Exhibit 10.2

 

Janel Corporation

 

2017 Equity Incentive Plan

 

Adopted: May 12, 2017

Approved By Stockholders: ________, 201__

 

1.             Purposes.

 

(a)          Eligible Stock Award Recipients. The persons eligible to receive
Stock Awards are Employees, Directors and Consultants.

 

(b)          Available Stock Awards. The purpose of the Plan is to provide a
means by which eligible recipients of Stock Awards may be given an opportunity
to benefit from increases in value of the Common Stock through the granting of
the following Stock Awards: (i) Incentive Stock Options, (ii) Non-statutory
Stock Options, (iii) Restricted Stock Awards, and (iv) Stock Appreciation
Rights.

 

(c)          General Purpose. The Company, by means of the Plan, seeks to retain
the services of the group of persons eligible to receive Stock Awards, to secure
and retain the services of new members of this group and to provide incentives
for such persons to exert maximum efforts for the success of the Company and its
Affiliates.

 

2.             Definitions.

 

As used in this Plan, the following terms have the following meanings:

 

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

 

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

 

(c)          “Capitalization Adjustment” has the meaning ascribed to that term
in Section 11(a).

 

(d)          “Change in Control” means the occurrence, in a single transaction
or in a series of related transactions, of any one or more of the following
events:

 

(i)          any Exchange Act Person becomes the Owner, directly or indirectly,
of securities of the Company representing more than fifty percent (50%) of the
combined voting power of the Company’s then outstanding securities other than by
virtue of a merger, consolidation or similar transaction. Notwithstanding the
foregoing, a Change in Control shall not be deemed to occur (A) on account of
the acquisition of securities of the Company by any institutional investor, or
any affiliate thereof or any other Exchange Act Person that acquires the
Company’s securities in a transaction or series of related transactions that are
primarily a private financing transaction for the Company or (B) solely because
the level of Ownership held by any Exchange Act Person (the “Subject Person”)
exceeds the designated percentage threshold of the outstanding voting securities
as a result of a repurchase or other acquisition of voting securities by the
Company reducing the number of shares outstanding, provided that if a Change in
Control would occur (but for the operation of this sentence) as a result of the
acquisition of voting securities by the Company, and after such share
acquisition, the Subject Person becomes the Owner of any additional voting
securities that, assuming the repurchase or other acquisition had not occurred,
increases the percentage of the then outstanding voting securities Owned by the
Subject Person over the designated percentage threshold, then a Change in
Control shall be deemed to occur;

 

 

 

 

(ii)         there is consummated a merger, consolidation or similar transaction
involving (directly or indirectly) the Company if, immediately after the
consummation of such merger, consolidation or similar transaction, the
stockholders of the Company immediately prior thereto do not Own, directly or
indirectly, either (A) outstanding voting securities representing more than
fifty percent (50%) of the combined outstanding voting power of the surviving
Entity in such merger, consolidation or similar transaction or (B) more than
fifty percent (50%) of the combined outstanding voting power of the parent of
the surviving Entity in such merger, consolidation or similar transaction;

 

(iii)        individuals who, on the date this Plan is adopted by the Board, are
members of the Board (the “Incumbent Board”) cease for any reason to constitute
at least a majority of the members of the Board; provided, however, that if the
appointment or election (or nomination for election) of any new Board member was
approved or recommended by a majority vote of the members of the Incumbent Board
then still in office, such new member shall, for purposes of this Plan, be
considered as a member of the Incumbent Board.; or

 

(iv)        there is consummated a sale, lease, license or other disposition of
all or substantially all of the consolidated assets of the Company and its
Subsidiaries, other than a sale, lease, license or other disposition of all or
substantially all of the consolidated assets of the Company and its Subsidiaries
to an Entity, more than fifty percent (50%) of the combined voting power of the
voting securities of which are Owned by stockholders of the Company in
substantially the same proportions as their Ownership of the Company immediately
prior to such sale, lease, license or other disposition.

 

The term Change in Control shall not include a sale of assets, merger or other
transaction effected exclusively for the purpose of changing the domicile of the
Company.

 

Notwithstanding the foregoing or any other provision of this Plan, the
definition of Change in Control (or any analogous term) in an individual written
agreement between the Company or any Affiliate and the Participant shall
supersede the foregoing definition with respect to Stock Awards subject to such
agreement (it being understood, however, that if no definition of Change in
Control or any analogous term is set forth in such an individual written
agreement, the foregoing definition shall apply).

 

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

 

(f)          “Committee” means a committee of one or more members of the Board
appointed by the Board in accordance with Section 3(c).

 

(g)          “Common Stock” means the Common Stock of the Company.

 

(h)          “Company” means Janel Corporation, a Nevada corporation.

 

(i)          “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) serving as a member of the Board of
Directors of an Affiliate and who is compensated for such services. However, the
term “Consultant” shall not include Directors who are not compensated by the
Company for their services as Directors, and the payment of a director’s fee by
the Company for services as a Director shall not cause a Director to be
considered a “Consultant” for purposes of the Plan.

 

 - 2 - 

 

 

(j)          “Continuous Service” means that the Participant’s service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. A change in the capacity in which the Participant
renders service to the Company or an Affiliate as an Employee, Consultant or
Director or a change in the entity for which the Participant renders such
service, provided that there is no interruption or termination of the
Participant’s service with the Company or an Affiliate, shall not terminate a
Participant’s Continuous Service. For example, a change in status from an
employee of the Company to a consultant to an Affiliate or to a Director shall
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. Notwithstanding the foregoing, a leave of absence
shall be treated as Continuous Service for purposes of vesting in a Stock Award
only to such extent as may be provided in the Company’s leave of absence policy
or in the written terms of the Participant’s leave of absence.

 

(k)          “Corporate Transaction” means the occurrence, in a single
transaction or in a series of related transactions, of any one or more of the
following events:

 

(i)          a sale or other disposition of all or substantially all, as
determined by the Board in its discretion, of the consolidated assets of the
Company and its Subsidiaries;

 

(ii)         a sale or other disposition of at least fifty percent (50%) of the
outstanding securities of the Company;

 

(iii)        a merger, consolidation or similar transaction following which the
Company is not the surviving corporation; or

 

(iv)        a merger, consolidation or similar transaction following which the
Company is the surviving corporation but the shares of Common Stock outstanding
immediately preceding the merger, consolidation or similar transaction are
converted or exchanged by virtue of the merger, consolidation or similar
transaction into other property, whether in the form of securities, cash or
otherwise.

 

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

 

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

 

(n)          “Employee” means any person employed by the Company or an
Affiliate. Service as a Director or payment of a director’s fee by the Company
for such service or for service as a member of the Board of Directors of an
Affiliate shall not be sufficient to constitute “employment” by the Company or
an Affiliate.

 

(o)          “Entity” means a corporation, partnership, limited liability
company, trust or other entity.

 

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

 

(q)          “Exchange Act Person” means any natural person, Entity or “group”
(within the meaning of Section 13(d) or 14(d) of the Exchange Act), except that
“Exchange Act Person” shall not include (A) the Company or any Subsidiary of the
Company, (B) any employee benefit plan of the Company or any Subsidiary of the
Company or any trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any Subsidiary of the Company, (C) an underwriter
temporarily holding securities pursuant to an offering of such securities, or
(D) an Entity owned, directly or indirectly, by the stockholders of the Company
in substantially the same proportions as their Ownership of stock of the
Company.

 

 - 3 - 

 

 

(r)          “Fair Market Value” means, as of any date, the value of the Common
Stock determined in good faith by the Board and in accordance with Section 409A
of the Code and applicable guidance thereunder.

