Document:

exv10w1

 

Exhibit 10.1

RESIGNATION AGREEMENT

     This Resignation Agreement (the “Agreement”) is entered into between Timothy J.
O’Malley (“Mr. O’Malley”) and Medwave, Inc. (“Medwave” or the “Company”).
For purposes of this Agreement, Mr. O’Malley and Medwave are collectively referred to as the
“Parties.” This Agreement is effective on the Effective Date, as defined below.

     For good and sufficient consideration more fully described below, the Parties agree to the
following terms.

     1. Resignation, Pay and Benefits.

     1.1. Resignation Date. This confirms that Mr. O’Malley has resigned from all offices
he holds at the Company, including without limitation as President and Chief Executive Officer,
effective on September 21, 2006. Mr. O’Malley shall cease to be an employee of the Company as of
September 30, 2006.

     1.2. Severance Pay. Mr. O’Malley shall be paid a lump sum in the amount of Two
Hundred Seventy Thousand Dollars ($270,000.00) (the “Severance Pay”). The Company shall
pay Mr. O’Malley the Severance Pay on October 2, 2006 (the “Payment Date”).

     1.3. Salary and Vacation Pay. On the Payment Date, the Company shall pay Mr. O’Malley
all remaining Salary due based on his employment to September 30, 2006. The Company shall also pay
Mr. O’Malley for 122 hours of vacation time, which the Parties agree constitutes his balance of
unused accrued vacation time as of September 30, 2006.

     1.4. Dental Insurance. Effective as of the Payment Date, Mr. O’Malley shall become
eligible to receive group dental plan coverage, pursuant to 29 U.S.C. § 1161 et seq.
(“COBRA”). Mr. O’Malley’s rights to receive such coverage shall be subject to the
provisions of COBRA. Subject to Mr. O’Malley’s continued eligibility for COBRA continuation
coverage and the following sentence, the Company shall pay the full premium for such COBRA
continuation coverage until the earlier of: (i) September 30, 2007; or (ii) Mr. O’Malley’s
commencement of other employment pursuant to which he has the right to obtain group dental
insurance coverage that is at least partially paid by his employer. If Mr. O’Malley remains
eligible for COBRA coverage and chooses to continue to receive such coverage after September 30,
2007, he will be responsible for the entire cost of the dental care premiums.

     1.5. Medical Insurance. Consistent with the Company’s policies and practices for
Massachusetts-based employees and with the availability of post-termination group health plan
continuation rights under COBRA, the Company shall reimburse 80% of Mr. O’Malley’s premiums for the
personal family medical insurance policy he currently maintains (the “Premiums”) effective
until September 30, 2007; provided that if prior to September 30, 2007, Mr. O’Malley commences
employment pursuant to which he has the right to obtain group medical insurance coverage that is at
least partially paid by his employer, the Company’s obligation to reimburse 80% of the Premiums
shall expire on the date such coverage becomes available to him.

 

 

     1.6. Reporting. To assist in administering the foregoing provisions and Section 5.1
below, Mr. O’Malley shall report to the Company the following in writing and promptly after he
accepts any new employment that is scheduled to commence before September 30, 2007: (i) the
identity of the employer; (ii) his anticipated start date; (iii) the timing of his earliest
eligibility to obtain group dental plan coverage from such employer; and (iv) the timing of his
earliest eligibility to obtain group medical plan coverage from such employer. Mr. O’Malley shall
also respond fully to any reasonable requests initiated by the Company for any of the foregoing
information.

     1.7. Other Benefits. Except as and to the extent specifically referenced in this
Agreement, and notwithstanding the terms of any other benefits plans, programs or policies, Mr.
O’Malley shall not be entitled to any other fringe benefits effective after September 30, 2006.

     2. Bonus Payment/Stock Plan.

     2.1. Bonus Payment. In lieu of any payment under any bonus, incentive or commission
plan of the Company, the Company shall pay Mr. O’Malley a lump sum of One Hundred Thirty-five Thousand
Dollars ($135,000.00) (“Bonus Payment”). The Company shall pay Mr. O’Malley the Bonus
Payment on the Payment Date.

     2.2. Stock Plan. For purposes of the Company’s 2002 Amended and Restated Stock Option
Plan, Mr. O’Malley’s resignation shall be deemed a retirement and Mr. O’Malley will therefore have
until December 31, 2006 to exercise stock options granted to him under said Plan.

     3. Tax Treatment.

     3.1. The Company shall undertake to make deductions, withholdings and tax reports with respect
to payments under this Agreement to the extent that it reasonably and in good faith determines that
it is required to make such deductions, withholdings and tax reports. Payments under this
Agreement shall be in amounts net of any such deductions or withholdings. Nothing in this
Agreement shall be construed to require the Company to make any payments to compensate Mr. O’Malley
for any adverse tax effect associated with any payments or benefits or for any deduction or
withholding from any payment or benefit.

     4. Return of Property; Non-Competition, Proprietary Information and Inventions
Agreement.

     4.1. Return of Property. Mr. O’Malley confirms that, to the best of his knowledge, he
has returned to the Company all Company property that is in his possession, custody or control,
including, without limitation, computer equipment, including any laptop computer, software, keys
and access cards, credit cards, files and any documents (including computerized data and any copies
made of any computerized data or software) containing information concerning the Company, its
business or its business relationships (in the latter two cases, actual or prospective). Mr.
O’Malley also commits to deleting and finally purging any duplicates of files or documents that may
contain Company information from any computer or other device that remains his property after the
end of his employment on September 30, 2006. In the event that Mr. O’Malley discovers that he
continues to retain any such property, he shall return it to the Company immediately.

