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Bonds.com 8-K [bonds-8k_0206.htm]
 
Exhibit 10.14

BONDS.COM GROUP, INC.
 
2011 EQUITY PLAN
 
1.           Purposes of the Plan. The purposes of this 2011 Equity Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees, Consultants and
Directors and to promote the success of the Company’s business. Options granted
under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as
determined by the Administrator at the time of grant of an option and subject to
the applicable provisions of Section 422 of the Code and the regulations and
interpretations promulgated thereunder. Stock purchase rights may also be
granted under the Plan.
 
2.           Definitions. As used herein, the following definitions shall apply:
 
(a)           “Administrator” means the Board or its Committee appointed
pursuant to Section 4 of the Plan.
 
(b)           “Affiliate” means an entity other than a Subsidiary (as defined
below) which, together with the Company, is under common control of a third
person or entity.
 
(c)           “Applicable Laws” means the legal requirements relating to the
administration of stock option and restricted stock purchase plans, including
under applicable U.S. state corporate laws, U.S. federal and applicable state
securities laws, other U.S. federal and state laws, the Code, any Stock Exchange
rules or regulations and the applicable laws, rules and regulations of any other
country or jurisdiction where Options or Stock Purchase Rights are granted under
the Plan, as such laws, rules, regulations and requirements shall be in place
from time to time.
 
(d)           “Board” means the Board of Directors of the Company.
 
(e)           “Cause” for termination of a Participant’s Continuous Service
Status will exist if the Participant is terminated by the Company for any of the
following reasons, unless the applicable Option Agreement or Restricted Stock
Purchase Agreement provides otherwise: (i) Participant’s willful failure
substantially to perform his or her duties and responsibilities to the Company
or deliberate violation of a Company policy; (ii) Participant’s commission of
any act of fraud, embezzlement, dishonesty or any other willful misconduct that
has caused or is reasonably expected to result in material injury to the
Company; (iii) unauthorized use or disclosure by Participant of any proprietary
information or trade secrets of the Company or any other party to whom the
Participant owes an obligation of nondisclosure as a result of his or her
relationship with the Company; or (iv) Participant’s willful breach of any of
his or her obligations under any written agreement or covenant with the Company.
The determination as to whether a Participant is being terminated for Cause
shall be made in good faith by the Administrator and shall be final and binding
on the Participant. The foregoing definition does not in any way limit the
Company’s ability to terminate a Participant’s employment or consulting
relationship at any time as provided in Section 5(d) below, and the term
“Company” will be interpreted to include any Subsidiary, Parent or Affiliate, as
appropriate.

(f)           "Change of Control" means (1) a sale of all or substantially all
of the Company’s assets, or (2) any merger, consolidation or other business
combination transaction of the Company with or into another corporation, entity
or person, other than a transaction in which the holders of at least a majority
of the shares of voting capital stock of the Company outstanding immediately
prior to such transaction continue to hold (either by such shares remaining
outstanding or by their being converted into shares of voting capital stock of
the surviving entity) a majority of the total voting power represented by the
shares of voting capital stock of the Company (or the surviving entity)
outstanding immediately after such transaction, or (3) the direct or indirect
acquisition (including by way of a tender or exchange offer) by any person, or
persons acting as a group, of beneficial ownership or a right

 
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to acquire beneficial ownership of shares representing a majority of the voting
power of the then outstanding shares of capital stock of the Company.
 
(g)           “Code” means the Internal Revenue Code of 1986, as amended.
 
(h)           “Committee” means one or more committees or subcommittees of the
Board appointed by the Board to administer the Plan in accordance with Section 4
below.
 
(i)           “Common Stock” means the Common Stock of the Company.
 
(j)           “Company” means Bonds.com Group, Inc., a Delaware corporation.
 
(k)           “Consultant” means any person other than an Employee, including an
advisor, who is engaged by the Company or any Parent, Subsidiary or Affiliate to
render services and is compensated for such services.
 
(l)           “Continuous Service Status” means the absence of any interruption
or termination of service as an Employee, Consultant or Director. Continuous
Service Status as an Employee, Consultant or Director shall not be considered
interrupted in the case of: (i) sick leave; (ii) military leave; (iii) any other
leave of absence approved by the Administrator, provided that such leave is for
a period of not more than ninety (90) days, unless reemployment upon the
expiration of such leave is guaranteed by contract or statute, or unless
provided otherwise pursuant to Company policy adopted from time to time; or
(iv) in the case of transfers between locations of the Company or between the
Company, its Parents, Subsidiaries, Affiliates or their respective successors. A
change in status from an Employee to a Consultant or Director, from a Consultant
to an Employee or Director, or from a Director to a Consultant or Employee will
not constitute an interruption of Continuous Service Status.
 
(m)           “Director” means a member of the Board who is not an Employee.
 