 

(s)          “Incentive Stock Option” means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

 

(t)          “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.

 

(u)          “Non-statutory Stock Option” means an Option not intended to
qualify as an Incentive Stock Option.

 

(v)         “Officer” means any person designated by the Company as an officer.

 

(w)          “Option” means an Incentive Stock Option or a Non-statutory Stock
Option granted pursuant to the Plan.

 

(x)          “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; provided, however, that an Option Agreement may contain terms that vary
from the terms of the Plan.

 

(y)          “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.

 

(z)          “Own,” “Owned,” “Owner,” “Ownership” A person or Entity shall be
deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired
“Ownership” of securities if such person or Entity, directly or indirectly,
through any contract, arrangement, understanding, relationship or otherwise, has
or shares voting power, which includes the power to vote or to direct the
voting, with respect to such securities.

 

(aa)         “Participant” means a person to whom a Stock Award is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Stock Award.

 

(bb)         “Plan” means this Janel Corporation 2017 Equity Incentive Plan.

 

(cc)         “Restricted Stock Award” means an award of shares of Common Stock
which is granted pursuant to the terms and conditions of Section 7(a).

 

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

 

 - 4 - 

 

 

(ee)         “Stock Appreciation Right” means a right to receive the
appreciation on Common Stock that is granted pursuant to the terms and
conditions of Section 7(b).

 

(ff)         “Stock Award” means any right granted under the Plan, including an
Option, a Restricted Stock Award and a Stock Appreciation Right.

 

(gg)         “Stock Award Agreement” means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.

 

(hh)         “Subsidiary” means, with respect to the Company, (i) any
corporation of which more than fifty percent (50%) of the outstanding capital
stock having ordinary voting power to elect a majority of the board of directors
of such corporation (irrespective of whether, at the time, stock of any other
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time, directly or
indirectly, Owned by the Company, and (ii) any partnership in which the Company
has a direct or indirect interest (whether in the form of voting or
participation in profits or capital contribution) of more than fifty percent
(50%).

 

(ii)         “Ten Percent Stockholder” means a person who Owns (or is deemed to
Own pursuant to Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of any of its Affiliates.

 

3.             Administration.

 

(a)           Administration by Board. The Board shall administer the Plan
unless and until the Board delegates administration to a Committee, as provided
in Section 3(c).

 

(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 from time to time which of the persons eligible under
the Plan shall be granted Stock Awards; when and how each Stock Award shall be
granted; what type or combination of types of Stock Award shall be granted; the
provisions of each Stock Award granted (which need not be identical), including
the time or times when a person shall be permitted to receive Common Stock
pursuant to a Stock Award; and the number of shares of Common Stock with respect
to which a Stock Award shall be granted to each such person.

 

(ii)         To construe and interpret the Plan and Stock Awards granted under
it, and to establish, interpret, 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 Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.

 

(iii)        To effect, at any time and from time to time, with the consent of
any adversely affected Optionholder, (1) the reduction of the exercise price of
any outstanding Option under the Plan, (2) the cancellation of any outstanding
Option under the Plan and the grant in substitution therefor of (A) a new Option
under the Plan or another equity plan of the Company covering the same or a
different number of shares of Common Stock, (B) a Restricted Stock Award
(including a stock bonus), (C) a Stock Appreciation Right, (D) cash and/or (E)
other valuable consideration (as determined by the Board, in its sole
discretion), or (3) any other action that is treated as a repricing under
generally accepted accounting principles.

 

 - 5 - 

 

 

(iv)        To amend the Plan or a Stock Award as provided in Section 12.

 

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

 

(vi)        To approve forms of Stock Award Agreements for use under the Plan
and to amend the terms of any one or more Stock Awards, including, but not
limited to, amendments to provide terms more favorable than previously provided
in the Stock Award Agreement, subject to any specified limits in the Plan that
are not subject to Board discretion; provided however, that, the rights under
any Award shall not be impaired by any such amendment unless (i) the Company
requests the consent of the affected Participant, and (ii) such Participant
consents in writing. Notwithstanding the foregoing, subject to the limitations
of applicable law, if any, and without the affected Participant’s consent, the
Board may amend the terms of any one or more Stock Awards if necessary to
maintain the qualified status of the Stock Award as an Incentive Stock Option,
to exempt the Stock Award from Section 409A of the Code and the related guidance
thereunder, or to bring the Stock Award into compliance with Section 409A of the
Code and the related guidance thereunder.

 

(vii)       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
and that are not in conflict with the provisions of the Plan.

 

(c)            Delegation to Committee. The Board may delegate administration of
the Plan to a Committee or Committees of one (1) or more members of the Board,
and the term “Committee” shall apply to any person or persons to whom such
authority has been delegated. If administration is delegated to a Committee, the
Committee shall have, in connection with the administration of the Plan, the
powers theretofore possessed by the Board, including the power to delegate to a
subcommittee any of the administrative powers the Committee is authorized to
exercise (and references in this Plan to the Board shall thereafter be to the
Committee or subcommittee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board. The Board may abolish the Committee at any time and revest in
the Board the administration of the Plan.

 

(d)           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.

 

4.             Shares Subject to the Plan.

 

(a)           Share Reserve. Subject to the provisions of Section 11(a) relating
to Capitalization Adjustments, the Common Stock that may be issued pursuant to
Stock Awards shall not exceed in the aggregate 10.77% of the fully-diluted
928,656 shares of Common Stock, or 100,000 shares.

 

 - 6 - 

 

 

(b)           Reversion of Shares to the Share Reserve. If any Stock Award shall
for any reason expire or otherwise terminate, in whole or in part, without
having been exercised in full, or if any shares of Common Stock issued to a
Participant pursuant to a Stock Award are forfeited back to or repurchased by
the Company, including, but not limited to, any repurchase or forfeiture caused
by the failure to meet a contingency or condition required for the vesting of
such shares, then the shares of Common Stock not acquired under such Stock Award
shall revert to and again become available for issuance under the Plan;
provided, however, that subject to the provisions of Section 11(a) relating to
Capitalization Adjustments, the aggregate maximum number of shares of Common
Stock that may be issued as Incentive Stock Options shall be the number of
shares originally set forth in Section 3(a) above before any amendment. If any
shares subject to a Stock Award are not delivered to a Participant because such
shares are withheld for the payment of taxes, then the number of shares that are
not delivered shall revert to and again become available for issuance under the
Plan. If the exercise price of any Stock Award is satisfied by tendering shares
of Common Stock held the Participant (either by actual deliver or attestation),
then the number of such tendered shares shall revert to and again become
available for 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.

 

(a)            Eligibility for Specific Stock Awards. Incentive Stock Options
may be granted only to Employees. Stock Awards other than Incentive Stock
Options may be granted to Employees, Directors and Consultants.

 

(b)           Ten Percent Stockholders. A Ten Percent Stockholder shall not be
granted an Incentive Stock Option unless the exercise price of such Option is at
least one hundred ten percent (110%) of the Fair Market Value of the Common
Stock on the date of grant and the Option is not exercisable after the
expiration of five (5) years from the date of grant.

 

(c)           Consultants. A Consultant shall not be eligible for the grant of a
Stock Award if, at the time of grant, either the offer or the sale of the
Company’s securities to such Consultant is not exempt under Rule 701 of the
Securities Act (“Rule 701”) because of the nature of the services that the
Consultant is providing to the Company, because the Consultant is not a natural
person, or because of some other provision of Rule 701.