2

 

     4.2. Non-Competition, Proprietary Information and Inventions Agreement. Mr. O’Malley
agrees to the terms and conditions of the Non-Competition, Proprietary Information and Inventions
Agreement (“Inventions Agreement”) incorporated hereto and attached as Exhibit A as if he
had entered into them upon commencement of his employment with the Company, except that this
Agreement supersedes Section 1 of the Inventions Agreement.

     5. Noncompetition.

     5.1. For the period of one (1) year following the Payment Date, Mr. O’Malley shall not,
directly or indirectly, whether as owner, partner, shareholder, consultant, agent, employee,
co-venturer, work for or otherwise assist or invest in Tensys Medical, Inc., Welch Allyn, Inc. or
the Critikon Division of General Electric Company (the “Competitors”) at or for any
location in the United States or Canada. Mr. O’Malley agrees that the scope of these restrictions
encompasses anywhere in the United States. Notwithstanding the foregoing, Mr. O’Malley may own up
to one percent of the outstanding common stock of the Competitors. Mr. O’Malley understands that
the restrictions set forth in this Section 4.1 are intended to protect the Company’s interest in
its Confidential Information and established employee, customer and supplier relationships and
goodwill. Mr. O’Malley agrees that such restrictions are reasonable and appropriate for this
purpose.

     6. Nondisparagement.

     6.1. Mr. O’Malley agrees not to make any disparaging statements concerning the Company or
current or former officers, directors, shareholders, employees or agents. The Company shall
instruct the current members of its Board of Directors not to make disparaging statements about Mr.
O’Malley during such persons’ service on its Board of Directors. These nondisparagement
obligations shall not in any way affect Mr. O’Malley’s or any director’s obligation to testify
truthfully in any legal proceeding.

     7. Mutual Releases.

     7.1. Release by Mr. O’Malley. In exchange for the consideration described in this
Agreement, Mr. O’Malley hereby agrees that he, on behalf of himself and his representatives,
agents, estate, heirs and assigns, absolutely and unconditionally releases, forever discharges, and
holds harmless the Company, its affiliated and related entities, and its current and former
directors, shareholders, officers, employees, attorneys, representatives and/or agents of the
Company both individually and in their official capacities (collectively and individually the
“Company Releasees”), from any and all actions or causes of action, suits, claims,
complaints, contracts, liabilities, agreements, promises, contracts, torts, debts, damages,
controversies, judgments, rights and demands of any kind and nature, whether existing or
contingent, known or unknown (collectively, “Claims”) that Mr. O’Malley now has, owns or
holds, or claims to have, own or hold, or at any time had, owned or held, or claimed to have had,
owned or held, against any of the Company Releasees. This general release of Claims includes,
without express or

3

 

implied limitation, all Claims against any of the Company Releasees that relate
to Mr. O’Malley’s employment with the Company and all Claims that arise from the agreement to
separate from employment pursuant to this Agreement. This release further includes, without
limitation, all Claims against any of the Company Releasees based on any federal or state law or
regulation concerning employment or employment discrimination, including those laws or
regulations concerning discrimination on the basis of age (including without limitation the Age
Discrimination in Employment Act); any contract, whether oral or written, express or implied; any
breach of the implied covenant of good faith and fair dealing, any tort; any claim for defamation
or damage to reputation; any Claim for equity or ownership interest (other than pursuant to Section
2.2); any Claim for salary or benefits; any Claim for attorney’s fees; and/or any statutory or
common law claims. Mr. O’Malley acknowledges that actions undertaken pursuant to and in
conformance with this Agreement, including without limitation the separation of his employment,
shall not give rise to any Claims. Except to the extent specifically provided above, Mr. O’Malley
is not releasing his rights, if any, to vested benefits as a terminated employee under the terms of
any employee benefit plan (as defined by the Employee Retirement Income Security Act) maintained by
the Company, including without limitation the Company’s SARSEP plan, nor is he releasing his rights
under this Agreement.

     Mr. O’Malley further agrees that he shall not seek or accept damages of any nature, other
equitable or legal remedies for his own benefit, attorney’s fees, or costs from any of the
Releasees with respect to any Claim released by this Agreement. As a material inducement to the
Company to enter into this Agreement, Mr. O’Malley represents that he has not assigned to any third
party and he has not filed with any agency or court any Claim released by this Agreement.

     7.2. Release by the Company. In exchange for the consideration described in this
Agreement, the Company, on behalf of itself and its representatives, agents, estates, heirs,
successors and assigns, hereby absolutely and unconditionally releases, forever discharges and
holds harmless Mr. O’Malley and his estate, heirs and attorneys (the “O’Malley Releasees”),
from any and all Claims that any of them now has, owns or holds, or claims to own or hold, or at
any time had, owned or held, or claimed to have had, owned or held, against any of the O’Malley
Releasees. This general release of Claims includes, without express or implied limitation, all
Claims that relate to Mr. O’Malley’s employment with the Company. This release further includes,
without limitation, all Claims against any of the O’Malley Releasees based on any contract, express
or implied; any tort; and any statutory or common law Claim. Except to the extent specifically
provided above, nothing herein shall be deemed to release or waive any right to seek enforcement of
the terms of this Agreement or of any plan, benefit or agreement expressly preserved pursuant to
this Agreement. In addition, nothing herein shall be deemed to release or waive any civil Claims
based on conduct of Mr. O’Malley that satisfies the elements of a criminal offense (“Excepted
Claims”). The Company represents that none of its directors currently has knowledge of any
basis for asserting any Excepted Claims against Mr. O’Malley.

