Document:

Exhibit 10.29

 

Execution Version

 

INTELLECTUAL PROPERTY SECURITY AGREEMENT

 

This INTELLECTUAL PROPERTY SECURITY AGREEMENT, dated as of March 4, 2011 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, this “Intellectual Property Security Agreement”), is made by each of the signatories hereto (collectively, the “Grantors”) in favor of JPMorgan Chase Bank, N.A., as administrative agent (together with its successors in such capacity, the “Administrative Agent”) for the Secured Parties (as defined in the Credit Agreement referred to below).

 

WHEREAS, GNC Corporation, a Delaware corporation, and General Nutrition Centers, Inc., a Delaware corporation (the “Borrower”), have entered into a Credit Agreement, dated as of March 4, 2011 (as amended, restated, amended and restated, supplemented, replaced or otherwise modified from time to time, the “Credit Agreement”), with the banks and other financial institutions and entities from time to time party thereto as lenders (the “Lenders”), Goldman Sachs Bank USA, as the Syndication Agent, and Deutsche Bank Securities Inc. and Morgan Stanley Senior Funding, Inc., as the Co-Documentation Agents, , Barclays Capital, the investment banking division of Barclays PLC, as the Co-Manager, and the Administrative Agent.  Capitalized terms used and not defined herein have the meanings given such terms in the Credit Agreement.

 

WHEREAS, it is a condition precedent to the obligation of the Lenders to make their respective extensions of credit to the Borrower under the Credit Agreement that the Grantors shall have executed and delivered that certain Guarantee and Collateral Agreement, dated as of March 4, 2011, in favor of the Administrative Agent (as amended, restated, amended and restated, supplemented, replaced or otherwise modified from time to time, the “Guarantee and Collateral Agreement”).

 

WHEREAS, under the terms of the Guarantee and Collateral Agreement, the Grantors have assigned and transferred to the Administrative Agent, and granted to the Administrative Agent, for the ratable benefit of the Secured Parties, a security interest in all of the Grantor’s right, title, and interest in and to certain Collateral, including, without limitation, certain of its Intellectual Property  and have agreed as a condition thereof to execute this Intellectual Property Security Agreement with respect to certain of its Intellectual Property in order to record the security interests granted therein with the United States Patent and Trademark Office or the United States Copyright Office (or any successor office or other applicable United States Governmental Authorities).

 

NOW, THEREFORE, in consideration of the above premises, the Grantors hereby agree with the Administrative Agent, for the ratable benefit of the Secured Parties, as follows:

 

SECTION 1.           Grant of Security.  Each Grantor hereby assigns and transfers to the Administrative Agent, and hereby grants to the Administrative Agent, for the ratable benefit of the Secured Parties, a security interest in all of such Grantor’s right, title and interest in and to the following (the “Intellectual Property Collateral”), as collateral security for the prompt and

 

 

complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of such Grantor’s Obligations:

 

(a)           (i) all United States, state and foreign trademarks, service marks, trade names, corporate names, company names, business names, trade dress, trade styles, logos, or other indicia of origin or source identification, Internet domain names, trademark and service mark registrations, and applications for trademark or service mark registrations and any renewals thereof, including, without limitation, each registration and application identified in Schedule 1, and (ii)  the goodwill of the business connected with the use of, and symbolized by, each of the above (collectively, the “Trademarks”);

 

(b)           (i) all United States and foreign patents, patent applications and patentable inventions, including, without limitation, each issued patent and patent application identified in Schedule 1, and all certificates of invention or similar property rights (ii) all inventions and improvements described and claimed therein, and (iii) all reissues, divisions, reexaminations, continuations, continuations-in-part, substitutes, renewals, and extensions thereof, all improvements thereon (collectively, the “Patents”);

 

(c)           (i) all United States and foreign copyrights, whether or not the underlying works of authorship have been published, including but not limited to copyrights in software and databases, all Mask Works (as defined in 17 U.S.C. 901 of the U.S. Copyright Act) and all works of authorship and other intellectual property rights therein, all right, title and interest to make and exploit all derivative works based on or adopted from works covered by such copyrights, and all copyright registrations, copyright applications, mask works registrations and mask works applications, and any renewals or extensions thereof, including, without limitation, each registration and application identified in Schedule 1, and (ii) the rights to print, publish and distribute any of the foregoing (“Copyrights”);

 

(d)           all trade secrets and all confidential and proprietary information, including know-how, manufacturing and production processes and techniques, inventions, research and development information, technical data, financial, marketing and business data, pricing and cost information, business and marketing plans, and customer and supplier lists and information, formulae, parts, diagrams, drawings, specifications, blue prints, lists of materials, and production manuals (collectively, the “Trade Secrets”);

 

(e)           (i) all Trademark Licenses (as defined in the Guarantee and Collateral Agreement), Trade Secret Licenses (as defined in the Guarantee and Collateral Agreement), Patent Licenses (as defined in the Guarantee and Collateral Agreement), and Copyright Licenses (as defined in the Guarantee and Collateral Agreement), in each case, to the extent Grantor is not the granting party, including, without limitation, any of the foregoing identified in Schedule 1; and

 

(f)            (i) the right to sue or otherwise recover for any and all past, present and future Infringements (as defined in the Guarantee and Collateral Agreement) and misappropriations of any of the property described (a) through (e) above, and (ii) all income, royalties, damages and other payments now and hereafter due and/or payable with respect to any of the property described in (a) though (e) above.

 

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SECTION 2.           Excluded Assets.  Notwithstanding anything to the contrary in this Intellectual Property Security Agreement, none of the Excluded Assets (as defined in the Credit Agreement) shall constitute Intellectual Property Collateral.

 

SECTION 3.           Recordation.  Each Grantor authorizes and requests that the Register of Copyrights, the Commissioner of Patents and Trademarks and any other applicable United States government officer record this Intellectual Property Security Agreement.

 

SECTION 4.           Execution in Counterparts.  This Intellectual Property Security Agreement may be executed in any number of counterparts (including by telecopy or other electronic transmission), each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

 

SECTION 5.           GOVERNING LAW.  THIS INTELLECTUAL PROPERTY SECURITY AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

SECTION 6.           Conflict Provision.  This Intellectual Property Security Agreement has been entered into in conjunction with the provisions of the Guarantee and Collateral Agreement and the Credit Agreement.  The rights and remedies of each party hereto with respect to the security interest granted herein are without prejudice to, and are in addition to those set forth in the Guarantee and Collateral Agreement and the Credit Agreement, all terms and provisions of which are incorporated herein by reference.  In the event that any provisions of this Intellectual Property Security Agreement are in conflict with the Guarantee and Collateral Agreement or the Credit Agreement, the provisions of the Guarantee and Collateral Agreement or the Credit Agreement shall govern.

 

SECTION 7.           Releases.

 

(a)           Upon the Discharge of Obligations, this Intellectual Property Security Agreement and the security interests granted hereby shall automatically terminate and be released, without the requirement for any further action by any Person, and the Administrative Agent shall promptly (and the Secured Parties hereby authorize the Administrative Agent to) take such action and execute any such documents as may be reasonably requested by any Grantor and at such Grantor’s expense to further document and evidence such termination and release.

 

(b)           In the event that any Grantor conveys, sells, leases, assigns, transfers or otherwise Disposes of all or any portion of assets of such Grantor to a Person that is not (and is not required hereunder to become) a Grantor hereunder in a transaction permitted under the Credit Agreement, the security interests created hereunder in respect of such assets shall automatically terminate and be released, without the requirement for any further action by any Person and the Administrative Agent shall promptly (and the Secured Parties hereby authorize the Administrative Agent to) take such action and execute any such documents as may be reasonably requested by such Grantor and at such Grantor’s expense to further document and evidence such termination and release of security interests hereunder in respect of such assets, and, in the case of a transaction permitted under the Credit Agreement the result of which is that

 

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a Grantor would cease to be a Restricted Subsidiary or would become an Excluded Subsidiary, all security interests granted hereunder by such Grantor shall automatically terminate and be released, without the requirement for any further action by any Person and the Administrative Agent shall promptly (and the Secured Parties hereby authorize the Administrative Agent to) take such action and execute any such documents as may be reasonably requested by such Grantor and at such Grantor’s expense to further document and evidence such termination and release of such security interests.

 

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IN WITNESS WHEREOF, each of the undersigned has caused this Intellectual Property Security Agreement to be duly executed and delivered as of the date first above written.

