Exhibit 10.3


 


CASTLEROCK SECURITY HOLDINGS, INC. 

2010 EQUITY INCENTIVE PLAN


 


STOCK APPRECIATION RIGHT AGREEMENT


 


Pursuant
to your Stock Appreciation Right Grant Notice (“Grant
Notice”) and this Stock Appreciation Right Agreement (the “SAR Agreement”), CastleRock
Security Holdings, Inc. (the “Company”)
has granted you a Stock Appreciation Right (“SAR”)
under its 2010 Equity Incentive Plan (the “Plan”)
with respect to the number of shares of the Company’s Common Stock indicated in
your Grant Notice at the grant value (“Grant Value”)
indicated in your Grant Notice.  Defined
terms not explicitly defined in this SAR Agreement but defined in the Plan
shall have the same definitions as in the Plan.


 


1.                                      VESTING.  Subject to the limitations contained herein,
your SAR 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 GRANT VALUE.  The
Grant Value of each share of Common Stock subject to your SAR will be not less
than one hundred percent (100%) of the Fair Market Value of such share of
Common Stock on the Date of Grant.  The
number of shares of Common Stock subject to your SAR and the Grant Value per
share may be adjusted from time to time for Capitalization Adjustments.


 


3.                                      WHOLE
SHARES.  You may exercise your SAR only
for whole shares of Common Stock.


 


4.                                      SECURITIES
LAW COMPLIANCE. 
Notwithstanding anything to the contrary contained herein, you may not
exercise your SAR unless the shares of Common Stock issuable upon such exercise
are then registered under the Securities Act. 
The exercise of your SAR also must comply with other applicable laws and
regulations governing your SAR, and you may not exercise your SAR if the
Company determines that such exercise would not be in material compliance with
such laws and regulations.


 


5.                                      TERM.  You may not exercise your SAR before the
commencement of its term or after its term expires.  The term of your SAR 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, provided that
if during any part of such three (3) month period you may not exercise
your SAR solely because of the condition set forth in the preceding paragraph
relating to “Securities Law Compliance,” your SAR shall not expire until the
earlier of the Expiration Date indicated in your Grant Notice or until it shall
have been exercisable for an aggregate period of three (3) months after
the termination of your Continuous Service;


 


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


 


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


 

















 


6.                                      EXERCISE.


 


(a)                                  You may
exercise the vested portion of your SAR 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 SAR you agree that, as a condition to any exercise of your SAR, 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 SAR, (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.


 


(c)                                  By exercising
your SAR you agree that the Company (or a representative of the underwriter(s))
may, in connection with the first underwritten registration of the offering of
any securities of the Company under the Securities Act, require that you 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 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.  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.


 


7.                                      VALUE
OF SAR.  Upon exercise of your SAR, you
will be entitled to receive from the Company an amount equal to the
Appreciation in the shares of Common Stock covered by the SAR that are
exercised.  For this purpose, “Appreciation” means the excess of (i) the
aggregate Fair Market Value (on the date of the exercise of the Stock
Appreciation Right) of the shares of Common Stock covered by the SAR that are
exercised, over (ii) the aggregate Grant Value for such shares.


 


8.                                      PAYMENT.  The Company shall satisfy its obligation to
pay amounts owed upon exercise of this SAR in shares of Common Stock.  Payment of such amounts shall commence as
soon as administratively practicable after the date of exercise of such SAR.


 


9.                                      TRANSFERABILITY.  Your SAR is not transferable, except (i) by
will or by the laws of descent and distribution, and (ii) with the prior
written approval of the Company, by instrument to an inter vivos or testamentary
trust, in a form accepted by the Company, in which the SAR is to be passed to
beneficiaries upon the death of the trustor (settlor).


 


10.                               SAR NOT
A SERVICE CONTRACT.  Your SAR is
not an employment or service contract, and nothing in your SAR 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 


 


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Company
or an Affiliate to continue your employment. 
In addition, nothing in your SAR 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.


 


11.                               WITHHOLDING
OBLIGATIONS.


 


(a)                                  At the time
your SAR is exercised, 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 as
instructed by the Company, for 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 SAR.


 


(b)                                  The Company
may, in its sole discretion, and in compliance with any applicable legal
conditions or restrictions, withhold from the amounts otherwise payable to you
upon the exercise of your SAR an amount not exceeding the minimum amount of tax
required to be withheld by law.


 


12.                               NOTICES.  Any notices provided for in your SAR 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.


 


13.                               GOVERNING
PLAN DOCUMENT.  Your SAR is
subject to all the provisions of the Plan, the provisions of which are hereby
made a part of your SAR, 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 SAR and
those of the Plan, the provisions of the Plan shall control.


 


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