Document:

Exhibit 10.15

 

MISTRAS GROUP, INC.

SEVERANCE PLAN

 

Introduction

 

Due to the competitive nature of the NDT business and the need for executive and managerial talent in the industry, executives and managers of Mistras Group, Inc. (“Mistras”) and its subsidiaries (Mistras and its subsidiaries are collectively referred to as the “Company”) have been and will continue to be recruited by other companies.  In order to attract and retain executive and managerial talent, the Compensation Committee of the Board of Directors of Mistras, in consultation with management, has implemented this severance plan (the “Plan”).  This Plan is designed to provide its participants with some level of continued income and benefits upon the termination of their employment with the Company under certain circumstances.

 

Participants

 

Participants who receive the benefit of this Plan (“Participants”) are U.S. based full time employees of the Company who are:

 

Chief Executive Officer

Other Executive Officers

Senior Vice Presidents and Corporate Vice Presidents

Other managers or divisional vice presidents selected by the CEO and approved by the Compensation Committee

 

If any Participant is party to an individual agreement with the Company that provides for severance benefits in the event of termination of employment with the Company, the individual will not be eligible to participate in the Plan until the termination or expiration of the agreement.

 

Circumstance for Severance

 

Severance benefits are payable to a Participant pursuant to this Plan in the following circumstances:

 

1.              Termination without Cause.

 

A Participant’s employment with the Company is terminated by the Company without Cause, with “Cause” being any of the following:

 

a.              Participant is convicted of or pleads nolo contendere to a felony;

 

b.              Participant is indicted for the commission of a felony against the Company that has a materially adverse effect on the Company’s business;

 

c.               Participant commits fraud or a material act or omission involving dishonesty with respect to the Company;

 

d.              Participant willfully fails or refuses to carry out the material responsibilities of his or her employment;

 

e.               Participant commits a willful act (or failure to act) that constitutes gross negligence which is materially injurious to the Company; or

 

[April 2013]

 

 

f.                Participant willfully violates a material policy of the Company, including policies on business ethics and conduct, and policies on the use of inside information and insider trading.

 

A willful act or omission by a Participant means an act or omission not in good faith and without reasonable belief that the action or omission was in the best interest of the Company.

 

2.              Termination for Good Reason.

 

The Participant’s employment with the Company is terminated by the Participant for “Good Reason,” with “Good Reason” being any of the following:

 

a.              there is a material adverse change in Participant’s status or position, including a material diminution of his or her position, duties, responsibilities or authority or the assignment to him of duties or responsibilities that are materially inconsistent with his status or position;

 

b.              a reduction in Participant’s annual base salary or failure to pay same;

 

c.               a reduction in Participant’s total target incentive award opportunities during a fiscal year;

 

d.              the relocation of Participant’s principal place of employment by more than 50 miles from the then current location;

 

e.               Participant is directed by the Board of Directors of Mistras or a higher level officer of the Company to engage in conduct that is unethical or illegal;

 

f.                in connection with a Change in Control (as defined below), the failure or refusal by the successor or acquiring company to expressly assume the obligations of the Company under this Plan at the time of the Change in Control; or

 

g.               there is a material adverse change to this Plan.

 

The Plan does not apply to the termination of employment under any other circumstances or for any reason except as expressly enumerated above.  This Plan does not apply to the termination of a Participant’s employment due to the Participant’s death or disability.  Disability means the Participant cannot perform, with reasonable accommodations, the essential and customary functions and responsibilities of his or her position for 150 consecutive calendar days or 150 or more calendar days in any 365 consecutive calendar period.

 

Conditions to Receive Severance

 

In order to receive any benefits under this Plan, a Participant must sign a release agreement as a condition for severance benefits.  The release agreement will provide the Company, its affiliates, and all officers, directors, employees and other representatives of the Company and its affiliates with a full release of any claims the Participant may have against them.  In addition, the release agreement will have customary confidential requirements, non-compete/non-solicitation restrictions during the period a Participant is receiving severance payments (the “Restricted Period”), an acknowledgement of the Company’s ownership of intellectual property, and a requirement to return all Company property.

 

In order for the release agreement to be binding and effective, the Participant must sign the release agreement and return it to the Company within 21 days after he or she receives it and not have rescinded it within any applicable rescission period, which will generally be 7 days unless a longer period is

 

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required by law.  The Company will endeavor to provide the Participant with the release agreement within 10 days after his or her termination of employment.

 

Benefits

 

1.              Pay

 

No Change in Control

 

If a Participant’s employment is terminated by the Company without Cause or a Participant terminates employment for Good Reason in a situation not involving a Change in Control, as defined below, the following shall be the paid to the Participant:

 

Chief Executive Officer:  18 months base salary plus a pro rata portion of the annual cash bonus for the year in which Participant is terminated.  The bonus amount shall be at the payout rate based upon Company performance at Participant’s target bonus opportunity.

 

Other Executive Officers:  12 months base salary plus a pro rata portion of the annual cash bonus for the year in which Participant is terminated.  The bonus amount shall be at the payout rate based upon Company performance at Participant’s target bonus opportunity.

 

Senior Vice President and Vice Presidents:  9 months base salary plus a pro rata portion of the annual cash bonus for the year in which Participant is terminated.  The bonus amount shall be at the payout rate based upon Company performance at Participant’s target bonus opportunity.

 

All other Participants:  6 months base salary plus a pro rata portion of the annual cash bonus for the year in which employee is terminated.  The bonus amount shall be at the payout rate based upon Company performance at Participant’s target bonus opportunity.

 

The annual cash bonus for the most recently completed fiscal year shall be payable as if a Participant was still employed with the Company at time the bonuses are paid, should termination occur after the end of the fiscal year and before payment of the annual bonus.

 

Change in Control

 

If a Participant’s employment is terminated by the Company without Cause or a Participant terminates employment for Good Reason, in either case within 6 months before or 2 years after a Change in Control, as defined below, the following shall be the paid to the Participant:

 

Chief Executive Officer:  24 months base salary plus 2 years of annual cash bonus at Participant’s target bonus opportunity.

 

Other Executive Officers:  18 months base salary plus 1-1/2 years of annual cash bonus at Participant’s target bonus opportunity.

