
be
granted under the Plan shall not exceed 2,463,422 shares (subject to
any increase or decrease pursuant to Section 4.2),
which
may
be either authorized and unissued Common
Stock or Common Stock held in or acquired for the treasury of the Company or
both. To
the
extent that a distribution pursuant to an Award is made in cash, the share
reserve shall be reduced by the number of shares of Common Stock bearing a
value
equal to the amount of the cash distribution as of the time that such amount
was
determined.
4.2.
Changes.
(a)
The
existence of the Plan and the Awards granted hereunder shall not
affect in any way the right or power of the Board or the shareholders of the
Company
to make or authorize (i) any adjustment,
recapitalization, reorganization or
other
change in the Company's capital structure or its business, (ii) any merger
or
consolidation of the Company or any Subsidiary, (iii) any issuance
of bonds, debentures,
preferred or prior preference stock ahead of or affecting the Common
Stock,
(iv) the dissolution or liquidation of the Company or any Subsidiary,
(v)
any
sale
or transfer of all or part of the assets or business of the Company or any
Subsidiary
or (vi) any other corporate act or proceeding.
(b)
Subject to the provisions of Section 4.2(d),
in
the
event of any such change
in
the capital structure or business of the Company by reason of any stock
split,
reverse stock split, stock dividend, combination or reclassification of shares,
recapitalization,
or other change in capital structure of the Company,
merger, consolidation,
spin-off, reorganization, partial or complete liquidation, issuance of
rights
or
warrants to purchase any Common Stock or securities convertible into
Common
Stock, any sale or transfer of all or part of the Company's assets or
business,
or any other corporate transaction or event having an effect similar to
any
of
the foregoing and effected without receipt of consideration by the Company,
then
the aggregate number and kind of shares that thereafter may be issued under
the
Plan, the number and kind of shares or other property (including cash) to be
issued upon exercise of an outstanding Stock Option or under other Awards
(“Exercisable Awards”) granted under the Plan and the
purchase or exercise
price thereof shall be appropriately adjusted consistent with such change
in
such
manner as the Committee may deem equitable to prevent substantial dilution
or enlargement of the rights granted to, or available for,
Participants under the Plan, and any such adjustment determined by the Committee
in good faith shall be final, binding and conclusive on the Company and all
Participants and
their
respective heirs, executors, administrators, successors and assigns.
In
connection
with any event described in this sub-section, the
Committee may provide,
in its sole discretion, for the cancellation of any outstanding Awards and
payment in cash or other property in exchange therefor. Except
as
provided in this
Section 4.2, a Participant shall have no rights by reason of any issuance by
the
Company of any class of securities convertible into stock of any class,
any
subdivision
or consolidation of shares of stock of any class, the payment of any
stock
dividend, any other increase or decrease in the number of shares of stock of
any
class, any sale or transfer of all or part of the Company's assets or business
or any
other
change affecting the Company's capital structure or business.
(c)
Fractional shares of Common Stock resulting from any adjustment in
Exercisable Awards pursuant to Section 4.2(a) or (b) shall be aggregated until,
and
eliminated at the time of such adjustment by rounding-down for fractions less
than
one-half and rounding-up for fractions equal to or greater than one-half;
provided,
however, that any such fractional shares of Common Stock resulting from any
adjustment to an Incentive Stock Option shall be eliminated by rounding down.
No
fractional shares of Common Stock shall be issued under the Plan. Notice of
any
adjustment shall be given by the Committee to each Participant whose
Award has been adjusted and such adjustment (whether or not such notice
is
given)
shall be effective and binding for all purposes of the Plan.
(d)
In
the
event of a merger or consolidation in which the Company is not
the
surviving entity or in the event of any transaction that results in
the
acquisition
of all or substantially all of the Company's outstanding
Common Stock
(or
the acquisition of more than fifty percent (50%)ofthe
voting interests of
all
outstanding classes of stock of the Company) by a single person or entity or
by
a
group of persons and/or entities acting in concert, or in the event of the
sale
or
transfer of all or substantially all of the Company's assets (all of the
foregoing being
referred to as “Acquisition Events”), then the Committee may, in its
sole
discretion,
terminate all outstanding Exercisable Awards, effective as of the date of the
Acquisition Event, by delivering notice of termination to each Participant
at
least
20
days prior to the date of consummation of the Acquisition Event, in
which
case during the period from the date on which such notice of termination is
delivered to the consummation of the Acquisition Event, each such Participant
shall have the right to exercise his or her Exercisable Awards that
are
then outstanding
to the extent vested as of the date on which such notice of termination
is
delivered (or, at the discretion of the Committee, without regard to, or subject
to,
any
limitations on
exercisability otherwise
contained in
the
Award agreements),
but any such exercise shall be contingent upon and subject to the occurrence
of the Acquisition Event, and, provided that, if the Acquisition Event
does
not
take place within a specified period after giving such notice for
any
reason
whatsoever, the notice and exercise pursuant thereto shall be null and void.
If
the Acquisition Event does take place after giving of such notice, any
Exercisable Award not exercised prior to the date of the consummation of such
Acquisition Event shall be forfeited simultaneous with the consummation of
the
Acquisition
Event.
If
an
Acquisition Event occurs but the Committee
does not terminate the outstanding
Exercisable Awards pursuant to this Section 4.2(d),
then
the
provisions of Section
4.2(b) shall apply.
4.3.
Minimum
Purchase Price. Notwithstanding
any provision of the Plan to the contrary, if authorized but previously unissued
shares of Common Stock are issued under the Plan, such shares shall not be
issued for a consideration that is less than as permitted
under applicable law.
4.4.
Assumption
of Awards. Stock
options that were granted by the Company prior to the Effective Date shall
for
all purposes be treated as if granted under the Plan and shall be governed
by
the terms of the Plan as of the Effective Date.
ARTICLE
V
ELIGIBILITY
5.1. General
Eligibility.
All
Eligible Employees, Non-Employee Directors and Consultants
and prospective Eligible Employees, Consultants and Non-Employee Directors
are
eligible to be granted Non-Qualified Stock Options, Restricted Stock and Other
Stock-Based Awards. Eligibility for the grant of Awards and actual participation
in
the
Plan shall be determined by the Committee in its sole discretion.
5.2. Incentive
Stock
Options.
All
Eligible Employees of the Company and its Subsidiaries
are eligible to be granted Incentive Stock Options under the Plan. Eligibility
for
the grant of an Incentive Stock Option and actual participation in the Plan
shall be determined by the Committee in its sole discretion.
5.3.