     7.3. Covenant Not to Sue. Each Party agrees that he or it shall not seek or accept
damages of any nature, other equitable or legal remedies for his or its own benefit, attorney’s
fees or costs with respect to any Claim released by this Agreement. Each Party represents that he
or it has not assigned to any third party and has not filed with any agency or court any Claim
released by this Agreement.

4

 

     8. Future Cooperation.

     8.1. Mr. O’Malley agrees to cooperate reasonably with the Company (including its outside
counsel) in connection with the contemplation, prosecution and defense of all phases of existing,
past and future litigation or proceedings before any governmental regulatory body about which the
Company believes Mr. O’Malley may have knowledge or information. Mr. O’Malley also agrees to
cooperate reasonably with the Company (including its outside counsel) in connection with or in
response to any inquiry of the Company by a governmental regulatory body. Mr. O’Malley further
agrees to make himself available at mutually convenient times during and outside of regular
business hours as reasonably deemed necessary by the Company’s counsel. Mr. O’Malley agrees to
appear without the necessity of a subpoena to testify truthfully in any legal proceedings or
proceedings before a regulatory governmental agency in which the Company calls him as a witness.
The Company shall also reimburse Mr. O’Malley for any pre-approved reasonable business travel
expenses that he incurs on the Company’s behalf as a result of his litigation and/or regulatory
compliance cooperation services, after receipt of appropriate documentation consistent with the
Company’s business expense reimbursement policy. In addition, for all time that Mr. O’Malley
reasonably expends in cooperation with the Company pursuant to this Section 8.1, the Company shall
compensate Mr. O’Malley at the rate of $190.00 per hour; provided that Mr. O’Malley’s right to such
compensation shall not apply to time spent in activities that could have been compelled pursuant to
a subpoena, including testimony and related attendance at depositions, hearings or trials.

     9. Enforcement.

     9.1. Jurisdiction. Mr. O’Malley and the Company hereby agree that the Superior Court
of the Commonwealth of Massachusetts and the United States District Court for the District of
Massachusetts shall have the exclusive jurisdiction to consider any matters related to this
Agreement, including without limitation any claim for violation of this Agreement. With respect to
any such court action, Mr. O’Malley (i) submits to the jurisdiction of such courts, (ii) consents
to service of process, and (iii) waives any other requirement (whether imposed by statute, rule of
court or otherwise) with respect to personal jurisdiction or venue.

     9.2. Relief. Mr. O’Malley agrees that it would be difficult to measure any harm
caused to the Company that might result from any breach by him of his promises set forth in
Sections 4, 5, 6 and 8, and that in any event money damages would be an inadequate remedy for any
such breach. Accordingly, Mr. O’Malley agrees that if he breaches, or propose to breach, any
portion of his obligations under Sections 4, 5, 6 and 8, the Company shall be entitled, in addition
to all other remedies it may have, to an injunction or other appropriate equitable relief to
restrain any such breach, without showing or proving any actual damage to the Company and without
the necessity of posting a bond. In the event that the Company prevails in any action to enforce
Sections 4, 5, 6 and 8, then Mr. O’Malley also shall be liable to the Company for attorney’s fees
and costs incurred by the Company in enforcing such provision(s).

     9.3. Enforcement. This Agreement shall be deemed to be made and entered into in the
Commonwealth of Massachusetts, and shall in all respects be interpreted, enforced and governed
under Massachusetts law, without giving effect to the conflict of laws principles of Massachusetts
law. The language of all parts of this Agreement shall in all cases be construed as a whole,
according to its fair meaning, and not strictly for or against any of the Parties.

5

 

     10. Agreement With Ms. O’Malley.

     10.1. In addition to any other conditions to the effectiveness of this Agreement, this
Agreement shall not take effect unless Brigitte O’Malley and the Company enter into a Resignation
Agreement.

     11. Severability.

     11.1. Should any provision of this Agreement be declared or be determined by any court to be
illegal or invalid, the validity of the remaining parts, terms, or provisions shall not be affected
thereby and said illegal or invalid part, term or provision shall be deemed not to be a part of
this Agreement.

     12. Time for Consideration; Effective Date.

     12.1. Mr. O’Malley acknowledges that he has been given the opportunity, if he desired, to
consider this Agreement for twenty-one (21) days before executing it. If Mr. O’Malley does not
sign this Agreement and return it to counsel for the Company so that such counsel receives this
Agreement within twenty-one (21) days of his receipt of this Agreement, this Agreement will not be
valid. In the event that Mr. O’Malley executes and returns this Agreement within less than
twenty-one (21) days, he acknowledges that such decision was entirely voluntary and that he
understood that he had the opportunity to consider this Agreement for the entire twenty-one (21)
day period.

     12.2. The Company acknowledges that for a period of seven (7) days from the date of Mr.
O’Malley’s execution of this Agreement, Mr. O’Malley shall retain the right to revoke this
Agreement by written notice that Medwave receives before the end of such period, and that this
Agreement shall not become effective or enforceable until the expiration of such revocation period.

     12.3. This Agreement shall become effective on the business day immediately following the
expiration of the revocation period (the “Effective Date”), provided that Mr. O’Malley does
not revoke this Agreement during that revocation period. If the Company makes any payments to Mr.
O’Malley in anticipation of the effectiveness of this Agreement but this Agreement does not become
effective, Mr. O’Malley shall immediately return any and all such payments to the Company
immediately.

