EX-10.1






Exhibit 10.1




INTERNATIONAL METAL ENTERPRISES, INC.

2006 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK PLAN





	1.	 	DEFINITIONS.






Unless otherwise specified or unless the context otherwise requires, the following terms,
as used in this International Metals, Inc. 2006 Employee, Director and Consultant Stock
Plan, have the following meanings:




Administrator means the Board of Directors, unless it has delegated power
to act on its behalf to the Committee, in which case the Administrator means the
Committee.




Affiliate means a corporation which, for purposes of Section 424 of the
Code, is a parent or subsidiary of the Company, direct or indirect.




Agreement means an agreement between the Company and a Participant
delivered pursuant to the Plan, in such form as the Administrator shall approve.




Board of Directors means the Board of Directors of the Company.




Code means the United States Internal Revenue Code of 1986, as amended.




Committee means the committee of the Board of Directors to which the Board
of Directors has delegated power to act under or pursuant to the provisions of the
Plan.




Common Stock means shares of the Company’s common stock, $0.0001 par value
per share.




Company means International Metal Enterprises, Inc., a Delaware corporation.




Disability or Disabled means permanent and total disability as
defined in Section 22(e)(3) of the Code.




Employee means any employee of the Company or of an Affiliate (including,
without limitation, an employee who is also serving as an officer or director of
the Company or of an Affiliate), designated by the Administrator to be eligible to
be granted one or more Stock Rights under the Plan.




Fair Market Value of a Share of Common Stock means:




(1) If the Common Stock is listed on a national securities exchange or traded in
the over-the-counter market and sales prices are regularly reported for the



 









 






Common Stock, the closing or last price of the Common Stock on the composite tape or other
comparable reporting system for the trading day on the applicable date and if such date is not a
trading day, the last market trading day prior to such date;




(2) If the Common Stock is not traded on a national securities exchange but is
traded on the over-the-counter market, if sales prices are not regularly reported for
the Common Stock for the trading day referred to in clause (1), and if bid and
asked prices for the Common Stock are regularly reported, the mean between the
bid and the asked price for the Common Stock at the close of trading in the over-
the-counter market for the trading day on which Common Stock was traded on the
applicable date and if such date is not a trading day, the last market trading day
prior to such date; and




(3) If the Common Stock is neither listed on a national securities exchange
nor traded in the over-the-counter market, such value as the Administrator, in
good faith, shall determine.




ISO means an option meant to qualify as an incentive stock option under Section 422 of the
Code.




Non-Qualified Option means an option which is not intended to qualify as an ISO.





Option means an ISO or Non-Qualified Option granted under the Plan.




Participant means an Employee, director or consultant of the Company or an Affiliate to
whom one or more Stock Rights are granted under the Plan. As used herein, “Participant” shall
include “Participant’s Survivors” where the context requires.




Plan means this International Metal Enterprises, Inc. 2006 Employee, Director and
Consultant Stock Plan.




Shares means shares of the Common Stock as to which Stock Rights have been or may be
granted under the Plan or any shares of capital stock into which the Shares are changed or for
which they are exchanged within the provisions of Paragraph 3 of the Plan. The Shares issued under
the Plan may be authorized and unissued shares or shares held by the Company in its treasury, or
both.




Stock-Based Award means a grant by the Company under the Plan of an equity award or an
equity based award which is not an Option or a Stock Grant.




Stock Grant means a grant by the Company of Shares under the Plan.



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Stock Right means a right to Shares or the value of Shares of the Company
granted pursuant to the Plan — an ISO, a Non-Qualified Option, a Stock Grant or a
Stock-Based Award.




Survivor means a deceased Participant’s legal representatives and/or any
person or persons who acquired the Participant’s rights to a Stock Right by will or
by the laws of descent and distribution.




	2.	 	PURPOSES OF THE PLAN.





     The Plan is intended to encourage ownership of Shares by Employees and directors of and
certain consultants to the Company in order to attract and retain such people, to induce them to
work for the benefit of the Company or of an Affiliate and to provide additional incentive for
them to promote the success of the Company or of an Affiliate. The Plan provides for the granting
of ISOs, Non-Qualified Options, Stock Grants and Stock-Based Awards.




	3.	 	SHARES SUBJECT TO THE PLAN.





     (a) The number of Shares which may be issued from time to time pursuant to this
Plan shall be 5,000,000, or the equivalent of such number of Shares after the Administrator,
in its
sole discretion, has interpreted the effect of any stock split, stock dividend, combination,
recapitalization or similar transaction in accordance with Paragraph 24 of the Plan.



     (b) If an Option ceases to be “outstanding,” in whole or in part (other than by
exercise), or if the Company shall reacquire (at not more than its original issuance price) any
Shares issued pursuant to a Stock Grant or Stock-Based Award, or if any Stock Right expires or
is forfeited, cancelled, or otherwise terminated or results in any Shares not being issued, the
unissued Shares which were subject to such Stock Right shall again be available for issuance
from time to time pursuant to this Plan. Notwithstanding the foregoing, if a Stock Right is
exercised, in whole or in part, by tender of Shares or if the Company’s tax withholding
obligation is satisfied by withholding Shares, the number of Shares deemed to have been issued
under the Plan for purposes of the limitation set forth in Paragraph 3(a) above shall be the
number of Shares that were subject to the Stock Right or portion thereof, and not the net number
of Shares actually issued.