General
Requirement. The
granting, vesting and exercise of Awards
granted
to
a
prospective Eligible Employee Consultant
or Non-Employee Director
are conditioned
upon such individual actually becoming an Eligible Employee, Consultant or
Non-Employee Director, provided that no Award may be granted to a prospective
Eligible
Employee, Consultant or Non-Employee Director unless the Company determines
that the Award will comply with applicable laws, including the securities laws
of
all
relevant jurisdictions.
ARTICLE
VI
STOCK
OPTIONS
6.1.
Stock
Options. Each
Stock Option granted hereunder shall be one of two types:
(a) an Incentive Stock Option;
or (b)
a Non-Qualified Stock
Option.
6.2.
Grants. Subject
to the provisions of Article V, the Committee shall have the
authority
to grant to any Eligible
Employee one or more Incentive Stock
Options, Non-Qualified Stock Options or both types of Stock Options.
To
the
extent that any Stock
Option does not qualify
as an Incentive
Stock Option (whether because of its provisions or the time or manner of its
exercise or otherwise), such Stock Option or the portion thereof that does
not
qualify, shall constitute a separate Non-Qualified Stock Option.
The Committee shall have the authority to grant any Consultant or
Non-Employee
Director one or more Non-Qualified Stock Options.
6.3.
Terms
of Stock Options.
Stock
Options shall be subject to the following terms and conditions, and shall be in
such form and contain such additional terms and conditions, not inconsistent
with the terms of the Plan (including Article XVII), as the Committee
shall deem desirable:
(a) Exercise
Price The
exercise price
per
share
of Common Stock subject to a Stock Option
shall
be
determined
by the Committee at the time of grant; provided
that the
per
share exercise price of a Stock
Option
shall not be less than
100%
of the Fair Market Value of the share of Common Stock at the time of
grant;
and provided, further, that if an Incentive Stock Option is granted to a Ten
Percent
Stockholder, the exercise price per share shall
be
no
less than 110% of the Fair
Market Value of the Common Stock.
(b)
Stock
Option Term. The
term
of each Stock Option
shall
be
fixed
by
the
Committee; provided, however, that no Stock Option shall be exercisable
more
than
10 years after the date such Stock Option is granted; and
further provided
that the term of an Incentive Stock Option granted to a Ten Percent Stockholder
shall not exceed five years.
(c)
Exercisability.
Stock
Options shall be exercisable at such time or times
and
subject to such terms and conditions as shall be determined by the Committee
at the time of grant. If the Committee provides, in its discretion, that
any
Stock
Option is exercisable subject to certain limitations (including, without
limitation,
that such Stock Option is exercisable only in installments or
within
certain
time periods or upon the attainment of certain financial results or
other
criteria),
the Committee may waive such limitations on the exercisability at any
time
at
or after grant in whole or in part (including, without limitation, waiver of
the
installment exercise provisions or acceleration of the time at which such Stock
Option
may be exercised), based on such factors, if any, as the Committee shall
determine,
in its sole discretion.
(d)
Method
of Exercise. Subject
to whatever installment exercise and waiting
period provisions apply under sub-section (c) above, to the extent vested,
a
Stock Option may be exercised in whole or in part at any time and from time
to
time
during the Stock Option term by giving written notice of exercise to
the
Committee
specifying the number of shares to be acquired. Such
notice shall be accompanied
by payment in full of the purchase price as follows: (i) in cash or by
check,
bank draft or money order payable to the order of the Company; (ii) to the
extent
permitted by law, if the Common Stock is traded on a national securities
exchange,
The Nasdaq Stock Market, Inc. or quoted on a national quotation
system
sponsored by the National Association of Securities Dealers, through
a
procedure
whereby the Participant delivers irrevocable instructions to
a
broker reasonably
acceptable to the Committee to deliver promptly to the Company an amount equal
to the purchase price, to the extent authorized by the Committee; or (iii)
on
such other terms and conditions as may be acceptable to the Committee
(including, without limitation, the relinquishment of Stock Options or by
payment in
full
or in part in the form of Common Stock owned by the Participant (and for
which
the
Participant has good title free and clear of any liens and encumbrances)
based
on
the Fair Market Value of the Common Stock on the payment date). No
shares
of
Common Stock shall be issued until payment therefor, as
provided herein,
has been made or provided for.
(e)
Incentive
Stock
Option
Limitations.
To the
extent that the aggregate
Fair Market Value (determined as of the time of grant) of the Common
Stock
with respect to which Incentive Stock Options are exercisable for the first
time
by an Eligible Employee during any calendar year under the Plan and/or any
other
stock option plan of the Company, any Subsidiary or any Parent exceeds $100,000,
such Options shall be treated as Non-Qualified Stock Options. In
addition,
if an Eligible Employee does not remain employed by the Company, any
Subsidiary
or any Parent at all times from the time an Incentive Stock Option is
granted
until three months prior to the date of exercise thereof (or such other
period
as
required by applicable law), such Stock Option shall be treated as
a
Non-Qualified
Stock Option. Should
any provision of the Plan not be necessary in
order
for the Stock Options to qualify as Incentive Stock Options, or should
any
additional provisions be required, the Committee
may amend the Plan accordingly,
without the necessity of obtaining the approval of the shareholders of
the
Company.
(f)
Form,
Modification,
Extension
and
Renewal of Stock Options. Subject
to the terms and conditions and within the limitations
of the Plan, Stock Options
shall be evidenced by such form of agreement or
grant
as is approved by the
Committee, and the Committee may (i) modify, extend
or
renew outstanding Stock
Options (provided that the rights of a Participant are
not
reduced without his
or
her consent), and (ii) accept the surrender of outstanding Stock
Options (up to
the
extent not theretofore exercised) and authorize the
granting of new Stock Options
in substitution therefor (to the extent not theretofore exercised).
(g)
Early
Exercise. The
Committee may provide that a Stock Option include
a
provision whereby the Participant may
elect
at any time before the Participant’s
Termination to exercise the Stock Option as
to any
part or all of the shares
of
Common Stock subject to the Stock Option prior
to
the full vesting of the
Stock
Option and such shares shall
be
subject to certain restrictions as
determined
by the Committee and be treated as Restricted Stock.
Any unvested shares
of
Common Stock so purchased may be subject to
a
repurchase option in favor of the Company or to any other restriction the
Committee
determines to be appropriate.
(h)
Other
Terms and Conditions. Stock
Options may contain such other
provisions, which shall not be inconsistent with any
of
the terms of the Plan, as the Committee shall deem appropriate.
ARTICLE
VII
RESTRICTED
STOCK
7.1.
Awards
of Restricted Stock.