 

6.             Option Provisions.

 

Each Option shall be in such form and shall contain such terms and conditions as
the Board shall deem appropriate. All Options shall be separately designated
Incentive Stock Options or Non-statutory Stock Options at the time of grant,
and, if certificates are issued, a separate certificate or certificates shall be
issued for shares of Common Stock purchased on exercise of each type of Option.
The provisions of separate Options need not be identical, but 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. Subject to the provisions of Section 5(b) regarding Ten
Percent Stockholders, no Incentive Stock Option granted shall be exercisable
after the expiration of ten (10) years from the date on which it was granted.

 

(b)           Exercise Price of a Stock Option. Subject to the provisions of
Section 5(b) regarding Ten Percent Stockholders, the exercise price of each
Stock Option shall be not less than one hundred percent (100%) of the Fair
Market Value of the Common Stock subject to the Option on the date the Option is
granted. Notwithstanding the foregoing, a Stock 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 Sections 409A and 424(a) of the Code.

 

 - 7 - 

 

 

(c)           Consideration. The purchase price of Common Stock acquired
pursuant to an Option shall be paid, to the extent permitted by applicable
statutes and regulations, either (i) by cash, check, bank draft or money order
payable to the Company at the time the Option is exercised or (ii) at the
discretion of the Board at the time of the grant of the Option (or subsequently
in the case of a Non-statutory Stock Option) (1) by delivery to the Company of
other Common Stock, (2) according to a deferred payment or other similar
arrangement with the Optionholder or (3) 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 instruction to pay the aggregate
exercise price to the Company from the sales proceeds, or (4) in any other form
of legal consideration that may be acceptable to the Board. Unless otherwise
specifically provided in the Option, the purchase price of Common Stock acquired
pursuant to an Option that is paid by delivery to the Company of other Common
Stock acquired, directly or indirectly from the Company, shall be paid only by
shares of the Common Stock of the Company that have been 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).

 

In the case of any deferred payment arrangement, interest shall be compounded at
least annually and shall be charged at the minimum rate of interest necessary to
avoid (1) the treatment as interest, under any applicable provisions of the
Code, of any amounts other than amounts stated to be interest under the deferred
payment arrangement and (2) the treatment of the Option as a variable award for
financial accounting purposes.

 

(d)           Transferability of an Incentive Stock Option. An Incentive Stock
Option shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder. Notwithstanding the foregoing, 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)           Transferability of a Non-statutory Stock Option. A Non-statutory
Stock Option shall be transferable to the extent provided in the Option
Agreement. If the Non-statutory Stock Option does not provide for
transferability, then the Non-statutory Stock Option shall not be transferable
except by will or by the laws of descent and distribution and shall be
exercisable during the lifetime of the Optionholder only by the Optionholder.
Notwithstanding the foregoing, (i) 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, and (ii) the Board may, in its sole discretion,
permit transfer of a Non-statutory Stock Option in a manner consistent with
applicable tax and securities laws upon the Optionholder’s request.

 

(f)           Vesting Generally. The total number of shares of Common Stock
subject to an Option may, but need not, vest and therefore become exercisable in
periodic installments that may, but need not, be equal. The Option may be
subject to such other terms and conditions on the time or times when it may be
exercised (which may be based on performance or other criteria) as the Board may
deem appropriate. The vesting provisions of individual Options may vary. The
provisions of this Section 6(f) are subject to any Option provisions governing
the minimum number of shares of Common Stock as to which an Option may be
exercised.

 

 - 8 - 

 

 

(g)           Termination of Continuous Service. Except as otherwise provided in
the applicable Stock Award Agreement or other agreement between the Company and
the Optionholder, in the event that 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 such Option 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
such longer or shorter period specified in the Option Agreement), 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. An Optionholder’s Option Agreement
may also provide that 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 of Common Stock 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 Section 6(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. Except as otherwise provided in the
applicable Stock Award Agreement or other agreement between the Company and the
Optionholder, in the event that 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 such
Option 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 such longer or shorter period specified in the Option Agreement)
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. Except as otherwise provided in the
applicable Stock Award Agreement or other agreement between the Company and the
Optionholder, in the event that (i) an Optionholder’s Continuous Service
terminates as a result of the Optionholder’s death or (ii) the Optionholder dies
within the period (if any) specified in the Option Agreement 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 such 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 pursuant to Section 6(e) or 6(f), but only within the
period ending on the earlier of (1) the date eighteen (18) months following the
date of death (or such longer or shorter period specified in the Option
Agreement) 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.

 

(k)            Early Exercise. The Option may, but need not, include a provision
whereby the Optionholder may elect at any time before the Optionholder’s
Continuous Service terminates to exercise the Option as to any part or all of
the shares of Common Stock subject to the Option prior to the full vesting of
the Option. 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 Board
determines to be appropriate.

 

 - 9 - 

 

 

(l)             Right of Repurchase. The Option may, but need not, include a
provision whereby the Company may elect to repurchase all or any part of the
vested shares of Common Stock acquired by the Optionholder pursuant to the
exercise of the Option.

 

(m)            Right of First Refusal. The Option may, but need not, include a
provision whereby the Company may elect to exercise a right of first refusal
following receipt of notice from the Optionholder of the intent to transfer all
or any part of the shares of Common Stock received upon the exercise of the
Option.

 

7.             Provisions of Stock Awards other than Options.

 

(a)            Restricted Stock Awards. Each Restricted Stock Award agreement
shall be in such form and shall contain such terms and conditions as the Board
shall deem appropriate. The terms and conditions of Restricted Stock Award
agreements may change from time to time, and the terms and conditions of
separate Restricted Stock Award agreements need not be identical; provided,
however, that each Restricted Stock Award agreement shall include (through
incorporation of the provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions:

 

(i)          Purchase Price. At the time of the grant of a Restricted Stock
Award, the Board will determine the price to be paid by the Participant for each
share subject to the Restricted Stock Award. To the extent required by
applicable law, the price to be paid by the Participant for each share of the
Restricted Stock Award will not be less than the par value of a share of Common
Stock. A Restricted Stock Award may be awarded as a stock bonus (i.e., with no
cash purchase price to be paid) to the extent permissible under applicable law.

 

(ii)         Consideration. At the time of the grant of a Restricted Stock
Award, the Board will determine the consideration permissible for the payment of
the purchase price of the Restricted Stock Award. The purchase price of Common
Stock acquired pursuant to the Restricted Stock Award shall be paid in one of
the following ways: (i) in cash at the time of purchase; (ii) at the discretion
of the Board, according to a deferred payment or other similar arrangement with
the Participant; (iii) by services rendered or to be rendered to the Company; or
(iv) in any other form of legal consideration that may be acceptable to the
Board.

 

(iii)        Vesting. Shares of Common Stock acquired under a Restricted Stock
Award may, but need not, be subject to a share repurchase option in favor of the
Company in accordance with a vesting schedule to be determined by the Board.

 

(iv)        Termination of Participant’s Continuous Service. In the event that a
Participant’s Continuous Service terminates, the Company may repurchase or
otherwise reacquire any or all of the shares of Common Stock held by the
Participant that have not vested as of the date of termination under the terms
of the Restricted Stock Award agreement. The Company will not exercise its
repurchase option until at least six (6) months (or such longer or shorter
period of time required to avoid a charge to earnings for financial accounting
purposes) have elapsed following the purchase of the restricted stock unless
otherwise determined by the Board or provided in the Restricted Stock Award
agreement.

 

(v)         Transferability. Rights to purchase or receive shares of Common
Stock granted under a Restricted Stock Award shall be transferable by the
Participant only upon such terms and conditions as are set forth in the
Restricted Stock Award agreement, as the Board shall determine in its
discretion, and so long as Common Stock awarded under the Restricted Stock Award
remains subject to the terms of the Restricted Stock Award agreement.