	4.	 	ADMINISTRATION OF THE PLAN.





     The Administrator of the Plan will be the Board of Directors, except to the extent the Board
of Directors delegates its authority to the Committee, in which case the Committee shall be the
Administrator. Subject to the provisions of the Plan, the Administrator is authorized to:



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	 	a.	 	Interpret the provisions of the Plan and all Stock Rights and to make all rules
and
determinations which it deems necessary or advisable for the administration of the
Plan;
	 
	 	b.	 	Determine which Employees, directors and consultants shall be granted Stock
Rights;
	 
	 	c.	 	Determine the number of Shares for which a Stock Right or Stock Rights shall be
granted, provided, however, that in no event shall Stock Rights with respect to
more than 500,000 Shares be granted to any Participant in any fiscal year;
	 
	 	d.	 	Specify the terms and conditions upon which a Stock Right or Stock Rights may
be granted;
	 
	 	e.	 	Make changes to any outstanding Stock Right, including, without limitation, to
reduce or increase the exercise price or purchase price, accelerate the vesting
schedule or extend the expiration date, provided that no such change shall impair
the rights of a Participant under any grant previously made without such
Participant’s consent;
	 
	 	f.	 	Adopt any sub-plans applicable to residents of any specified jurisdiction as
it deems necessary or appropriate in order to comply with or take advantage of any tax
or other laws applicable to the Company or to Plan Participants or to otherwise
facilitate the administration of the Plan, which sub-plans may include additional
restrictions or conditions applicable to Stock Rights or Shares issuable pursuant to a
Stock Right.




provided, however, that all such interpretations, rules, determinations, terms and conditions shall
be made and prescribed in the context of preserving the tax status under Section 422 of the Code of
those Options which are designated as ISOs. Subject to the foregoing, the interpretation and
construction by the Administrator of any provisions of the Plan or of any Stock Right granted under
it shall be final, unless otherwise determined by the Board of Directors, if the Administrator is
the Committee. In addition, if the Administrator is the Committee, the Board of Directors may take
any action under the Plan that would otherwise be the responsibility of the Committee.



        To the extent permitted under applicable law, the Board of Directors or the Committee may
allocate all or any portion of its responsibilities and powers to any one or more of its members
and may delegate all or any portion of its responsibilities and powers to any other




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person selected by it. The Board of Directors or the Committee may revoke any such allocation or
delegation at any time.





	5.	 	ELIGIBILITY FOR PARTICIPATION.





     The Administrator will, in its sole discretion, name the Participants in the Plan, provided,
however, that each Participant must be an Employee, director or consultant of the Company or of an
Affiliate at the time a Stock Right is granted. Notwithstanding the foregoing, the Administrator
may authorize the grant of a Stock Right to a person not then an Employee, director or consultant
of the Company or of an Affiliate; provided, however, that the actual grant of such Stock Right
shall be conditioned upon such person becoming eligible to become a Participant at or prior to the
time of the execution of the Agreement evidencing such Stock Right. ISOs may be granted only to
Employees. Non-Qualified Options, Stock Grants and Stock-Based Awards may be granted to any
Employee, director or consultant of the Company or an Affiliate. The granting of any Stock Right
to any individual shall neither entitle that individual to, nor disqualify him or her from,
participation in any other grant of Stock Rights.




	6.	 	TERMS AND CONDITIONS OF OPTIONS.





     Each Option shall be set forth in writing in an Option Agreement, duly executed by the
Company and, to the extent required by law or requested by the Company, by the Participant. The
Administrator may provide that Options be granted subject to such terms and conditions, consistent
with the terms and conditions specifically required under this Plan, as the Administrator may deem
appropriate including, without limitation, subsequent approval by the shareholders of the Company
of this Plan or any amendments thereto. The Option Agreements shall be subject to at least the
following terms and conditions:




	 	A.	 	Non-Qualified Options: Each Option intended to be a Non-Qualified
Option shall be subject to the terms and conditions which the Administrator determines
to be appropriate and in the best interest of the Company, subject to the following
minimum standards for any such Non-Qualified Option:






	 	a.	 	Option Price: Each Option Agreement shall state the
option price (per
share) of the Shares covered by each Option, which option price shall be
determined by the Administrator but shall not be less than the Fair Market
Value per share of Common Stock.
	 
	 	b.	 	Number of Shares: Each Option Agreement shall state the
number of
Shares to which it pertains.
	 
	 	c.	 	Option Periods: Each Option Agreement shall state the
date or dates on
which it first is exercisable and the date after which it may no longer be
exercised, and may provide that the Option rights accrue or become
exercisable in installments over a period of months or years, or upon the




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	 	 	 	occurrence of certain conditions or the attainment of stated goals or events.
	 
	 	d.	 	Option Conditions: Exercise of any Option may be conditioned upon
the Participant’s execution of a Share purchase agreement in form satisfactory to the
Administrator providing for certain protections for the Company and its other
shareholders, including requirements that:






	 	i.	 	The Participant’s or the Participant’s Survivors’ right to
sell or transfer the Shares may be restricted; and
	 
	 	ii.	 	The Participant or the Participant’s Survivors may be
required to execute letters of investment intent and must also acknowledge
that the Shares will bear legends noting any applicable restrictions.