 

	
 
    	
 
    	
GNC CORPORATION
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Michael M. Nuzzo
    
	
 
    	
 
    	
 
    	
Name:
    	
Michael M. Nuzzo
    
	
 
    	
 
    	
 
    	
Title:
    	
Authorized Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
GENERAL NUTRITION CENTERS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Michael M. Nuzzo
    
	
 
    	
 
    	
 
    	
Name:
    	
Michael M. Nuzzo
    
	
 
    	
 
    	
 
    	
Title:
    	
Authorized Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
GENERAL NUTRITION CORPORATION
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Michael M. Nuzzo
    
	
 
    	
 
    	
 
    	
Name:
    	
Michael M. Nuzzo
    
	
 
    	
 
    	
 
    	
Title:
    	
Authorized Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
GENERAL NUTRITION INVESTMENT COMPANY
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Michael M. Nuzzo
    
	
 
    	
 
    	
 
    	
Name:
    	
Michael M. Nuzzo
    
	
 
    	
 
    	
 
    	
Title:
    	
Authorized Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
GNC TRANSPORTATION, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Lee Karayusuf
    
	
 
    	
 
    	
 
    	
Name:
    	
Lee Karayusuf
    
	
 
    	
 
    	
 
    	
Title:
    	
Authorized Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
GNC FUNDING, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Michael M. Nuzzo
    
	
 
    	
 
    	
 
    	
Name:
    	
Michael M. Nuzzo
    
	
 
    	
 
    	
 
    	
Title:
    	
Authorized Signatory
    

 

[Signature Page to the IP Security Agreement]

 

 

 

IN WITNESS WHEREOF, the undersigned has caused this Intellectual Property Security Agreement to be duly executed and delivered as of the date first above written.

 

	
 
    	
 
    	
JPMORGAN CHASE BANK, N.A.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Barry K. Bergman
    
	
 
    	
 
    	
 
    	
Name:
    	
Barry K. Bergman
    
	
 
    	
 
    	
 
    	
Title:
    	
Managing Director
    

 

 

	
State of New York
    	
 
    
	
 
    	
 
    
	
County of New York
    	
March 3, 2011
    

 

 

Then personally appeared the above named Barry K. Bergman personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual, or the person on behalf of which the individual acted, executed the instrument.

 

 

	
 
    	
 
    	
/s/   Margarita Torres
    
	
 
    	
 
    	
Notary Public
    
	
 
    	
 
    	
MARGARITA TORRES
    
	
 
    	
 
    	
Notary Public, State of New York
    
	
 
    	
 
    	
Qualified in Bronx County
    
	
 
    	
 
    	
No. 01TO6041062
    
	
 
    	
 
    	
My Commission Expires May 1, 2014
    

 

[Signature Page to IP Security Agreement]

 

 

 

SCHEDULE 1

 

COPYRIGHTS, PATENTS, TRADEMARKS, INTELLECTUAL PROPERTY
 LICENSES AND OTHER INTELLECTUAL PROPERTY

 

See the following attached charts and lists:

 

General Nutrition Investment Company (“GNIC”) U.S. and International Trademark Portfolio;

 

GNIC Copyright Portfolio;

 

GNIC Domain Name Registrations Portfolio;

 

GNC Internet Keywords; and

 

IP-Related Claims against GNC Acquisition Holdings, Inc. (together with its Subsidiaries, the “GNC Group”).

 

 

[IP-RELATED CLAIMS AGAINST GNC

 

Patent

 

·                  New View Technologies, Inc.  New View Technologies, Inc. (“NVT”) sent the GNC Group a letter on October 11, 2007 alleging the GNC Group was using debit and gift cards activated in a manner that may raise issues with an NVT patent (U.S. Patent No. 6,032,859, entitled “Method For Processing Debit Purchase Transactions Using a Counter-Top Terminal System”).  In the letter, NVT asked if the GNC Group was interested in taking a license under the patent.  Thereafter in a discussion in early November 2007 between counsel for the parties, NVT requested 2.5% of the GNC Group’s debit card transaction proceeds to settle the matter.

 

·                  US Ethernet Innovations, LLC.  US Ethernet Innovations, LLC (“USEI”) sent the GNC Group a letter on June 16, 2010 asking the GNC Group if it was interested in taking a license to the USEI Ethernet patent portfolio.  The GNC Group’s June 21, 2010 letter to USEI informed USEI that the GNC Group was in receipt of USEI’s letter.

 

·                  Lifescience Labs.  Lifescience Labs (“Lifescience”) sent an e-mail to the GNC Group on September 4, 2008 alerting the GNC Group to a Lifescience Patent (US Patent 6,090,414, entitled “Method and Composition to Reduce Cancer Incidence”).

 

·                  Philips.  Philips sent the GNC Group a cease and desist letter on October 27, 2009 alleging that certain DVD products sold within the GNC Group’s stores infringed on Philips’ Optical Media Patents.  On November 2, 2009, the GNC Group tendered the claim to its third party supplier who sold the products in question to the GNC Group.  The GNC Group’s November 2, 2009 letter to Philips informed Philips of the tender.  Philips’ counsel called the GNC Group’s counsel after his receipt of the GNC Group’s November 2, 2009 letter and thanked the GNC Group for tendering the claim to the third party supplier.

 

·                  Webvention, LLC.  Webvention, LLC (“Webvention”) sent the GNC Group a cease and desist letter on April 6, 2010 alleging that certain functionality within the GNC Group’s website infringed a Webvention’s Patent (US Patent No. 5,251,294 entitled “Accessing, Assembling, and Using Bodies of Information”).  On April 8, 2010, the GNC Group tendered the claim to GSI Commerce, Inc. (“GSI”) and GSI subsequently accepted the tender.

 

·                  United Therapeutics.  United Therapeutics (“UT”) sent the GNC Group a letter on March 7, 2007 alerting the GNC Group to certain UT patents (US Patent Nos. 5,217,997; 5,428,070; 5,891,459; 5,945,452; 6,117872; and 6,646,006) and inquired whether the GNC Group was interested in licensing the patents.  The GNC Group informed UT via its March 15, 2007 letter that it would investigate the matter and asked UT to identify the specific GNC Group products that UT believed infringed its patents.

 

Trademark

 

United States

 

·                  TNG Worldwide, Inc.  TNG Worldwide, Inc. (“TNG”) sent the GNC Group a cease and desist letter on October 8, 2009 alleging that the GNC Group’s Be Beautiful trademark was infringing on TNG’s Bebeautiful trademark for on-line ordering services featuring beauty products.  The GNC Group informed TNG via its November 3, 2009 letter that it was not

 

 

infringing on TNG’s mark due to the differences in the GNC Group’s goods and services, the limited nature of the GNC Group’s actual usage of its Be Beautiful mark and the distinctions between the GNC Group’s mark and TNG’s mark.

 

·                  Dynamic Nutrition & Athletics, LLC.  Dynamic Nutrition & Athletics, LLC (“DNA”) sent the GNC Group a demand letter on July 10, 2008 alleging that the GNC Group violated trademark law and California Business and Professional Code Section 17200 for selling a third party product called “Jacked” in its stores.  DNA stated in the letter that it was willing to settle the dispute for $100,000.  The GNC Group tendered the claim to the supplier of the Jacked product, Value Source Nutrition LLC (“VSN”).  The GNC Group subsequently learned that it ceased selling the Jacked product three years prior to DNA’s July 2008 letter and that DNA had sued and entered into a settlement agreement with VSN over the Jacked product prior to DNA’s issuance of the letter to the GNC Group.  In September 2008, the GNC Group notified DNA that it had learned of the facts specified in the preceding sentence and that therefore the GNC Group considered the matter closed.

 

·                  PepsiCo, Inc.  PepsiCo, Inc. (“Pepsi”) sent the GNC Group a cease and desist letter on August 20, 2009 whereby it alleged the GNC Group’s use of the word “Amp” on its ready to drink Pro Performance Amp beverages infringed upon Pepsi’s registered trademark for Amp in connection with soft drinks and energy drinks.  The GNC Group responded to Pepsi via its September 8, 2009 letter whereby it refuted Pepsi’s claim on the basis that the GNC Group’s Pro Performance Amp mark was altogether different than Pepsi’s Amp mark and was used on dissimilar goods.  Pepsi agreed via its November 24, 2009 letter to take no further action against the GNC Group provided the GNC Group agreed not to use the designation Amp Up and provided the GNC Group only used the mark GNC Pro Performance Amp in connection with sports nutrition products.

 

·                  Nutraceutical Corp.  Nutraceutical Corp. (“NC”) sent the GNC Group a cease and desist letter on May 6, 2009 alleging the GNC Group’s use of the Soloday trademark infringed NC’s Soloray trademark.  The GNC Group subsequently learned that NC was using the trademark Ultra Mega Vite and demanded that NC cease and desist from such use given the likelihood of confusion between this mark and the GNC Group’s Ultra Mega trademark.  The parties are currently negotiating a settlement of the dispute whereby each party will change the name of their product in future production runs of the products.

 

·                  Medical Nutrition USA, Inc.  Medical Nutrition USA, Inc. (“MN”) sent the GNC Group a letter on July 29, 2010 requesting that the GNC Group discontinue use of its current packaging materials for its GNC Stat! line of products and to only use the GNC Stat! mark in the future as a unitary mark as set forth in the GNC Group’s trademark application for GNC Stat!  MN alleges that the GNC Group’s current packaging for the GNC Stat! line separates the GNC and Stat! portions of the mark such that confusion is possible with MN’s line of products bearing the Stat name.  The GNC Group is preparing a response to MN which informs MN that the GNC Group will not repackage its products given there is no likelihood of confusion between the GNC Group’s GNC Stat! line of products and MN’s Stat line of products.