     12.4. Mr. O’Malley acknowledges that he has been advised to discuss all aspects of this
Agreement with his attorney, that he has carefully read and fully understands all of the provisions
of this Agreement, and that he is voluntarily entering into this Agreement.

6

 

     13. No Transfer.

     13.1. Each Party represents that such Party has not assigned, transferred, or purported to
assign or transfer, to any person or entity, any Claim or any portion of any Claim or interest
therein.

     14. No Reliance.

     14.1. Each Party represents and acknowledges that in executing this Agreement, such Party has
not relied upon any representation or statement made by any of the other Party’s Releasees with
regard to the subject matter, basis or effect of this Agreement, other than the promises and
representations made in this Agreement.

     15. Binding Nature of Agreement.

     15.1. This Agreement shall be binding upon each of the Parties and upon their respective
representatives, successors and assigns and shall inure to the benefit of each Party and to their
representatives, successors and assigns.

     16. Modification of Agreement.

     16.1. This Agreement may be amended, revoked, changed or modified only upon a written
agreement executed by all Parties. No waiver of any provision of this Agreement will be valid
unless it is in writing and signed by the Party against whom such waiver is charged.

     17. Entire Agreement.

     17.1. This Agreement sets forth the entire agreement between the Parties hereto, and fully
supersedes any and all prior agreements or understandings between Mr. O’Malley and the Company,
except that: (a) this Agreement shall not supersede the agreement referenced in Section 4.2 of this
Agreement and (b) nothing in this Agreement shall affect Mr. O’Malley’s SARSEP plan rights.

     17.2. Notwithstanding anything in this Agreement to the contrary, Mr. O’Malley shall retain
indemnification rights he may have under the Company’s By-Laws.

     18. Authority.

     18.1. Each of the persons executing this Agreement represents and warrants that he has full
power and authority to enter into this Agreement on behalf of the Party for which he is signing and
that each and every provision of this Agreement that purports to bind or obligate each such Party
is a valid and enforceable obligation of that Party.

     19. Counterparts.

     19.1. This Agreement may be executed in counterparts. Each counterpart when executed shall
have the efficacy of a signed original.

7

 

     This Agreement has been executed as a sealed instrument by the Parties.

	 	 	 	 
	/s/ Timothy J. O’Malley
 

Timothy J. O’Malley	 	September 22, 2006
 

Date
	          Then personally appeared before
me Timothy O’Malley and stated that
the execution of this
Resignation Agreement was his

free act and deed
	 	 	
 

 

Notary Public

My commission expires: 12/15/2011
	MEDWAVE, INC	 	 
	By: /s/ Frank A. Katarow
 

Name: Frank A. Katarow

Title: CEO (interim)	 	
September 23, 2006
 

Date
	          Then personally appeared before me
the above signatory and stated that
the execution of
this Resignation Agreement was such

signatory’s free act and deed
	 	 	
 

 

Notary Public

My commission expires:           
                      

8<PAGE>

                                                                    EXHIBIT 10.1

                          WORLD ENERGY SOLUTIONS, INC.

                            2003 STOCK INCENTIVE PLAN

1. Purpose

     The purpose of this 2003 Stock Incentive Plan (the "Plan") of World Energy
Solutions, Inc., a Delaware corporation (the "Company"), is to advance the
interests of the Company's stockholders by enhancing the Company's ability to
attract, retain and motivate persons who make (or are expected to make)
important contributions to the Company by providing such persons with equity
ownership opportunities and performance-based incentives and thereby better
aligning the interests of such persons with those of the Company's stockholders.
Except where the context otherwise requires, the term "Company" shall include
any of the Company's present or future parent or subsidiary corporations as
defined in Sections 424(e) or (f) of the Internal Revenue Code of 1986, as
amended, and any regulations promulgated thereunder (the "Code") and any other
business venture (including, without limitation, joint venture or limited
liability company) in which the Company has a controlling interest, as
determined by the Board of Directors of the Company (the "Board").

2. Eligibility

     All of the Company's employees, officers, directors, consultants and
advisors are eligible to be granted options, restricted stock awards, or other
stock-based awards (each, an "Award") under the Plan. Each person who has been
granted an Award under the Plan shall be deemed a "Participant".

3. Administration and Delegation

     (a) Administration by Board of Directors. The Plan will be administered by
the Board. The Board shall have authority to grant Awards and to adopt, amend
and repeal such administrative rules, guidelines and practices relating to the
Plan as it shall deem advisable. The Board may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or any Award in the manner
and to the extent it shall deem expedient to carry the Plan into effect and it
shall be the sole and final judge of such expediency. All decisions by the Board
shall be made in the Board's sole discretion and shall be final and binding on
all persons having or claiming any interest in the Plan or in any Award. No
director or person acting pursuant to the authority delegated by the Board shall
be liable for any action or determination relating to or under the Plan made in
good faith.

     (b) Appointment of Committees. To the extent permitted by applicable law,
the Board may delegate any or all of its powers under the Plan to one or more
committees or subcommittees of the Board (a "Committee"). All references in the
Plan to the "Board" shall mean the Board or a Committee of the Board or the
executive officers referred to in Section 3(c) to the extent that the Board's
powers or authority under the Plan have been delegated to such Committee or
executive officers.

     (c) Delegation to Executive Officers. To the extent permitted by applicable
law, the Board may delegate to one or more executive officers of the Company the
power to grant

<PAGE>

Awards to employees or officers of the Company or any of its present or future
subsidiary corporations and to exercise such other powers under the Plan as the
Board may determine, provided that the Board shall fix the terms of the Awards
to be granted by such executive officers (including the exercise price of such
Awards, which may include a formula by which the exercise price will be
determined) and the maximum number of shares subject to Awards that the
executive officers may grant; provided further, however, that no executive
officer shall be authorized to grant Awards to any "executive officer" of the
Company (as defined by Rule 3b-7 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) or to any "officer" of the Company (as defined by
Rule 16a-1 under the Exchange Act).