 

Senior Vice President and Vice Presidents:  12 months base salary plus 1 year of annual cash bonus at Participant’s target bonus opportunity.

 

All other Participants:  9 months base salary plus 75% of one year of annual cash bonus at Participant’s target bonus opportunity.

 

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The annual cash bonus for the most recently completed fiscal year shall be payable as if a Participant was still employed with the Company at time the bonuses are paid, should termination occur after the end of the fiscal year and before payment of the annual bonus.

 

For purposes of this Plan, a “Change in Control” shall be deemed to have occurred if (a) any person (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (“Exchange Act”)) becomes the beneficial owner (within the meaning of Exchange Act Rule 13d-3) of securities of Mistras (not including in the securities beneficially owned by such person any securities acquired directly from Mistras or its affiliates) representing 40% or more of the combined voting power of the Mistras’ then outstanding voting securities, other than (1) Sotirios Vahaviolos, (2) Mistras, (3) any employee benefit plan of Mistras, (4) any entity owned directly or indirectly by the shareholders of Mistras in substantially the same proportion as their ownership of stock of Mistras, or (5) any person who becomes a beneficial owner directly or indirectly of securities of Mistras pursuant to a transaction described in (b) below which meets the exceptions in (b) (1) - (3) below; or (b) there shall have been consummated a consolidation, merger or reorganization of Mistras, unless (1) the stockholders of Mistras immediately before such consolidation, merger or reorganization own, directly or indirectly, at least a majority of the combined voting power of the outstanding voting securities of Mistras or other entity resulting from such consolidation, merger or reorganization, (2) individuals who were members of the Board of Directors of Mistras (the “Board”) immediately prior to the execution of the agreement providing for such consolidation, merger or reorganization constitute a majority of the board of directors of the surviving corporation or of a corporation directly or indirectly beneficially owning a majority of the voting securities of the surviving corporation, and (3) no person beneficially owns more than 50% of the combined voting power of the then outstanding voting securities of the surviving corporation (other than a person who is (A) Mistras or a subsidiary of Mistras, (B) an employee benefit plan maintained by Mistras, the surviving corporation or any subsidiary, or (C) the beneficial owner of 50% or more of the combined voting power of the outstanding voting securities of Mistras immediately prior to such consolidation, merger or reorganization); or (c) individuals who are directors or director nominees of Mistras as of January 1, 2013 (the “Incumbent Board”) cease for any reason to constitute a majority of the Board, provided that any individual becoming a director subsequent to January 1, 2013 whose appointment or nomination for election by Mistras’ stockholders, was approved by a vote of at least two-thirds of the Incumbent Board shall be considered as though such individual was a member of the Incumbent Board; or (d) the stockholders of Mistras approve the complete liquidation or dissolution of Mistras, or a sale or other disposition of all or substantially all of the assets of Mistras (other than to an entity described in (a)(5) above).

 

Timing of Payments.  Severance payments under this Plan shall be paid pursuant to the Company’s normal payroll cycle in which the Participant was paid immediately prior to the termination of employment.  Each payment shall be treated as a separate payment for purposes of Section 409A of the Internal Revenue Code (or any successor provision).  Payments will begin being paid as promptly as reasonably possible following the Participant’s return of the signed release agreement and the expiration of any relevant rescission period.  If a Participant has the ability to enable payments hereunder to commence in the year employment is terminated or the following year, based upon the amount of time the Participant takes to return the signed release, payments will not commence until the year following termination of employment.  If a Participant is entitled to payment pursuant to this Plan of deferred compensation subject to section 409A prior to six months after such Participant’s termination of employment, such payments will be deferred and paid in a lump sum after the end of such six-month period.  Any such delay shall not affect the timing of other payments under this Plan.

 

Severance not Earnings.  Amounts payable under this Plan will not be included as earnings under any other Company plan, such Mistras 401(k) Savings Plan contributions subject to matching.

 

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2.              Benefits

 

Medical Coverage.  If a Participant is enrolled in a Company-sponsored medical plan at the time his or her employment is terminated, he or she may continue to participate in the medical plan for up to twelve (12) months following termination at the active employee rate.  After the 12 months of active rate coverage, the Participant will be eligible to continue to participate in the medical plan for up to an additional 18 months at full cost under COBRA.

 

Life Insurance.  A Participant may continue his or her group term life insurance coverage existing at the time employment is terminated at the active employee rate for up to 12 months following termination.

 

Base Salary.  For purposes of benefits under this plan, base salary shall mean the highest annualized rate of base salary in effect for the Participant during the 12 month period preceding termination of employment.

 

Other Benefits.  Benefits under all Company benefit plans and programs will terminate in accordance with the terms of those plans as they are normally applied to employees who resign or are terminated from their employment with the Company.

 

3.              Equity Awards.

 

If a Participant’s employment is terminated by the Company without Cause or the Participant terminates employment for Good Reason, not in connection with a Change in Control, then during the Restricted Period (so long as the Participant is complying with the confidentiality requirements and the non-compete and non-solicitation restrictions in his or her release agreement), all equity awards will continue to vest, and with respect to any outstanding performance-based awards for which a measuring period ends before the end of such Restricted Period, the amount of any awards payable or vesting will be determined at the end of the applicable performance period as if the Participant’s employment had continued.  Any vested stock options shall expire 90 days after the end of the Restricted Period.

 

If a Participant’s employment is terminated by the Company without Cause or the Participant terminates employment for Good Reason within 6 months before or 2 years after a Change in Control, all equity-based incentive awards granted to the Participant which were not paid out or fully vested in connection with the Change in Control shall become fully vested immediately, with the payout under any performance-based awards being equal to the target amount.

 

Administration

 

The Compensation Committee of the Board (the “Committee”) shall administer this Plan and shall delegate administration of the Plan to a designated Plan Administrator (“Plan Administrator”).  The Plan Administrator shall be initially the Vice President, Human Resources, until such time as another Plan Administrator is designated by the Committee.  In addition, the Plan Administrator shall make, in his or her reasonable discretion, all determinations arising in the administration, construction, or interpretation of the Plan, including the rights to construe disputed Plan terms and provisions.  All such determinations shall be conclusive and binding on all persons, except as otherwise provided by law.  The Plan Administrator is authorized to approve exceptions to this Plan, in his or her reasonable discretion, within the limits prescribed by Section 409A of the Internal Revenue Code and other applicable laws.  This Plan is intended to constitute separation pay for purposes of Section 409A of the Internal Revenue Code and ERISA to the extent permissible and is otherwise intended to be a deferred compensation plan maintained primarily for a select group of management or highly compensated employees and to comply with section 409A of the Code, and shall be interpreted strictly in accordance with such foregoing intent.  The

 

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Company reserves the right to decide whether the circumstances justify the payment of benefits under this Plan in any particular case, and the decision of the Company is final.