 

·                  Morinda Holdings.  Morinda Holdings, Inc. (“Morinda”) sent the GNC Group a cease and desist letter on September 1, 2006 alleging infringement of the “Tahitian Noni” trademark by the GNC Group’s Natural Brand Super Noni trademark.  On the package label, the GNC Group’s product was described as “Organic Tahitian Noni.”  The GNC Group agreed to

 

 

delete the “Organic Tahitian Noni” phrase when the existing supply of affected product labels was exhausted.

 

International

 

·                  Argentina.  In October 2009, Adolfo Mosner filed an opposition in the Argentina Trademark Office against the GNC Group’s trademark application for Mega Men.  Mr. Mosner owns a trademark registration for Meggan.  This opposition is currently pending.

 

·                  Brazil.  In June 2010, Performance Trading Importacao Exportacao e Comercio Ltda. filed an opposition in the Brazil Trademark Office against the GNC Group’s Pro Performance trademark application.  This opposition is currently pending.

 

·                  Chile.  In November 2009 Ramirez y Sanchez Ltda. (“R&S”) filed an opposition in the Chile Trademark Office against the pending trademark GNC for retail services.  R&S owns trademark registrations for ANC American Nutrition and ANC American Nutrition Corp (the “ANC Marks”).  This opposition is currently pending.  In 2007, the GNC Group filed oppositions in the Chile Trademark Office against the ANC Marks but these oppositions were rejected.

 

·                  El Salvador.  In January 2007, Laboraorios Vijosa (“Vijosa”) filed an opposition against TM App. No. 2006/008300 for “MEGA MEN” in Int’l Class 29 and TM App. No. 2006/008301 for “MEGA MEN” in Int’l Class 32 before the Trademark Office of El Salvador.  Vijosa also filed trademark oppositions before the Trademark Office of El Salvador against the GNC Group’s TM App. Nos. 2006/0082999 for MEGA MEN in Int’l Class 5, TM App. No. 2006/0083002 for WOMEN’S ULTRA MEGA in Int’l Class 5, TM App. No. 2006/0083003 for WOMEN’S ULTRA MEGA in Int’l Class 29 and TM App. No. 2006/0083004 for WOMEN’S ULTRA MEGA in Int’l Class 32.  In March 2007, the El Salvador Trademark Office rejected all of the above-mentioned oppositions and Vijosa appealed.  This appeal is currently pending.

 

·                  Honduras. In June 2007, Industrias Quimicus (“IQ”) filed an opposition with the Honduras Trademark Office against the GNC Group’s Mega Men trademark application based on IQ’s Mega Man trademark registration.  In June 2009, the Honduras Trademark Office granted the opposition and the GNC Group appealed.  The appeal is currently pending.

 

·                  Nicaragua.  In July 2006, Vijosa filed an opposition against TM App. No. 2006-00755 for “ULTRA MEGA” in Int’l Class 5, TM App. No. 2006-00756 for “WOMEN’S ULTRA MEGA” in Int’l Class 5 and TM App. No. 2006-00754 for “MEGA MEN” in Int’l Class 5 before the Trademark Office of Nicaragua.  These oppositions were subsequently suspended pending the outcome of GNC’s oppositions of the Vijosa marks “Ultra Doceplex Mega Man,” “Ultra,” and “Doceplex Mega Woman” that were filed by the GNC Group in the Trademark Office of Nicaragua in January 2006.  In those oppositions, the Nicaragua Trademark Office rejected the GNC Group’s oppositions but this decision was overturned on appeal and the oppositions were granted.

 

·                  Poland.  In July 2009, Nutrico N.V. (“Nutrico”) filed an opposition against the GNC Group’s Pro Performance mark in the Poland Trademark Office based upon its Performance Nutrition For Athletes trademark registration.  This opposition is currently pending.

 

 

·                  Portugal.  In December 2009, Nutrico filed an opposition against the GNC Group’s Pro Performance mark in the Portugal Trademark Office based upon its Performance Nutrition For Athletes trademark registration.  This opposition is currently pending.

 

Unfair Competition

 

·                  Unilever.  On September 1, 2006, Unilever United States Inc. (“Unilever”) sent the GNC Group a cease and desist letter demanding it cease the dissemination of any claims that third party hoodia-containing products (the “Products”) sold in GNC Group stores will be effective in weight loss because of their hoodia content.  GNIC (formerly known as General Nutrition Distribution, L.P.) tendered this claim to the third party companies that provided the Products (the “Product Companies”).  General Nutrition Centers, Inc. (formerly known as General Nutrition Incorporated) informed Unilever via a letter on September 13, 2006 that the Products were provided to it by third parties, that the claim was tendered to each of the third parties, and that Unilever should direct its allegations directly to the Product Companies.  The Product Companies accepted GNIC’s tender and provided it with responses denying Unilever’s allegations.

 

Trade Dress

 

·                  IronMind Enterprises, Inc.  IronMind Enterprises, Inc. (“IE”) sent the GNC Group a cease and desist letter on September 9, 2010 alleging that the design of the GNC Group’s handgrip products infringed on IE’s trade dress.  On September 13, 2010, the GNC Group tendered the claim to the manufacturer of its handgrip products and informed IE of the tender.  The manufacturer of the GNC Group’s handgrip products and IE are in discussions concerning IE’s claim. ]Exhibit 10.2

 

CERTIFICATE OF AMENDMENT 
 OF AMENDED AND RESTATED 2001 STOCK PLAN OF

NEXSAN CORPORATION.

 

The undersigned, who is the duly elected, qualified and acting Secretary of Nexsan Corporation, a Delaware corporation (the “Corporation”), does hereby certify, as follows:

 

1.             The first sentence of Section 3 of the Amended and Restated 2001 Stock Plan (the “Plan”) was amended and restated, by the Compensation Committee of the Board of Directors (the “Compensation Committee”) of the Corporation at a meeting of the Compensation Committee dated as of February 3, 2011, and by the stockholders of the Corporation by written consent in lieu of a meeting dated as of February 9, 2011,  to read in its entirety, as follows:

 

“3.           Stock Subject to the Plan.  Subject to the provisions of Section 13 of the Plan, the maximum aggregate number of Shares which may be subject to options and sold under the Plan is 2,994,957 Shares.”

 

2.             The foregoing amendments to the Plan have not been modified, amended, rescinded or revoked and remain in full force and effect on the date hereof.

 

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

 

 

IN WITNESS WHEREOF, I have hereunto subscribed my name on February 10, 2011.

 

 

	
 
    	
/s/   Gene Spies
    
	
 
    	
Gene   Spies
    
	
 
    	
Secretary
    

 

 

AMENDED AND RESTATED

 

NEXSAN CORPORATION

 

2001 STOCK PLAN

 

1.             Purposes of the Plan.  The purposes of this Stock Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to Employees, Directors and Consultants and to promote the success of the Company’s business.  Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as determined by the Administrator at the time of grant. Stock Purchase Rights and Restricted Stock Units may also be granted under the Plan.  This Plan is intended to be a written compensatory plan within the meaning of Rule 701 promulgated under the Securities Act.

 

2.             Definitions.  As used herein, the following definitions shall apply:

 

(a)           “Administrator” means the Board or any of its Committees as shall be administering the Plan in accordance with Section 4 hereof.

 

(b)           “Applicable Laws” means the requirements relating to the administration of stock option plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any other country or jurisdiction where Options or Stock Purchase Rights are granted under the Plan.

 

(c)           “Award” means any award pursuant to the terms and conditions of this Plan, including any Option, Restricted Stock Unit, or Restricted Stock Award.

 

(d)           “Award Agreement” means, with respect to each Award, the signed written agreement between the Company and the Service Provider setting forth the terms and conditions of the Award as approved by the Committee.

 

(e)           “Board” means the Board of Directors of the Company.

 

(f)            “Code” means the Internal Revenue Code of 1986, as amended.

 

(g)           “Committee” means a committee of Directors appointed by the Board in accordance with Section 4 hereof.

 

(h)           “Common Stock” means the common stock, par value $0.001 per share, of the Company.

 

(i)            “Company” means Nexsan Corporation, a  Delaware corporation.

 

(j)            “Consultant” means any person who is engaged by the Company or any Parent or Subsidiary to render consulting or advisory services to such entity.

 

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(k)           “Director” means a member of the Board of Directors of the Company.

 

(l)            “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code, or if otherwise defined in any agreement between the Company and the Service Provider, as so defined.

 

(m)          “Employee” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company.  A Service Provider shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, any Subsidiary or any successor.  For purposes of Incentive Stock Options, no such leave may exceed ninety days, unless re-employment upon expiration of such leave is guaranteed by statute or contract.  If re-employment upon expiration of a leave of absence approved by the Company is not so guaranteed, on the 181st day of such leave any Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option.  Neither service as a Director nor payment of a director’s fee by the Company shall be sufficient to constitute “employment” by the Company.