 

 - 10 - 

 

 

 

(b)            Stock Appreciation Rights. Each Stock Appreciation Right
agreement shall be in such form and shall contain such terms and conditions as
the Board shall deem appropriate. The terms and conditions of Stock Appreciation
Right agreements may change from time to time, and the terms and conditions of
separate Stock Appreciation Rights agreements need not be identical, but each
Stock Appreciation Right agreement shall include (through incorporation of the
provisions hereof by reference in the agreement or otherwise) the substance of
each of the following provisions:

 

(i)          Term. No Stock Appreciation Right shall be exercisable after the
expiration of ten (10) years from the date of its grant or such shorter period
specified in the Stock Appreciation Right Agreement.

 

(ii)         Strike Price. Notwithstanding anything in the applicable Stock
Award Agreement to the contrary, the strike price of each Stock Appreciation
Right shall not be less than the Fair Market Value of the Common Stock
equivalents subject to the Stock Appreciation Right on the date of grant.

 

(iii)        Calculation of Appreciation. Each Stock Appreciation Right will be
denominated in share of Common Stock equivalents. The appreciation distribution
payable on the exercise of a Stock Appreciation Right will be not greater than
an amount equal to the excess of (A) the aggregate Fair Market Value (on the
date of the exercise of the Stock Appreciation Right) of a number of shares of
Common Stock equal to the number of share of Common Stock equivalents in which
the Participant is vested under such Stock Appreciation Right and with respect
to which the Participant is exercising the Stock Appreciation Right on such
date, over (B) the strike price that is determined by the Committee pursuant to
Section 7(b)(ii).

 

(iv)        Vesting. At the time of the grant of a Stock Appreciation Right, the
Board may impose such restrictions or conditions to the vesting of such Right as
it deems appropriate.

 

(v)         Exercise. To exercise any outstanding Stock Appreciation Right, the
Participant must provide written notice of exercise to the Company in compliance
with the provisions of the Stock Appreciation Rights agreement evidencing such
Right.

 

(vi)        Payment. The appreciation distribution in respect of a Stock
Appreciation Right may be paid in Common Stock, in cash, or any combination of
the two, as the Board deems appropriate.

 

(vii)       Termination of Continuous Service. If a Participant’s Continuous
Service terminates for any reason, any unvested Stock Appreciation Rights shall
be forfeited and any vested Stock Appreciation Rights shall be automatically
redeemed.

 

8.             Covenants of the Company.

 

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

 

 - 11 - 

 

 

(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 Stock Awards and to issue and sell shares
of Common Stock upon exercise of the Stock Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any
such Stock Award. 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 Common Stock
under the Plan, the Company shall be relieved from any liability for failure to
issue and sell Common Stock upon exercise of such Stock Awards unless and until
such authority is obtained. A Participant shall not be eligible for the grant of
a Stock Award or the subsequent issuance of Common Stock pursuant to the Stock
Award if such grant or issuance would be in violation of any applicable
securities laws.

 

9.             Use of Proceeds from Stock.

 

Proceeds from the sale of Common Stock pursuant to Stock Awards shall constitute
general funds of the Company.

 

10.           Miscellaneous.

 

(a)          Acceleration of Exercisability and Vesting. The Board shall have
the power to accelerate the time at which a Stock Award may first be exercised
or the time during which a Stock Award or any part thereof will vest in
accordance with the Plan, notwithstanding the provisions in the Stock Award
stating the time at which it may first be exercised or the time during which it
will vest.

 

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

 

(c)          No Employment or other Service Rights. Nothing in the Plan or any
instrument executed or Stock Award granted pursuant thereto shall confer upon
any Participant any right to continue to serve the Company or an Affiliate in
the capacity in effect at the time the Stock Award was granted 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.

 

(d)          Incentive Stock Option $100,000 Limitation. To the extent that the
aggregate Fair Market Value (determined at the time of grant) of Common Stock
with respect to which Incentive Stock Options are exercisable for the first time
by any Optionholder during any calendar year (under all plans of the Company and
its Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or
portions thereof that exceed such limit (according to the order in which they
were granted) shall be treated as Non-statutory Stock Options, notwithstanding
any contrary provision of any Stock Award Agreement or any Board resolutions
related thereto.

 

 - 12 - 

 

 

(e)            Investment Assurances. The Company may require a Participant, as
a condition of exercising or acquiring Common Stock under any Stock Award, (i)
to give written assurances satisfactory to the Company as to the Participant’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 Stock Award; and (ii) to
give written assurances satisfactory to the Company stating that the Participant
is acquiring Common Stock subject to the Stock Award for the Participant’s own
account and not with any present intention of selling or otherwise distributing
the Common Stock. The foregoing requirements, and any assurances given pursuant
to such requirements, shall be inoperative if (1) the issuance of the shares of
Common Stock upon the exercise or acquisition of Common Stock under the Stock
Award has been registered under a then currently effective registration
statement under the Securities Act or (2) 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 Common Stock.

 

(f)            Withholding Obligations. To the extent provided by the terms of a
Stock Award Agreement, the Participant may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition of Common
Stock under a Stock Award by any of the following means (in addition to the
Company’s right to withhold from any compensation paid to the Participant by the
Company) or by a combination of such means: (i) tendering a cash payment; (ii)
authorizing the Company to withhold shares of Common Stock from the shares of
Common Stock otherwise issuable to the Participant as a result of the exercise
or acquisition of Common Stock under the Stock Award; 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 such lower amount as may be necessary to
avoid variable award accounting); or (iii) delivering to the Company owned and
unencumbered shares of Common Stock; or (iv) by such other method as may be set
forth in the Stock Award Agreement.

 

(g)            Electronic Delivery. Any reference herein to a “written”
agreement or document shall include any agreement or document delivered
electronically or posted on the Company’s website.

 

(h)            Corporate Action Constituting Grant of Stock Awards. Corporate
action constituting a grant by the Company of a Stock Award to any Participant
shall be deemed completed as of the date of such corporate action, unless
otherwise determined by the Board, regardless of when the instrument,
certificate, or letter evidencing the Stock Award is communicated to, or
actually received or accepted by, the Participant. If the Board determines that
the terms of a Stock Award do not reflect the appropriate exercise, strike or
purchase price on the appropriate date of grant in accordance with the
requirements of the Plan, the terms of the Stock Award shall be automatically
corrected to reflect the appropriate price or other terms provided for under the
Plan, as determined by the Board, without the need for consent of the
Participant; provided, however , that no such correction shall result in a
direct or indirect reduction in the exercise price or strike price of the Stock
Award.

 

 - 13 - 

 

 