 

Claims Procedure

 

If a dispute arises between the Plan Administrator and a Participant or beneficiary over the amount of benefits payable under the Plan, the Participant or beneficiary may file a claim for benefits by notifying the Plan Administrator in writing of his or her claim. The Plan Administrator will review and adjudicate the claim.  If the claimant and the Plan Administrator are unable to reach a mutually satisfactory resolution of the dispute, it will be submitted to arbitration under the rules of the American Arbitration Association.  Each Participant agrees by continuing in his or her position which makes the Participant eligible to be a Participant, that arbitration will be the sole means of resolving disputes arising under the Plan and waives, on behalf of the Participant and any of his or her beneficiaries, any right to litigate any such dispute in a court of law.

 

Amendment & Termination

 

The Plan may be amended or terminated by the Company at any time for any reason, with or without notice.  The Company reserves the right, by action of the Compensation Committee of the Board, or by any duly appointed successor committee or authorized delegate of the Board, to amend, modify, suspend or terminate this Plan and to disqualify employees from eligibility under the Plan at any time for any reason or for no reason with or without notice.  Any such action is not contingent upon the financial condition of Mistras.

 

6Exhibit 4.2

 

KOTURA, INC.

 

SECOND AMENDED AND RESTATED
 2003 STOCK PLAN

 

ORIGINALLY ADOPTED ON OCTOBER 27, 2003

 

AS AMENDED AND RESTATED ON OCTOBER 7, 2009 AND MAY 14, 2013

 

 

TABLE OF CONTENTS

 

	
 
    	
Page No.
    
	
 
    	
 
    
	
SECTION 1. ESTABLISHMENT   AND PURPOSE
    	
1
    
	
 
    	
 
    
	
SECTION 2. ADMINISTRATION
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Committees of the Board of Directors
    	
1
    
	
 
    	
(b)
    	
Authority of the Board of Directors
    	
1
    
	
 
    	
 
    
	
SECTION 3. ELIGIBILITY
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
General Rule
    	
1
    
	
 
    	
(b)
    	
Ten-Percent Shareholders
    	
1
    
	
 
    	
 
    
	
SECTION 4. STOCK SUBJECT TO   PLAN
    	
2
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Basic Limitation
    	
2
    
	
 
    	
(b)
    	
Additional Shares
    	
2
    
	
 
    	
 
    
	
SECTION 5. TERMS AND   CONDITIONS OF AWARDS OR SALES
    	
2
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Stock Purchase Agreement
    	
2
    
	
 
    	
(b)
    	
Duration of Offers and Nontransferability of Rights
    	
2
    
	
 
    	
(c)
    	
Purchase Price
    	
2
    
	
 
    	
(d)
    	
Withholding Taxes
    	
2
    
	
 
    	
(e)
    	
Restrictions on Transfer of Shares and Minimum Vesting
    	
2
    
	
 
    	
 
    
	
SECTION 6. TERMS AND   CONDITIONS OF RESTRICTED STOCK UNITS
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
RSU Agreement
    	
3
    
	
 
    	
(b)
    	
Basic Term
    	
3
    
	
 
    	
(c)
    	
Settlement
    	
3
    
	
 
    	
(d)
    	
Termination of Service
    	
3
    
	
 
    	
(e)
    	
Transferability of Restricted Stock Units
    	
3
    
	
 
    	
(f)
    	
Withholding Taxes
    	
3
    
	
 
    	
(g)
    	
No Rights as a Shareholder
    	
3
    
	
 
    	
 
    
	
SECTION 7. TERMS AND   CONDITIONS OF OPTIONS
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Stock Option Agreement
    	
3
    
	
 
    	
(b)
    	
Number of Shares
    	
4
    
	
 
    	
(c)
    	
Exercise Price
    	
4
    
	
 
    	
(d)
    	
Exercisability
    	
4
    
	
 
    	
(e)
    	
Basic Term
    	
4
    
	
 
    	
(f)
    	
Termination of Service (Except by Death)
    	
4
    
	
 
    	
(g)
    	
Leaves of Absence
    	
5
    

 

i

 

	
 
    	
(h)
    	
Death of Optionee
    	
5
    
	
 
    	
(i)
    	
Restrictions on Transfer of Shares and Minimum Vesting
    	
5
    
	
 
    	
(j)
    	
Transferability of Options
    	
5
    
	
 
    	
(k)
    	
Withholding Taxes
    	
5
    
	
 
    	
(l)
    	
No Rights as a Shareholder
    	
6
    
	
 
    	
(m)
    	
Modification, Extension and Assumption of Options
    	
6
    
	
 
    	
 
    
	
SECTION 8. PAYMENT FOR   SHARES
    	
6
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
General Rule
    	
6
    
	
 
    	
(b)
    	
Surrender of Stock
    	
6
    
	
 
    	
(c)
    	
Services Rendered
    	
6
    
	
 
    	
(d)
    	
Promissory Note
    	
6
    
	
 
    	
(e)
    	
Exercise/Sale
    	
7
    
	
 
    	
(f)
    	
Exercise/Pledge
    	
7
    
	
 
    	
 
    
	
SECTION 9. ADJUSTMENT OF   SHARES
    	
7
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
General
    	
7
    
	
 
    	
(b)
    	
Mergers and Consolidations
    	
7
    
	
 
    	
(c)
    	
Reservation of Rights
    	
8
    
	
 
    	
 
    
	
SECTION 10. SECURITIES LAW   REQUIREMENTS
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
General
    	
9
    
	
 
    	
(b)
    	
Financial Reports
    	
9
    
	
 
    	
 
    
	
SECTION 11. NO RETENTION   RIGHTS
    	
9
    
	
 
    	
 
    
	
SECTION 12. DURATION AND   AMENDMENTS
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Term of the Plan
    	
9
    
	
 
    	
(b)
    	
Right to Amend or Terminate the Plan
    	
9
    
	
 
    	
(c)
    	
Effect of Amendment or Termination
    	
10
    
	
 
    	
 
    
	
SECTION 13.   SECTION 409A
    	
10
    
	
 
    	
 
    
	
SECTION 14. DEFINITIONS
    	
10
    

 

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KOTURA, INC. SECOND AMENDED AND RESTATED 2003 STOCK PLAN

 

SECTION 1.  ESTABLISHMENT AND PURPOSE.