The
Committee shall determine the eligible Participants
to whom, and the time or times at which, grants
of
Restricted Stock will be made,
the
number of shares to be awarded, the purchase price (if
any)
to be paid by the Participant
(subject to Section 7.2),
the
time
or times at which such Awards may be subject
to forfeiture (if any), the vesting schedule (if any) and rights to acceleration
thereof,
and all other terms and conditions of the Awards. The
Committee may condition the
grant
or vesting of Restricted Stock upon the attainment of
specified performance targets
or such other factors as the Committee may determine, in
its
sole discretion. Unless
otherwise determined by the Committee, the Participant shall
not
be permitted to transfer
shares of Restricted Stock awarded under the Plan during a period set by the
Committee
(if any) (the "Restriction Period") commencing with
the
date of such Award, as
set
forth in the applicable Award agreement.
7.2.
Awards
and Certificates. A
Participant selected to receive Restricted Stock
shall not have any rights with respect to such Award, unless
and until such Participant
has delivered to the Company a fully executed copy
of
the Award agreement evidencing
the Award and has otherwise complied with the applicable
terms and conditions
of such Award. Further, such Award shall be subject
to the following conditions
and the conditions specified in Article XVII:
(a)
Purchase
Price. The
purchase price of Restricted Stock shall be determined by the Committee,
but
shall not be less than as permitted
under applicable
law.
(b) Acceptance.
Awards
of
Restricted Stock must be accepted within a
period
of 60 days (or such shorter period as the Committee may specify at grant)
after
the
grant date, by executing an Award agreement and by paying the purchase price
(if
any) the Committee has designated thereunder.
(c) Legend.
Each
Participant
receiving Restricted Stock shall be issued
a
stock certificate in respect of such shares of Restricted Stock, unless the
Committee
elects to use another system, such as book entries by the transfer
agent,
as
evidencing ownership of Restricted Stock. Such
certificate shall be registered
in the name of such Participant, and shall bear an appropriate legend referring
to the terms, conditions, and restrictions applicable to
such
Award, substantially
in the following form:
“The
anticipation, alienation, attachment, sale,
transfer, assignment, pledge, encumbrance or charge of the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of The WAAT Corp. (the “Company”)
2006
Stock Incentive Plan (the “Plan”), and an Award agreement entered
into
between
the
registered
owner
and
the Company
dated __________.
Copies
of
such Plan and Award agreement are on file at the principal
office of the Company.”
(d) Custody.
The
Committee may require that any stock certificates evidencing such shares be
held
in custody by the Company until the restrictions thereon shall have lapsed,
and
that, as a condition to the grant of Restricted Stock, the Participant shall
have delivered a duly signed stock power, endorsed in blank, relating to the
Common Stock covered by such Award.
(e) Rights
as Shareholder. Except
as
provided in this sub-section and sub-section
(d) above and as otherwise determined
by the Committee, the Participant
shall have, with respect to the shares of Restricted Stock, all
of
the rights
of
a holder of shares of Common Stock of the Company including, without
limitation,
the right to receive any dividends, the right to vote such shares and,
subject
to and conditioned upon the full vesting of shares of Restricted Stock, the
right to tender such shares. Notwithstanding the foregoing, the payment of
dividends shall be deferred until, and conditioned upon, the expiration of
the
applicable Restriction Period, unless the Committee,
in its sole discretion, specifies
otherwise at the time of the grant of the Award.
(f) Lapse
of Restrictions. If
and
when the Restriction Period expires without
a
prior forfeiture of the Restricted Stock subject to such
Restriction Period,
the certificates for such shares shall be delivered to the Participant.
All
legends
shall be removed from said certificates at the time of delivery to
the
Participant
except as otherwise required by applicable law or the Shareholders
Agreement. Notwithstanding
the foregoing, actual certificates shall not be issued to the extent that book
entry recordkeeping is used.
ARTICLE
VIII
OTHER
STOCK-BASED AWARDS
8.1.
Awards
of Other Stock-Based Awards.
The
Committee shall have authority
to determine the persons to whom and the time or times at which Other
Stock-Based Awards shall be made, the number of shares of Common Stock or dollar
amount to be
awarded pursuant to such Awards, and all other conditions of the Awards. The
Committee
may also provide for the grant of Common Stock or payment of the dollar amount
under such Awards upon the completion of a specified performance period or
such
other criteria as determined by the Committee, in its sole
discretion.
8.2.
Terms
and Conditions.
Other
Stock-Based Awards made pursuant to this Article VIII shall be subject to the
terms of the applicable Award agreement and following terms and conditions
and
the conditions specified in Article XVII:
(a)
Dividends.
Unless
otherwise determined by the Committee at the time
of
award, subject to the provisions of the Award agreement or grant letter and
the
Plan, the recipient of an Award under this Article VIII shall be entitled to
receive,
currently or on a deferred basis, dividends or dividend equivalents with
respect
to the number of shares of Common Stock covered by the Award, as
determined
at the time of the Award by the Committee, in its sole discretion.
(b)
Vesting.
Any
Award
under this Article VIII and any Common Stock
covered by any such Award shall vest or be forfeited to the extent
so
provided
in the Award agreement, as determined by the Committee, in its sole
discretion.
(c)
Waiver
of Limitation. The
Committee may, in its sole discretion, waive
in
whole or in part any or all of the limitations imposed hereunder (if any)
with
respect to all or any portion of an Award under this Article VIII.
(d)
Price.
Common
Stock or Other Stock-Based Awards issued on a bonus basis under this Article
VIII may be issued for no cash consideration; Common
Stock or Other Stock-Based Awards purchased pursuant to a purchase right
awarded under this Article VIII shall be priced as
determined by the Committee.
Subject
to Section 4.3, the purchase price of shares of Common Stock
or
Other Stock-Based Awards may be zero to the extent permitted by
applicable
law, and, to the extent not so permitted, such purchase price may not
be
less
than par value. The purchase of shares of Common Stock or Other
Stock-Based
Awards may be made on either an after-tax or pre-tax basis, as determined by
the
Committee; provided, however, that if the purchase is made on a pre-tax
basis,
such purchase shall be made pursuant to a deferred compensation program
established
by the Committee, which will be deemed a part of the Plan.
(e) Payment.
The form
of payment for the Other Stock-Based Awards shall
be
specified in the Award agreement.
(f)
ARTICLE
IX
NON-TRANSFERABILITY
AND TERMINATION OF
EMPLOYMENT/CONSULTANCY/DIRECTORSHIP
9.1.
Non-Transferability.