 

(n)           “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(o)           “Fair Market Value” means, as of any date, the value of Common Stock determined as follows:

 

(i)        If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market trading day prior to the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

 

(ii)       If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Common Stock on the last market trading day prior to the day of determination; or

 

(iii)      In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator.

 

(p)           “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code.

 

(q)           “Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock Option.

 

(r)            “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

 

(s)           “Option” means a stock option granted pursuant to the Plan.

 

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(t)            “Option Agreement” means a written or electronic agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant.  The Option Agreement is subject to the terms and conditions of the Plan. The Option Agreement will contain such representations and agreements regarding Optionee’s investment intent and access to information and other matters, if any, as may be required or desirable by the Company to comply with applicable securities laws.

 

(u)           “Option Exchange Program” means a program whereby outstanding Options are exchanged for Options with a lower exercise price.

 

(v)           “Optioned Stock” means the Common Stock subject to an Option or a Stock Purchase Right.

 

(w)          “Optionee” means the holder of an outstanding Option or Stock Purchase Right granted under the Plan.

 

(x)            “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

 

(y)           “Plan” means this 2001 Stock Plan.

 

(z)            “Purchase Price” means the price at which a Participant may purchase Restricted Stock pursuant to this Plan.

 

(aa)         “Restricted Stock” means shares of Common Stock acquired pursuant to a grant of a Stock Purchase Right under Section 11 below.

 

(bb)         “Restricted Stock Unit” means an Award granted pursuant to Section 12 of the Plan.”

 

(cc)         “Securities Act” means the Securities Act of 1933, as amended.

 

(dd)         “Service Provider” means an Employee, Director or Consultant.

 

(ee)         “Share” means a share of the Common Stock, as adjusted in accordance with Section 13 below.

 

(ff)           “Stock Purchase Right” means a right to purchase Common Stock pursuant to Section 11 below.

 

(gg)         “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.

 

3.             Stock Subject to the Plan.  Subject to the provisions of Section 13 of the Plan, the maximum aggregate number of Shares which may be subject to options and sold under the Plan is 2,494,957 Shares.  The Shares may be authorized but unissued, or reacquired Common Stock.

 

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If an Option, Restricted Stock Unit or Stock Purchase Right expires or becomes unexercisable without having been exercised in full, or is surrendered pursuant to an Option Exchange Program, the unpurchased Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated).  However, Shares that have actually been issued under the Plan, upon exercise of either an Option or Stock Purchase Right or settlement of a Restricted Stock Unit, shall not be returned to the Plan and shall not become available for future distribution under the Plan, except that if Shares of Restricted Stock are repurchased by the Company at their original purchase price, such Shares shall become available for future grant under the Plan.

 

4.             Administration of the Plan.

 

(a)           Administrator.  The Plan shall be administered by the Board or a Committee appointed by the Board, which Committee shall be constituted to comply with Applicable Laws.

 

(b)           Powers of the Administrator.  Subject to the provisions of the Plan and, in the case of a Committee, the specific duties delegated by the Board to such Committee, and subject to the approval of any relevant authorities, the Administrator shall have the authority in its discretion:

 

(i)        to determine the Fair Market Value;

 

(ii)       to select the Service Providers to whom Awards may from time to time be granted hereunder;

 

(iii)      to determine the number of Shares to be covered by each such award granted hereunder;

 

(iv)      to approve forms of agreement for use under the Plan;

 

(v)       to determine the terms and conditions, of any Award granted hereunder.  Such terms and conditions include, but are not limited to, the exercise price, the time or times when Options or Stock Purchase Rights may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;

 

(vi)      to determine whether and under what circumstances an Award may be settled in cash under subsection 9(f) below instead of Common Stock;

 

(vii)     to reduce the exercise price of any Option to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such Option has declined since the date the Option was granted;

 

(viii)    to initiate an Option Exchange Program;

 

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(ix)       to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of qualifying for preferred tax treatment under foreign tax laws;

 

(x)        to allow Award holders to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise of an Option or Stock Purchase Right or settlement of a Restricted Stock Unit that number of Shares having a Fair Market Value equal to the amount required to be withheld.  The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined.  All elections by Award holders to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable;

 

(xi)       to extend the vesting period beyond the term set forth in any Option Agreement or Stock Purchase Right agreement.

 

(xii)      to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan.

 

(c)           Effect of Administrator’s Decision.  All decisions, determinations and interpretations of the Administrator shall be final and binding on all Optionees.

 

5.             Eligibility.

 

(a)           Nonstatutory Stock Options, Restricted Stock Units and Stock Purchase Rights may be granted to Service Providers.  Incentive Stock Options may be granted only to Employees.

 

(b)           Each Option shall be designated in the Option Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.  However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options.  For purposes of this Section 5(b), Incentive Stock Options shall be taken into account in the order in which they were granted.  The Fair Market Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted.

 

(c)           Neither the Plan nor any Award shall confer upon any recipient any right with respect to continuing the recipient’s relationship as a Service Provider with the Company, nor shall it interfere in any way with his or her right or the Company’s right to terminate such relationship at any time, with or without cause.

 

6.             Term of Plan.  The Plan shall become effective upon its adoption by the Board.  It shall continue in effect for a term of ten (10) years unless sooner terminated under Section 15 of the Plan.

 

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7.             Term of Awards.  The term of each Award shall be stated in the Award Agreement; provided, however, that the term of an Incentive Stock Option and a Nonstatutory Stock Option, granted within the United States, shall be no more than ten (10) years from the date of grant thereof.  The term of a Nonstatutory Stock Option, granted outside of the United States, shall be no more than twenty (20) years from the date of grant thereof.  In the case of an Incentive Stock Option granted to an Optionee who, at the time the Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Option shall be five (5) years from the date of grant or such shorter term as may be provided in the Option Agreement.

 

8.             Option Exercise Price and Consideration.

 

(a)           The per share exercise price for the Shares to be issued upon exercise of an Option shall be such price as is determined by the Administrator, but shall be subject to the following:

 

(i)        In the case of an Incentive Stock Option

 

(A)          granted to an Employee who, at the time of grant of such Option, owns stock representing more than ten (10%) percent of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant; and

 

(B)           granted to any other Employee, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.

 

(ii)       Notwithstanding the foregoing, Options may be granted with a per Share exercise price other than as required above pursuant to a merger or other corporate transaction.

 

(b)           The consideration to be paid for the Shares to be issued upon exercise or settlement of an Award, including the method of payment, shall be determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined at the time of grant).  Such consideration  may be paid:

 

(i)            in cash; or by check; or by a promissory note;

 

(ii)           by cancellation of indebtedness of the Company owed to the Award holder;

 

(iii)          by surrender of shares that:(1) either (x) have been owned by Optionee for more than six (6) months and have been paid for within the meaning of Exchange Act Rule 144 (and if such shares were purchased from the Company by use of a promissory note, such note has been fully paid with respect to such shares), or (y) were obtained by Optionee in the public market and (2) are clear of all liens, claims, encumbrances or security interests;

 

(iv)          by tender of a promissory note having such terms as may be approved by the Administrator and bearing interest at a rate sufficient to avoid imputation of 

 

6

 

income under Sections 483 and 1274 of the Code; provided, however, that Optionees who are not employees or directors of the Company will not be entitled to purchase Shares with a promissory note unless the note is adequately secured by collateral other than the Shares; provided, further, that the portion of the exercise price or the purchase price, as the case may be, equal to the par value of the Shares must be paid in cash or other legal consideration permitted by the Delaware General Corporation Law;

 

(v)           by waiver of compensation due or accrued to the Award holder from the Company for services rendered;

 

(vi)          with respect only to purchases upon exercise of an Option and provided that a public market for the Shares exists: (1) through a ‘same day sale’ commitment from the Optionee and a broker-dealer that is a member of the National Association of Securities Dealers (an “NASD Dealer”) whereby the Optionee irrevocably elects to exercise the Option and to sell a portion of the Shares so purchased sufficient to pay the total exercise price, and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the total exercise price directly to the Company; or (2) through ‘margin’ commitment from the Optionee and a NASD Dealer whereby the Optionee irrevocably elects to exercise the option in the amount of the total exercise price, and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the total exercise price directly to the Company; or

 

(vii)         any combination of the foregoing methods of payment.

 

In making its determination as to the type of consideration to accept, the Administrator shall consider if acceptance of such consideration may be reasonably expected to benefit the Company.

 

9.             Exercise of Option.

 

(a)           Procedure for Exercise; Rights as a Stockholder.  Any Option granted hereunder shall be exercisable according to the terms hereof at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement.  Unless the Administrator provides otherwise, vesting of Options granted hereunder to Officers and Directors shall be tolled during any unpaid leave of absence.  An Option may not be exercised for a fraction of a Share.