 

The purpose of the Plan is to offer selected persons an opportunity to acquire a proprietary interest in the success of the Company, or to increase such interest, by purchasing Shares of the Company’s Stock.  The Plan provides both for the direct award or sale of Shares, for the grant of Options to purchase Shares and for the grant of Restricted Stock Units.  Options granted under the Plan may include Nonstatutory Options as well as ISOs intended to qualify under Section 422 of the Code.

 

The Plan amends and restates in its entirety the First Amended Plan.  Capitalized terms are defined in Section 13.

 

SECTION 2.  ADMINISTRATION.

 

(a)                                 Committees of the Board of Directors.  The Plan may be administered by one or more Committees.  Each Committee shall consist of one or more members of the Board of Directors who have been appointed by the Board of Directors.  Each Committee shall have such authority and be responsible for such functions as the Board of Directors has assigned to it.  If no Committee has been appointed, the entire Board of Directors shall administer the Plan.  Any reference to the Board of Directors in the Plan shall be construed as a reference to the Committee (if any) to whom the Board of Directors has assigned a particular function.

 

(b)                                 Authority of the Board of Directors.  Subject to the provisions of the Plan, the Board of Directors shall have full authority and discretion to take any actions it deems necessary or advisable for the administration of the Plan.  All decisions, interpretations and other actions of the Board of Directors shall be final and binding on all Purchasers, all Grantees, all Optionees and all persons deriving their rights from a Purchaser, Grantee or Optionee.

 

SECTION 3.  ELIGIBILITY.

 

(a)                                 General Rule.  Only Employees, Outside Directors and Consultants shall be eligible for the grant of Nonstatutory Options or Restricted Stock Units or the direct award or sale of Shares.  Only Employees shall be eligible for the grant of ISOs.

 

(b)                                 Ten-Percent Shareholders.  A person who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company, its Parent or any of its Subsidiaries shall not be eligible for designation as an Optionee with respect to an ISO unless (i) the Exercise Price of such ISO is at least 110% of the Fair Market Value of a Share on the date of grant, and (ii) such ISO by its terms is not exercisable after the expiration of five years from the date of grant.  For purposes of this Subsection (b), in determining stock ownership, the attribution rules of Section 424(d) of the Code shall be applied.

 

 

SECTION 4.  STOCK SUBJECT TO PLAN.

 

(a)                                 Basic Limitation.  Not more than 9,230,000 Shares may be issued under the Plan (subject to Subsection (b) below and Section 9).  The number of Shares that are subject to Options, Restricted Stock Units or other rights outstanding at any time under the Plan shall not exceed the number of Shares that then remain available for issuance under the Plan.  The Company, during the term of the Plan, shall at all times reserve and keep available sufficient Shares to satisfy the requirements of the Plan.  Shares offered under the Plan may be authorized but unissued Shares or treasury Shares.

 

(b)                                 Additional Shares.  In the event that Shares previously issued under the Plan are reacquired by the Company, such Shares shall be added to the number of Shares then available for issuance under the Plan.  In the event that an outstanding Option, Restricted Stock Unit or other right for any reason expires or is canceled under the Plan, the Shares allocable to the expired or cancelled and, if applicable, unexercised portion of such Option, Restricted Stock Unit or other right shall be added to the number of Shares then available for issuance under this Plan.

 

SECTION 5.  TERMS AND CONDITIONS OF AWARDS OR SALES.

 

(a)                                 Stock Purchase Agreement.  Each award or sale of Shares under the Plan (other than upon exercise of an Option or pursuant to the settlement of a Restricted Stock Unit) shall be evidenced by a Stock Purchase Agreement between the Purchaser and the Company.  Such award or sale shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan and which the Board of Directors deems appropriate for inclusion in a Stock Purchase Agreement.  The provisions of the various Stock Purchase Agreements entered into under the Plan need not be identical.

 

(b)                                 Duration of Offers and Nontransferability of Rights.  Any right to acquire Shares under the Plan (other than an Option or Restricted Stock Unit) shall automatically expire if not exercised by the Purchaser within 30 days after the grant of such right was communicated to the Purchaser by the Company.  Such right shall not be transferable and shall be exercisable only by the Purchaser to whom such right was granted.

 

(c)                                  Purchase Price.  The Board of Directors shall determine the Purchase Price at its sole discretion.  The Purchase Price shall be payable in a form described in Section 8.

 

(d)                                 Withholding Taxes.  As a condition to the purchase of Shares, the Purchaser shall make such arrangements as the Board of Directors may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with such purchase.

 

(e)                                  Restrictions on Transfer of Shares and Minimum Vesting.  Any Shares awarded or sold under the Plan shall be subject to such special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Board of Directors may determine.  Such restrictions shall be set forth in the applicable Stock Purchase Agreement and shall apply in addition to any restrictions that may apply to holders of Shares generally.

 

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SECTION 6.  TERMS AND CONDITIONS OF RESTRICTED STOCK UNITS.

 

(a)                                 RSU Agreement.  Each award of Restricted Stock Units under the Plan shall be evidenced by an RSU Agreement between the Grantee and the Company.  Restricted Stock Units shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan and which the Board of Directors deems appropriate for inclusion in an RSU Agreement.  The provisions of the various RSU Agreements entered into under the Plan need not be identical.

 

(b)                                 Basic Term.  The RSU Agreement shall specify the term of the Restricted Stock Units.  The term shall not exceed 10 years from the date of grant.  Subject to the preceding sentence, the Board of Directors at its sole discretion shall determine when an award of Restricted Stock Units is to expire.