(n)           “Employee” means any person employed by the Company or any Parent,
Subsidiary or Affiliate, with the status of employment determined based upon
such factors as are deemed appropriate by the Administrator in its discretion,
subject to any requirements of the Code or the Applicable Laws. The payment by
the Company of a director’s fee to a Director shall not be sufficient to
constitute “employment” of such Director by the Company.
 
(o)           “Exchange Act” means the Securities Exchange Act of 1934, as
amended.
 
(p)           “Fair Market Value” means, as of any date (i) if the Common Stock
is a Listed Security, the closing price for the Shares as reported in the Wall
Street Journal for the applicable date (or, if there is no closing price on that
date, then on the last preceding date on which a closing price was reported),
and  (ii) if the Common Stock is not a Listed Security, the fair market value of
the Common Stock, as determined by the Administrator in good faith on such basis
as it deems appropriate and applied consistently with respect to Participants. .
 
(q)           “Incentive Stock Option” means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code, as
designated in the applicable Option Agreement.
 
(r)   “Listed Security” means any security of the Company that is listed or
approved for listing on a national securities exchange.
 
(s)           “Nonstatutory Stock Option” means an Option not intended to
qualify as an Incentive Stock Option, as designated in the applicable Option
Agreement.
 
 
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(t)           “Option” means a stock option granted pursuant to the Plan.
 
(u)           “Option Agreement” means a written document, the form(s) of which
shall be approved from time to time by the Administrator, reflecting the terms
of an Option granted under the Plan and includes any documents attached to or
incorporated into such Option Agreement, including, but not limited to, a notice
of stock option grant and a form of exercise notice.
 
(v)           “Option Exchange Program” means a program approved by the
Administrator whereby outstanding Options are exchanged for Options with a lower
exercise price or are amended to decrease the exercise price as a result of a
decline in the Fair Market Value of the Common Stock.
 
(w)           “Optioned Stock” means the Common Stock subject to an Option.
 
(x)           “Optionee” means an Employee, Consultant or Director who receives
an Option.
 
(y)           “Parent” means a “parent corporation,” whether now or hereafter
existing, as defined in Section 424(e) of the Code, or any successor provision.
 
(z)           “Participant” means any holder of one or more Options or Stock
Purchase Rights, or the Shares issuable or issued upon exercise of such awards,
under the Plan.
 
(aa)           “Plan” means this 2011 Equity Plan.
 
(bb)           “Reporting Person” means an officer, Director, or greater than
ten percent stockholder of the Company within the meaning of Rule 16a-2 under
the Exchange Act, who is required to file reports pursuant to Rule 16a-3 under
the Exchange Act.
 
(cc)           “Restricted Stock” means Shares of Common Stock acquired pursuant
to a grant of a Stock Purchase Right under Section 11 below.
 
(dd)           “Restricted Stock Purchase Agreement” means a written document,
the form(s) of which shall be approved from time to time by the Administrator,
reflecting the terms of a Stock Purchase Right granted under the Plan and
includes any documents attached to such agreement.
 
(ee)           “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act,
as amended from time to time, or any successor provision.
 
(ff)           “Share” means a share of the Common Stock, as adjusted in
accordance with Section 14 of the Plan.
 
(gg)           “Stock Exchange” means any stock exchange or consolidated stock
price reporting system on which prices for the Common Stock are quoted at any
given time.
 
(hh)           “Stock Purchase Right” means the right to purchase Common Stock
pursuant to Section 11 below.
 
(ii)           “Subsidiary” means a “subsidiary corporation,” whether now or
hereafter existing, as defined in Section 424(f) of the Code, or any successor
provision.

 
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(jj)           “Ten Percent Holder” means a person who owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary.
 
3.           Stock Subject to the Plan.

(a)           General. Subject to the provisions of Section 14 of the Plan, the
maximum aggregate number of Shares that may be sold under the Plan is 72,850,000
shares of Common Stock. The Shares may be authorized, but unissued, or
reacquired Common Stock. If an award should expire or become unexercisable for
any reason without having been exercised in full, or is surrendered pursuant to
an Option Exchange Program, the unpurchased Shares that were subject thereto
shall, unless the Plan shall have been terminated, become available for future
grant under the Plan. In addition, any Shares of Common Stock which are retained
by the Company upon exercise of an award in order to satisfy the exercise or
purchase price for such award or any withholding taxes due with respect to such
exercise or purchase shall be treated as not issued and shall continue to be
available under the Plan. Shares issued under the Plan and later repurchased by
the Company pursuant to any repurchase right which the Company may have shall be
available for future grant under the Plan. Shares sold under awards issued by
the Company in assumption of, or in substitution or exchange for, awards
previously granted, by a company acquired by the Company or any Subsidiary or
with which the Company or any Subsidiary combines shall not reduce the maximum
in the first sentence of this Section.