 

An Option shall be deemed exercised when the Company receives: (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option; such notice shall include (x) the number of Shares being purchased, (y) the restriction imposed on the Shares under the Option Agreement, if any, and (z) such representations and agreements regarding Optionee’s investment intent and access to information and other matters, if any, as may be required or desirable by Company to comply with applicable securities laws; and  (ii) full payment for the Shares with respect to which the Option is exercised.  Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and the Plan.  Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse.  Until the Shares are issued (as 

 

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evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Shares, notwithstanding the exercise of the Option.  The Company shall issue (or cause to be issued) such Shares promptly after the Option is exercised.  No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 13 of the Plan.

 

Exercise of an Option in any manner shall result in a decrease in the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

 

(b)           Termination of Relationship as a Service Provider.  If an Optionee ceases to be a Service Provider, such Optionee may exercise his or her Option within such period of time as is specified in the Option Agreement (which shall be at least thirty (30) days) to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of the Option as set forth in the Option Agreement).  In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for three (3) months following the Optionee’s termination.  If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan.  If, after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.  If the holder of a Restricted Stock Unit ceases to be a Service Provider, the unvested Restricted Stock Unit shall immediately be cancelled.

 

(c)           Disability of Award holder.  If an Award holder ceases to be a Service Provider as a result of the Award holder’s Disability, the Award holder may exercise his or her Option within such period of time as is specified in the Option Agreement (which shall be at least six (6) months) to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement).  In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following the Award holder’s termination.  If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan.  If, after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

 

(d)           Termination for Cause.  Notwithstanding any other provision of the Plan, if an Award holder is terminated for Cause, then Award holder’s Options, Restricted Stock Units or Stock Purchase Right shall expire on such termination date, or on such conditions as are determined by the Administrator. “Cause” has the meaning set forth in any agreement between the Company and the Award holder, or absent such agreement, means termination of a Service Provider’s term with the Company because of (i) any willful, material violation by the Award holder of any law or regulation applicable to the business of the Company or a Parent or a Subsidiary of the Company, the Award holder’s conviction for, or guilty plea - or nolo contendere - to, a felony or a crime involving moral turpitude, (ii) the Award holder’s commission of an act of personal dishonesty which involves personal profit in connection with the Company or any other entity having a business relationship with the Company, (iii) any 

 

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material breach by the Award holder of any provision of any agreement or understanding between the Company or any Parent or Subsidiary of the Company and the Award holder regarding the terms of the Award holder’s service as a Service Provider, including any contract of employment, (iv) the Award holder’s violation of any of the policies of the Company or any Parent or Subsidiary of the Company so as to cause loss, damage or injury to the property, reputation or employees of the Company or any Parent or Subsidiary of the Company, or (v) any other misconduct by the Award holder which is materially injurious to the financial condition or business reputation of, or is otherwise injurious to, the Company or a Parent or a Subsidiary of the Company.

 

(e)           Death of Award Holder.  If an Award holder dies while a Service Provider, the Option may be exercised within such period of time as is specified in the Option Agreement (which shall be at least six (6) months) to the extent that the Option is vested on the date of death (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement) by the Award holder’s estate or by a person who acquires the right to exercise the Option by bequest or inheritance.  In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following the Award holder’s termination.  If, at the time of death, the Award holder is not vested as to the entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan.  If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

 

(f)            Buyout Provisions.  The Administrator may at any time offer to buy out for a payment in cash or Shares, an Award previously granted, based on such terms and conditions as the Administrator shall establish and communicate to the Award holder at the time that such offer is made.

 

(g)           Right of First Refusal. At the discretion of the Administrator, the Company may reserve to itself the right of first refusal, in any of the Award Agreements, to purchase all Shares that an Award holder may propose to transfer to a third party, provided that the right of first refusal terminates upon the Company’s initial public offering of Common Stock pursuant to an effective registration statement filed under the Securities Act.

 

10.           Non-Transferability of Awards.  Except as otherwise provided in the applicable Award Agreement, the Awards may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and Options may be exercised, during the lifetime of the Optionee, only by the Optionee.

 

11.           Stock Purchase Rights.

 

(a)           Right of First Refusal. At the discretion of the Administrator, the Company may reserve to itself the right of first refusal, in any of the Restricted Stock purchase agreements, to purchase all Shares that a Service Provider may propose to transfer to a third party, provided that the right of first refusal terminates upon the Company’s initial public offering of Common Stock pursuant to an effective registration statement filed under the Securities Act.

 

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(b)           Rights to Purchase.  Stock Purchase Rights may be issued either alone, in addition to, or in tandem with other awards granted under the Plan and/or cash awards made outside of the Plan.  After the Administrator determines that it will offer Stock Purchase Rights under the Plan, it shall advise the offeree in writing or electronically of the terms, conditions and restrictions related to the offer, including the number of Shares that such person shall be entitled to purchase, the price to be paid, and the time within which such person must accept such offer.  The offer shall be accepted by execution of a Restricted Stock purchase agreement in the form determined by the Administrator.

 

(c)           Repurchase Option.  Unless the Administrator determines otherwise, the Restricted Stock purchase agreement shall grant the Company a repurchase option exercisable upon the voluntary or involuntary termination of the purchaser’s service with the Company for any reason (including death or Disability).  The purchase price for Shares repurchased pursuant to the Restricted Stock purchase agreement shall be the original price paid by the purchaser and may be paid by cancellation of any indebtedness of the purchaser to the Company.  The repurchase option shall lapse at such rate as the Administrator may determine.

 

(d)           Other Provisions.  The Restricted Stock purchase agreement shall contain such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Administrator in its sole discretion.

 

(e)           Rights as a Stockholder.  Once the Stock Purchase Right is exercised, the purchaser shall have rights equivalent to those of a stockholder and shall be a stockholder when his or her purchase is entered upon the records of the duly authorized transfer agent of the Company.  No adjustment shall be made for a dividend or other right for which the record date is prior to the date the Stock Purchase Right is exercised, except as provided in Section 13 of the Plan.

 

12.           Restricted Stock Units.

 

(a)           Awards of Restricted Stock Units.  A Restricted Stock Unit (“RSU”) is an Award covering a number of Shares that may be settled in cash, or by issuance of those Shares at a date in the future.  No Purchase Price shall apply to an RSU settled in Shares other than the payment of the aggregate par value of all Shares issuable upon such settlement. All grants of Restricted Stock Units will be evidenced by an Award Agreement that will be in such form (which need not be the same for each Service Provider) as the Committee will from time to time approve, and will comply with and be subject to the terms and conditions of this Plan.

 

(b)           Form and Timing of Settlement.  To the extent permissible under applicable law, the Committee may permit a Service Provider to defer payment under a RSU to a date or dates after the RSU is earned, provided that the terms of the RSU and any deferral satisfy the requirements of Section 409A of the Code (or any successor) and any regulations or rulings promulgated thereunder.  Payment may be made in the form of cash or whole Shares or a combination thereof, all as the Committee determines.

 

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13.           Adjustments Upon Changes in Capitalization, Merger or Asset Sale.

 

(a)           Changes in Capitalization.  Subject to any required action by the stockholders of the Company, the number of shares of Common Stock covered by each outstanding Option, Restricted Stock Unit or Stock Purchase Right, and the number of shares of Common Stock which have been authorized for issuance under the Plan but as to which no Options, Restricted Stock Unit or Stock Purchase Rights have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option, Restricted Stock Unit or Stock Purchase Right, as well as the price per share of Common Stock covered by each such outstanding Option, Restricted Stock Unit or Stock Purchase Right, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company.  The conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.”  Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive.  Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an Option, Restricted Stock Unit or Stock Purchase Right.

 

(b)           Dissolution or Liquidation.  In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Award holder as soon as practicable prior to the effective date of such proposed transaction.  The Administrator in its discretion may provide for an Optionee to have the right to exercise his or her Option or Stock Purchase Right until fifteen (15) days prior to such transaction as to all of the Optioned Stock covered thereby, including Shares as to which the Option or Stock Purchase Right would not otherwise be exercisable.  In addition, the Administrator may provide that any Company repurchase option applicable to any Shares purchased upon exercise of an Option or Stock Purchase Right shall lapse as to all such Shares, provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated.  To the extent it has not been previously exercised, an Option, Restricted Stock Unit or Stock Purchase Right will terminate immediately prior to the consummation of such proposed action.

 

(c)           Merger or Asset Sale.  In the event of a merger of the Company with or into another corporation, or the sale of substantially all of the assets of the Company, each outstanding Award shall be assumed or an equivalent option or right substituted by the successor corporation or a Parent or Subsidiary of the successor corporation.  In the event that the successor corporation refuses to assume or substitute for the Award, the Award holder shall fully vest in and have the right to exercise the Award as to all of the Optioned Stock or underlying shares, including Shares as to which it would not otherwise be vested or exercisable.  If an Award becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Administrator shall notify the Optionee in writing or electronically that the Option or Stock Purchase Right shall be fully exercisable for a period of fifteen (15) days from the date of such notice, and the Option or Stock Purchase Right shall terminate upon the expiration of such period.  For the purposes of this paragraph, the Option, Restricted Stock Unit or Stock Purchase Right shall be considered assumed if, following the merger or sale of assets, the option or right confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option or Stock Purchase Right or deliverable upon settlement of a 

 

11

 

Restricted Stock Unit immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or sale of assets is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option or Stock Purchase Right or settlement of a Restricted Stock Unit, for each Share of Optioned Stock subject to the Option or Stock Purchase Right or deliverable upon settlement of a Restricted Stock Unit, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or sale of assets.