(i)            Compliance with 409A. To the extent that the Board determines
that any Stock Award granted under the Plan is subject to Section 409A of the
Code, the Stock Award Agreement evidencing such Stock Award shall incorporate
the terms and conditions necessary to avoid the consequences specified in
Section 409A(a)(1) of the Code. To the extent permitted by applicable law, the
Plan and Stock Award Agreements shall be interpreted in accordance with Section
409A of the Code and Department of Treasury regulations and other interpretive
guidance issued thereunder, including without limitation any such regulations or
other guidance that may be issued or amended after the date the Plan was
approved by the Board and stockholders of the Company. Notwithstanding anything
in the Plan or in any Stock Award Agreement to the contrary, to the extent that
any amount or benefit that would constitute non-exempt “deferred compensation”
for purposes of the Code would otherwise be payable or distributable under the
Plan or any Stock Award Agreement by reason of the occurrence of a Change in
Control, or Participant’s Disability or separation from service, such amount or
benefit will not be payable or distributable to Participant by reason of such
circumstance unless (i) the circumstances giving rise to such Change in Control,
Disability or separation from service meet any description or definition of
“change in control event,” “disability” or “separation from service”, as the
case may be, in Section 409A of the Code and applicable regulations (without
giving effect to any elective provisions that may be available under such
definition), or (ii) the payment or distribution of such amount or benefit would
be exempt from the application of Section 409A of the Code by reason of the
short-term deferral exemption or otherwise. This provision does not prohibit the
vesting of any amount upon a Change in Control, Disability or separation from
service, however defined. If this provision prevents the payment or distribution
of any amount or benefit, such payment or distribution shall be made on the
date, if any, on which an event occurs that constitutes a Section 409A-compliant
“change in control event” “disability” or “separation from service” as the case
may be. In addition, to the greatest extent permitted by applicable law, the
Board may adopt such amendments to the Plan and the applicable Stock Award
Agreement (including but not limited to increasing the exercise price of an
Award to the extent required for the avoidance of the tax consequences set forth
in Section 409A(a)(1)) or adopt other policies and procedures (including
amendments, policies and procedures with retroactive effect), or take any other
actions, that the Board determines are necessary or appropriate to (i) exempt
the Stock Award from Section 409A of the Code and/or preserve the intended tax
treatment of the benefits provided with respect to the Stock Award, or (ii)
comply with the requirements of Section 409A of the Code and related Department
of Treasury guidance.

 

11.           Adjustments upon Changes in Stock.

 

(a)            Capitalization Adjustments. If any change is made in, or other
event occurs with respect to, the Common Stock subject to the Plan or subject to
any Stock Award 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 (each a “Capitalization Adjustment”), the Plan will be appropriately
adjusted in the class(es) and maximum number of securities subject to the Plan
pursuant to Sections 4(a) and 4(b) and the outstanding Stock Awards will be
appropriately adjusted in the class(es) and number of securities and price per
share of Common Stock subject to such outstanding Stock Awards. 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. Except as otherwise provided in the
Stock Award Agreement, in the event of a dissolution or liquidation of the
Company, and upon ten (10) days prior written notice, all outstanding Stock
Awards shall terminate immediately prior to the completion of such dissolution
or liquidation, and shares of Common Stock subject to the Company’s repurchase
option may be repurchased by the Company notwithstanding the fact that the
holder of such stock in still in Continuous Service, provided, however, that the
Board may, in its sole discretion, cause some or all Stock Awards to become
fully vested, exercisable and/or no longer subject to repurchase or forfeiture
(to the extent such Stock Awards have not previously expired or terminated)
before the dissolution or liquidation is completed but contingent on its
completion.

 

 - 14 - 

 

 

(c)            Corporate Transaction. Except as otherwise stated in the Stock
Award Agreement, in the event of a Corporate Transaction, any surviving
corporation or acquiring corporation may assume or continue any or all Stock
Awards outstanding under the Plan or may substitute similar stock awards for
Stock Awards outstanding under the Plan (it being understood that similar stock
awards include, but are not limited to, awards to acquire the same consideration
paid to the stockholders or the Company, as the case may be, pursuant to the
Corporate Transaction), and any reacquisition or repurchase rights held by the
Company in respect of Common Stock issued pursuant to Stock Awards may be
assigned by the Company to the successor of the Company (or such successor’s
parent company), if any, in connection with such Corporate Transaction. A
surviving corporation or acquiring corporation (or its parent) may choose to
assume or continue only a portion of a Stock Award or substitute a similar stock
award for only a portion of a Stock Award. Except as otherwise stated in the
Stock Award Agreement, in the event that any surviving corporation or acquiring
corporation does not assume or continue any or all such outstanding Stock Awards
or substitute similar stock awards for such outstanding Stock Awards, then with
respect to Stock Awards that have not been assumed, continued or substituted and
that are held by Participants whose Continuous Service has not terminated prior
to the effective time of the Corporate Transaction (“Current Participants”), the
vesting of such Stock Awards (and, if applicable, the time at which such Stock
Awards may be exercised) shall (contingent upon the effectiveness of the
Corporate Transaction) be accelerated in full to a date prior to the effective
time of such Corporate Transaction as the Board shall determine (or, if the
Board shall not determine such a date, to the date that is five (5) days prior
to the effective time of the Corporate Transaction), the Stock Awards shall
terminate if not exercised (if applicable) at or prior to such effective time,
and any reacquisition or repurchase rights held by the Company with respect to
such Stock Awards held by Participants whose Continuous Service has not
terminated shall (contingent upon the effectiveness of the Corporate
Transaction) lapse. With respect to any other Stock Awards outstanding under the
Plan that have not been assumed, continued or substituted that are not held by
current Participants, the vesting of such Stock Awards (and, if applicable, the
time at which such Stock Award may be exercised) shall not be accelerated,
unless otherwise provided in a written agreement between the Company or any
Affiliate and the holder of such Stock Award, and such Stock Awards, upon
advance written notice by the Company of at least 10 days to the holders of such
Stock Awards, shall terminate if not exercised (if applicable) prior to the
effective time of the Corporate Transaction; provided, however that any
reacquisition or repurchase rights held by the Company with respect to such
Stock Awards shall not terminate and may continue to be exercised
notwithstanding the Corporate Transaction.

 

(d)           Change in Control.

 

(i)          Stock Awards May be Assumed. Except as otherwise stated in the
Stock Award Agreement, in the event of a Change in Control, any surviving
corporation or acquiring corporation (or the surviving or acquiring
corporation’s parent company) may assume or continue any or all Stock Awards
outstanding under the Plan or may substitute similar stock awards for Stock
Awards outstanding under the Plan (including but not limited to, awards to
acquire the same consideration paid to the stockholders of the Company pursuant
to the Change in Control), and any reacquisition or repurchase rights held by
the Company in respect of Common Stock issued pursuant to Stock Awards may be
assigned by the Company to the successor of the Company (or the successor’s
parent company, if any), in connection with such Change in Control. A surviving
corporation or acquiring corporation (or its parent) may choose to assume or
continue only a portion of a Stock Award or substitute a similar stock award for
only a portion of a Stock Award.

 

 - 15 - 

 

 

(ii)         Stock Awards Not Assumed Held by Current Participants. Except as
otherwise stated in the Stock Award Agreement, in the event of a Change in
Control in which the surviving corporation or acquiring corporation (or its
parent company) does not assume or continue any or all outstanding Stock Awards
or substitute similar stock awards for such outstanding Stock Awards, then with
respect to Stock Awards that have not been assumed, continued or substituted and
that are held by Current Participants, the vesting of such Stock Awards (and, if
applicable, the time at which such Stock Awards may be exercised) shall
(contingent upon the effectiveness of the Change in Control) be accelerated in
full to a date prior to the effective time of such Change in Control as the
Board shall determine (or, if the Board shall not determine such a date, to the
date that is five business (5) days prior to the effective time of the Change in
Control), and such Stock Awards shall terminate if not exercised (if applicable)
at or prior to the effective time of the Change in Control, and any
reacquisition or repurchase rights held by the Company with respect to such
Stock Awards shall lapse (contingent upon the effectiveness of the Change in
Control).

 

(iii)        Stock Awards Not Assumed Held by Persons other than Current
Participants. Except as otherwise stated in the Stock Award Agreement, in the
event of a Change in Control in which the surviving corporation or acquiring
corporation (or its parent company) does not assume or continue any or all
outstanding Stock Awards or substitute similar stock awards for such outstanding
Stock Awards, then with respect to Stock Awards that have not been assumed,
continued or substituted and that are held by persons other than current
Participants, the vesting of such Stock Awards (and, if applicable, the time at
which such Stock Award may be exercised) shall not be accelerated and such Stock
Awards (other than a Stock Award consisting of vested and outstanding shares of
Common Stock not subject to the Company’s right of repurchase), upon advance
written notice by the Company of at least 10 days to the holders of such Stock
Awards, shall terminate if not exercised (if applicable) prior to the effective
time of the Change in Control; provided, however, that any reacquisition or
repurchase rights held by the Company with respect to such Stock Awards shall
not terminate and may continue to be exercised notwithstanding the Change in
Control.