(b)           Individual Limit. Subject to the provisions of Section 14 of the
Plan, the maximum aggregate number of Shares which may be subject to Options and
Stock Purchase Rights granted under the Plan to any individual in any calendar
year shall not exceed 72,850,000 shares of Common Stock. To the extent required
by Section 162(m) of the Code, shares subject to Options and Stock Purchase
Rights which are canceled continue to be counted against such limit.
 
4.           Administration of the Plan.
 
(a)           General. The Plan shall be administered by the Board or a
Committee, or a combination thereof, as determined by the Board. The Plan may be
administered by different administrative bodies with respect to different
classes of Participants and, if permitted by the Applicable Laws, the Board may
authorize one or more officers to make awards under the Plan.
 
(b)           Committee Composition. If a Committee has been appointed pursuant
to this Section 4, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time the Board may
increase the size of any Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members in substitution
therefor, fill vacancies (however caused) and remove all members of a Committee
and thereafter directly administer the Plan, all to the extent permitted by the
Applicable Laws and, in the case of a Committee administering the Plan in
accordance with the requirements of Rule 16b-3 or Section 162(m) of the Code, to
the extent permitted or required by such provisions. The Committee shall in all
events conform to any requirements of the Applicable Laws.
 
(c)           Powers of the Administrator. Subject to the provisions of the Plan
and in the case of a Committee, the specific duties delegated by the Board to
such Committee, the Administrator shall have the authority, in its discretion:
 
(i)           to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(q) of the Plan, provided that such determination shall
be applied consistently with respect to Participants under the Plan;
 
(ii)           to select the Employees, Consultants and  Directors to whom Plan
awards may from time to time be granted;
 

 
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(iii)           to determine whether and to what extent Plan awards are granted;
 
(iv)           to determine the number of Shares of Common Stock to be covered
by each award granted;
 
(v)           to approve the form(s) of agreement(s) used under the Plan;
 
(vi)           to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any award granted hereunder, which terms and conditions
include but are not limited to the exercise or purchase price, the time or times
when awards may be exercised (which may be based on performance criteria), any
vesting acceleration or waiver of forfeiture restrictions, any pro rata
adjustment to vesting as a result of a Participant’s transitioning from full- to
part-time service (or vice versa), and any restriction or limitation regarding
any Option, Optioned Stock, Stock Purchase Right or Restricted Stock, based in
each case on such factors as the Administrator, in its sole discretion, shall
determine;
 
(vii)           to determine whether and under what circumstances an Option may
be settled in cash under Section 10(c) instead of Common Stock;
 
(viii)           to implement an Option Exchange Program on such terms and
conditions as the Administrator in its discretion deems appropriate, provided
that no amendment or adjustment to an Option that would materially and adversely
affect the rights of any Optionee shall be made without the prior written
consent of the Optionee;
 
(ix)           to adjust the vesting of an Option held by an Employee or
Consultant as a result of a change in the terms or conditions under which such
person is providing services to the Company;
 
(x)           to construe and interpret the terms of the Plan and awards granted
under the Plan, which constructions, interpretations and decisions shall be
final and binding on all Participants; and
 
(xi)           in order to fulfill the purposes of the Plan and without amending
the Plan, to modify grants of Options or Stock Purchase Rights to Participants
who are foreign nationals or employed outside of the United States in order to
recognize differences in local law, tax policies or customs.
 
5.           Eligibility.
 
(a)           Recipients of Grants. Nonstatutory Stock Options and Stock
Purchase Rights may be granted to Employees, Consultants and Directors.
Incentive Stock Options may be granted only to Employees, provided that
Employees of Affiliates shall not be eligible to receive Incentive Stock
Options.
 
(b)           Type of Option. Each Option shall be designated in the Option
Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.
 
(c)           ISO $100,000 Limitation. Notwithstanding any designation under
Section 5(b), to the extent that the aggregate Fair Market Value of Shares with
respect to which Options designated as Incentive Stock Options are exercisable
for the first time by any Optionee during any calendar year (under all plans of
the Company or any Parent or Subsidiary) exceeds $100,000, such excess Options
shall be treated as Nonstatutory Stock Options. For purposes of this
Section 5(c), Incentive Stock Options shall be taken into account in the order
in which they were granted, and the Fair Market Value of the Shares subject to
an Incentive Stock Option shall be determined as of the date of the grant of
such Option.
 

 
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(d)           No Employment Rights. The Plan shall not confer upon any
Participant any right with respect to continuation of an employment or
consulting relationship with the Company, nor shall it interfere in any way with
such Participant’s right or the Company’s right to terminate the employment or
consulting relationship at any time for any reason.
 
6.           Term of Plan. The Plan shall become effective upon its adoption by
the Board of Directors. It shall continue in effect for a term of ten (10) years
unless sooner terminated under Section 16 of the Plan.
 