 

14.           Time of Granting Awards.  The date of grant of an Award shall, for all purposes, be the date on which the Administrator makes the determination granting such Award, or such other date as is determined by the Administrator.  Notice of the determination shall be given to each Service Provider to whom an Award is so granted within a reasonable time after the date of such grant.

 

15.           Amendment and Termination of the Plan.

 

(a)           Amendment and Termination.  The Board may at any time amend, alter, suspend or terminate the Plan.

 

(b)           Stockholder Approval.  The Board shall obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.

 

(c)           Effect of Amendment or Termination.  No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Award holder, unless mutually agreed otherwise between the Award holder and the Administrator, which agreement must be in writing and signed by the Optionee and the Company.  Termination of the Plan shall not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Options, Restricted Stock Units or Stock Purchase Rights granted under the Plan prior to the date of such termination.

 

16.           Conditions Upon Issuance of Shares.

 

(a)           Legal Compliance.  Shares shall not be issued pursuant to the exercise of an Option or settlement of a Restricted Stock Unit unless the exercise of such Option and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance.

 

(b)           Investment Representations.  As a condition to the exercise of an Option or settlement of a Restricted Stock Unit, the Administrator may require the person exercising such Option to represent and warrant in the Option Agreement and/or at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required or recommended.

 

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17.           Inability to Obtain Authority.  The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

 

18.           Reservation of Shares.  The Company, during the term of this Plan, shall at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

 

19.           Stockholder Approval.  The Plan shall be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted.  Such stockholder approval shall be obtained in the degree and manner required under Applicable Laws.

 

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THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS.

 

	
  Option
  Certificate No. «no»

  	
   

  	
  Option
  to Purchase «shares» Shares of Common Stock

  
	
   

  	
   

  	
  (Subject
  to Adjustment)

  
	
   

  	
   

  	
   

  
	
  Original
  Issue Date: «issuedate»

  
	
   

  	
   

  	
   

  
	
  Original
  Exercise Price: «price» per share

  
					

 

 

OPTION
TO PURCHASE COMMON STOCK

 

OF

 

NEXSAN
CORPORATION

 

This certifies that «name» or
permitted assigns (the
“Option Holder”), is entitled, subject
to the terms and conditions set forth herein, at any time and from time to
time, on and after the Original Issue Date set forth above until 5:00 P.M.,
New York, New York time, on the fifth anniversary of the Original Issue Date
(the “Expiration Date”), to purchase from NEXSAN CORPORATION, a corporation organized and existing under the laws of the
State of Delaware (hereinafter called the “Company”), up to
«shares» fully paid and non-assessable shares of Common Stock, $.001 par value
per share, of the Company upon surrender of this Option Certificate, at the
principal office of the Company, with the subscription form annexed hereto duly executed by the Option Holder, and
simultaneous payment therefor in lawful money of the  United States of the exercise price per share set
forth above (or in the manner set forth in Section 2.2 hereof)
subject to adjustment as provided below (such amount being herein called the “Exercise
Price”).  The number and character of
such shares of Common Stock issuable upon exercise
of this Option are subject to adjustment as provided below.  The Options granted under this Option
Certificate are granted under the Company’s 2001 Stock Plan, a copy of which
has been delivered to the Option Holder, and pursuant to the Series A
Stock Purchase Agreement, dated October 27, 2003, among the Corporation
and the parties identified therein, as the same may be amended from time to
time.

 

1.             The Options.  The term “Option(s)”
as used herein means the Option represented by this Certificate and any Options
delivered in substitution or exchange therefor as provided herein.  The term “Option Shares” as used
herein means as of any date all shares of Common Stock of the Company or other securities, properties or rights
theretofore issued or at the 

 

 

1

 

time  issuable upon
exercise of the Options.  The term
“Common Stock” as used herein means (i) the
class of stock currently designated as Common Stock in the Amended and Restated
Certificate of Incorporation of the Company, as the same may be further amended
from time to time (the “Restated Charter”) or (ii) any other class
of stock resulting from successive changes or reclassifications of such Common
Stock.

 

2.             Exercise.

 

2.1           This Option may be exercised at any
time and from time to time on and after the Original Issue Date until 5:00 P.M.,
New York, New York time on the Expiration Date, for up to the full number of
shares of Common Stock called for hereby (after giving effect to any required
adjustment), by surrendering this Certificate at the then principal office of
the Company (currently located at 21700 Oxnard Street, Woodland Hills,
California 91367) with the subscription form duly executed by the Option Holder
indicating the number of shares as to which the Option is then being exercised
together with payment by certified or official bank check or in immediately
available funds of the sum obtained by multiplying (i) the number of
shares of Common Stock as to which this Option is being exercised (after giving
effect to any adjustment therein as provided below) by (ii) the Exercise
Price.

 

2.2           In addition to the method of payment
set forth in Section 2.1 and in lieu of any cash payment required
thereunder, this Option may be exercised at any time and from time to time in
full or in part by surrendering the Option Certificate in the manner specified in
Section 2.1 in exchange for the number of shares of Common Stock equal to
the product of (x) the number of shares as to which this Option is being
exercised multiplied by (y) a fraction, the numerator of which is the
Market Price (as defined herein) of the Common Stock for the trading day
immediately preceding the date on which the form of subscription attached
hereto is deemed to have been given to the Company pursuant to Section 11
hereof less the Exercise Price, and the denominator of which is such Market
Price.  As used in this Option
Certificate, the term “Market Price” at any date shall be deemed to be
the last reported sales price of Common Stock on such date, as officially
reported by the principal securities exchange on which the Common Stock is listed
or admitted to trading, or, if the Common Stock is not listed or admitted to
trading on any national securities exchange, on NASDAQ or on the OTCBB, as the
case may be (and if no sales were made on any such date, the average of the
closing bid and asked prices on such date as furnished by NASDAQ or the OTCBB,
as the case may be, or similar organization if NASDAQ or the OTCBB is no longer reporting such information), or if the Common
Stock is not quoted on NASDAQ or the OTCBB, as determined in good faith
by resolution of the Board of Directors of the Company based on the best
information available to it.

 

2.3           This Option may be exercised for less
than the full number of shares of Common Stock called for hereby (but not as to
fractional shares of Common Stock) in the manner set forth in Sections 2.1 and
2.2.  Upon any partial exercise, the
number of shares of Common Stock issuable upon the exercise of this Option as a
whole, and the sum (if any) payable upon the exercise of this Option as a
whole, shall be proportionately reduced. 
Upon such partial exercise, this Option Certificate shall be
surrendered, and (unless it is after 5:00 P.M., New York, New York time on
the Expiration Date) a new Option Certificate of the same tenor, with the same
Expiration Date and for the purchase of the number of such shares of Common
Stock not purchased upon such exercise or any prior exercise shall be issued by
the Company to the Option Holder.

 

2

 

2.4           Upon its exercise, this Option shall
be deemed to have been exercised immediately prior to the close of business on
the date of surrender for exercise of this Certificate (or, in the event this
Certificate is not available, on the date of surrender of the documents
described in Section 9 hereof, together with a letter containing
substantially the information included on the subscription form attached
hereto) as provided above, and the person entitled to receive the shares of
Common Stock or other securities, properties or rights issuable upon such
exercise shall be treated for all purposes as the holder of such shares,
securities, properties or rights of record as of the close of business on such
date.  No later than the first business
day following such date, the Company shall issue and deliver to the person or
persons entitled to receive the same a stock certificate or certificates for
the number of full shares of Common Stock, properties or rights issuable upon
such exercise, together with cash, in lieu of any fraction of a share of Common
Stock, equal to such fraction of the then current market value of one full
share of Common Stock.

 

2.5           Unless the Option Shares are
registered under the Securities Act of 1933, as amended (the “Act”), the certificate or certificates representing
the Option Shares shall bear a legend in substantially the following
form:

 

“The securities represented by this certificate
have not been registered with the Securities and Exchange Commission or the
securities commission of any state in reliance upon an exemption from
registration under the Securities Act of 1933, as amended (the “Securities
Act”), and accordingly, may not be offered or sold except pursuant to an
effective registration statement under the Securities Act or pursuant to an
available exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act and in accordance with applicable state
securities laws.”