	 	B.	 	ISOs: Each Option intended to be an ISO shall be issued only to an Employee and be
subject to the following terms and conditions, with such additional restrictions or changes
as the Administrator determines are appropriate but not in conflict with Section 422 of the
Code and relevant regulations and rulings of the Internal Revenue Service:






	 	a.	 	Minimum standards: The ISO shall meet the minimum standards required
of Non-Qualified Options, as described in Paragraph 6 (A) above, except
clause (a) thereunder.
	 
	 	b.	 	Option Price: Immediately before the ISO is granted, if the
Participant
owns, directly or by reason of the applicable attribution rules in
Section 424(d) of the Code:






	 	i.	 	10% or less of the total combined voting power of all classes of
    stock of the Company or an Affiliate, the Option price per share of the
Shares covered by each ISO shall not be less than 100% of the Fair Market
Value per share of the Shares on the date of the grant of the Option; or
	 
	 	ii.	 	More than 10% of the total combined voting power of all
classes of stock of the Company or an Affiliate, the Option price per share
of the Shares covered by each ISO shall not be less than 110% of the Fair
Market Value on the date of grant.






	 	c.	 	Term of Option: For Participants who own:






	 	i.	 	10% or less of the total combined voting power of all
classes of stock of the Company or an Affiliate, each ISO shall terminate not




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	 	 	 	more than ten years from the date of the grant or at such earlier
time as the Option Agreement may provide; or
	 
	 	ii.	 	More than 10% of the total combined voting
power of all classes of stock of the Company or an Affiliate, each ISO
shall terminate not more than five years from the date of the grant or
at such earlier time as the Option Agreement may provide.






	 	d.	 	Limitation on Yearly Exercise: The Option Agreements
shall restrict the amount of ISOs which may become exercisable in any calendar
year (under this or any other ISO plan of the Company or an Affiliate) so that
the aggregate Fair Market Value (determined at the time each ISO is granted)
of the stock with respect to which ISOs are exercisable for the first time by
the Participant in any calendar year does not exceed $100,000.






	7.	 	TERMS AND CONDITIONS OF STOCK GRANTS.





     Each offer of a Stock Grant to a Participant shall state the date prior to which the Stock
Grant must be accepted by the Participant, and the principal terms of each Stock Grant shall be
set forth in an Agreement, duly executed by the Company and, to the extent required by law or
requested by the Company, by the Participant. The Agreement shall be in a form approved by the
Administrator and shall contain terms and conditions which the Administrator determines to be
appropriate and in the best interest of the Company, subject to the following minimum standards:




	 	(a)	 	Each Agreement shall state the purchase price (per share), if any, of the
Shares
covered by each Stock Grant, which purchase price shall be determined by the
Administrator but shall not be less than the minimum consideration required by
the Delaware General Corporation Law on the date of the grant of the Stock
Grant;
	 
	 	(b)	 	Each Agreement shall state the number of Shares to which the Stock Grant
pertains; and
	 
	 	(c)	 	Each Agreement shall include the terms of any right of the Company to restrict
or reacquire the Shares subject to the Stock Grant, including the time and events
upon which such rights shall accrue and the purchase price therefor, if any.






	8.	 	TERMS AND CONDITIONS OF OTHER STOCK-BASED AWARDS.





     The Board shall have the right to grant other Stock-Based Awards based upon the Common
Stock having such terms and conditions as the Board may determine, including, without
limitation, the grant of Shares based upon certain conditions, the grant of securities



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convertible into Shares and the grant of stock appreciation rights, phantom stock awards or stock
units. The principal terms of each Stock-Based Award shall be set forth in an Agreement, duly
executed by the Company and, to the extent required by law or requested by the Company, by the
Participant. The Agreement shall be in a form approved by the Administrator and shall contain terms
and conditions which the Administrator determines to be appropriate and in the best interest of the
Company.





	9.	 	EXERCISE OF OPTIONS AND ISSUE OF SHARES.





     An Option (or any part or installment thereof) shall be exercised by giving written notice to
the Company or its designee, together with provision for payment of the full purchase price in
accordance with this Paragraph for the Shares as to which the Option is being exercised, and upon
compliance with any other condition(s) set forth in the Option Agreement. Such notice shall be
signed by the person exercising the Option, shall state the number of Shares with respect to which
the Option is being exercised and shall contain any representation required by the Plan or the
Option Agreement. Payment of the purchase price for the Shares as to which such Option is being
exercised shall be made (a) in United States dollars in cash or by check, or (b) at the discretion
of the Administrator, through delivery of shares of Common Stock having a Fair Market Value equal
as of the date of the exercise to the cash exercise price of the Option and held for at least six
months, or (c) at the discretion of the Administrator, by having the Company retain from the
shares otherwise issuable upon exercise of the Option, a number of shares having a Fair Market
Value equal as of the date of exercise to the exercise price of the Option, or (d) at the
discretion of the Administrator, by delivery of the grantee’s personal recourse note bearing
interest payable not less than annually at no less than 100% of the applicable Federal rate, as
defined in Section 1274(d) of the Code, or (e) at the discretion of the Administrator, in
accordance with a cashless exercise program established with a securities brokerage firm, and
approved by the Administrator, or (f) at the discretion of the Administrator, by any combination
of (a), (b), (c), (d) and (e) above or (g) at the discretion of the Administrator, payment of such
other lawful consideration as the Administrator may determine. Notwithstanding the foregoing, the
Administrator shall accept only such payment on exercise of an ISO as is permitted by Section 422
of the Code.



     The Company shall then reasonably promptly deliver the Shares as to which such Option was
exercised to the Participant (or to the Participant’s Survivors, as the case may be). In
determining what constitutes “reasonably promptly,” it is expressly understood that the issuance
and delivery of the Shares may be delayed by the Company in order to comply with any law or
regulation (including, without limitation, state securities or “blue sky” laws) which requires the
Company to take any action with respect to the Shares prior to their issuance. The Shares shall,
upon delivery, be fully paid, non-assessable Shares.



     The Administrator shall have the right to accelerate the date of exercise of any installment
of any Option; provided that the Administrator shall not accelerate the exercise date of any
installment of any Option granted to an Employee as an ISO (and not previously converted into a
Non-Qualified Option pursuant to Paragraph 27) if such acceleration would



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violate the annual vesting limitation contained in Section 422(d) of the Code, as described in
Paragraph 6.B.d.