7.           Term of Option. The term of each Option shall be the term stated in
the Option Agreement; provided that the term shall be no more than ten years
from the date of grant thereof or such shorter term as may be provided in the
Option Agreement and provided further that, in the case of an Incentive Stock
Option granted to a person who at the time of such grant is a Ten Percent
Holder, the term of the Option shall be five years from the date of grant
thereof or such shorter term as may be provided in the Option Agreement.
 
8.           [Reserved]
 
9.           Option Exercise Price and Consideration.
 
(a)           Exercise Price. The per Share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be such price as is determined by
the Administrator and set forth in the Option Agreement, but shall be subject to
the following:
 
(i)           In the case of an Incentive Stock Option
 
(A)           granted to an Employee who at the time of grant is a Ten Percent
Holder, the per Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant; or
 
(B)           granted to any other Employee, the per Share exercise price shall
be no less than 100% of the Fair Market Value per Share on the date of grant.
 
(ii)           In the case of a Nonstatutory Stock Option, the per share
Exercise Price shall be no less than 100% of the Fair Market Value on the date
of grant.
 
(iii)           Notwithstanding the foregoing, Options may be granted with a per
Share exercise price other than as required above pursuant to a merger or other
corporate transaction.
 
(b)           Permissible Consideration. The consideration to be paid for the
Shares to be issued upon exercise of an Option, including the method of payment,
shall be determined by the Administrator (and, in the case of an Incentive Stock
Option, shall be determined at the time of grant) and may consist entirely of
(1) cash; (2) check; (3) subject to any requirements of the Applicable Laws
(including without limitation Section 153 of the Delaware General Corporation
Law), delivery of Optionee’s promissory note having such recourse, interest,
security and redemption provisions as the Administrator determines to be
appropriate after taking into account the potential accounting consequences of
permitting an Optionee to deliver a promissory note; (4) cancellation of
indebtedness; (5) other Shares that have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which the
Option is exercised; (6) if, as of the date of exercise of an Option the Company
then is permitting employees to engage in a “same-day sale” cashless brokered
exercise program involving one or more brokers, through such a program that
complies with the Applicable Laws (including without limitation the requirements
of Regulation T and other applicable regulations promulgated by the Federal
Reserve Board) and that ensures prompt delivery to the Company of the amount
required to pay the exercise price and any applicable withholding taxes; or (7)
any combination of the foregoing methods of payment. In making its determination
as to

 
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the type of consideration to accept, the Administrator shall consider if
acceptance of such consideration may be reasonably expected to benefit the
Company and the Administrator may, in its sole discretion, refuse to accept a
particular form of consideration at the time of any Option exercise.
 
10.           Exercise of Option.
 
(a)           General.
 
(i)           Exercisability. Any Option granted hereunder shall be exercisable
at such times and under such conditions as determined by the Administrator,
consistent with the term of the Plan and reflected in the Option Agreement,
including vesting requirements and/or performance criteria with respect to the
Company and/or the Optionee; provided however that, if required under the
Applicable Laws, the Option (or Shares issued upon exercise of the Option) shall
comply with the requirements of Section 260.140.41(f) and (k) of the Rules of
the California Corporations Commissioner.
 
(ii)           Leave of Absence. The Administrator shall have the discretion to
determine whether and to what extent the vesting of Options shall be tolled
during any unpaid leave of absence. In the event of military leave, vesting
shall toll during any unpaid portion of such leave, provided that, upon a
Participant’s returning from military leave (under conditions that would entitle
him or her to protection upon such return under the Uniform Services Employment
and Reemployment Rights Act), he or she shall be given vesting credit with
respect to Options to the same extent as would have applied had the Participant
continued to provide services to the Company throughout the leave on the same
terms as he or she was providing services immediately prior to such leave.
 
(iii)           Minimum Exercise Requirements. An Option may not be exercised
for a fraction of a Share. The Administrator may require that an Option be
exercised as to a minimum number of Shares, provided that such requirement shall
not prevent an Optionee from exercising the full number of Shares as to which
the Option is then exercisable.
 
(iv)           Procedures for and Results of Exercise. An Option shall be deemed
exercised when written notice of such exercise has been given to the Company in
accordance with the terms of the Option by the person entitled to exercise the
Option and the Company has received full payment for the Shares with respect to
which the Option is exercised. Full payment may, as authorized by the
Administrator, consist of any consideration and method of payment allowable
under Section 9(b) of the Plan, provided that the Administrator may, in its sole
discretion, refuse to accept any form of consideration at the time of any Option
exercise.
 
Exercise of an Option in any manner shall result in a decrease in the number of
Shares that thereafter may be available, both for purposes of the Plan and for
sale under the Option, by the number of Shares as to which the Option is
exercised.
 
(v)           Rights as Stockholder. Until the issuance of the Shares (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or receive dividends
or any other rights as a stockholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. No adjustment will be made
for a dividend or other right for which the record date is prior to the date the
stock certificate is issued, except as provided in Section 14 of the Plan.
 