 

(c)                                  Settlement.  Upon the vesting of a Restricted Stock Unit, the Grantee shall be entitled to receive from the Company one Share or an amount of cash or other property equal to the Fair Market Value of one Share on the settlement date, as provided in the applicable RSU Agreement.  The Committee may provide that settlement of Restricted Stock Units shall occur upon or as soon as reasonably practicable after the vesting of the Restricted Stock Units or shall instead be deferred, on a mandatory basis or at the election of the Grantee, in a manner that complies with Section 409A of the Code.

 

(d)                                 Termination of Service.  Except to the extent otherwise provided by the Committee in an RSU Agreement, if a Grantee’s Service terminates for any reason (including due to an Involuntary Termination), then the Grantee’s Restricted Stock Units (to the extent then-unvested) shall be forfeited and cancelled without consideration therefor.

 

(e)                                  Transferability of Restricted Stock Units.  Restricted Stock Units shall be transferable by the Grantee only by (i) a beneficiary designation, (ii) a will or (iii) the laws of descent and distribution, except as provided in the next sentence.  If the applicable RSU Agreement so provides, Restricted Stock Units shall also be transferable by gift or domestic relations order to a Family Member of the Grantee.

 

(f)                                   Withholding Taxes.  As a condition to the grant of an award of Restricted Stock Units and/or the issuance of Shares upon settlement of Restricted Stock Units, the Grantee shall make such arrangements as the Board of Directors may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with such grant and/or issuance, as applicable.

 

(g)                                  No Rights as a Shareholder.  A Grantee, or a transferee of a Grantee, shall have no rights as a shareholder with respect to any Shares covered by the Grantee’s Restricted Stock Units until the Shares underlying such Restricted Stock Units are issued to such person upon the settlement of such Restricted Stock Units.

 

SECTION 7.  TERMS AND CONDITIONS OF OPTIONS.

 

(a)                                 Stock Option Agreement.  Each grant of an Option under the Plan shall be evidenced by a Stock Option Agreement between the Optionee and the Company.  The

 

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Option shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan and which the Board of Directors deems appropriate for inclusion in a Stock Option Agreement.  The provisions of the various Stock Option Agreements entered into under the Plan need not be identical.

 

(b)                                 Number of Shares.  Each Stock Option Agreement shall specify the number of Shares that are subject to the Option and shall provide for the adjustment of such number in accordance with Section 9.  The Stock Option Agreement shall also specify whether the Option is an ISO or a Nonstatutory Option.

 

(c)                                  Exercise Price.  Each Stock Option Agreement shall specify the Exercise Price, which shall not be less than 100% of the Fair Market Value of a Share on the date of grant, and a higher percentage may be required by Section 3(b).  Subject to the preceding sentence, the Exercise Price under any Option shall be determined by the Board of Directors at its sole discretion.  The Exercise Price shall be payable in a form described in Section 8.

 

(d)                                 Exercisability.  Each Stock Option Agreement shall specify the date when all or any installment of the Option is to become exercisable.  No Option shall be exercisable unless the Optionee has delivered an executed copy of the Stock Option Agreement to the Company.  The Board of Directors shall determine the exercisability provisions of the Stock Option Agreement at its sole discretion.  All of an Optionee’s Options shall become exercisable in full if Section 9(b)(iv) applies.

 

(e)                                  Basic Term.  The Stock Option Agreement shall specify the term of the Option.  The term shall not exceed 10 years from the date of grant, and a shorter term may be required by Section 3(b).  Subject to the preceding sentence, the Board of Directors at its sole discretion shall determine when an Option is to expire.

 

(f)                                   Termination of Service (Except by Death).  If an Optionee’s Service terminates for any reason other than the Optionee’s death, then the Optionee’s Options shall expire on the earliest of the following occasions:

 

(i)                                     The expiration date determined pursuant to Subsection (e) above;

 

(ii)                                  The date twelve months following the date of an Involuntary Termination occurring within eighteen months following a Change in Control;

 

(iii)                               The date 30 days after the termination of the Optionee’s Service for any reason other than Disability or as set forth under Subsection (f)(ii) above, or such later date as the Board of Directors may determine; or

 

(iv)                              The date six months after the termination of the Optionee’s Service by reason of Disability, or such later date as the Board of Directors may determine.

 

The Optionee may exercise all or part of the Optionee’s Options at any time before the expiration of such Options under the preceding sentence, but only to the extent that such Options had become exercisable before the Optionee’s Service terminated (or became exercisable as a result of the termination) and the underlying Shares had vested before the Optionee’s Service

 

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terminated (or vested as a result of the termination).  The balance of such Options shall lapse when the Optionee’s Service terminates.  In the event that the Optionee dies after the termination of the Optionee’s Service but before the expiration of the Optionee’s Options, all or part of such Options may be exercised (prior to expiration) by the executors or administrators of the Optionee’s estate or by any person who has acquired such Options directly from the Optionee by beneficiary designation, bequest or inheritance, but only to the extent that such Options had become exercisable before the Optionee’s Service terminated (or became exercisable as a result of the termination) and the underlying Shares had vested before the Optionee’s Service terminated (or vested as a result of the termination).

 

(g)                                  Leaves of Absence.  For purposes of Subsection (f) above, Service shall be deemed to continue while the Optionee is on a bona fide leave of absence, if such leave was approved by the Company in writing and if continued crediting of Service for this purpose is expressly required by the terms of such leave or by applicable law (as determined by the Company).

 

(h)                                 Death of Optionee.  If an Optionee dies while the Optionee is in Service, then the Optionee’s Options shall expire on the earlier of the following dates:

 

(i)                                     The expiration date determined pursuant to Subsection (e) above; or

 

(ii)                                  The date six months after the Optionee’s death, or such later date as the Board of Directors may determine.

 

All or part of the Optionee’s Options may be exercised at any time before the expiration of such Options under the preceding sentence by the executors or administrators of the Optionee’s estate or by any person who has acquired such Options directly from the Optionee by beneficiary designation, bequest or inheritance, but only to the extent that such Options had become exercisable before the Optionee’s death (or became exercisable as a result of the death) and the underlying Shares had vested before the Optionee’s death (or vested as a result of the Optionee’s death). The balance of such Options shall lapse when the Optionee dies.