     The Administrator may, in its discretion, amend any term or condition of an outstanding
Option provided (i) such term or condition as amended is permitted by the Plan, (ii) any such
amendment shall be made only with the consent of the Participant to whom the Option was granted,
or in the event of the death of the Participant, the Participant’s Survivors, if the amendment is
adverse to the Participant, and (iii) any such amendment of any Option shall be made only after
the Administrator determines whether such amendment would constitute a “modification” of any
Option which is an ISO (as that term is defined in Section 424(h) of the Code) or would cause any
adverse tax consequences for the holder of such Option including, but not limited to, pursuant to
Section 409A of the Code.




	10.	 	ACCEPTANCE OF STOCK GRANTS AND STOCK-BASED AWARDS AND ISSUE OF SHARES.





     A Stock Grant or Stock-Based Award (or any part or installment thereof) shall be accepted by
executing the applicable Agreement and delivering it to the Company or its designee, together with
provision for payment of the full purchase price, if any, in accordance with this Paragraph for the
Shares as to which such Stock Grant or Stock-Based Award is being accepted, and upon compliance
with any other conditions set forth in the applicable Agreement. Payment of the purchase price for
the Shares as to which such Stock Grant or Stock-Based Award is being accepted shall be made (a) in
United States dollars in cash or by check, or (b) at the discretion of the Administrator, through
delivery of shares of Common Stock held for at least six months and having a Fair Market Value
equal as of the date of acceptance of the Stock Grant or Stock Based-Award to the purchase price of
the Stock Grant or Stock-Based Award, or (c) at the discretion of the Administrator, by delivery of
the grantee’s personal recourse note bearing interest payable not less than annually at no less
than 100% of the applicable Federal rate, as defined in Section 1274(d) of the Code, or (d) at the
discretion of the Administrator, by any combination of (a), (b) and (c) above; or (e) at the
discretion of the Administrator, payment of such other lawful consideration as the Administrator
may determine.



     The Company shall then, if required by the applicable Agreement, reasonably promptly deliver
the Shares as to which such Stock Grant or Stock-Based Award was accepted to the Participant (or
to the Participant’s Survivors, as the case may be), subject to any escrow provision set forth in
the applicable Agreement. In determining what constitutes “reasonably promptly,” it is expressly
understood that the issuance and delivery of the Shares may be delayed by the Company in order to
comply with any law or regulation (including, without limitation, state securities or “blue sky”
laws) which requires the Company to take any action with respect to the Shares prior to their
issuance.



     The Administrator may, in its discretion, amend any term or condition of an outstanding Stock
Grant, Stock-Based Award or applicable Agreement provided (i) such term or condition as amended is
permitted by the Plan, and (ii) any such amendment shall be made only with the



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consent of the Participant to whom the Stock Grant or Stock-Based Award was made, if the amendment
is adverse to the Participant.





	11.	 	RIGHTS AS A SHAREHOLDER.





     No Participant to whom a Stock Right has been granted shall have rights as a shareholder with
respect to any Shares covered by such Stock Right, except after due exercise of the Option or
acceptance of the Stock Grant or as set forth in any Agreement, and tender of the full purchase
price, if any, for the Shares being purchased pursuant to such exercise or acceptance and
registration of the Shares in the Company’s share register in the name of the Participant.




	12.	 	ASSIGNABILITY AND TRANSFERABILITY OF STOCK RIGHTS.





     By its terms, a Stock Right granted to a Participant shall not be transferable by the
Participant other than (i) by will or by the laws of descent and distribution, or (ii) as approved
by the Administrator in its discretion and set forth in the applicable Agreement. Notwithstanding
the foregoing, an ISO transferred except in compliance with clause (i) above shall no longer
qualify as an ISO. The designation of a beneficiary of a Stock Right by a Participant, with the
prior approval of the Administrator and in such form as the Administrator shall prescribe, shall
not be deemed a transfer prohibited by this Paragraph. Except as provided above, a Stock Right
shall only be exercisable or may only be accepted, during the Participant’s lifetime, by such
Participant (or by his or her legal representative) and shall not be assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Any attempted transfer, assignment, pledge,
hypothecation or other disposition of any Stock Right or of any rights granted thereunder contrary
to the provisions of this Plan, or the levy of any attachment or similar process upon a Stock
Right, shall be null and void.




	13.	 	EFFECT ON OPTIONS OF TERMINATION OF SERVICE OTHER THAN “FOR
CAUSE” OR DEATH OR DISABILITY.





     Except as otherwise provided in a Participant’s Option Agreement, in the event of a
termination of service (whether as an employee, director or consultant) with the Company or an
Affiliate before the Participant has exercised an Option, the following rules apply:




	 	a.	 	A Participant who ceases to be an employee, director or consultant of the
Company or of an Affiliate (for any reason other than termination “for cause”,
Disability, or death for which events there are special rules in Paragraphs 14, 15, and
16, respectively), may exercise any Option granted to him or her to the extent that the
Option is exercisable on the date of such termination of service, but only within such
term as the Administrator has designated in a Participant’s Option Agreement.