(b)           Termination of Continuous Service Status. Except as otherwise set
forth in this Section 10(b), the Administrator shall establish and set forth in
the applicable Option Agreement the terms and conditions upon which an Option
shall remain exercisable, if at all, following termination of an Optionee’s
Continuous Service Status, which provisions may be waived or modified by the
Administrator at any time. Unless the Administrator otherwise provides in the
Option Agreement, to the extent that the Optionee is not vested in Optioned
Stock at the date of termination of his or her Continuous Service Status, or if
the Optionee (or other person

 
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entitled to exercise the Option) does not exercise the Option to the extent so
entitled within the time specified in the Option Agreement or below (as
applicable), the Option shall terminate and the Optioned Stock underlying the
unexercised portion of the Option shall revert to the Plan. In no event may any
Option be exercised after the expiration of the Option term as set forth in the
Option Agreement (and subject to Section 7).
 
The following provisions (1) shall apply to the extent an Option Agreement does
not specify the terms and conditions upon which an Option shall terminate upon
termination of an Optionee’s Continuous Service Status, and (2) establish the
minimum post-termination exercise periods that may be set forth in an Option
Agreement:
 
(i)           Termination other than Upon Disability or Death or for Cause. In
the event of termination of Optionee’s Continuous Service Status other than
under the circumstances set forth in subsections (ii) through (v) below, such
Optionee may exercise an Option for 30 days following such termination to the
extent the Optionee was vested in the Optioned Stock as of the date of such
termination.  No termination shall be deemed to occur and this Section 10(b)(i)
shall not apply if (i) the Optionee is a Consultant who becomes an Employee or
Director, (ii) the Optionee is an Employee who becomes a Consultant or Director,
or (ii) the Optionee is a Director who becomes a Consultant or Employee.
 
(ii)           Disability of Optionee. In the event of termination of an
Optionee’s Continuous Service Status as a result of his or her disability
(including a disability within the meaning of Section 22(e)(3) of the Code),
such Optionee may exercise an Option at any time within six months following
such termination to the extent the Optionee was vested in the Optioned Stock as
of the date of such termination.
 
(iii)           Death of Optionee. In the event of the death of an Optionee
during the period of Continuous Service Status since the date of grant of the
Option, or within thirty days following termination of Optionee’s Continuous
Service Status, the Option may be exercised by Optionee’s estate or by a person
who acquired the right to exercise the Option by bequest or inheritance at any
time within twelve months following the date of death, but only to the extent
the Optionee was vested in the Optioned Stock as of the date of death or, if
earlier, the date the Optionee’s Continuous Service Status terminated.
 
(iv)           Termination for Cause. In the event of termination of an
Optionee’s Continuous Service Status for Cause, any Option (including any
exercisable portion thereof) held by such Optionee shall immediately terminate
in its entirety upon first notification to the Optionee of termination of the
Optionee’s Continuous Service Status. If an Optionee’s employment, consulting or
director relationship with the Company is suspended pending an investigation of
whether the Optionee shall be terminated for Cause, all the Optionee’s rights
under any Option likewise shall be suspended during the investigation period and
the Optionee shall have no right to exercise any Option. This Section 10(b)(iv)
shall apply with equal effect to vested Shares acquired upon exercise of an
Option granted on any date on which the Common Stock is not a Listed Security to
a person other than an officer, Director or Consultant, in that the Company
shall have the right to repurchase such Shares from the Participant upon the
following terms: (A) the repurchase is made within 90 days of termination of the
Participant’s Continuous Service Status for Cause at the Fair Market Value of
the Shares as of the date of termination, (B) consideration for the repurchase
consists of cash or cancellation of purchase money indebtedness, and (C) the
repurchase right terminates upon the effective date of the Company’s initial
public offering of its Common Stock. With respect to vested Shares issued upon
exercise of an Option granted to any officer, Director or Consultant, the
Company’s right to repurchase such Shares upon termination of the Participant’s
Continuous Service Status for Cause shall be made at the Participant’s original
cost for the Shares and shall be effected pursuant to such terms and conditions,
and at such time, as the Administrator shall determine. Nothing in this Section
10(b)(iv) shall in any way limit the Company’s right to purchase unvested Shares
issued upon exercise of an Option as set forth in the applicable Option
Agreement.
 
(c)           Buyout Provisions. The Administrator may at any time offer to buy
out for a payment in cash or Shares an Option previously granted under the Plan
based on such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer is made.

 
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11.           Stock Purchase Rights.
 