4. Stock Available for Awards. Subject to adjustment under Section 8, Awards may
be made under the Plan for up to 9,452,800 shares of non-voting common stock,
$0.0001 par value per share, of the Company (the "Non-Voting Common Stock"). If
any Award expires or is terminated, surrendered or canceled without having been
fully exercised or is forfeited in whole or in part (including as the result of
shares of Non-Voting Common Stock subject to such Award being repurchased by the
Company at the original issuance price pursuant to a contractual repurchase
right) or results in any Non-Voting Common Stock not being issued, the unused
Non-Voting Common Stock covered by such Award shall again be available for the
grant of Awards under the Plan, subject, however, in the case of Incentive Stock
Options (as hereinafter defined), to any limitations under the Code. Shares
issued under the Plan may consist in whole or in part of authorized but unissued
shares or treasury shares. At no time while there is any Option (as defined
below) outstanding and held by a Participant who was a resident of the State of
California on the date of grant of such Option, shall the total number of shares
of Non-Voting Common Stock issuable upon exercise of all outstanding options and
the total number of shares provided for under any stock bonus or similar plan of
the Company exceed the applicable percentage as calculated in accordance with
the conditions and exclusions of Section 260.140.45 of the California Code of
Regulations, based on the shares of the Company which are outstanding at the
time the calculation is made.

5. Stock Options

     (a) General. The Board may grant options to purchase Non-Voting Common
Stock (each, an "Option") and determine the number of shares of Non-Voting
Common Stock to be covered by each Option, the exercise price of each Option and
the conditions and limitations applicable to the exercise of each Option,
including conditions relating to applicable federal or state securities laws, as
it considers necessary or advisable. An Option which is not intended to be an
Incentive Stock Option (as hereinafter defined) shall be designated a
"Nonstatutory Stock Option".

     (b) Incentive Stock Options. An Option that the Board intends to be an
"incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of the Company and shall be
subject to and shall be construed consistently with the requirements of Section
422 of the Code. The Company shall have no liability to a Participant, or any
other party, if an Option (or any part thereof) which is intended to be an
Incentive Stock Option is not an Incentive Stock Option.

                                       -2-

<PAGE>

     (c) Exercise Price. The Board shall establish the exercise price at the
time each Option is granted and specify it in the applicable option agreement.

     (d) Duration of Options. Each Option shall be exercisable at such times and
subject to such terms and conditions as the Board may specify in the applicable
option agreement.

     (e) Exercise of Option. Options may be exercised by delivery to the Company
of a written notice of exercise signed by the proper person or by any other form
of notice (including electronic notice) approved by the Board together with
payment in full as specified in Section 5(f) for the number of shares for which
the Option is exercised.

     (f) Payment Upon Exercise. Non-Voting Common Stock purchased upon the
exercise of an Option granted under the Plan shall be paid for as follows:

          (1) in cash or by check, payable to the order of the Company;

          (2) except as the Board may, in its sole discretion, otherwise provide
in an option agreement, by (i) delivery of an irrevocable and unconditional
undertaking by a creditworthy broker to deliver promptly to the Company
sufficient funds to pay the exercise price and any required tax withholding or
(ii) delivery by the Participant to the Company of a copy of irrevocable and
unconditional instructions to a creditworthy broker to deliver promptly to the
Company cash or a check sufficient to pay the exercise price and any required
tax withholding;

          (3) when the Company's voting common stock, $.0001 par value per share
(the "Voting Common Stock", and, together with the Non-Voting Common Stock, the
"Common Stock") is registered under the Securities Exchange Act of 1934 (the
"Exchange Act"), by delivery of shares of Non-Voting Common Stock (or such other
class of security into which such Non-Voting Common Stock has been exchanged or
converted, if applicable) owned by the Participant valued at their fair market
value as determined by (or in a manner approved by) the Board in good faith
("Fair Market Value"), provided (i) such method of payment is then permitted
under applicable law and (ii) such Non-Voting Common Stock, if acquired directly
from the Company, was owned by the Participant at least six months prior to such
delivery;

          (4) to the extent permitted by the Board, in its sole discretion by
(i) delivery of a promissory note of the Participant to the Company on terms
determined by the Board, or (ii) payment of such other lawful consideration as
the Board may determine; or

          (5) by any combination of the above permitted forms of payment.

     (g) Substitute Options. In connection with a merger or consolidation of an
entity with the Company or the acquisition by the Company of property or stock
of an entity, the Board may grant Options in substitution for any options or
other stock or stock-based awards granted by such entity or an affiliate
thereof. Substitute Options may be granted on such terms as the Board deems
appropriate in the circumstances, notwithstanding any limitations on Options
contained in the other sections of this Section 5 or in Section 2.

                                       -3-

<PAGE>

6. Restricted Stock

     (a) Grants. The Board may grant Awards entitling recipients to acquire
shares of Non-Voting Common Stock, subject to the right of the Company to
repurchase all or part of such shares at their issue price or other stated or
formula price (or to require forfeiture of such shares if issued at no cost)
from the recipient in the event that conditions specified by the Board in the
applicable Award are not satisfied prior to the end of the applicable
restriction period or periods established by the Board for such Award (each, a
"Restricted Stock Award").