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	 	b.	 	Except as provided in Subparagraph (c) below, or Paragraph 15 or 16, in no event
may an Option intended to be an ISO, be exercised later than three months after
the Participant’s termination of employment.
	 
	 	c.	 	The provisions of this Paragraph, and not the provisions of Paragraph 15 or 16,
shall apply to a Participant who subsequently becomes Disabled or dies after the
termination of employment, director status or consultancy; provided, however, in
the case of a Participant’s Disability or death within three months after the
termination of employment, director status or consultancy, the Participant or the
Participant’s Survivors may exercise the Option within one year after the date of
the Participant’s termination of service, but in no event after the date of
expiration
of the term of the Option.
	 
	 	d.	 	Notwithstanding anything herein to the contrary, if subsequent to a
Participant’s
termination of employment, termination of director status or termination of
consultancy, but prior to the exercise of an Option, the Board of Directors
determines that, either prior or subsequent to the Participant’s termination, the
Participant engaged in conduct which would constitute “cause”, then such
Participant shall forthwith cease to have any right to exercise any Option.
	 
	 	e.	 	A Participant to whom an Option has been granted under the Plan who is absent
from the Company or an Affiliate because of temporary disability (any disability
other than a Disability as defined in Paragraph 1 hereof), or who is on leave of
absence for any purpose, shall not, during the period of any such absence, be
deemed, by virtue of such absence alone, to have terminated such Participant’s
employment, director status or consultancy with the Company or with an
Affiliate, except as the Administrator may otherwise expressly provide.
	 
	 	f.	 	Except as required by law or as set forth in a Participant’s Option Agreement,
Options granted under the Plan shall not be affected by any change of a
Participant’s status within or among the Company and any Affiliates, so long as
the Participant continues to be an employee, director or consultant of the
Company or any Affiliate.






	14.	 	EFFECT ON OPTIONS OF TERMINATION OF SERVICE “FOR CAUSE”.





     Except as otherwise provided in a Participant’s Option Agreement, the following rules apply
if the Participant’s service (whether as an employee, director or consultant) with the Company or
an Affiliate is terminated “for cause” prior to the time that all his or her outstanding Options
have been exercised:




	 	a.	 	All outstanding and unexercised Options as of the time the Participant is
notified
his or her service is terminated “for cause” will immediately be forfeited.
	 
	 	b.	 	For purposes of this Plan, “cause” shall include (and is not limited to)
dishonesty
with respect to the Company or any Affiliate, insubordination, substantial




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	 	 	 	malfeasance or non-feasance of duty, unauthorized disclosure of confidential
information, breach by the Participant of any provision of any employment,
consulting, advisory, nondisclosure, non-competition or similar agreement between
the Participant and the Company, and conduct substantially prejudicial to the
business of the Company or any Affiliate. The determination of the Administrator as
to the existence of “cause” will be conclusive on the Participant and the Company.
	 
	 	c.	 	“Cause” is not limited to events which have occurred prior to a Participant’s
termination of service, nor is it necessary that the Administrator’s finding of
“cause” occur prior to termination. If the Administrator determines, subsequent
to a Participant’s termination of service but prior to the exercise of an Option,
that
either prior or subsequent to the Participant’s termination the Participant engaged
in conduct which would constitute “cause”, then the right to exercise any Option
is forfeited.
	 
	 	d.	 	Any provision in an agreement between the Participant and the Company or an
Affiliate, which contains a conflicting definition of “cause” for termination and
which is in effect at the time of such termination, shall supersede the definition
in
this Plan with respect to that Participant.






	15.	 	EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR DISABILITY. 





     Except as otherwise provided in a Participant’s Option Agreement:




	 	a.	 	A Participant who ceases to be an employee, director or consultant of the
Company or of an Affiliate by reason of Disability may exercise any Option
granted to such Participant:






     (i) To the extent that the Option has become exercisable but has not been
exercised on the date of Disability; and




     (ii) In the event rights to exercise the Option accrue periodically, to the
extent of a pro rata portion through the date of Disability of any additional
vesting rights that would have accrued on the next vesting date had the Participant
not become Disabled. The proration shall be based upon the number of days accrued
in the current vesting period prior to the date of Disability.




	 	b.	 	A Disabled Participant may exercise such rights only within the period ending
one year after the date of the Participant’s termination of employment, directorship or
consultancy, as the case may be, notwithstanding that the Participant might have
been able to exercise the Option as to some or all of the Shares on a later date if
the Participant had not become Disabled and had continued to be an employee,
director or consultant or, if earlier, within the originally prescribed term of the
Option.






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	 	c.	 	The Administrator shall make the determination both of whether Disability has
occurred and the date of its occurrence (unless a procedure for such determination is
set forth in another agreement between the Company and such Participant, in which case
such procedure shall be used for such determination). If requested, the Participant
shall be examined by a physician selected or approved by the Administrator, the cost
of which examination shall be paid for by the Company.






	16.	 	EFFECT ON OPTIONS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.
	 
	 	 	Except as otherwise provided in a Participant’s Option Agreement:






	 	a.	 	In the event of the death of a Participant while the Participant is an
employee, director or consultant of the Company or of an Affiliate, such Option may be
exercised by the Participant’s Survivors:






     (i) To the extent that the Option has become exercisable but has not been
exercised on the date of death; and




     (ii) In the event rights to exercise the Option accrue periodically, to the
extent of a pro rata portion through the date of death of any additional vesting
rights that would have accrued on the next vesting date had the Participant not
died. The proration shall be based upon the number of days accrued in the current
vesting period prior to the Participant’s date of death.




	 	b.	 	If the Participant’s Survivors wish to exercise the Option, they must take all
necessary steps to exercise the Option within one year after the date of death of
such Participant, notwithstanding that the decedent might have been able to
exercise the Option as to some or all of the Shares on a later date if he or she had
not died and had continued to be an employee, director or consultant or, if earlier,
within the originally prescribed term of the Option.






	17.	 	EFFECT OF TERMINATION OF SERVICE ON UNACCEPTED STOCK GRANTS.





     In the event of a termination of service (whether as an employee, director or consultant)
with the Company or an Affiliate for any reason before the Participant has accepted a Stock Grant,
such offer shall terminate.