(a)
Except
as
otherwise specifically provided herein, no Stock Option shall
be
Transferable by the Participant otherwise than by will or by the laws of
descent
and distribution. All
Stock
Options shall be exercisable, during the Participant’s
lifetime, only by the Participant. Shares
of
Restricted Stock or Other Stock-Based Awards may not be Transferred prior to
the
date on which shares are issued,
or if later, the date on which any applicable restriction, performance
or
deferral
period lapses. Any
attempt to Transfer any such Award or share of Common Stock not in accordance
with the provisions of Section 12.2
shall be void
and
immediately cancelled, and no Award shall in any manner be liable for
or
subject to the debts, contracts, liabilities, engagements or torts of any person
who
shall
be entitled to such Award, nor shall it be subject to attachment or legal
process for or against such person.
(b)
Notwithstanding the foregoing, the Committee may determine, in its
sole
discretion, at the time of grant or thereafter that a Non-Qualified Stock
Option
that is otherwise not Transferable pursuant to this Section 9.1 is
Transferable
to a Family Member in whole or in part and in such circumstances, and
under
such conditions, as specified by the Committee. A
Non-Qualified Stock
Option that is Transferred to a Family Member pursuant to the preceding sentence
(i) may not be subsequently Transferred otherwise than by will or by the
laws
of
descent and distribution and (ii) remains subject to the terms of the Plan
and
the
Stock Option agreement. Any shares of Common Stock acquired upon the
exercise of a Stock Option by a permissible transferee of a Stock Option or
a
permissible
transferee pursuant to a Transfer after the exercise of the Stock Option
shall be subject to the terms of the Plan and the Stock Option agreement,
including,
without limitation, the provisions of Article XII hereof.
9.2. Termination.
The
following rules apply with regard to the Termination of a
Participant.
(a) Rules
Applicable to Stock Options. Unless
otherwise determined by
the
Committee at grant or, if no rights of the Participant are reduced,
thereafter:
(i) Termination
by Reason of Death, Disability or Retirement. If
a
Participant’s
Termination is by reason of
death,
Disability or Retirement,
all Stock Options that are held by such Participant that are vested
and exercisable at the time of the Participant’s
Termination may be exercised by the Participant (or, in the case of
death,
by the legal representative
of the Participant’s
estate) at any time within a period of one
year
from the date of such Termination, but in no event beyond the expiration of
the
stated term of such Stock Options; provided, however, that
in
the case of Retirement, if the Participant dies within such exercise
period,
all unexercised Stock Options held by such
Participant shall thereafter
be exercisable, to the extent to that they were exercisable at the time of
death, for a period of one year from the date of such death, but in no
event
beyond the expiration of the stated term of such Stock
Options.
(ii) Involuntary
Termination Without Cause. If
a
Participant’s
Termination
is by involuntary termination without
Cause, all Stock Options
that are held by such Participant that are vested and exercisable at
the
time
of the Participant’s
Termination may be
exercised by the Participant at any time within a period of 90 days from the
date of such Termination, but in no event beyond the expiration of the stated
term of such
Stock Options.
(iii) Voluntary
Termination. If
a
Participant’s
Termination is voluntary
(other than a voluntary termination described
in Section 9.2(a)(iv)(2)
below),
all Stock Options that are held by such Participant that
are
vested and exercisable at the time of the Participant’s
Termination may be exercised by the Participant at any time within a period
of
30 days from
the
date of such Termination, but in no event beyond the expiration of
the
stated terms of such Stock Options.
(iv) Termination
for Cause. If
a Participant’s
Termination: (1) is
for
Cause or (2) except with respect to Participants whose awards are subject to
Section 260.140.41 of Title 10
of the
California Code of Regulations,
is a voluntary Termination (as provided in sub-section (iii) above)
after the occurrence of an event that would be grounds for
a
Termination
for Cause, all Stock Options, whether vested or not vested, that
are
held by such Participant shall thereupon terminate and expire as of the
date
of such Termination.
(v) Unvested
Stock Options. Stock
Options that are not vested as
of the
date of a Participant’s
Termination for any reason shall terminate and
expire as of the date of such Termination.
(b)
Rules
Applicable to
Restricted Stock and
Other
Stock-Based Awards.
Unless
otherwise determined by the Committee at grant or, if no rights of
the
Participant are reduced, thereafter, upon a Participant’s
Termination for any reason:
(i) during the relevant Restriction Period, all Restricted Stock still subject
to
restriction shall be forfeited; and (ii) any unvested Other Stock-Based Awards
shall
be
forfeited.
ARTICLE
X
10.1.
Benefits. Except
as
otherwise provided by the Committee in an Award agreement,
in the event of a Change in Control of
the
Company after the Effective Date, the
Committee may, but shall not be obligated to:
(a) accelerate,
vest or cause the restrictions to lapse with respect to, all or
any
portion of an Award; or
(b)
cancel
Awards for fair value (as determined in good faith by the Committee)
which, in the case of Options, may equal the excess, if any, of the value
of
the consideration to be paid in the Change in Control transaction to
holders
of the same number of shares of Common Stock subject to such Options
(or,
if
no consideration is paid in any such transaction, the Fair Market Value of
the
shares of Common Stock subject to such Options) over the aggregate exercise
price
of
such Options; or
(c)
provide
for the issuance of substitute Awards that will substantially preserve
the otherwise applicable terms of any affected
Awards previously granted
hereunder as determined by the Committee in its sole discretion.
10.2.
Change
in Control Defined. Unless
otherwise determined by the Committee
in the applicable Award agreement, a “Change in Control” shall be the
occurrence
of any of the following after the Effective Date: (i) any acquisition, by merger
or
otherwise, of equity securities of the Company, from shareholders of the
Company,
representing
at least 75% of the outstanding voting securities of the Company, by
any
unaffiliated
third party; or (ii) any sale of all or substantially all of
the
assets of the Company
to any unaffiliated third party.
ARTICLE
XI
TERMINATION
OR AMENDMENT OF PLAN
Notwithstanding
any other provision of the Plan, the Board or the Committee may at any time,
and
from
time to time,
amend, in whole or in part, any or all of the provisions of
the
Plan (including any amendment deemed necessary to ensure that the Company
may
comply with any regulatory requirement referred to in Article XIV or Section
409A of
the
Code as described below), or suspend or terminate it entirely, retroactively
or otherwise;
provided, however, that if the Committee, in its sole discretion, determines
that
the
rights of a Participant with respect to Awards granted prior to such amendment,
suspension
or termination, may be adversely impaired, the consent of such Participant
shall
be
required; and provided further, without the approval of the shareholders
of
the
Company
entitled to vote in accordance with applicable law, no amendment may be made
that
would:
(a) increase
the aggregate number of shares of Common Stock that may
be
issued under the Plan (other than due to an adjustment under Section
4.2);
(b) change
the classification of individuals eligible to receive Awards under
the
Plan;
(c) decrease
the minimum exercise price of any Stock Option;
(d) extend
the maximum Stock Option period under Section 6.3; or
(e)
require shareholder approval in order for the Plan to continue to comply
with Section 422 of the Code to the extent applicable to Incentive Stock
Options
or the rules of any exchange or system on which the
Company's securities
are listed or traded at the request of the Company.