(a)           Rights to Purchase. When the Administrator determines that it will
offer Stock Purchase Rights under the Plan, it shall advise the offeree in
writing of the terms, conditions and restrictions related to the offer,
including the number of Shares that such person shall be entitled to purchase,
the price to be paid, and the time within which such person must accept such
offer. In the case of a Stock Purchase Right granted prior to the date, if any,
on which the Common Stock becomes a Listed Security and if required by the
Applicable Laws at that time, the purchase price of Shares subject to such Stock
Purchase Rights shall not be less than 85% of the Fair Market Value of the
Shares as of the date of the offer, or, in the case of a Ten Percent Holder, the
price shall not be less than 100% of the Fair Market Value of the Shares as of
the date of the offer. If the Applicable Laws do not impose the requirements set
forth in the preceding sentence and with respect to any Stock Purchase Rights
granted after the date, if any, on which the Common Stock becomes a Listed
Security, the purchase price of Shares subject to Stock Purchase Rights shall be
as determined by the Administrator. The offer to purchase Shares subject to
Stock Purchase Rights shall be accepted by execution of a Restricted Stock
Purchase Agreement in the form determined by the Administrator.
 
(b)           Repurchase Option.
 
(i)           General. Unless the Administrator determines otherwise, the
Restricted Stock Purchase Agreement shall grant the Company a repurchase option
exercisable upon the termination of the purchaser’s Continuous Service Status
for any reason (including death or disability). Subject to any requirements of
the Applicable Laws, the terms of the Company’s repurchase option (including
without limitation the price at which, and the consideration for which, it may
be exercised, and the events upon which it shall lapse) shall be as determined
by the Administrator in its sole discretion and reflected in the Restricted
Stock Purchase Agreement.
 
(ii)           Leave of Absence. The Administrator shall have the discretion to
determine whether and to what extent the lapsing of Company repurchase rights
shall be tolled during any unpaid leave of absence. In the event of military
leave, the lapsing of Company repurchase rights shall toll during any unpaid
portion of such leave, provided that, upon a Participant’s returning from
military leave (under conditions that would entitle him or her to protection
upon such return under the Uniform Services Employment and Reemployment Rights
Act), he or she shall be given “vesting” credit with respect to Shares purchased
pursuant to the Restricted Stock Purchase Agreement to the same extent as would
have applied had the Participant continued to provide services to the Company
throughout the leave on the same terms as he or she was providing services
immediately prior to such leave.
 
(iii)           Termination for Cause. In the event of termination of a
Participant’s Continuous Service Status for Cause, the Company shall have the
right to repurchase from the Participant vested Shares issued upon exercise of a
Stock Purchase Right granted to any person other than an officer, Director or
Consultant prior to the date, if any, upon which the Common Stock becomes a
Listed Security upon the following terms: (A) the repurchase must be made within
90 days of termination of the Participant’s Continuous Service Status for Cause
at the Fair Market Value of the Shares as of the date of termination, (B)
consideration for the repurchase consists of cash or cancellation of purchase
money indebtedness, and (C) the repurchase right terminates upon the effective
date of the Company’s initial public offering of its Common Stock. With respect
to vested Shares issued upon exercise of a Stock Purchase Right granted to any
officer, Director or Consultant, the Company’s right to repurchase such Shares
upon termination of such Participant’s Continuous Service Status for Cause shall
be made at the Participant’s original cost for the Shares and shall be effected
pursuant to such terms and conditions, and at such time, as the Administrator
shall determine. Nothing in this Section 11(b)(ii) shall in any way limit the
Company’s right to purchase unvested Shares as set forth in the applicable
Restricted Stock Purchase Agreement.
 
(c)           Other Provisions. The Restricted Stock Purchase Agreement shall
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole

 
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discretion. In addition, the provisions of Restricted Stock Purchase Agreements
need not be the same with respect to each purchaser.
 
(d)           Rights as a Stockholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
stockholder, and shall be a stockholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 14
of the Plan.
 
12.           Taxes.
 
(a)           As a condition of the grant, vesting or exercise of an Option or
Stock Purchase Right granted under the Plan, the Participant (or in the case of
the Participant’s death, the person exercising the Option or Stock Purchase
Right) shall make such arrangements as the Administrator may require for the
satisfaction of any applicable federal, state, local or foreign withholding tax
obligations that may arise in connection with such grant, vesting or exercise of
the Option or Stock Purchase Right or the issuance of Shares. The Company shall
not be required to issue any Shares under the Plan until such obligations are
satisfied. If the Administrator allows the withholding or surrender of Shares to
satisfy a Participant’s tax withholding obligations under this Section 12
(whether pursuant to Section 12(c), (d) or (e), or otherwise), the Administrator
shall not allow Shares to be withheld in an amount that exceeds the minimum
statutory withholding rates for federal and state tax purposes, including
payroll taxes.
 
(b)           In the case of an Employee and in the absence of any other
arrangement, the Employee shall be deemed to have directed the Company to
withhold or collect from his or her compensation an amount sufficient to satisfy
such tax obligations from the next payroll payment otherwise payable after the
date of an exercise of the Option or Stock Purchase Right.
  