     For purposes of this Paragraph 17 and Paragraph 18 below, a Participant to whom a Stock Grant
has been offered and accepted under the Plan who is absent from work with the Company or with an
Affiliate because of temporary disability (any disability other than a Disability as defined in
Paragraph 1 hereof), or who is on leave of absence for any purpose, shall not, during the period
of any such absence, be deemed, by virtue of such absence alone, to have terminated



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such Participant’s employment, director status or consultancy with the Company or with an
Affiliate, except as the Administrator may otherwise expressly provide.




     In addition, for purposes of this Paragraph 17 and Paragraph 18 below, any change of
employment or other service within or among the Company and any Affiliates shall not be treated as
a termination of employment, director status or consultancy so long as the Participant continues
to be an employee, director or consultant of the Company or any Affiliate.




	18.	 	EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE OTHER THAN “FOR CAUSE” OR DEATH OR DISABILITY.





     Except as otherwise provided in a Participant’s Stock Grant Agreement, in the event of a
termination of service (whether as an employee, director or consultant), other than termination
“for cause,” Disability, or death for which events there are special rules in Paragraphs 19, 20,
and 21, respectively, before all Company rights of repurchase shall have lapsed, then the Company
shall have the right to repurchase that number of Shares subject to a Stock Grant as to which the
Company’s repurchase rights have not lapsed.




	19.	 	EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE “FOR CAUSE”.





     Except as otherwise provided in a Participant’s Stock Grant Agreement, the following rules
apply if the Participant’s service (whether as an employee, director or consultant) with the
Company or an Affiliate is terminated “for cause”:




	 	a.	 	All Shares subject to any Stock Grant shall be immediately subject to
repurchase by the Company at $0.0001, if any, thereof.
	 
	 	b.	 	For purposes of this Plan, “cause” shall include (and is not limited to)
dishonesty
with respect to the employer, insubordination, substantial malfeasance or
non-feasance of duty, unauthorized disclosure of confidential information, breach
by the Participant of any provision of any employment, consulting, advisory,
nondisclosure, non-competition or similar agreement between the Participant and
the Company, and conduct substantially prejudicial to the business of the
Company or any Affiliate. The determination of the Administrator as to the
existence of “cause” will be conclusive on the Participant and the Company.
	 
	 	c.	 	“Cause” is not limited to events which have occurred prior to a Participant’s
termination of service, nor is it necessary that the Administrator’s finding of
“cause” occur prior to termination. If the Administrator determines, subsequent
to a Participant’s termination of service, that either prior or subsequent to the
Participant’s termination the Participant engaged in conduct which would
constitute “cause,” then the Company’s right to repurchase all of
such Participant’s Shares shall apply.




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	 	d.	 	Any provision in an agreement between the Participant and the Company or an
Affiliate, which contains a conflicting definition of “cause” for termination and
which is in effect at the time of such termination, shall supersede the definition
in this Plan with respect to that Participant.






	20.	 	EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE FOR DISABILITY.





     Except as otherwise provided in a Participant’s Stock Grant Agreement, the following rules
apply if a Participant ceases to be an employee, director or consultant of the Company or of an
Affiliate by reason of Disability: to the extent the forfeiture provisions or the Company’s rights
of repurchase have not lapsed on the date of Disability, they shall be exercisable; provided,
however, that in the event such forfeiture provisions or rights of repurchase lapse periodically,
such provisions or rights shall lapse to the extent of a pro rata portion of the Shares subject to
such Stock Grant through the date of Disability as would have lapsed had the Participant not become
Disabled. The proration shall be based upon the number of days accrued prior to the date of
Disability.



     The Administrator shall make the determination both of whether Disability has occurred and
the date of its occurrence (unless a procedure for such determination is set forth in another
agreement between the Company and such Participant, in which case such procedure shall be used for
such determination). If requested, the Participant shall be examined by a physician selected or
approved by the Administrator, the cost of which examination shall be paid for by the Company.




	21.	 	EFFECT ON STOCK GRANTS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.





     Except as otherwise provided in a Participant’s Stock Grant Agreement, the following rules
apply in the event of the death of a Participant while the Participant is an employee, director or
consultant of the Company or of an Affiliate: to the extent the forfeiture provisions or the
Company’s rights of repurchase have not lapsed on the date of death, they shall be exercisable;
provided, however, that in the event such forfeiture provisions or rights of repurchase lapse
periodically, such provisions or rights shall lapse to the extent of a pro rata portion of the
Shares subject to such Stock Grant through the date of death as would have lapsed had the
Participant not died. The proration shall be based upon the number of days accrued prior to the
Participant’s death.




	22.	 	PURCHASE FOR INVESTMENT.





     Unless the offering and sale of the Shares to be issued upon the particular exercise or
acceptance of a Stock Right shall have been effectively registered under the Securities Act of
1933, as now in force or hereafter amended (the “1933 Act”), the Company shall be under no



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obligation to issue the Shares covered by such exercise unless and until the following conditions
have been fulfilled:





	 	a.	 	The person(s) who exercise(s) or accept(s) such Stock Right shall warrant to
the Company, prior to the receipt of such Shares, that such person(s) are acquiring
such Shares for their own respective accounts, for investment, and not with a view
to, or for sale in connection with, the distribution of any such Shares, in which
event the person(s) acquiring such Shares shall be bound by the provisions of the
following legend which shall be endorsed upon the certificate(s) evidencing their
Shares issued pursuant to such exercise or such grant:






“The shares represented by this certificate have been taken for investment
and they may not be sold or otherwise transferred by any person, including
a pledgee, unless (1) either (a) a Registration Statement with respect to
such shares shall be effective under the Securities Act of 1933, as
amended, or (b) the Company shall have received an opinion of counsel
satisfactory to it that an exemption from registration under such Act is
then available, and (2) there shall have been compliance with all
applicable state securities laws.”




	 	b.	 	At the discretion of the Administrator, the Company shall have received an
opinion of its counsel that the Shares may be issued upon such particular exercise
or acceptance in compliance with the 1933 Act without registration thereunder.