     (b) Terms and Conditions. The Board shall determine the terms and
conditions of any such Restricted Stock Award, including the conditions for
repurchase (or forfeiture) and the issue price, if any.

     (c) Stock Certificates. Any stock certificates issued in respect of a
Restricted Stock Award shall be registered in the name of the Participant and,
unless otherwise determined by the Board, deposited by the Participant, together
with a stock power endorsed in blank, with the Company (or its designee). At the
expiration of the applicable restriction periods, the Company (or such designee)
shall deliver the certificates no longer subject to such restrictions to the
Participant or if the Participant has died, to the beneficiary designated, in a
manner determined by the Board, by a Participant to receive amounts due or
exercise rights of the Participant in the event of the Participant's death (the
"Designated Beneficiary"). In the absence of an effective designation by a
Participant, Designated Beneficiary shall mean the Participant's estate.

7. Other Stock-Based Awards

     The Board shall have the right to grant other Awards based upon the
Non-Voting Common Stock having such terms and conditions as the Board may
determine, including the grant of shares based upon certain conditions, the
grant of securities convertible into Non-Voting Common Stock and the grant of
stock appreciation rights.

8. Adjustments for Changes in Common Stock and Certain Other Events

     (a) Changes in Capitalization. In the event of any stock split, reverse
stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in capitalization
or event, or any distribution to holders of Common Stock other than a normal
cash dividend, (i) the number and class of securities available under this Plan,
(ii) the number and class of securities and exercise price per share subject to
each outstanding Option, (iii) the repurchase price per share subject to each
outstanding Restricted Stock Award, and (iv) the terms of each other outstanding
Award shall be appropriately adjusted by the Company (or substituted Awards may
be made, if applicable) to the extent the Board shall determine, in good faith,
that such an adjustment (or substitution) is necessary and appropriate. If this
Section 8(a) applies and Section 8(c) also applies to any event, Section 8(c)
shall be applicable to such event, and this Section 8(a) shall not be
applicable.

     (b) Liquidation or Dissolution. In the event of a proposed liquidation or
dissolution of the Company, the Board shall upon written notice to the
Participants provide that all then unexercised Options will (i) become
exercisable in full as of a specified time at least 10 business days prior to
the effective date of such liquidation or dissolution and (ii) terminate
effective upon

                                       -4-

<PAGE>

such liquidation or dissolution, except to the extent exercised before such
effective date. The Board may specify the effect of a liquidation or dissolution
on any Restricted Stock Award or other Award granted under the Plan at the time
of the grant of such Award.

     (c) Reorganization Events

          (1) Definition. A "Reorganization Event" shall mean: (a) any merger or
consolidation of the Company with or into another entity as a result of which
all of the Common Stock of the Company is converted into or exchanged for the
right to receive cash, securities or other property or (b) any exchange of all
of the Common Stock of the Company for cash, securities or other property
pursuant to a share exchange transaction.

          (2) Consequences of a Reorganization Event on Options. Upon the
occurrence of a Reorganization Event, or the execution by the Company of any
agreement with respect to a Reorganization Event, the Board shall provide that
all outstanding Options shall be assumed, or equivalent options shall be
substituted, by the acquiring or succeeding entity (or an affiliate thereof).
For purposes hereof, an Option shall be considered to be assumed if, following
consummation of the Reorganization Event, the Option confers the right to
purchase, for each share of Common Stock subject to the Option immediately prior
to the consummation of the Reorganization Event, the consideration (whether
cash, securities or other property) received as a result of the Reorganization
Event by holders of Common Stock for each share of Common Stock held immediately
prior to the consummation of the Reorganization Event (and if holders were
offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding shares of Common Stock); provided,
however, that if the consideration received as a result of the Reorganization
Event is not solely common equity of the acquiring or succeeding entity (or an
affiliate thereof), the Company may, with the consent of the acquiring or
succeeding entity, provide for the consideration to be received upon the
exercise of Options to consist solely of common equity of the acquiring or
succeeding entity (or an affiliate thereof) equivalent in fair market value to
the per share consideration received by holders of outstanding shares of Common
Stock as a result of the Reorganization Event.

     Notwithstanding the foregoing, if the acquiring or succeeding entity (or an
affiliate thereof) does not agree to assume, or substitute for, such Options,
then the Board shall, upon written notice to the Participants, provide that all
then unexercised Options will become exercisable in full as of a specified time
prior to the Reorganization Event and will terminate immediately prior to the
consummation of such Reorganization Event, except to the extent exercised by the
Participants before the consummation of such Reorganization Event; provided,
however, that in the event of a Reorganization Event under the terms of which
holders of Common Stock will receive upon consummation thereof a cash payment
for each share of Common Stock surrendered pursuant to such Reorganization Event
(the "Acquisition Price"), then the Board may instead provide that all
outstanding Options shall terminate upon consummation of such Reorganization
Event and that each Participant shall receive, in exchange therefor, a cash
payment equal to the amount (if any) by which (A) the Acquisition Price
multiplied by the number of shares of Common Stock subject to such outstanding
Options (whether or not then exercisable), exceeds (B) the aggregate exercise
price of such Options. To the extent all or any portion of an Option becomes
exercisable solely as a result of the first sentence of this paragraph, upon
exercise of such Option the Participant shall receive shares

                                       -5-

<PAGE>

subject to a right of repurchase by the Company or its successor at the Option
exercise price. Such repurchase right (1) shall lapse at the same rate as the
Option would have become exercisable under its terms and (2) shall not apply to
any shares subject to the Option that were exercisable under its terms without
regard to the first sentence of this paragraph.