 

(i)                                     Restrictions on Transfer of Shares and Minimum Vesting.  Any Shares issued upon exercise of an Option shall be subject to such special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Board of Directors may determine.  Such restrictions shall be set forth in the applicable Stock Option Agreement and shall apply in addition to any restrictions that may apply to holders of Shares generally.

 

(j)                                    Transferability of Options.  An Option shall be transferable by the Optionee only by (i) a beneficiary designation, (ii) a will or (iii) the laws of descent and distribution, except as provided in the next sentence.  If the applicable Stock Option Agreement so provides, a Nonstatutory Option shall also be transferable by gift or domestic relations order to a Family Member of the Optionee.  An ISO may be exercised during the lifetime of the Optionee only by the Optionee or by the Optionee’s guardian or legal representative.

 

(k)                                 Withholding Taxes.  As a condition to the exercise of an Option, the Optionee shall make such arrangements as the Board of Directors may require for the satisfaction

 

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of any federal, state, local or foreign withholding tax obligations that may arise in connection with such exercise.  The Optionee shall also make such arrangements as the Board of Directors may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with the disposition of Shares acquired by exercising an Option.

 

(l)                                     No Rights as a Shareholder.  An Optionee, or a transferee of an Optionee, shall have no rights as a shareholder with respect to any Shares covered by the Optionee’s Option until such person becomes entitled to receive such Shares by filing a notice of exercise and paying the Exercise Price pursuant to the terms of such Option.

 

(m)                             Modification, Extension and Assumption of Options.  Within the limitations of the Plan, the Board of Directors may modify, extend or assume outstanding Options or may accept the cancellation of outstanding Options (whether granted by the Company or another issuer) in return for the grant of new Options for the same or a different number of Shares and at the same or a different Exercise Price.  The foregoing notwithstanding, no modification of an Option shall, without the consent of the Optionee, impair the Optionee’s rights or increase the Optionee’s obligations under such Option.

 

SECTION 8.  PAYMENT FOR SHARES.

 

(a)                                 General Rule.  The entire Purchase Price or Exercise Price of Shares issued under the Plan shall be payable in cash or cash equivalents at the time when such Shares are purchased, except as otherwise provided in this Section 8.

 

(b)                                 Surrender of Stock.  At the discretion of the Board of Directors, all or any part of the Exercise Price may be paid by surrendering, or attesting to the ownership of, Shares that are already owned by the Optionee.  Such Shares shall be surrendered to the Company in good form for transfer and shall be valued at their Fair Market Value on the date when the Option is exercised.  The Optionee shall not surrender, or attest to the ownership of, Shares in payment of the Exercise Price if such action would cause the Company to recognize compensation expense (or additional compensation expense) with respect to the Option for financial reporting purposes.

 

(c)                                  Services Rendered.  At the discretion of the Board of Directors, Shares may be awarded under the Plan in consideration of services rendered to the Company, a Parent or a Subsidiary prior to the award.

 

(d)                                 Promissory Note.  At the discretion of the Board of Directors, all or a portion of the Exercise Price or Purchase Price (as the case may be) of Shares issued under the Plan may be paid with a full-recourse promissory note; provided, however, that payment of any portion of the Exercise Price or Purchase Price by promissory note shall not be permitted where such loan would be prohibited by applicable laws, regulations and rules of the Securities and Exchange Commission and any other governmental agency having jurisdiction. However, the par value of the Shares, if newly issued, shall be paid in cash or cash equivalents.  The Shares shall be pledged as security for payment of the principal amount of the promissory note and interest thereon.  The interest rate payable under the terms of the promissory note shall not be less than the minimum rate (if any) required to avoid the imputation of additional interest under the Code.

 

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Subject to the foregoing, the Board of Directors (at its sole discretion) shall specify the term, interest rate, amortization requirements (if any) and other provisions of such note; provided, however, that each such note shall comply with all applicable laws, regulations and rules of the Board of Governors of the Federal Reserve System and any other governmental agency having jurisdiction.

 

(e)                                  Exercise/Sale.  To the extent that a Stock Option Agreement so provides, and if Stock is publicly traded, payment may be made all or in part by the delivery (on a form prescribed by the Company) of an irrevocable direction to a securities broker approved by the Company to sell Shares and to deliver all or part of the sales proceeds to the Company in payment of all or part of the Exercise Price and any withholding taxes.

 

(f)                                   Exercise/Pledge.  To the extent that a Stock Option Agreement so provides, and if Stock is publicly traded, payment may be made all or in part by the delivery (on a form prescribed by the Company) of an irrevocable direction to pledge Shares to a securities broker or lender approved by the Company, as security for a loan, and to deliver all or part of the loan proceeds to the Company in payment of all or part of the Exercise Price and any withholding taxes.

 

SECTION 9.  ADJUSTMENT OF SHARES.

 

(a)                                 General.  In the event of a subdivision of the outstanding Stock, a declaration of a dividend payable in Shares or a combination or consolidation of the outstanding Stock into a lesser number of Shares, corresponding adjustments shall automatically be made in each of (i) the number of Shares available for future grants under Section 4, (ii) the number of Shares covered by each outstanding Option and each outstanding Restricted Stock Unit and (iii) the Exercise Price under each outstanding Option.  In the event of a declaration of an extraordinary dividend payable in a form other than Shares in an amount that has a material effect on the Fair Market Value of the Stock, a recapitalization, a spin-off, a reclassification or a similar occurrence, the Board of Directors at its sole discretion may make appropriate adjustments in one or more of (i) the number of Shares available for future grants under Section 4, (ii) the number of Shares covered by each outstanding Option and/or each outstanding Restricted Stock Unit and/or (iii) the Exercise Price under each outstanding Option.

 

(b)                                 Mergers and Consolidations.  In the event that the Company is a party to a merger or consolidation, all outstanding Options and Restricted Stock Units shall be subject to the agreement of merger or consolidation.  Such agreement shall provide for one or more of the following:

 

(i)                                     The continuation of such outstanding Options and/or Restricted Stock Units by the Company (if the Company is the surviving corporation).

 

(ii)                                  The assumption of such outstanding Options and/or Restricted Stock Units by the surviving corporation or its parent, provided, that any such assumption of Options shall be conducted in a manner that complies with Section 424(a) of the Code (whether or not such Options are ISOs).