	23.	 	DISSOLUTION OR LIQUIDATION OF THE COMPANY.





     Upon the dissolution or liquidation of the Company, all Options granted under this Plan which
as of such date shall not have been exercised and all Stock Grants and Stock-Based Awards which
have not been accepted will terminate and become null and void; provided, however, that if the
rights of a Participant or a Participant’s Survivors have not otherwise terminated and expired,
the Participant or the Participant’s Survivors will have the right immediately prior to such
dissolution or liquidation to exercise or accept any Stock Right to the extent that the Stock
Right is exercisable or subject to acceptance as of the date immediately prior to such dissolution
or liquidation. Upon the dissolution or liquidation of the Company, any outstanding Stock-Based
Awards shall immediately terminate unless otherwise determined by the Administrator or
specifically provided in the applicable Agreement.




	24.	 	ADJUSTMENTS.





     Upon the occurrence of any of the following events, a Participant’s rights with respect to any
Stock Right granted to him or her hereunder shall be adjusted as hereinafter provided, unless
otherwise specifically provided in a Participant’s Agreement:



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     A. Stock Dividends and Stock Splits. If (i) the shares of Common Stock shall be
subdivided or combined into a greater or smaller number of shares or if the Company shall
issue any shares of Common Stock as a stock dividend on its outstanding Common Stock, or
(ii) additional shares or new or different shares or other securities of the Company or other
non-cash assets are distributed with respect to such shares of Common Stock, the number of shares
of Common Stock deliverable upon the exercise of an Option or acceptance of a Stock Grant shall
be appropriately increased or decreased proportionately, and appropriate adjustments shall be
made including, in the purchase price per share, to reflect such events.



     B. Corporate Transactions. If the Company is to be consolidated with or acquired by
another entity in a merger, sale of all or substantially all of the Company’s assets other
than a transaction to merely change the state of incorporation (a “Corporate Transaction”), the

Administrator or the board of directors of any entity assuming the obligations of the Company
hereunder (the “Successor Board”), shall, as to outstanding Options, either (i) make
appropriate provision for the continuation of such Options by substituting on an equitable basis for the
Shares then subject to such Options either the consideration payable with respect to the
outstanding shares of Common Stock in connection with the Corporate Transaction or securities
of any successor or acquiring entity; or (ii) upon written notice to the Participants, provide
that all Options must be exercised (either (a) to the extent then exercisable or, (b) at the
discretion of the Administrator, all Options being made fully exercisable for purposes of this
Subparagraph),
within a specified number of days of the date of such notice, at the end of which period the
Options shall terminate; or (iii) terminate all Options in exchange for a cash payment equal
to the
excess of the Fair Market Value of the Shares subject to such Options (either (a) to the
extent
then exercisable or, (b) at the discretion of the Administrator, all Options being made fully

exercisable for purposes of this Subparagraph) over the exercise price thereof.



     With respect to outstanding Stock Grants, the Administrator or the Successor Board, shall
either (i) make appropriate provisions for the continuation of such Stock Grants on the same terms
and conditions by substituting on an equitable basis for the Shares then subject to such Stock
Grants either the consideration payable with respect to the outstanding Shares of Common Stock in
connection with the Corporate Transaction or securities of any successor or acquiring entity; or
(ii) terminate all Stock Grants in exchange for a cash payment equal to the excess of the Fair
Market Value of the Shares subject to such Stock Grants over the purchase price thereof, if any.
In addition, in the event of a Corporate Transaction, the Administrator may waive any or all
Company forfeiture or repurchase rights with respect to outstanding Stock Grants.



     C. Recapitalization or Reorganization. In the event of a recapitalization or
reorganization of the Company other than a Corporate Transaction pursuant to which securities
of the Company or of another corporation are issued with respect to the outstanding shares of
Common Stock, a Participant upon exercising an Option or accepting a Stock Grant after the
recapitalization or reorganization shall be entitled to receive for the purchase price paid
upon
such exercise or acceptance of the number of replacement securities which would have been
received if such Option had been exercised or Stock Grant accepted prior to such
recapitalization
or reorganization.



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     D. Adjustments to Stock-Based Awards. Upon the happening of any of the events
described in Subparagraphs A, B or C above, any outstanding Stock-Based Award shall be
appropriately adjusted to reflect the events described in such Subparagraphs. The
Administrator
or the Successor Board shall determine the specific adjustments to be made under this
Paragraph 24, including, but not limited to the effect if any, of a Change in Control and, subject
to Paragraph 4, its determination shall be conclusive.



     E. Modification of ISOs. Notwithstanding the foregoing, any adjustments made
pursuant to Subparagraph A, B or C above with respect to ISOs shall be made only after the
Administrator determines whether such adjustments would constitute a “modification” of such
ISOs (as that term is defined in Section 424(h) of the Code) or would cause any adverse tax
consequences for the holders of such ISOs. If the Administrator determines that such
adjustments made with respect to ISOs would constitute a modification of such ISOs, it may
refrain from making such adjustments, unless the holder of an ISO specifically requests in
writing that such adjustment be made and such writing indicates that the holder has full
knowledge of the consequences of such “modification” on his or her income tax treatment with
respect to the ISO.