 

3.             Payment of Taxes. 
All shares of Common Stock or other securities issued upon the exercise
of this Option pursuant to the terms of this Option Certificate shall be
validly issued, fully paid and non-assessable, and the Company shall pay all
issuance taxes and other similar governmental charges that may be imposed in
respect of the issue or delivery thereof, but in no event shall the Company pay
a tax on or measured by the net income or gain attributed to such exercise;
neither shall the Company be required to pay any tax or other charge imposed in
connection with any transfer of this Option or any transfer involved in the
issuance of any certificate for shares of Common Stock or other securities in
any name other than that of the Option Holder.

 

4.             Transfer and Exchange.

 

4.1           This Option is issued upon the
following terms, to all of which each holder or owner hereof by the taking
hereof consents and agrees:

 

 

3

 

(a)           title to this Option may be
transferred by endorsement (by the registered holder hereof executing the form
of assignment at the end hereof) and delivery in the same manner as in the case
of a negotiable instrument transferable by endorsement and delivery;

 

(b)           any person in possession of this
Option properly endorsed is authorized to represent himself as absolute owner
hereof and is empowered to transfer absolute title hereto by endorsement and
delivery hereof to a bona fide purchaser hereof for value;

 

(c)           this Option and all Option Shares may
be disposed of only in accordance with the Act and the rules and
regulations promulgated thereunder by the Securities and Exchange
Commission.  In connection with any such
proposed disposition, the Company may require such holder to furnish an opinion
of counsel, reasonably satisfactory to the Company, that the proposed
disposition, if effected, will not violate the registration requirements of the
Act.

 

4.2           The Company agrees that, promptly
following any request to do so pursuant to the terms hereof, it will effect any
and all transfers of this Option (or any portion thereof) on the books of the
Company established for such purpose; provided, however, until any such
transfer is effected on the books of the Company, the Company may treat the
prior holder hereof as the absolute owner hereof for all purposes,
notwithstanding any notice to the contrary.

 

5.             Certain Adjustments of Exercise Price and Number of
Shares.

 

5.1           Adjustment for Stock Splits,
Reverse Splits, Stock Dividends, Reclassification, Recapitalizations, etc.  If at any time or from time to time after the
Original Issue Date, the Company shall increase or decrease the number of
outstanding shares of Common Stock by means of any stock dividend, stock split,
reverse split, subdivision, combination or reclassification of shares,
recapitalization or other similar event, then, in each such event, the Exercise
Price shall, simultaneously with the happening of such event, be adjusted by
multiplying the then current Exercise Price by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such event and the denominator of which shall be the number of shares
of Common Stock outstanding immediately after such event, and the product so
obtained shall thereafter be the Exercise Price as then in effect.  The Exercise Price, as so adjusted, shall be
readjusted in the same manner upon the happening of any successive event or
events described herein in this Section 5.1.  The holder of this Option shall thereafter,
on the exercise hereof, be entitled to receive that number of shares of Common
Stock determined by multiplying the number of shares of Common Stock which
would otherwise (but for the provisions of this Section 5.1) be issuable
on such exercise by a fraction of which (i) the numerator is the Exercise
Price which would otherwise (but for the provisions of this Section 5.1)
be in effect, and (ii) the denominator is the Exercise Price in effect on
the date of such exercise.

 

5.2           Adjustment for Reorganization, Merger, Consolidation
or Disposition of Assets.  If at any time or from time to
time after the Original Issue Date, the Company shall reorganize its capital
(other than in a recapitalization as to which an adjustment is made pursuant to
Section 5.1 above), consolidate, amalgamate or merge with or into another
corporation (as a result of which the Company is not the surviving
corporation), or sell, transfer or otherwise 

 

 

4

 

dispose of all or substantially all of its property,
assets or business to another entity and, pursuant to the terms of such
reorganization, merger, amalgamation, consolidation or disposition of assets,
shares of common stock of the successor or acquiring entity, or any cash,
shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring entity (“Other
Property”), are to be received by or distributed to the holders of Common
Stock of the Company, then the Option Holder shall have the right thereafter to
receive, upon any present or future exercise of this Option and payment of the
Exercise Price as provided for herein, the number of shares of common stock of
the successor or acquiring entity or of the Company, if it is the surviving
corporation, and Other Property received upon or as a result of such
reorganization, merger, amalgamation,
consolidation or disposition of assets by a holder of the number of shares of
Common Stock for which this Option is exercisable immediately prior to such
event.  In case of any such
reorganization, merger, consolidation or disposition of assets, the successor
or acquiring entity (if other than the Company) shall expressly assume the due
and punctual observance and performance of each and every covenant and condition
of this Option to be performed and observed by the Company and all of the
obligations and liabilities hereunder, subject to such modifications as may be
deemed appropriate (as determined by resolution of the Board of Directors of
the Company) in order to provide for adjustments of shares of the Common Stock
for which this Option is exercisable which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 5.  The foregoing provisions of this Section 5.2
shall similarly apply to successive reorganizations, amalgamations, mergers,
consolidations or dispositions of assets.

 

6.             No Impairment. 
The Company will not, by amendment of its Restated Certificate of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of
this Option, but will at all times in good faith assist in the carrying out of
all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the holders of the Options
against impairment.  Without limiting the
generality of the foregoing, the Company (a) will not increase the par
value of any shares of stock receivable on the exercise of the Option above the
amount payable therefor on such exercise of
the Option, (b) will take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and non-assessable shares of stock on the exercise of this Option, and (c) will
not consolidate with or merge into any other person or permit any such person
to consolidate with or merge into the Company (if the Company is not the
surviving person), unless such other person shall expressly assume in writing
and will be bound by all the terms of this Option.

 

7.             Accountants’ Certificate as to Adjustments.  In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable on
the exercise of this Option or in the Exercise Price, the Company shall compute
such adjustment or readjustment in accordance with the terms of this Option and
prepare a certificate setting forth such adjustment or readjustment and showing
in reasonable detail the facts upon which such adjustment or readjustment is
based, including a statement of (a) the consideration received or
receivable by the Company for any additional shares of Common Stock (or Other
Securities) issued or sold or deemed to have been issued or sold, (b) the
number of shares of Common Stock (or Other Securities) outstanding or deemed to
be outstanding, and (c) the Exercise Price and the number of shares of
Common Stock to be received upon exercise of this Option, in effect immediately
prior to such issue or sale and as adjusted and readjusted as provided in this
Option.  The Company will forthwith mail
a copy of each such certificate to each holder of record of a Option.

 

 

5

 

8.             Notices of Record Date.  If at any time or from time to time:

 

(a)           the Company shall pay any dividend
upon its Common Stock or make any other distribution to holders of its Common
Stock, or offer for subscription, purchase or other method of acquisition to
holders of its Common Stock any shares of stock of any class or any securities
or any other rights; or

 

(b)           there shall be any capital
reorganization of the Company, any reclassification of the capital stock of the
Company, any consolidation or merger of the Company with or into another
corporation, except for mergers into the Company of its wholly-owned subsidiaries, or any conveyance of all or
substantially all of the assets of the Company to another entity; or

 

(c)           there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company;

 

then, in each such case, the
Company shall give to the holder of this Option, in accordance with Section 11
hereof, (i) at least twenty days prior written notice of the date on which
the books of the Company shall close or a record shall be taken for such
dividend, distribution or offer of subscription rights, or for determining rights
to vote in respect of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation, or winding up, and (ii) in
the case of any such reorganization, reclassification, consolidation merger,
sale, dissolution, liquidation, or winding up, at least twenty days’ prior
written notice of the date when the same shall take place.  Such notice in accordance with the foregoing
clause (i) shall also specify, in the case of any such dividend,
distribution, or offer of subscription rights, the date on which the holders of
Common Stock shall be entitled thereto, and such notice in accordance with the foregoing clause
(ii) shall also specify the date on which the holders of Common Stock
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation, or winding up, as the case may be.

 

9.             Loss or Mutilation.  Upon receipt by the Company of evidence
satisfactory to it (in the exercise of reasonable discretion) of the ownership
of and the loss, theft, destruction or mutilation
of any Option Certificate and (in the case of loss, theft or destruction) of
indemnity of the Option Holder satisfactory to it (in the exercise of
reasonable discretion), and (in the case of mutilation) upon surrender and
cancellation thereof, the Company will execute and deliver in lieu thereof a
new Option Certificate of like tenor.

 

10.           Reservation and Listing of Common
Stock.  The Company shall at all
times reserve and keep available for issue upon the exercise of this Option
such number of its authorized but unissued shares of Common Stock as will be
sufficient to permit the exercise in full of this Option.  If any shares of Common Stock required to be
reserved for issuance upon exercise of this Option require registration or
qualification with any governmental authority or 

 

 

6

 

other governmental approval or filing under any law
before such shares may be so issued, the Company
will in good faith and as expeditiously as possible and at its expense endeavor
to cause such shares to be duly registered or qualified or to take such
other action as may be reasonably necessary to effectuate the issuance of such
shares.  The Company will, at its
expense, list on each national securities
exchange or association on which shares of Common Stock are presently
listed or are hereafter listed (or if then traded on NASDAQ or the OTCBB, make
eligible for trading on NASDAQ or the OTCBB, as the case may be), maintain and,
when necessary, increase such listing (or, if applicable, eligibility for
trading) of, all shares of Common Stock issued or, to the extent permissible
under the applicable securities exchange or association rules, issuable upon
the exercise of this Option so long as any shares of Common Stock shall be so listed
(or, if applicable, so traded).