 

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(iii)                               The substitution by the surviving corporation or its parent of new options for such outstanding Options and/or Restricted Stock Units, provided, that any such substitution of Options shall be conducted in a manner that complies with Section 424(a) of the Code (whether or not such Options are ISOs).

 

(iv)                              Full exercisability of such outstanding Options and full vesting of the Shares subject to such Options and/or Restricted Stock Units, followed by the cancellation of such Options and/or Restricted Stock Units.  The full exercisability of such Options and full vesting of the Shares subject to such Options and/or Restricted Stock Units may be contingent on the closing of such merger or consolidation.  The Optionees shall be able to exercise such Options during a period of not less than five full business days preceding the closing date of such merger or consolidation, unless (A) a shorter period is required to permit a timely closing of such merger or consolidation and (B) such shorter period still offers the Optionees a reasonable opportunity to exercise such Options.  Any exercise of such Options during such period may be contingent on the closing of such merger or consolidation.

 

(v)                                 The cancellation of such outstanding Options and a payment to the Optionees equal to the excess of (A) the Fair Market Value of the Shares subject to such Options (whether or not such Options are then exercisable or such Shares are then vested) as of the closing date of such merger or consolidation over (B) their Exercise Price and/or the cancellation of such outstanding Restricted Stock Units and a payment to the Grantees equal to the Fair Market Value of the Shares subject to such Restricted Stock Units (whether or not such Shares are then vested).  Such payment shall be made in the form of cash, cash equivalents, or securities of the surviving corporation or its parent with a Fair Market Value equal to the required amount.  Such payment may be made in installments and may be deferred until the date or dates when such Options would have become exercisable or such Shares would have vested.  Such payment may be subject to vesting based on the Optionee’s or the Grantee’s continuing Service, provided that the vesting schedule shall not be less favorable to the Optionees or Grantees than the schedule under which such Options would have become exercisable or such Shares would have vested.  If the Exercise Price of the Shares subject to such Options exceeds the Fair Market Value of such Shares, then such Options may be cancelled without making a payment to the Optionees.  For purposes of this Paragraph (v), the Fair Market Value of any security shall be determined without regard to any vesting conditions that may apply to such security.

 

(c)                                  Reservation of Rights.  Except as provided in this Section 9, an Optionee, Grantee or Purchaser shall have no rights by reason of (i) any subdivision or consolidation of shares of stock of any class, (ii) the payment of any dividend or (iii) any other increase or decrease in the number of shares of stock of any class.  Any issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or Exercise Price, as applicable, of Shares subject to an Option or Restricted Stock Unit.  The grant of an Option or Restricted Stock Unit pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or

 

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business structure, to merge or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or assets.

 

SECTION 10.  SECURITIES LAW REQUIREMENTS.

 

(a)                                 General.  Shares shall not be issued under the Plan unless the issuance and delivery of such Shares comply with (or are exempt from) all applicable requirements of law, including (without limitation) the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, state securities laws and regulations, and the regulations of any stock exchange or other securities market on which the Company’s securities may then be traded.

 

(b)                                 Financial Reports.  The Company each year shall furnish to Optionees, Grantees, Purchasers and shareholders who have received Stock under the Plan its balance sheet and income statement, unless such Optionees, Grantees, Purchasers or shareholders are key Employees whose duties with the Company assure them access to equivalent information.  Such balance sheet and income statement need not be audited.

 

SECTION 11.  NO RETENTION RIGHTS.

 

Nothing in the Plan or in any right, Restricted Stock Unit or Option granted under the Plan shall confer upon the Purchaser, Grantee or Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company (or any Parent or Subsidiary employing or retaining the Purchaser, Grantee or Optionee) or of the Purchaser, Grantee or Optionee, which rights are hereby expressly reserved by each, to terminate his or her Service at any time and for any reason, with or without cause.

 

SECTION 12.  DURATION AND AMENDMENTS.

 

(a)                                 Term of the Plan.  The First Amended Plan became effective on October 7, 2009.  This Plan, as amended and restated, shall become effective on the date of its adoption by the Board of Directors, subject to the approval of the Company’s shareholders.  If the shareholders fail to approve the Plan within 12 months after its adoption by the Board of Directors, then any grants, exercises or sales that have already occurred under the Plan shall be rescinded and no additional grants, exercises or sales shall thereafter be made under the Plan.  The Plan shall terminate automatically 10 years after the later of (i) its adoption by the Board of Directors or (ii) the most recent increase in the number of Shares reserved under Section 4 that was approved by the Company’s shareholders.  The Plan may be terminated on any earlier date pursuant to Subsection (b) below.

 

(b)                                 Right to Amend or Terminate the Plan.  The Board of Directors may amend, suspend or terminate the Plan at any time and for any reason; provided, however, that any amendment of the Plan shall be subject to the approval of the Company’s shareholders if it (i) increases the number of Shares available for issuance under the Plan (except as provided in Section 9) or (ii) materially changes the class of persons who are eligible for the grant of ISOs.  Shareholder approval shall not be required for any other amendment of the Plan.  If the shareholders fail to approve an increase in the number of Shares reserved under Section 4 within 12 months after its adoption by the Board of Directors, then any grants, exercises or sales that

 

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have already occurred in reliance on such increase shall be rescinded and no additional grants, exercises or sales shall thereafter be made in reliance on such increase.

 

(c)                                  Effect of Amendment or Termination.  No Shares shall be issued or sold under the Plan after the termination thereof, except upon exercise of an Option granted prior to such termination.  The termination of the Plan, or any amendment thereof, shall not affect any Share previously issued or any Option or Restricted Stock Unit previously granted under the Plan.

 

SECTION 13.  SECTION 409A.

 

Options, Restricted Stock Units and sales or awards of Shares under the Plan are intended either to be exempt from the rules of Section 409A of the Code or to satisfy those rules, and the Plan and such awards shall be construed accordingly.  Granted rights may be modified at any time, in the Board of Director’s discretion, so as to increase the likelihood of exemption from or compliance with the rules of Section 409A of the Code.

 

SECTION 14.  DEFINITIONS.

 

(a)                                 “Board of Directors” shall mean the Board of Directors of the Company, as constituted from time to time.