The
Committee may amend the terms of any Award
theretofore granted, prospectively
or retroactively, but,
subject to Article IV above or as otherwise specifically
provided herein, no such amendment or other action by the Committee shall
adversely
impair the rights of any holder without the holder's consent. Notwithstanding
anything
herein to the contrary, the Board or the Committee may amend the Plan or any
Award
granted hereunder at any time without a Participant’s
consent to comply
with Section
409A of the Code or any other applicable law.
ARTICLE
XII
COMPANY
CALL RIGHTS; RIGHTS OF FIRST REFUSAL
12.1.
Company
Call Rights.
(a)
In
the
event of a Participant’s
Termination for
Cause
or a Participant’s
voluntary Termination within 90 days after the occurrence
of an event that would be grounds for a Termination for Cause, the Company
may
at any
time
repurchase (or may cause its designee to repurchase) from the Participant (or
his or her transferee) any shares of Common Stock previously acquired
by the Participant through the exercise of a Stock Option or pursuant to
Restricted
Stock or Other Stock-Based Awards granted under the
Plan
at a repurchase
price equal to the lesser of (A) the original purchase price or exercise
price
(as
applicable), if any or
(B)
the Fair Market Value of a share of Common Stock on the date of Termination
or
the date of repurchase, as selected by the Committee.
(b)
In
the
event of a Termination for any reason other than for Cause (including
Termination
due
to
Retirement, death, Disability,
involuntary
termination
without Cause or resignation), the Company may at any time within the
later
of one year after (i) a Participant incurs a Termination or (ii) the date a
Participant
acquires shares of Common Stock upon the exercise of a Stock Option following
his or her Termination for any reason other than for
Cause: (A) repurchase
(or may cause its designee to purchase) from the Participant
the outstanding
vested portion of the Option based on the difference between the
exercise
price of a share of Common Stock relating to such Stock Option and the
Fair
Market Value of a share of Common Stock on the date of repurchase and (B) repurchase
from the Participant any shares of Common Stock previously acquired by the
Participant through the exercise of a Stock Option at a repurchase price equal
to the Fair Market Value on the date of repurchase.
(c)
In
the
event of a Termination for any reason other than for Cause (including
Termination
due
to
Retirement, death,
Disability, involuntary
termination
without Cause or resignation), the Company may at any time within one
year
after a Participant incurs a Termination other than for Cause repurchase
(or
may
cause its designee to purchase) from the Participant any
shares of Common Stock previously acquired by the Participant pursuant
to
Restricted Stock
or
Other Stock-Based Awards under the Plan at a repurchase price equal to
Fair
Market Value on the date of repurchase.
(d)
(i)
If
the Company elects to exercise call rights under this Section 12.1,
it
shall do so by delivering to the Participant a notice of such election,
specifying the number of shares to be purchased and such closing date and time
that, solely for purposes of sub-sections (b) and (c),
is
within
the applicable one year
period. Such closing shall take place at the Company's principal executive
offices.
(ii)
At
such
closing, the Company will pay the Participant the repurchase
price as specified in
this
Section 12.1 in
cash,
or by cancellation
of indebtedness of the Participant to the Company.
12.2.
Transfer
Limit. (a)
No
Participant shall, directly or indirectly, prior to the Registration Date or
such other date determined by the Committee, Transfer any shares of Common
Stock
acquired through the exercise of a Stock Option or pursuant to Restricted
Stock
or
Other Stock-Based Award under the Plan prior to the Participant’s
Termination and
expiration of the time period provided in Sections 11.1(b) and (c) hereof (the
“Transfer
Restriction Period”). Notwithstanding the foregoing, the Participant shall have
the
right
to Transfer such shares of Common Stock to a “Permissible Transferee" who
takes
the
shares subject to the terms of the Plan and applicable Award agreement.
Permissible
Transferees shall mean Family Members.
(b)
After
the
Transfer Restriction Period, no Participant shall Transfer any
Common Stock acquired through the exercise of a Stock Option or pursuant
to
Restricted Stock or Other Stock-Based Award to any Person other
than a Permissible
Transferee unless in each such instance the Participant (or his or her
estate
or
legal representative) shall have first offered
to the Company the Common
Stock proposed to be Transferred pursuant to a bona fide offer to a third
party.
(c)
Notice
of Proposed Transfer.
Prior
to
any proposed Transfer of the Common Stock acquired through the exercise of
a
Stock Option or pursuant to Restricted Stock or Other Stock-Based Award, the
Participant shall give a written notice
(the “Transfer Notice”) to the Company describing fully the
proposed Transfer,
including the number of shares of Common Stock, the name and address
of
the
proposed Transferee (the “Proposed Transferee”) and, if the Transfer
is
voluntary,
the proposed Transfer price, and containing such information necessary to show
that the Participant has obtained a bona fide binding offer to Transfer the
Common Stock for cash from a third party. The Participant shall provide a
separate
Transfer Notice with regard to each Proposed Transferee. The
Transfer Notice
shall be signed by both the Participant and the Proposed Transferee and must
constitute a binding and unconditional commitment of the Participant and the
Proposed Transferee for the Transfer of the Common Stock to the Proposed
Transferee
for cash subject only to the right of first refusal specified
herein.
(d)
Bona
Fide
Transfer.
If
the
Company determines that the information
provided by the Participant in the Transfer Notice is insufficient to establish
the bona fade nature of a proposed voluntary Transfer, the
Company shall
give the Participant written notice of the Participant’s
failure to comply with the
procedure described herein, and the Participant shall have no right to Transfer
the
Common Stock without first complying with this procedure. The
Participant shall
not
be permitted to Transfer the Common Stock if the proposed Transfer is
not
bona
fide.