     If any Option provides that it may be exercised for shares of Common Stock
which remain subject to a repurchase right in favor of the Company, upon the
occurrence of a Reorganization Event, any shares of restricted stock received
upon exercise of such Option shall be treated in accordance with Section 8(c)(3)
as if they were a Restricted Stock Award.

          (3) Consequences of a Reorganization Event on Restricted Stock Awards.
Upon the occurrence of a Reorganization Event, the repurchase and other rights
of the Company under each outstanding Restricted Stock Award shall inure to the
benefit of the Company's successor and shall apply to the cash, securities or
other property which the Non-Voting Common Stock was converted into or exchanged
for pursuant to such Reorganization Event in the same manner and to the same
extent as they applied to the Non-Voting Common Stock subject to such Restricted
Stock Award.

          (4) Consequences of a Reorganization Event on Other Awards. The Board
shall specify the effect of a Reorganization Event on any other Award granted
under the Plan at the time of the grant of such Award.

9. General Provisions Applicable to Awards

     (a) Transferability of Awards. Except as the Board may otherwise determine
or provide in an Award, Awards shall not be sold, assigned, transferred, pledged
or otherwise encumbered by the person to whom they are granted, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution, and, during the life of the Participant, shall be exercisable only
by the Participant. References to a Participant, to the extent relevant in the
context, shall include references to authorized transferees.

     (b) Documentation. Each Award shall be evidenced in such form (written,
electronic or otherwise) as the Board shall determine. Each Award may contain
terms and conditions in addition to those set forth in the Plan.

     (c) Board Discretion. Except as otherwise provided by the Plan, each Award
may be made alone or in addition or in relation to any other Award. The terms of
each Award need not be identical, and the Board need not treat Participants
uniformly.

     (d) Termination of Status. The Board shall determine the effect on an Award
of the disability, death, retirement, authorized leave of absence or other
change in the employment or other status of a Participant and the extent to
which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary may exercise
rights under the Award.

     (e) Withholding. Each Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of, any taxes required by law to
be withheld in connection with Awards to such Participant no later than the date
of the event creating the tax liability.

                                       -6-

<PAGE>

Except as the Board may otherwise provide in an Award, when the Common Stock is
registered under the Exchange Act, Participants may satisfy such tax obligations
in whole or in part by delivery of shares of Non-Voting Common Stock, including
shares retained from the Award creating the tax obligation, valued at their Fair
Market Value; provided, however, that the total tax withholding where stock is
being used to satisfy such tax obligations cannot exceed the Company's minimum
statutory withholding obligations (based on minimum statutory withholding rates
for federal and state tax purposes, including payroll taxes, that are applicable
to such supplemental taxable income). Company may, to the extent permitted by
law, deduct any such tax obligations from any payment of any kind otherwise due
to a Participant.

     (f) Amendment of Award. The Board may amend, modify or terminate any
outstanding Award, including but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.

     (g) Conditions on Delivery of Stock. The Company will not be obligated to
deliver any shares of Non-Voting Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.

     (h) Acceleration. The Board may at any time provide that any Award shall
become immediately exercisable in full or in part, free of some or all
restrictions or conditions, or otherwise realizable in full or in part, as the
case may be.

10. Miscellaneous

     (a) No Right To Employment or Other Status. No person shall have any claim
or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly provided in the
applicable Award.

     (b) No Rights As Stockholder. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Non-Voting Common Stock to be
distributed with respect to an Award until becoming the record holder of such
shares. Notwithstanding the foregoing, in the event the Company effects a split
of the Common Stock by means of a stock dividend and the exercise price of and
the number of shares subject to such Option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such
dividend), then an optionee who exercises an

                                       -7-

<PAGE>

Option between the record date and the distribution date for such stock dividend
shall be entitled to receive, on the distribution date, the stock dividend with
respect to the shares of Common Stock acquired upon such Option exercise,
notwithstanding the fact that such shares were not outstanding as of the close
of business on the record date for such stock dividend.

     (c) Effective Date and Term of Plan. The Plan shall become effective on the
date on which it is adopted by the Board. No Awards shall be granted under the
Plan after the completion of ten years from the earlier of (i) the date on which
the Plan was adopted by the Board or (ii) the date the Plan was approved by the
Company's stockholders, but Awards previously granted may extend beyond that
date.

     (d) Amendment of Plan. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time.

     (e) Authorization of Sub-Plans. The Board may from time to time establish
one or more sub-plans under the Plan for purposes of satisfying applicable blue
sky, securities or tax laws of various jurisdictions. The Board shall establish
such sub-plans by adopting supplements to this Plan containing (i) such
limitations on the Board's discretion under the Plan as the Board deems
necessary or desirable or (ii) such additional terms and conditions not
otherwise inconsistent with the Plan as the Board shall deem necessary or
desirable. All supplements adopted by the Board shall be deemed to be part of
the Plan, but each supplement shall apply only to Participants within the
affected jurisdiction and the Company shall not be required to provide copies of
any supplement to Participants in any jurisdiction which is not the subject of
such supplement.

     (f) Governing Law. The provisions of the Plan and all Awards made hereunder
shall be governed by and interpreted in accordance with the laws of the State of
Delaware, without regard to any applicable conflicts of law.

                                       -8-

<PAGE>

                          WORLD ENERGY SOLUTIONS, INC.

                            2003 STOCK INCENTIVE PLAN

                              CALIFORNIA SUPPLEMENT

     Pursuant to Section 10(e) of the Plan, the Board has adopted this
supplement for purposes of satisfying the requirements of Section 25102(o) of
the California Corporations Code:

     Any Awards granted under the Plan to a Participant who is a resident of the
State of California on the date of grant (a "California Participant") shall be
subject to the following additional limitations, terms and conditions:

Additional Limitations on Options.