 

(iv)        Additional Provisions. A Stock Award may be subject to additional
acceleration of vesting and exercisability upon or after a Change in Control as
may be provided in the Stock Award Agreement for such Stock Award or as may be
provided in any other written agreement between the Company or any Affiliate and
the Participant. A Stock Award may vest as to all or any portion of the shares
subject to the Stock Award (i) immediately upon the occurrence of a Change in
Control, whether or not such Stock Award is assumed, continued, or substituted
by a surviving or acquiring entity in the Change in Control, and/or (ii) in the
event a Participant’s Continuous Service is terminated, actually or
constructively, within a designated period following the occurrence of a Change
in Control.

 

12.           Amendment of the Plan and Stock Awards.

 

(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(a) relating to
Capitalization Adjustments, 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 Section 422 of the Code.

 

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

 

(c)          Contemplated Amendments. It is expressly contemplated that the
Board may amend the Plan in any respect the Board deems necessary or advisable
to provide eligible Employees with the maximum benefits provided or to be
provided under the provisions of the Code and the regulations promulgated
thereunder relating to Incentive Stock Options and to certain nonqualified
deferred compensation under Section 409A of the Code and/or to bring the Plan
and/or Stock Awards granted under it into compliance therewith, subject to the
limitations, if any, of applicable law.

 

 - 16 - 

 

 

(d)          No Impairment of Rights. Rights under any Stock Award 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 Participant and (ii) the
Participant consents in writing.

 

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

 

13.           Termination or Suspension of the Plan.

 

(a)          Plan Term. The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on the day before the tenth
(10th) anniversary of the date the Plan is adopted by the Board or approved by
the stockholders of the Company, whichever is earlier. No Stock Awards 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 Stock Award granted while the
Plan is in effect except with the written consent of the Participant.

 

14.           Effective Date of Plan.

 

The Plan shall become effective as determined by the Board, but no Stock Award
shall be exercised (or, in the case of a stock bonus, shall be granted) 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.

 

The law of the State of New York shall govern all questions concerning the
construction, validity and interpretation of this Plan, without regard to such
state’s conflict of laws rules.

 

 - 17 - 

 

 

Attachment A

 

Janel Corporation

2017 Equity Incentive Plan

Stock Option Agreement

(Incentive Stock Option or Non-statutory Stock Option)

 

Pursuant to your Stock Option Grant Notice (“Grant Notice”) and this Stock
Option Agreement, Janel Corporation (the “Company”) has granted you an option
under its 2017 Equity Incentive Plan (the “Plan”) to purchase the number of
shares of the Company’s Common Stock indicated in your Grant Notice at the
exercise price indicated in your Grant Notice. Defined terms not explicitly
defined in this Stock Option Agreement but defined in the Plan shall have the
same definitions as in the Plan.

 

The details of your option are as follows:

 

1.             Vesting. Subject to the limitations contained herein, your option
will vest as provided in your Grant Notice, provided that vesting will cease
upon the termination of your Continuous Service.

 

2.             Number of Shares and Exercise Price. The number of shares of
Common Stock subject to your option and your exercise price per share referenced
in your Grant Notice may be adjusted from time to time for Capitalization
Adjustments.

 

3.             Exercise prior to Vesting (“Early Exercise”). If permitted in
your Grant Notice (i.e., the “Exercise Schedule” indicates that “Early Exercise”
of your option is permitted) and subject to the provisions of your option, you
may elect at any time that is both (i) during the period of your Continuous
Service and (ii) during the term of your option, to exercise all or part of your
option, including the nonvested portion of your option; provided, however, that:

 

(a)          a partial exercise of your option shall be deemed to cover first
vested shares of Common Stock and then the earliest vesting installment of
unvested shares of Common Stock;

 

(b)          any shares of Common Stock so purchased from installments that have
not vested as of the date of exercise shall be subject to the purchase option in
favor of the Company as described in the Company’s form of Early Exercise Stock
Purchase Agreement;

 

(c)          you shall enter into the Company’s form of Early Exercise Stock
Purchase Agreement with a vesting schedule that will result in the same vesting
as if no early exercise had occurred; and

 

(d)          if your option is an Incentive Stock Option, then, to the extent
that the aggregate Fair Market Value (determined at the time of grant) of the
shares of Common Stock with respect to which your option plus all other
Incentive Stock Options you hold are exercisable for the first time by you
during any calendar year (under all plans of the Company and its Affiliates)
exceeds one hundred thousand dollars ($100,000), your option(s) or portions
thereof that exceed such limit (according to the order in which they were
granted) shall be treated as Non-statutory Stock Options.

 

4.             Method of Payment. Payment of the exercise price is due in full
upon exercise of all or any part of your option. You may elect to make payment
of the exercise price in cash or by check or in any other manner permitted by
your Grant Notice, which may include one or more of the following:

 

 A- i

 

 

(a)           In the Company’s sole discretion at the time your option is
exercised and 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.

 

(b)           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 you have held for the period
required to avoid a charge to the Company’s reported earnings (generally six (6)
months) or that you 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, in the sole discretion of the Company at the time
you exercise your option, shall include delivery to the Company of your
attestation of ownership of such shares of Common Stock in a form approved by
the Company. Notwithstanding the foregoing, you may not exercise your 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.

 

(c)           Pursuant to the following deferred payment alternative:

 

(i)          Not less than one hundred percent (100%) of the aggregate exercise
price, plus accrued interest, shall be due four (4) years from date of exercise
or, at the Company’s election, upon termination of your Continuous Service.

 

(ii)         Interest shall be compounded at least annually and shall be charged
at the minimum rate of interest necessary to avoid (1) the treatment as
interest, under any applicable provisions of the Code, of any amounts other than
amounts stated to be interest under the deferred payment arrangement and (2) the
treatment of the Option as a variable award for financial accounting purposes.

 

(iii)        At any time that the Company is incorporated in Delaware, payment
of the Common Stock’s “par value,” as defined in the Delaware General
Corporation Law, shall be made in cash and not by deferred payment.

 

(iv)        In order to elect the deferred payment alternative, you must, as a
part of your written notice of exercise, give notice of the election of this
payment alternative and, in order to secure the payment of the deferred exercise
price to the Company hereunder, if the Company so requests, you must tender to
the Company a promissory note and a pledge agreement covering the purchased
shares of Common Stock, both in form and substance satisfactory to the Company,
or such other or additional documentation as the Company may request.

 

5.             Whole Shares. You may exercise your option only for whole shares
of Common Stock.

 

6.             Securities Law Compliance. Notwithstanding anything to the
contrary contained herein, you may not exercise your option unless the shares of
Common Stock issuable upon such exercise are then registered under the
Securities Act or, if such shares of Common Stock are not then so registered,
the Company has determined that such exercise and issuance would be exempt from
the registration requirements of the Securities Act. The exercise of your option
also must comply with other applicable laws and regulations governing your
option, and you may not exercise your option if the Company determines that such
exercise would not be in material compliance with such laws and regulations.