(e)
Exercise
of Right of First Refusal. If
the
Company determines the proposed
Transfer to be a bona fide Transfer, the Company shall have the right to
repurchase all or any part of the shares of Common Stock
at
the proposed Transfer
price per share, by delivering to the Participant (or his or her estate
or
legal
representative) written notice of such exercise within 30 days after the date
the
Company has determined that the proposed Transfer is bona
fide. The
Company's
exercise or failure to exercise the right of first refusal with respect to
any
proposed Transfer described in a Transfer Notice shall not affect the
Company's
right to exercise the right of first refusal with respect to any proposed
Transfer
described in any other Transfer Notice, whether
or not such other Transfer
Notice is issued by the Participant or issued by a person other than the
Participant
with respect to a proposed Transfer to the same Proposed Transferee.
If
the
Company exercises the right of first refusal, the
Company and the Participant
shall thereupon consummate the sale of the Common Stock to the
Company
within five days after the date the Company has decided to exercise the right
of
first refusal described herein (unless a longer period is offered
by the Proposed
Transferee). For
purposes of the foregoing, cancellation of
any
indebtedness
of the Participant to the Company shall be treated as payment to the Participant
in cash to the extent of the unpaid principal and any accrued interest
canceled.
(f)
Failure to Exercise Right of First Refusal. If the Company
fails to exercise the right of first refusal with respect to any share of Common
Stock within the period specified in sub-section (e) above, and the Company
has
not given notice to the Participant that the proposed Transfer is not a bona
fide Transfer pursuant to sub-section (d) above, the Participant may conclude
a
Transfer to the Proposed Transferee of the Common Stock on the terms and
conditions described in the Transfer Notice, provided such Transfer occurs
not
later than five days after the date the Company has determined not to exercise
the right of first refusal described herein. The Company shall have the right
to
demand further assurances from the Participant and the Proposed Transferee
(in a
form satisfactory to the Company) that the Transfer of the Common Stock was
actually carried out on the terms and conditions described in the Transfer
Notice. No Common Stock shall be transferred on the books of the Company until
the Company has received such assurances, if so demanded, and has approved
the
proposed Transfer as bona fide. Any proposed Transfer on terms and conditions
different from those described in the Transfer Notice, as well as any subsequent
proposed Transfer by the Participant (or his or her estate or legal
representative), shall again be subject to the right of first refusal and shall
require compliance by the Participant with the procedure described in this
Section 12.2.
(g)
Assignment of Right of First Refusal. The Company
shall have the right to assign the right of first refusal at any time, whether
or not there has been an attempted Transfer, to one or more persons as may
be
selected by the Company, from time to time.
(h) Application
to Transferees. This
Section 12.2 shall apply to any Permissible
Transferee in the same manner as it applies to a Participant.
12.3.
Alternative
Call Rights, Rights of First Refusal and Other Rights. The
Committee
may provide in the applicable Award agreement alternative (or no) call rights
and/or rights of first refusal and/or other rights at the time of grant (or,
thereafter, if no rights
of
the Participant are reduced) as it may decide in its sole discretion (including
as necessary
to comply with the requirements specified in Article XVII). Notwithstanding
anything
herein to the contrary, if a Participant executes the Shareholders Agreement
(or
similar agreement) that provides call rights and/or rights of first refusal
and/or drag-along and/or co-sale rights, the provisions in the Shareholders
Agreement (or similar agreement) shall control to the extent they are
inconsistent with or in addition to the provisions of this Article
XII.
12.4.
Effect
of Registration.
Notwithstanding
the foregoing, unless otherwise determined
by the Committee, the Company shall cease to have rights pursuant to this
Article
XII on and after the Registration Date.
ARTICLE
XIII
UNFUNDED
PLAN
The
Plan
is intended to constitute an “unfounded” plan for incentive and deferred
compensation.
With respect to any payments as to which a Participant has a fixed and
vested
interest but which are not yet made to a Participant by the Company,
nothing contained
herein shall give any such Participant any rights that are greater than those
of
a
general
unsecured creditor of the Company.
ARTICLE
XIV
GENERAL
PROVISIONS
14.1.
Legend.
The
Committee may require each person receiving shares pursuant
to an Award to represent to and agree with the Company in writing that the
Participant is acquiring the shares without a view to distribution thereof
and
such other securities
law related representations as the Committee shall request. In
addition to any legend
required by the Plan, the certificates and/or book entry accounts for such
shares may include any legend that the Committee deems appropriate to reflect
any restrictions on
Transfer.
All
certificates and book entry accounts for shares of Common Stock delivered
under
the
Plan shall be subject to such stop transfer orders and other restrictions
as
the
Committee
may deem advisable under the rules, regulations and other requirements
of
the
Securities and Exchange Commission, any stock exchange upon which the Common
Stock
is
then listed or any national automated quotation system upon whose system the
Common
Stock is then quoted, any applicable Federal or state securities law,
and
any applicable
corporate law, and the Committee may cause a legend or legends to be put on
any
such
certificates to make appropriate reference to such restrictions.
14.2.
Other
Plans.
Nothing
contained in the Plan shall prevent the Board from adopting other or additional
compensation arrangements, subject to shareholder approval if such approval
is
required; and such arrangements may be either generally applicable or
applicable
only in specific cases.
14.3.
No
Right to Employment/Consultancy/Directorship. Neither
the Plan nor the
grant
of any Award hereunder shall give any Participant or other employee,
Consultant
or Non-Employee Director any right with respect to continuance of employment,
consultancy or directorship by the Company or any Subsidiary, nor shall
there
be
a limitation in any way on the right of the Company or any Subsidiary by which
an
employee is employed or a Consultant or Non-Employee Director is retained to
terminate his or her employment, consultancy or directorship at any
time.
14.4.
Withholding
of Taxes.
The
Company shall have the right to deduct from any payment to be made to a
Participant, or to otherwise require, prior to the issuance or delivery of
any
shares of Common Stock or the payment of any cash hereunder, payment by the
Participant of, any Federal, state or local taxes required by law to be
withheld. Upon the vesting of Restricted Stock, or upon making an election
under
Section 83(b) of the Code, a Participant shall pay all required withholding
to
the Company.
Any
statutorily required withholding obligation with
regard to any Eligible Employee
may be satisfied, subject to the consent of the Committee, by
reducing the number
of
shares of Common Stock otherwise deliverable or by delivering shares
of
Common
Stock already owned. Any
fraction of a share of Common Stock required to satisfy
such tax obligations shall be disregarded and the amount due shall be paid
instead in
cash
by the Participant.
14.5.
Listing
and Other Conditions.
(a)
Unless otherwise determined by the Committee, as long as the Common
Stock is listed on a national securities exchange or system sponsored by a
national securities association, the issue of any shares
of
Common Stock pursuant
to an Award shall be conditioned upon such shares being listed on such
exchange
or system. The Company shall have no obligation to issue such shares
unless
and until such shares are so listed, and the right to exercise any Award with
respect to such shares shall be suspended until such listing has been
effected.