	25.	 	ISSUANCES OF SECURITIES.





     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 subject to Stock
Rights. Except as expressly provided herein, no adjustments shall be made for dividends paid in
cash or in property (including without limitation, securities) of the Company prior to any issuance
of Shares pursuant to a Stock Right.




	26.	 	FRACTIONAL SHARES.





     No fractional shares shall be issued under the Plan and the person exercising a Stock Right
shall receive from the Company cash in lieu of such fractional shares equal to the Fair Market
Value thereof.








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	27.	 	CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOs.





     The Administrator, at the written request of any Participant, may in its discretion take such
actions as may be necessary to convert such Participant’s ISOs (or any portions thereof) that have
not been exercised on the date of conversion into Non-Qualified Options at any time prior to the
expiration of such ISOs, regardless of whether the Participant is an employee of the Company or an
Affiliate at the time of such conversion. At the time of such conversion, the Administrator (with
the consent of the Participant) may impose such conditions on the exercise of the resulting
Non-Qualified Options as the Administrator in its discretion may determine, provided that such
conditions shall not be inconsistent with this Plan. Nothing in the Plan shall be deemed to give
any Participant the right to have such Participant’s ISOs converted into Non-Qualified Options,
and no such conversion shall occur until and unless the Administrator takes appropriate action.
The Administrator, with the consent of the Participant, may also terminate any portion of any ISO
that has not been exercised at the time of such conversion.




	28.	 	WITHHOLDING.





     In the event that any federal, state, or local income taxes, employment taxes, Federal
Insurance Contributions Act (“F.I.C.A.”) withholdings or other amounts are required by applicable
law or governmental regulation to be withheld from the Participant’s salary, wages or other
remuneration in connection with the exercise or acceptance of a Stock Right or in connection with
a Disqualifying Disposition (as defined in Paragraph 29) or upon the lapsing of any forfeiture
provision or right of repurchase or for any other reason required by law, the Company may withhold
from the Participant’s compensation, if any, or may require that the Participant advance in cash
to the Company, or to any Affiliate of the Company which employs or employed the Participant, the
statutory minimum amount of such withholdings unless a different withholding arrangement,
including the use of shares of the Company’s Common Stock or a promissory note, is authorized by
the Administrator (and permitted by law). For purposes hereof, the fair market value of the shares
withheld for purposes of payroll withholding shall be determined in the manner provided in
Paragraph 1 above, as of the most recent practicable date prior to the date of exercise. If the
fair market value of the shares withheld is less than the amount of payroll withholdings required,
the Participant may be required to advance the difference in cash to the Company or the Affiliate
employer. The Administrator in its discretion may condition the exercise of an Option for less
than the then Fair Market Value on the Participant’s payment of such additional withholding.




	29.	 	NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.





     Each Employee who receives an ISO must agree to notify the Company in writing immediately
after the Employee makes a Disqualifying Disposition of any shares acquired pursuant to the
exercise of an ISO. A Disqualifying Disposition is defined in Section 424(c) of the Code and
includes any disposition (including any sale or gift) of such shares before the later of (a) two
years after the date the Employee was granted the ISO, or (b) one year after the date




19









 







the Employee acquired Shares by exercising the ISO, except as otherwise provided in Section 424(c)
of the Code. If the Employee has died before such stock is sold, these holding period requirements
do not apply and no Disqualifying Disposition can occur thereafter.





	30.	 	TERMINATION OF THE PLAN.





     The Plan will terminate on        , 2016, 10 years after adoption, the date
which is ten years from the earlier of the date of its adoption by the Board of Directors
and the date of its approval by the shareholders of the Company. The Plan may be terminated at an
earlier date by vote of the shareholders or the Board of Directors of the Company; provided,
however, that any such earlier termination shall not affect any Agreements executed prior to the
effective date of such termination.




	31.	 	AMENDMENT OF THE PLAN AND AGREEMENTS.





     The Plan may be amended by the shareholders of the Company. The Plan may also be amended by
the Administrator, including, without limitation, to the extent necessary to qualify any or all
outstanding Stock Rights granted under the Plan or Stock Rights to be granted under the Plan for
favorable federal income tax treatment (including deferral of taxation upon exercise) as may be
afforded incentive stock options under Section 422 of the Code, and to the extent necessary to
qualify the shares issuable upon exercise or acceptance of any outstanding Stock Rights granted, or
Stock Rights to be granted, under the Plan for listing on any national securities exchange or
quotation in any national automated quotation system of securities dealers. Any amendment approved
by the Administrator which the Administrator determines is of a scope that requires shareholder
approval shall be subject to obtaining such shareholder approval. Any modification or amendment of
the Plan shall not, without the consent of a Participant, adversely affect his or her rights under
a Stock Right previously granted to him or her. With the consent of the Participant affected, the
Administrator may amend outstanding Agreements in a manner which may be adverse to the Participant
but which is not inconsistent with the Plan. In the discretion of the Administrator, outstanding
Agreements may be amended by the Administrator in a manner which is not adverse to the Participant.




	32.	 	EMPLOYMENT OR OTHER RELATIONSHIP.





     Nothing in this Plan or any Agreement shall be deemed to prevent the Company or an Affiliate
from terminating the employment, consultancy or director status of a Participant, nor to prevent a
Participant from terminating his or her own employment, consultancy or director status or to give
any Participant a right to be retained in employment or other service by the Company or any
Affiliate for any period of time.



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	33.	 	GOVERNING LAW.





     This Plan shall be construed and enforced in accordance with the law of the State of Delaware.




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