 

(b)                                 “Cause” shall mean:

 

(i)                                     An unauthorized use or disclosure by the Optionee or Grantee of the Company’s confidential information or trade secrets;

 

(ii)                                  A material failure by the Optionee or Grantee to comply with the Company’s written policies or rules;

 

(iii)                               The Optionee’s or Grantee’s conviction of, or plea of “guilty” or “no contest” to, a felony under the laws of the United States or any state thereof; or

 

(iv)                              The Optionee’s or Grantee’s gross misconduct.

 

(c)                                  “Change in Control” shall mean (i) the consummation of a merger or consolidation of the Company with or into another entity or (ii) the dissolution, liquidation or winding up of the Company.  The foregoing notwithstanding, a merger or consolidation of the Company shall not constitute a “Change in Control” if immediately after such merger or consolidation a majority of the voting power of the capital stock of the continuing or surviving entity, or any direct or indirect parent corporation of such continuing or surviving entity, will be owned by the persons who were the Company’s shareholders immediately prior to such merger or consolidation in substantially the same proportions as their ownership of the voting power of the Company’s capital stock immediately prior to such merger or consolidation. Notwithstanding the foregoing, to the extent any amount constituting “nonqualified deferred compensation” subject to Section 409A of the Code would become payable under an Option or a sale or award of Shares by reason of a Change of Control, it shall become payable only if the event or circumstances constituting the Change of Control would also constitute a change in the

 

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ownership or effective control of the Company, or a change in the ownership of a substantial portion of the Company’s assets, within the meaning of subsection (a)(2)(A)(v) of Section 409A of the Code.

 

(d)                                 “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

(e)                                  “Committee” shall mean a committee of the Board of Directors, as described in Section 2(a).

 

(f)                                   “Company” shall mean Kotura, Inc., a California corporation formerly known as Arroyo Optics, Inc.

 

(g)                                  “Consultant” shall mean a person who performs bona fide services for the Company, a Parent or a Subsidiary as a consultant or advisor, excluding Employees and Outside Directors.

 

(h)                                 “Disability” shall mean that the Optionee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment.

 

(i)                                     “Employee” shall mean any individual who is a common-law employee of the Company, a Parent or a Subsidiary.

 

(j)                                    “Exercise Price” shall mean the amount for which one Share may be purchased upon exercise of an Option, as specified by the Board of Directors in the applicable Stock Option Agreement.

 

(k)                                 “Fair Market Value” shall mean the fair market value of a Share, as determined by the Board of Directors in good faith; provided, however, that Fair Market Value shall be determined consistent with the requirements of Section 409A of the Code.  Such determination shall be conclusive and binding on all persons.

 

(l)                                     “Family Member” shall mean (i) 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, (ii) any person sharing the Optionee’s or Grantee’s household (other than a tenant or employee), (iii) a trust in which persons described in Clause (i) or (ii) have more than 50% of the beneficial interest, (iv) a foundation in which persons described in Clause (i) or (ii) or the Optionee or Grantee control the management of assets and (v) any other entity in which persons described in Clause (i) or (ii) or the Optionee or Grantee own(s) more than 50% of the voting interests.

 

(m)                             “First Amended Plan” shall mean the Kotura, Inc. Amended and Restated 2003 Stock Plan.

 

(n)                                 “Grantee” shall mean a person who has been granted an award of Restricted Stock Units under the Plan.

 

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(o)                                 “Involuntary Termination” shall mean the termination of the Optionee’s or Grantee’s Service by reason of:

 

(i)                                     The involuntary discharge of the Optionee or Grantee by the Company (or the Parent or Subsidiary employing him or her) for reasons other than Cause; or

 

(ii)                                  The voluntary resignation of the Optionee or Grantee following (A) a change in the Optionee’s position with the Company (or the Parent or Subsidiary employing him or her) that materially reduces his or her level of authority or responsibility, (B) a reduction in the Optionee’s or Grantee’s base salary by more than 15% or (C) receipt of notice that the Optionee’s or Grantee’s principal workplace will be relocated more than 50 miles.

 

(p)                                 “ISO” shall mean an employee incentive stock option described in Section 422(b) of the Code.

 

(q)                                 “Nonstatutory Option” shall mean a stock option not described in Sections 422(b) or 423(b) of the Code.

 

(r)                                    “Option” shall mean an ISO or Nonstatutory Option granted under the Plan and entitling the holder to purchase Shares.

 

(s)                                   “Optionee” shall mean a person who holds an Option.

 

(t)                                    “Outside Director” shall mean a member of the Board of Directors who is not an Employee.

 

(u)                                 “Parent” shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.  A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be considered a Parent commencing as of such date.

 

(v)                                 “Plan” shall mean this Kotura, Inc. Second Amended and Restated 2003 Stock Plan.

 

(w)                               “Purchase Price” shall mean the consideration for which one Share may be acquired under the Plan (other than upon exercise of an Option or pursuant to the settlement of a Restricted Stock Unit), as specified by the Board of Directors.

 

(x)                                 “Purchaser” shall mean a person to whom the Board of Directors has offered the right to acquire Shares under the Plan (other than upon exercise of an Option or pursuant to the settlement of a Restricted Stock Unit).

 

(y)                                 “Restricted Stock Unit” shall mean an unfunded, unsecured right to receive, on the applicable settlement date, one Share or an amount in cash or other consideration

 

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determined by the Committee equal to the value thereof as of such payment date, which right may be subject to certain vesting conditions and other restrictions.

 

(z)                                  “RSU Agreement” shall mean the agreement between the Company and a Grantee that contains the terms, conditions and restrictions pertaining to the Grantee’s Restricted Stock Units.

 

(aa)                          “Service” shall mean service as an Employee, Outside Director or Consultant.

 

(bb)                          “Share” shall mean one share of Stock, as adjusted in accordance with Section 9 (if applicable).

 

(cc)                            “Stock” shall mean the Common Stock of the Company.

 

(dd)                          “Stock Option Agreement” shall mean the agreement between the Company and an Optionee that contains the terms, conditions and restrictions pertaining to the Optionee’s Option.

 

(ee)                            “Stock Purchase Agreement” shall mean the agreement between the Company and a Purchaser who acquires Shares under the Plan that contains the terms, conditions and restrictions pertaining to the acquisition of such Shares.

 

(ff)                              “Subsidiary” shall mean any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.  A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date.

 

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