(b)
If at
any
time counsel to the Company shall be of the opinion that any
sale
or delivery of shares of Common Stock pursuant to an Award is or may
in
the
circumstances be unlawful or result in the imposition of excise taxes on the
Company under the statutes, rules or regulations of any applicable jurisdiction,
the
Company shall have no obligation to make such sale or delivery, or to make
any
application or to effect or to maintain any qualification or registration under
the
Securities Act or otherwise with respect to shares of Common Stock
or
Awards,
and the right to exercise any Award may be suspended until, in
the
opinion
of said counsel, such sale or delivery shall be lawful and will not result
in
the
imposition of excise taxes on the Company.
(c)
Upon
termination of any period
of
suspension under
this Section
14.5, an Award affected by such suspension that shall not
then
have expired
or terminated shall be reinstated as to all shares available before such
suspension
and as to shares that would otherwise have become available during the period
of
such suspension, but no such suspension shall extend the term of any
Award.
(d)
A
Participant shall be required to supply the Company with any certificates,
representations and information that
the
Company requests and otherwise
cooperate with the Company in obtaining any
listing, registration, qualification, exemption, consent or approval the Company
deems necessary or appropriate.
14.6.
Shareholders
Agreement and Other Requirements. Notwithstanding
anything herein to the contrary, as a condition to the receipt of shares of
Common Stock pursuant to an Award, to the extent required by the Committee,
the
Participant shall execute and deliver a shareholders agreement or such other
documentation that shall set forth certain restrictions on transferability
of
the shares of Common Stock acquired upon exercise or purchase, a right of first
refusal of the Company with respect to shares, and such
other terms or restrictions as the Board or Committee shall from time to time
establish.
Such shareholders agreement or other documentation shall apply to the Common
Stock acquired under the Plan and covered by such shareholders agreement or
other
documentation. The Company may require, as a condition of exercise, the
Participant
to become a party to any other existing shareholders agreement or other
agreement.
14.7.
Governing
Law.
The
Plan
shall be governed and construed in accordance with the laws of the State of
Delaware (regardless of the law that might otherwise govern under applicable
Delaware principles of conflict of laws).
14.8.
Construction. Wherever
any words are used in the Plan in the masculine gender they shall be construed
as though they were also used in the feminine gender in all cases where they
would so apply, and wherever any words are used herein in the singular form
they
shall be construed as though they were also used in the plural form in all
cases
where they would so apply.
14.9.
Other
Benefits.
No
Award
shall be deemed compensation for purposes of computing benefits under any
retirement plan of the Company or its Subsidiaries nor affect any benefits
under
any other benefit plan now or subsequently in effect under which the
availability or amount of benefits is related to the level of
compensation.
14.10.
Costs.
The
Company shall bear all expenses associated with administering the Plan,
including expenses of issuing Common Stock pursuant to any Award granted
hereunder.
14.11.
No
Right to Same Benefits.
The
provisions of Awards need not be the same with respect to each Participant,
and
Awards granted to individual Participants need not
be
the same.
14.12.
Death/Disability.
The
Committee may in its discretion require the transferee of a Participant to
supply it with written notice of the Participant’s
death or Disability and to supply it with a copy of the will (in the case of
the
Participant’s
death) or
such
other evidence as the Committee deems necessary to establish the validity of
the
transfer
of an Award. The Committee may also require that the agreement of the
transferee
to be bound by all of the terms and conditions of the Plan.
14
.13.
Section
16(b) of the Exchange Act. On
and
after the Registration Date, all elections and transactions under the Plan
by
persons subject to Section 16 of the Exchange Act involving shares of Common
Stock are intended to comply with any applicable exemptive condition under
Rule
16b-3. The
Committee may establish and adopt
written administrative guidelines, designed to facilitate compliance with
Section 16(b) of the Exchange Act, as it may deem necessary or proper for the
administration and operation of the Plan and the transaction of business
thereunder.
14.14.
Severability
of Provisions.
If
any
provision of the Plan shall be held invalid or unenforceable, such invalidity
or
unenforceability shall not affect any other provisions hereof, and the Plan
shall be construed and enforced as if such provisions had not
been
included; provided, however, that if the Company's call rights and rights of
first refusal
set forth in Article XII shall be held invalid or unenforceable, the Awards
granted under the Plan shall be cancelled and terminated.
14.15.
Headings
and Captions. The
headings and captions herein are provided for reference and convenience only,
shall not be considered part of the Plan, and shall not be employed in the
construction of the Plan.
14.16.
Securities
Act Compliance. Except
as
the Company or Committee shall otherwise determine, the Plan is intended to
comply with Section 4(2) or Rule 701 of
the
Securities
Act, and any provisions inconsistent with such Section or Rule of the Securities
Act shall be inoperative and shall not affect the validity of the
Plan.
14
.17.
Successors
and Assigns.
The
Plan
shall be binding on all successors and permitted
assigns of a Participant, including, without limitation, the estate of such
Participant
and the executor, administrator or trustee of such estate.
I4.18.
Payment
to Minors, Etc.
Any
benefit payable to or for the benefit of a minor, an incompetent person or
other
person incapable of receipt thereof shall be deemed
paid when paid to such person's guardian or to the party providing or reasonably
appearing
to provide for the care of such person, and such payment shall fully discharge
the Committee, the Board, the Company, its Subsidiaries and their employees,
agents and representatives with respect thereto.
14.19.
Agreement.
As
a
condition to the grant of an Award, if requested by the Company and the lead
underwriter of any public offering of the Common Stock (the “Lead
Underwriter”),
a Participant shall irrevocably agree not to sell, contract to sell,
grant
any
option to purchase, transfer the economic risk of ownership in, make any short
sale of, pledge or otherwise transfer or dispose of, any interest in any Common
Stock or any
securities convertible into, derivative of, or exchangeable or exercisable
for,
or any other
rights to purchase or acquire Common Stock (except Common Stock included in
such
public offering or acquired on the public market after such offering) during
such period of time following the effective date of a registration statement
of
the Company filed
under the Securities Act that the Lead Underwriter shall specify (the “Lock-up
Period”).
The Participant shall further agree to sign such documents as may be requested
by the Lead Underwriter to effect the foregoing and agree that the Company
may
impose stop-transfer
instructions with respect to Common Stock acquired pursuant to an Award until
the end of such Lock-up Period.
14.20.
No
Rights as Shareholder.