     (g) Minimum Vesting Rate. Except in the case of Options granted to
California Participants who are officers, directors, consultants or advisors of
the Company or its affiliates (which Options may become exercisable at whatever
rate is determined by the Board), Options granted to California Participants
shall become exercisable at a rate of no less than 20% per year over five years
from the date of grant; provided, that, such Options may be subject to such
reasonable forfeiture conditions as the Board may choose to impose and which are
not inconsistent with Section 260.140.41 of the California Code of Regulations.

     (h) Minimum Exercise Price. The exercise price of Options granted to
California Participants may not be less than 85% of the Fair Market Value of the
Non-Voting Common Stock on the date of grant in the case of a Nonstatutory Stock
Option or less than 100% of the Fair Market Value of the Non-Voting Common Stock
on the date of grant in the case of an Incentive Stock Option; provided,
however, that if the California Participant is a person who owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or its parent or subsidiary corporations, the exercise
price shall be not less than 110% of the Fair Market Value of the Non-Voting
Common Stock on the date of grant.

     (i) Maximum Duration of Options. No Options granted to California
Participants will be granted for a term in excess of 10 years.

     (j) Minimum Exercise Period Following Termination. Unless a California
Participant's employment is terminated for cause (as defined in any contract of
employment between the Company and such Participant, or if none, in the
instrument evidencing the grant of such Participant's Option), in the event of
termination of employment of such Participant, he or she shall have the right to
exercise an Option, to the extent that he or she was otherwise entitled to
exercise such Option on the date employment terminated, as follows: (i) at least
six months from the date of termination, if termination was caused by such
Participant's death or "permanent and total disability" (within the meaning of
Section 22(e)(3) of the Code) and (ii) at least 30 days from the date of
termination, if termination was caused other than by such Participant's death or
"permanent and total disability" (within the meaning of Section 22(e)(3) of the
Code).

                                       -9-

<PAGE>

     (k) Limitation on Repurchase Rights. If an Option granted to a California
Participant gives the Company the right to repurchase shares of Common Stock
issued pursuant to the Plan upon termination of employment of such Participant,
the terms of such repurchase right must comply with Section 260.140.41(k) of the
California Code of Regulations.

11. Additional Limitations for Restricted Stock Awards.

     (a) Minimum Purchase Price. The purchase price for a Restricted Stock Award
granted to a California Participant shall be not less than 85% of the Fair
Market Value of the Non-Voting Common Stock at the time such Participant is
granted the right to purchase shares under the Plan or at the time the purchase
is consummated; provided, however, that if such Participant is a person who owns
stock possessing more than 10% of the total combined voting power or value of
all classes of stock of the Company or its parent or subsidiary corporations,
the purchase price shall be not less than 100% of the Fair Market Value of the
Non-Voting Common Stock at the time such Participant is granted the right to
purchase shares under the Plan or at the time the purchase is consummated.

     (b) Limitation of Repurchase Rights. If a Restricted Stock Award granted to
a California Participant gives the Company the right to repurchase shares of
Non-Voting Common Stock issued pursuant to the Plan upon termination of
employment of such Participant, the terms of such repurchase right must comply
with Section 260.140.42(h) of the California Code of Regulations.

12. Additional Limitations for Other Stock-Based Awards. The terms of all Awards
granted to a California Participant under Section 7 of the Plan shall comply, to
the extent applicable, with Section 260.140.41 or Section 260.140.42 of the
California Code of Regulations.

13. Additional Requirement to Provide Information to California Participants.
The Company shall provide to each California Participant and to each California
Participant who acquires Non-Voting Common Stock pursuant to the Plan, not less
frequently than annually, copies of annual financial statements (which need not
be audited). The Company shall not be required to provide such statements to key
employees whose duties in connection with the Company assure their access to
equivalent information.

14. Additional Limitations on Timing of Awards. No Award granted to a California
Participant shall become exercisable, vested or realizable, as applicable to
such Award, unless the Plan has been approved by the Company's stockholders
within 12 months before or after the date the Plan was adopted by the Board.

15. Additional Limitations Relating to Definition of Fair Market Value. For
purposes of Section 1(b) and 2(a) of this supplement, "Fair Market Value" shall
be determined in a manner not inconsistent with Section 260.140.50 of the
California Code of Regulations.

16. Additional Restriction Regarding Recapitalizations, Stock Splits, Etc. For
purposes of Section 8 of the Plan, in the event of a stock split, reverse stock
split, stock dividend, recapitalization, combination, reclassification or other
distribution of the Company's securities, the number of securities allocated to
each California Participant must be adjusted proportionately and without the
receipt by the Company of any consideration from any California participant.

                                      -10-

<PAGE>

                          WORLD ENERGY SOLUTIONS, INC.

                               AMENDMENT NO. 1 TO
                            2003 STOCK INCENTIVE PLAN

     The 2003 Stock Incentive Plan (the "Plan") of World Energy Solutions, Inc.
(the "Company") is hereby amended, pursuant to Section 10(d) of the Plan, as
follows:

     1.   Section 4 of the Plan be and hereby is amended by increasing the
          maximum number of awards of Non-Voting Common Stock of the Company
          which may be made thereunder from 9,452,800 to 14,000,000 shares
          pursuant to the terms and provisions of the Plan.

               Adopted by the Board of Directors: October 3, 2003
               Adopted by the Stockholders: October 7, 2003

                                      -11-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}]]