(c)           This Section 12(c) shall apply only after the date, if any, upon
which the Common Stock becomes a Listed Security. In the case of an Employee
where the next payroll payment is not sufficient to satisfy such tax
obligations, with respect to any remaining tax obligations), in the absence of
any other arrangement and to the extent permitted under the Applicable Laws, the
Participant shall be deemed to have elected to have the Company withhold from
the Shares to be issued upon exercise of the Option or Stock Purchase Right that
number of Shares having a Fair Market Value determined as of the applicable Tax
Date (as defined below) equal to the amount required to be withheld. For
purposes of this Section 12, the Fair Market Value of the Shares to be withheld
shall be determined on the date that the amount of tax to be withheld is to be
determined under the Applicable Laws (the “Tax Date”).
 
(d)           If permitted by the Administrator, in its discretion, a
Participant may satisfy his or her tax withholding obligations upon exercise of
an Option or Stock Purchase Right by surrendering to the Company Shares that
have a Fair Market Value determined as of the applicable Tax Date equal to the
amount required to be withheld.
 
(e)           Any election or deemed election by a Participant to have Shares
withheld to satisfy tax withholding obligations under Section 12(c) or (d) above
shall be irrevocable as to the particular Shares as to which the election is
made and shall be subject to the consent or disapproval of the Administrator.
Any election by a Participant under Section 12(d) above must be made on or prior
to the applicable Tax Date.
 
(f)           In the event an election to have Shares withheld is made by a
Participant and the Tax Date is deferred under Section 83 of the Code because no
election is filed under Section 83(b) of the Code, the Participant shall receive
the full number of Shares with respect to which the Option or Stock Purchase
Right is exercised but such Participant shall be unconditionally obligated to
tender back to the Company the proper number of Shares on the Tax Date.

 
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13.           Non-Transferability of Options and Stock Purchase Rights.
 
(a)           General. Except as set forth in this Section 13, Options and Stock
Purchase Rights may not be sold, pledged, assigned, hypothecated, transferred or
disposed of in any manner other than by will or by the laws of descent or
distribution. The designation of a beneficiary by an Optionee will not
constitute a transfer. An Option or Stock Purchase Right may be exercised,
during the lifetime of the holder of an Option or Stock Purchase Right, only by
such holder or a transferee permitted by this Section 13.
 
(b)           Limited Transferability Rights. Notwithstanding anything else in
this Section 13, the Administrator may in its discretion grant Nonstatutory
Stock Options that may be transferred by instrument to an inter vivos or
testamentary trust in which the Options are to be passed to beneficiaries upon
the death of the trustor (settlor) or by gift or pursuant to domestic relations
orders to "Immediate Family Members" (as defined below) of the Optionee.
"Immediate Family" means any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law
(including adoptive relationships), a trust in which these persons have more
than fifty percent of the beneficial interest, a foundation in which these
persons (or the Optionee) control the management of assets, and any other entity
in which these persons (or the Optionee) own more than fifty percent of the
voting interests.
 
14.           Adjustments Upon Changes in Capitalization, Merger or Certain
Other Transactions.
 
(a)           Changes in Capitalization. Subject to any action required under
Applicable Laws by the stockholders of the Company, the number of Shares of
Common Stock covered by each outstanding award, the numbers of Shares set forth
in Section 3(a) and 3(b), and the number of Shares of Common Stock that have
been authorized for issuance under the Plan but as to which no awards have yet
been granted or that have been returned to the Plan upon cancellation or
expiration of an award, as well as the price per Share of Common Stock covered
by each such outstanding award, shall be adjusted to the extent deemed equitable
or appropriate by the Administrator, in its discretion, for any increase or
decrease in the number of issued Shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination, recapitalization or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued Shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been “effected
without receipt of consideration.” Such adjustment shall be made by the
Administrator, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of Shares of Common Stock subject to an award.
 
(b)           Dissolution or Liquidation. In the event of the dissolution or
liquidation of the Company, each Option and Stock Purchase Right will terminate
immediately prior to the consummation of such action, unless otherwise
determined by the Administrator.
 
(c)           Corporate Transaction. In the event of a Change of Control, each
outstanding Option or Stock Purchase Right shall be assumed or an equivalent
option or right shall be substituted by such successor corporation or a parent
or subsidiary of such successor corporation (the “Successor Corporation”),
unless the Successor Corporation does not agree to assume the award or to
substitute an equivalent option or right, in which case such Option or Stock
Purchase Right shall terminate upon the consummation of the
transaction.  Notwithstanding the above, in the event of a Change of Control and
irrespective of whether outstanding awards are being assumed, substituted or
terminated in connection with the transaction, the vesting and exercisability of
each outstanding Option and Stock Purchase Right shall accelerate as and to the
extent (if at all) provided in such Participant’s Option Agreement or Restricted
Stock Purchase Agreement. To the extent that an Option or Stock Purchase Right
is not exercised prior to consummation of a Change of Control in which the
Option or Stock Purchase Right is not being assumed or substituted, such Option
or Stock Purchase Right shall terminate upon such

 
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consummation and the Administrator shall notify the Optionee or holder of such
fact at least five (5) days prior to the date on which the Option or Stock
Purchase Right terminates.
 