Except
as
provided in Article VII with respect to Restricted Stock or Article VIII with
respect to Other Stock-Based Awards, subject to the provisions of the Award
agreement, no Participant or Permitted Transferee shall have any rights as
a
shareholder of the Company with respect to any Award until such individual
becomes the holder of record of the shares of Common Stock underlying the
Award.
14.21.
Section
409A of the Code. The
Plan
is intended to comply with the applicable
requirements of Section 409A of the Code and shall be limited, construed and
interpreted
in accordance with such intent. To
the
extent that any Award is subject to Section 409A of the Code, it shall be paid
in a manner that will comply with Section 409A of the Code, including proposed,
temporary or final regulations or any other guidance issued by the Secretary
of
the Treasury and the Internal Revenue Service with respect thereto.
Notwithstanding anything herein to the contrary, any provision in the Plan
that
is inconsistent with Section 409A of the Code shall be deemed to be amended
to
comply
with Section 409A of the Code and to the extent such provision cannot
be
amended
to comply therewith, such provision shall be null and void.
14.22.
Consideration.
Awards
may be awarded in consideration for past services actually
rendered to the Company or a Subsidiary for its benefit; provided, however,
that
in
the
case of an Award to be made to a new Eligible Employee, Non-Employee Director,
or
Consultant who has not performed prior services for the Company, the Company
will require
payment of the par value of the Common Stock by cash or check in order to ensure
proper issuance of the shares in compliance with Delaware General Corporation
Law.
ARTICLE
XV
EFFECTIVE
DATE OF PLAN
The
Plan
shall become effective upon adoption by the Board or such later date as
provided
in the adopting resolution, subject
to the approval of the Plan by the shareholders
of the Company within 12 months before or after adoption of the Plan by the
Board in accordance with the laws of the State of Delaware.
ARTICLE
XVI
TERM
OF
PLAN
No
Award
shall be granted pursuant to the Plan on or after the tenth anniversary
of
the
earlier of the date the Plan is adopted or the date of shareholder approval,
but
Awards
granted prior to such tenth anniversary may, and the Committee's authority
to
administer
the terms of such Awards shall, extend beyond that date.
ARTICLE
XVII
PROVISIONS
APPLICABLE TO AWARDS
GRANTED
TO RESIDENTS OF CALIFORNIA
Notwithstanding
the foregoing, any Award granted under the Plan to a California resident shall
be subject to the provisions of this Article XVII (in addition to other
applicable provisions of the Plan that are not inconsistent with this Article
XVII) and, notwithstanding any provision of the Plan to the contrary, solely
to
the extent necessary to comply with Title 10 of the California Code of
Regulations at the time an Award is granted, the following shall apply to each
such Award:
17.1
At
no
time shall the total number of shares issuable upon exercise or vesting
of all outstanding Awards provided for under any stock bonus or similar plan
of
the Company exceed thirty percent (30%) of all outstanding shares of the
Company, including convertible preferred shares or convertible senior common
shares on an as-converted basis, based on the shares of the Company which are
outstanding at the time the calculation is made.
17.2.
Any
Stock
Option granted under the Plan shall be exercisable according to the terms hereof
at such times and under such conditions as determined by the Committee
and
set
forth in the Stock Option
agreement. Except in
the
case
of
Stock Options granted to
officers, directors and consultants, Stock Options shall become exercisable
at a
rate of no less than
20%
per year over five
years
from the date the Stock Options are granted.
17.3.
Any
repurchase
option in favor of the Company that is applicable to an Award to an Eligible
Employee who is not an officer, director or consultant shall be subject to
the
following:
(a)
The
repurchase option gives the Company the right to repurchase the
shares of Stock
upon Termination at not less than the Fair Market Value of the shares of Common
Stock to be purchased on the date of Termination and
(x)
the right to repurchase is exercised for cash or cancellation of purchase money
indebtedness for the shares of Common Stock within ninety (90) days of
Termination (or in the case of shares of Common Stock issued upon exercise
of
Awards after such date of Termination, within ninety (90) days after the date
of
the
exercise) or such longer period as may be agreed to by the Company and the
Participant
and (y) the right shall terminates on and after the Listing Date.
(b)
The
repurchase option gives the Company the right to repurchase the shares of Common
Stock upon Termination at the original purchase price, if and (x) the right
to
repurchase at the original purchase price lapses at the rate of at least
twenty percent (20%) of such shares of Common Stock per year over five (5)
years
from the date that the Award is granted (without respect to the date
the
Award
was
exercised or became exercisable) and (y) the right to repurchase is exercised
for cash or cancellation of purchase money indebtedness for the shares
of
Common
Stock within ninety (90) days of Termination (or in the case of shares
of
Common
Stock issued upon exercise of Options after such date of termination,
within
ninety (90) days after the date of the exercise) or such longer period
as
may
be
agreed to by the Company and the Participant in compliance with applicable
law.
17.4.
Prior
the
Date,
Listing a
Ten
Percent Stockholder shall not be granted a Non-Qualified
Stock Option
unless
the exercise price of such Option is at least (i) one hundred ten percent (110%)
of the Fair
Market Value of the Common Stock on the date of
grant
or (ii) such lower
percentage of the Fair Market Value of the Common Stock at the
date
of grant as is permitted by Section 260.140.41 of Title 10 of the California
Code of
Regulations at the time of the grant of the Option. Prior to the Listing Date,
a
Ten Percent
Stockholder shall not be granted an award of Restricted Stock unless the
purchase price of the Restricted Stock is at least (i) one hundred percent
(100%) of the Fair Market Value of the Common Stock at the date of
grant or (ii) such lower percentage of
the
Fair Market Value of the Common Stock at the date of grant as is permitted
by
Section
260.140.41 of Title 10 of the California Code of Regulations at the time of
the
grant
of
the Option.
17.5.
Prior
to
the Listing Date, the Fair Market Value of the Common Stock subject
to an Award shall be determined in a manner consistent with Section 260.140.50
of Title 10 of the California Code of Regulations.
17.6.
In
addition to the restrictions set forth in Section 9.1, an Award shall be
Transferable solely to the extent permitted by Section 260.140.41(d) of Title
10
of the California Code of Regulations.
17.7.
Prior
to
the Listing Date, to the extent required by Section 260.140.46 of Title 10
of
the California Code of Regulations, the Company shall deliver financial
statements to Participants at least annually. This sub-section shall not apply
to key employees
whose duties in connection with the Company assure them access to equivalent
information.
17.8.
Except as the Company or the Committee shall otherwise determine, the
Plan
is
intended to comply with Section 25.102(o) of the California Corporations Code,
and any provisions inconsistent with such Section of the California Corporations
Code shall be inoperative and shall not affect the validity of the
Plan