 

 A- ii

 

 

7.             Term. You may not exercise your option before the commencement or
after the expiration of its term. The term of your option commences on the Date
of Grant and expires upon the earliest of the following:

 

(a)          three (3) months after the termination of your Continuous Service
for any reason other than your Disability or death, provided that if during any
part of such three (3) month period your option is not exercisable solely
because of the condition set forth in Section 6, your option shall not expire
until the earlier of the Expiration Date or until it shall have been exercisable
for an aggregate period of three (3) months after the termination of your
Continuous Service;

 

(b)          twelve (12) months after the termination of your Continuous Service
due to your Disability;

 

(c)          eighteen (18) months after your death if you die either during your
Continuous Service or within three (3) months after your Continuous Service
terminates;

 

(d)          the Expiration Date indicated in your Grant Notice; or

 

(e)          the day before the tenth (10th) anniversary of the Date of Grant.

 

If your option is an Incentive Stock Option, note that to obtain the federal
income tax advantages associated with an Incentive Stock Option, the Code
requires that at all times beginning on the date of grant of your option and
ending on the day three (3) months before the date of your option’s exercise,
you must be an employee of the Company or an Affiliate, except in the event of
your death or your permanent and total disability, as defined in Section 22(e)
of the Code. (The definition of disability in Section 22(e) of the Code is
different from the definition of the Disability under the Plan). The Company has
provided for extended exercisability of your option under certain circumstances
for your benefit but cannot guarantee that your option will necessarily be
treated as an Incentive Stock Option if you continue to provide services to the
Company or an Affiliate as a Consultant or Director after your employment
terminates or if you otherwise exercise your option more than three (3) months
after the date your employment with the Company or an Affiliate terminates.

 

8.             Exercise.

 

(a)          You may exercise the vested portion of your option (and the
unvested portion of your option if your Grant Notice so permits) during its term
by delivering a Notice of Exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require.

 

(b)          By exercising your option you agree that, as a condition to any
exercise of your option, the Company may require you to enter into an
arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of (1) the exercise of
your option, (2) the lapse of any substantial risk of forfeiture to which the
shares of Common Stock are subject at the time of exercise, or (3) the
disposition of shares of Common Stock acquired upon such exercise.

 

 A- iii

 

 

(c)          If your option is an Incentive Stock Option, by exercising your
option you agree that you will notify the Company in writing within fifteen (15)
days after the date of any disposition of any of the shares of the Common Stock
issued upon exercise of your option that occurs within two (2) years after the
date of your option grant or within one (1) year after such shares of Common
Stock are transferred upon exercise of your option.

 

(d)          By exercising your option you agree that you shall not sell,
dispose of, transfer, make any short sale of, grant any option for the purchase
of, or enter into any hedging or similar transaction with the same economic
effect as a sale, any shares of Common Stock or other securities of the Company
held by you, for a period of time specified by the managing underwriter(s) (not
to exceed one hundred eighty (180) days) following the effective date of a
registration statement of the Company filed under the Securities Act (the “Lock
Up Period”); provided, however, that nothing contained in this section shall
prevent the exercise of a repurchase option, if any, in favor of the Company
during the Lock Up Period. You further agree to execute and deliver such other
agreements as may be reasonably requested by the Company and/or the
underwriter(s) that are consistent with the foregoing or that are necessary to
give further effect thereto. In order to enforce the foregoing covenant, the
Company may impose stop-transfer instructions with respect to your shares of
Common Stock until the end of such period. The underwriters of the Company’s
stock are intended third party beneficiaries of this Section 8(d) and shall have
the right, power and authority to enforce the provisions hereof as though they
were a party hereto.

 

9.             Transferability. Your option is not transferable, except by will
or by the laws of descent and distribution, and is exercisable during your life
only by you. Notwithstanding the foregoing, by delivering written notice to the
Company, in a form satisfactory to the Company, you may designate a third party
who, in the event of your death, shall thereafter be entitled to exercise your
option.

 

10.           Change In Control.

 

(a)          If a Change in Control occurs and as of the effective time of such
Change in Control your Continuous Service terminates due to an involuntary
termination (not including death or Disability) without Cause or due to a
voluntary termination with Good Reason, then, as of the date of termination of
Continuous Service, the vesting and exercisability of your option shall be
accelerated in full.

 

(b)          “Cause” means the occurrence of any one or more of the following:
(i) your commission of any crime involving fraud, dishonesty or moral turpitude;
(ii) your attempted commission of or participation in a fraud or act of
dishonesty against the Company that results in (or might have reasonably
resulted in) material harm to the business of the Company; (iii) your
intentional, material violation of any contract or agreement between you and the
Company or any statutory duty you owe to the Company; or (iv) your conduct that
constitutes gross insubordination, incompetence or habitual neglect of duties
and that results in (or might have reasonably resulted in) material harm to the
business of the Company; provided, however, that the action or conduct described
in clauses (iii) and (iv) above will constitute “Cause” only if such action or
conduct continues after the Company has provided you with written notice thereof
and thirty (30) days to cure the same.

 

 A- iv

 

 

(c)          “Good Reason” means that one or more of the following are
undertaken by the Company without your express written consent: (i) the
assignment to you of any duties or responsibilities that results in a material
diminution in your function as in effect immediately prior to the effective date
of the Change in Control; provided, however, that a change in your title or
reporting relationships shall not provide the basis for a voluntary termination
with Good Reason; (ii) a material reduction by the Company in your annual base
salary, as in effect on the effective date of the Change in Control or as
increased thereafter; provided, however, that Good Reason shall not be deemed to
have occurred in the event of a reduction in your annual base salary that is
pursuant to a salary reduction program affecting substantially all of the
employees of the Company and that does not adversely affect you to a greater
extent than other similarly situated employees; (iii) any failure by the Company
to continue in effect any benefit plan or program, including incentive plans or
plans with respect to the receipt of securities of the Company, in which you
were participating immediately prior to the effective date of the Change in
Control (hereinafter referred to as “Benefit Plans”), or the taking of any
action by the Company that would adversely affect your participation in or
reduce your benefits under the Benefit Plans or deprive you of any fringe
benefit that you enjoyed immediately prior to the effective date of the Change
in Control; provided, however, that Good Reason shall not be deemed to have
occurred if the Company provides for your participation in benefit plans and
programs that, taken as a whole, are comparable to the Benefit Plans; (iv) a
relocation of your business office to a location more than fifty (50) miles from
the location at which you performed your duties as of the effective date of the
Change in Control, except for required travel by you on the Company’s business
to an extent substantially consistent with your business travel obligations
prior to the effective date of the Change in Control; or (v) a material breach
by the Company of any provision of the Plan or the Option Agreement or any other
material agreement between you and the Company concerning the terms and
conditions of your employment.

 

11.           Option not a Service Contract. Your option is not an employment or
service contract, and nothing in your option shall be deemed to create in any
way whatsoever any obligation on your part to continue in the employ of the
Company or an Affiliate, or of the Company or an Affiliate to continue your
employment. In addition, nothing in your option shall obligate the Company or an
Affiliate, their respective stockholders, Boards of Directors, Officers or
Employees to continue any relationship that you might have as a Director or
Consultant for the Company or an Affiliate.

 

12.           Withholding Obligations.

 

(a)          At the time you exercise your option, in whole or in part, or at
any time thereafter as requested by the Company, you hereby authorize
withholding from payroll and any other amounts payable to you, and otherwise
agree to make adequate provision for (including by means of a “cashless
exercise” pursuant to a program developed under Regulation T as promulgated by
the Federal Reserve Board to the extent permitted by the Company), any sums
required to satisfy the federal, state, local and foreign tax withholding
obligations of the Company or an Affiliate, if any, which arise in connection
with the exercise of your option.