For purposes of this Section 14(c), an Option or a Stock Purchase Right shall be
considered assumed, without limitation, if, at the time of issuance of the stock
or other consideration upon a Change of Control, as the case may be, each holder
of an Option or Stock Purchase Right would be entitled to receive upon exercise
of the award the same number and kind of shares of stock or the same amount of
property, cash or securities as such holder would have been entitled to receive
upon the occurrence of the transaction if the holder had been, immediately prior
to such transaction, the holder of the number of Shares of Common Stock covered
by the award at such time (after giving effect to any adjustments in the number
of Shares covered by the Option or Stock Purchase Right as provided for in this
Section 14); provided that if such consideration received in the transaction is
not solely common stock of the Successor Corporation, the Administrator may,
with the consent of the Successor Corporation, provide for the consideration to
be received upon exercise of the award to be solely common stock of the
Successor Corporation equal to the Fair Market Value of the per Share
consideration received by holders of Common Stock in the transaction.
 
(d)           Certain Distributions. In the event of any distribution to the
Company’s stockholders of securities of any other entity or other assets (other
than dividends payable in cash or stock of the Company) without receipt of
consideration by the Company, the Administrator may, in its discretion,
appropriately adjust the price per Share of Common Stock covered by each
outstanding Option or Stock Purchase Right to reflect the effect of such
distribution.
 
15.           Time of Granting Options and Stock Purchase Rights. The date of
grant of an Option or Stock Purchase Right shall, for all purposes, be the date
on which the Administrator makes the determination granting such Option or Stock
Purchase Right, or such other date as is determined by the Administrator,
provided that in the case of any Incentive Stock Option, the grant date shall be
the later of the date on which the Administrator makes the determination
granting such Incentive Stock Option or the date of commencement of the
Optionee’s employment relationship with the Company. Notice of the determination
shall be given to each Employee ,Consultant or  Director to whom an Option or
Stock Purchase Right is so granted within a reasonable time after the date of
such grant.
 
16.           Amendment and Termination of the Plan.
 
(a)           Authority to Amend or Terminate. The Board may at any time amend,
alter, suspend or discontinue the Plan, but no amendment, alteration, suspension
or discontinuation (other than an adjustment pursuant to Section 14 above) shall
be made that would materially and adversely affect the rights of any Optionee or
holder of Stock Purchase Rights under any outstanding grant, without his or her
consent. In addition, to the extent necessary and desirable to comply with the
Applicable Laws, the Company shall obtain stockholder approval of any Plan
amendment in such a manner and to such a degree as required.
 
(b)           Effect of Amendment or Termination. Except as to amendments which
the Administrator has the authority under the Plan to make unilaterally, no
amendment or termination of the Plan shall materially and adversely affect
Options or Stock Purchase Rights already granted, unless mutually agreed
otherwise between the Optionee or holder of the Stock Purchase Rights and the
Administrator, which agreement must be in writing and signed by the Optionee or
holder and the Company.
 
17.           Conditions Upon Issuance of Shares. Notwithstanding any other
provision of the Plan or any agreement entered into by the Company pursuant to
the Plan, the Company shall not be obligated, and shall have no liability for
failure, to issue or deliver any Shares under the Plan unless such issuance or
delivery would comply with the Applicable Laws, with such compliance determined
by the Company in consultation with its legal counsel. As a condition to the
exercise of an Option or Stock Purchase Right, the Company may require the
person exercising the award to represent and warrant at the time of any such
exercise that the Shares are being purchased only for

 
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investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation is required
by law.
 
18.           Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
 
19.           Agreements. Options and Stock Purchase Rights shall be evidenced
by Option Agreements and Restricted Stock Purchase Agreements, respectively, in
such form(s) as the Administrator shall from time to time approve.
 
20.           Stockholder Approval. If required by the Applicable Laws,
continuance of the Plan shall be subject to approval by the stockholders of the
Company within twelve (12) months before or after the date the Plan is adopted
by the Board. Such stockholder approval shall be obtained in the manner and to
the degree required under the Applicable Laws. Failure to secure stockholder
approval of the Plan within twelve (12) months after the date the Plan is
adopted by the Board shall not affect Options or Stock Purchase Rights granted
prior to such date, unless mutually agreed otherwise between the Optionee or
holder of the Stock Purchase Rights and the Administrator, which agreement must
be in writing and signed by the Optionee or holder and the Company.

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