 

(b)          Upon your request and subject to approval by the Company, in its
sole discretion, and compliance with any applicable legal conditions or
restrictions, the Company may withhold from fully vested shares of Common Stock
otherwise issuable to you upon the exercise of your option a number of whole
shares of Common Stock having a Fair Market Value, determined by the Company as
of the date of exercise, not in excess of the minimum amount of tax required to
be withheld by law (or such lower amount as may be necessary to avoid variable
award accounting). If the date of determination of any tax withholding
obligation is deferred to a date later than the date of exercise of your option,
share withholding pursuant to the preceding sentence shall not be permitted
unless you make a proper and timely election under Section 83(b) of the Code,
covering the aggregate number of shares of Common Stock acquired upon such
exercise with respect to which such determination is otherwise deferred, to
accelerate the determination of such tax withholding obligation to the date of
exercise of your option. Notwithstanding the filing of such election, shares of
Common Stock shall be withheld solely from fully vested shares of Common Stock
determined as of the date of exercise of your option that are otherwise issuable
to you upon such exercise. Any adverse consequences to you arising in connection
with such share withholding procedure shall be your sole responsibility.

 

 A- v

 

 

(c)          You may not exercise your option unless the tax withholding
obligations of the Company and/or any Affiliate are satisfied. Accordingly, you
may not be able to exercise your option when desired even though your option is
vested, and the Company shall have no obligation to issue a certificate for such
shares of Common Stock or release such shares of Common Stock from any escrow
provided for herein unless such obligations are satisfied.

 

13.           Notices. Any notices provided for in your option or the Plan shall
be given in writing and shall be deemed effectively given upon receipt or, in
the case of notices delivered by mail by the Company to you, five (5) days after
deposit in the United States mail, postage prepaid, addressed to you at the last
address you provided to the Company.

 

14.           Governing Plan Document. Your option is subject to all the
provisions of the Plan, the provisions of which are hereby made a part of your
option, and is further subject to all interpretations, amendments, rules and
regulations, which may from time to time be promulgated and adopted pursuant to
the Plan. In the event of any conflict between the provisions of your option and
those of the Plan, the provisions of the Plan shall control.

 

 A- vi

 

 

Attachment B

 

Janel Corporation
Stock Option Grant Notice
(2017 Equity Incentive Plan)

 

Janel Corporation (the “Company”), pursuant to its 2017 Equity Incentive Plan
(the “Plan”), hereby grants to Optionholder an option to purchase the number of
shares of the Company’s Common Stock set forth below. This option is subject to
all of the terms and conditions as set forth herein and in the Stock Option
Agreement, the Plan and the Notice of Exercise, all of which are attached hereto
and incorporated herein in their entirety.

 

Optionholder:   Date of Grant:   Vesting Commencement Date:   Number of Shares
Subject to Option:   Exercise Price (Per Share):   Total Exercise Price:  
Expiration Date:  

 

Type of Grant: ¨ Incentive Stock Option1 ¨ Non-statutory Stock Option      
Exercise Schedule: ¨ Same as Vesting Schedule ¨ Early Exercise Permitted

 

Vesting Schedule:

 

Payment:By one or a combination of the following items (described in the Stock
Option Agreement):

 

¨By cash or check

¨Pursuant to a Regulation T Program if the Shares are publicly traded

¨By delivery of already-owned shares if the Shares are publicly traded

¨By deferred payment

 

Additional Terms/Acknowledgements: The undersigned Optionholder acknowledges
receipt of, and understands and agrees to, this Stock Option Grant Notice, the
Stock Option Agreement and the Plan. Optionholder further acknowledges that as
of the Date of Grant, this Stock Option Grant Notice, the Stock Option Agreement
and the Plan set forth the entire understanding between Optionholder and the
Company regarding the acquisition of stock in the Company and supersede all
prior oral and written agreements on that subject with the exception of (i)
options previously granted and delivered to Optionholder under the Plan, and
(ii) the following agreements only:

 

Other Agreements:          

 

 

1           If this is an Incentive Stock Option, it (plus other outstanding
Incentive Stock Options) cannot be first exercisable for more than $100,000 in
value (measured by exercise price) in any calendar year. Any excess over
$100,000 is a Nonstatutory Stock Option.

 

 B- i

 

 

Janel Corporation   Optionholder:           By:         Signature     Signature
          Title:     Date:             Date:        

 

Attachments: Stock Option Agreement, 2017 Equity Incentive Plan and Notice of
Exercise

 

 B- ii

 

 

Attachment C

 

NOTICE OF EXERCISE

 

TO: Janel Corporation

 

Date of Exercise: _______________

 

Ladies and Gentlemen:

 

This constitutes notice under my stock option that I elect to purchase the
number of shares for the price set forth below.

 

Type of option (check one): Incentive  ¨ Non-statutory  ¨ Stock option dated:  
  Number of shares as to which option is exercised:     Certificates to be
issued in name of:     Total exercise price: $   Cash payment delivered
herewith: $   Promissory note delivered herewith: $   Value of ________ shares
of common stock delivered herewith2: $  

 

By this exercise, I agree (i) to provide such additional documents as you may
require pursuant to the terms of the 2017 Equity Incentive Plan, (ii) to provide
for the payment by me to you (in the manner designated by you) of your
withholding obligation, if any, relating to the exercise of this option, and
(iii) if this exercise relates to an incentive stock option, to notify you in
writing within fifteen (15) days after the date of any disposition of any of the
shares of Common Stock issued upon exercise of this option that occurs within
two (2) years after the date of grant of this option or within one (1) year
after such shares of Common Stock are issued upon exercise of this option.

 

 

2           Shares must meet the public trading requirements set forth in the
option. Shares must be valued in accordance with the terms of the option being
exercised, must have been owned for the minimum period required in the option,
and must be owned free and clear of any liens, claims, encumbrances or security
interests. Certificates must be endorsed or accompanied by an executed
assignment separate from certificate.

 

 C- i

 

 

I hereby make the following certifications and representations with respect to
the number of shares of Common Stock of the Company listed above (the “Shares”),
which are being acquired by me for my own account upon exercise of the Option as
set forth above:

 

I acknowledge that the Shares have not been registered under the Securities Act
of 1933, as amended (the “Securities Act”), and are deemed to constitute
“restricted securities” under Rule 701 and “control securities” under Rule 144
promulgated under the Securities Act. I warrant and represent to the Company
that I have no present intention of distributing or selling said Shares, except
as permitted under the Securities Act and any applicable state securities laws.

 

I further acknowledge that I will not be able to resell the Shares for at least
ninety days (90) after the stock of the Company becomes publicly traded (i.e.,
subject to the reporting requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934) under Rule 701 and that more restrictive conditions apply
to affiliates of the Company under Rule 144.

 

I further acknowledge that all certificates representing any of the Shares
subject to the provisions of the Option shall have endorsed thereon appropriate
legends reflecting the foregoing limitations, as well as any legends reflecting
restrictions pursuant to the Company’s Articles of Incorporation, Bylaws and/or
applicable securities laws.

 

I further agree that, if required by the Company (or a representative of the
underwriters) in connection with the first underwritten registration of the
offering of any securities of the Company under the Securities Act, I will not
sell, dispose of, transfer, make any short sale of, grant any option for the
purchase of, or enter into any hedging or similar transaction with the same
economic effect as a sale, any Shares or other securities of the Company held by
me, for a period of time specified by the underwriter(s) (not to exceed one
hundred eighty (180) days) following the effective date of the registration
statement of the Company filed under the Securities Act. I further agree to
execute and deliver such other agreements as may be reasonably requested by the
Company and/or the underwriter(s) that are consistent with the foregoing or that
are necessary to give further effect thereto. In order to enforce the foregoing
covenant, the Company may impose stop-transfer instructions with respect to my
Shares until the end of such period.

 

  Very truly yours,        

 

 C- ii