 

11.           Notices.  All notices and other communications shall be
deemed validly given, made or served if in writing and delivered (as of such
delivery) or sent by certified mail (as of three days after deposit in a United
States post office), postage prepaid, return receipt requested, or by facsimile
or overnight courier service, charges prepaid (as of the date of confirmation
of receipt): (i) if to the Option Holder, to the address or telecopy
number furnished to the Company in writing by the last holder of this Option
who shall have furnished an address or telecopy number to the Company in
writing; or (ii) if to the Company, to the address set forth in Section 2.1
hereof or to such other address or telecopy number furnished in writing by the
Company to the Option Holder.

 

12.           Change; Waiver.  Neither this Option nor any term hereof may
be changed, waived, discharged or terminated orally but only by an instrument
in writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.

 

13.           No Rights or Liability as a
Stockholder.  Except as otherwise
expressly provided herein, no holder, as such, of this Option shall be entitled
to vote or receive dividends or be deemed a stockholder of the Company for any
purpose, nor shall anything contained in this Option be construed to confer
upon the holder hereof, as such, any of the rights of a stockholder of the
Company or any right to vote, give or withhold consent to any corporate action
(whether any reorganization, issue of stock, reclassification of stock,
consolidation, merger, conveyance or otherwise), receive notice of meetings
(except as otherwise expressly provided herein), or receive dividends or
subscription rights, prior to the issuance to the holder of this Option of the
Common Stock or other securities which he is then entitled to receive upon the
due exercise of this Option.  No
provision hereof, in the absence of affirmative action by the holder hereof to
purchase Common Stock, and no enumeration herein of the rights or privileges of
the holder hereof shall give rise to any liability of such holder as a
stockholder of the Company.

 

14.           Headings.  The headings in this Option are for purposes
of convenience in reference only and shall not be deemed to constitute a part
hereof or to affect the interpretation of any provision of this Option.

 

 

7

 

15.           Law Governing.  This Option shall be construed and enforced
in accordance with and shall be governed by the laws of New York.

 

	
   

  	
  NEXSAN CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: 

  
	
   

  	
   

  	
  Title: 

  

 

 

8

 

OPTION

SUBSCRIPTION FORM

 

(To be executed only upon exercise of Option)

 

The undersigned holder of this
Option Certificate irrevocably elects to exercise the right, represented by this
Option Certificate, to purchase [                      ]
shares of Common Stock of Nexsan Corporation and herewith tenders payment
therefor in the amount of $[                      ]  or surrenders this Option Certificate for the number of shares of Common
Stock determined pursuant to Section 2.2 hereof, all in accordance with
the terms of this Option Certificate. 
The undersigned requests that a certificate for such securities be
registered in the name of                                                                                 
whose address is

 

Date:
                               

 

	
   

  	
   

  
	
   

  	
  (Printed
  Name of Option Holder)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Signature
  of Holder)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Street
  Address)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (City)
  (State) (Zip)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Tax
  ID Number

  

 

Tax ID Number

 

 

OPTION

FORM OF ASSIGNMENT

 

FOR VALUE RECEIVED, the
undersigned holder of this Option hereby sells, assigns and transfers unto the
Assignee named below all of the rights of the undersigned under the within
Option, with respect to the number of shares of Common Stock set forth below:

 

Name of Assignee                             Address
and Tax ID Number                                Number
of Shares

 

and
does hereby irrevocably constitute and appoint                                             , attorney to make such transfer
on the books of Nexsan Corporation maintained for the purpose, with full power
of substitution in the premises.

 

Date:                                 

 

	
   

  	
   

  
	
   

  	
  (Printed
  Name of Option Holder)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Witness

  

 

 

 

STOCK OPTION EXERCISE
FORM

 

(To be executed only upon
exercise of Option)

 

The undersigned holder of the attached Option
Agreement irrevocably elects to exercise the right, represented by the Option
Agreement, to purchase                                         
shares of Common Stock of Nexsan Corporation and herewith tenders payment for
the shares in the amount of $                              .

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Printed Name of Option Holder)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Signature of Holder)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Street Address)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (City)

  	
  (State)

  	
  (Zip)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Tax ID Number

  

 

1

 

NEXSAN CORPORATION

 

2001 STOCK PLAN — STOCK
OPTION AGREEMENT

 

This
Stock Option Agreement (the “Agreement”)
is made and entered into as of the date of grant set forth below (the “Date of Grant”) by and between
Nexsan Corporation, a Delaware corporation (the “Company”),
and the Service Provider named below (the “Optionee”).  Capitalized terms not defined herein shall
have the meaning ascribed to them in the Company’s 2001 Stock Plan (the “Plan”).

 

Optionee:                                                                                                                                           Employee X

 

Address:

 

 

Total Option Shares:                                                                                                                                                              XX,000

 

Exercise Price Per Share:                                                                          $x.xxxx

 

Date of Grant:                                                                                                                                           Month and Day,
200X

 

Vesting Schedule:                                                                                          The Option
shall become exercisable as to X,000Shares on each of the first through fourth
anniversaries of the Date of Grant.

 

Expiration Date:                                                                                                      11:59 p.m.
on month and day, 201X

(unless earlier terminated under Section 9 of the Plan)

 

Type of Stock Option                                                                                                                              [   ] Incentive
Stock Option

 

(Check one):                                                                                                                                                                         
 [   ] Nonqualified Stock Option

 

1.                                      GRANT OF OPTION.  The Company
hereby grants to the Optionee an option (the “Option”) to purchase the total
number of shares of Common Stock of the Company set forth above as Total Option
Shares (the “Shares”) at the Exercise
Price Per Share set forth above (the “Exercise Price”),
subject to all of the terms and conditions of this Agreement and the Plan.  If designated as an Incentive Stock Option
above, the Option is intended to qualify as an “incentive stock option” (an “ISO”) within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended (the “Code”).

 

2.                                      EXERCISE PERIOD.

 

2.1                               Exercise Period of Option.  This Option is
exercisable only to the extent that vesting has occurred.  Provided Optionee continues to provide
services to the Company or to any Parent or Subsidiary of the Company, the
Shares issuable upon exercise of, this Option will become vested as per the
Vesting Schedule set forth above until the Shares are vested with respect to one
hundred percent (100%) of the Shares or vesting ceases as per this Agreement or
the Plan.  If application of the Vesting
Schedule causes a fractional share, such share shall be rounded down to the
nearest whole share for each quarterly vesting period except for the last 

 

quarterly vesting period, at the end of which this
Option shall become vested for the full remainder of the Shares.  Notwithstanding any provision in the Plan or
this Agreement to the contrary, Options shall cease vesting after the date upon
which Optionee’s services to the Company terminate (“Termination
Date”) and shall lapse upon Optionee’s Termination Date.

 

2.2                               Vesting of Options.  Shares that
are vested pursuant to the Vesting Schedule set forth herein are “Vested Shares.” Shares that are not
vested pursuant to the Vesting Schedule set forth herein are “Unvested Shares.”

 

2.3                               Expiration.  The Option
shall expire on the Expiration Date set forth above or earlier as provided in Section 3
below or pursuant to the Plan.

 

3.                                      TERMINATION.

 

3.1                               Termination for Any Reason
Except Death, Disability or Cause.  If Optionee is terminated from the Company
and ceases to provide services to the Company (“Terminated”)
for any reason, except death, Disability or for Cause, the Option, to the
extent (and only to the extent) that it would have been exercisable by Optionee
on the Termination Date, may be exercised by Optionee no later than ninety (90)
days after the Termination Date, but in any event no later than the Expiration
Date.

 

3.2                               Termination Because of
Death or Disability.  If Optionee is Terminated because of death or
Disability of Optionee (or Optionee dies within three (3) months of
Termination when Termination is for any reason other than Optionee’s Disability
or for Cause), the Option, to the extent that it is exercisable by Optionee on
the Termination Date, may be exercised by Optionee (or Optionee’s legal
representative) no later than six (6) months after the Termination Date,
but in any event no later than the Expiration Date.  Any exercise beyond (i) three (3) months
after the Termination Date when the Termination is for any reason other than
the Optionee’s death or disability, within the meaning of Section 22(e)(3) of
the Code; or (ii) six (6) months after the Termination Date when the
termination is for Optionee’s disability, within the meaning of Section 22(e)(3) of
the Code, is deemed to be an NQSO.

 

3.3                               Termination for Cause.  If Optionee is
Terminated for Cause, then the Option will expire on Optionee’s Termination
Date, or at such later time and on such conditions as are determined by the
Committee.

 

3.4                               No Vesting after
Termination.  Vesting of the Option shall cease upon
Optionee’s Termination Date, regardless of the cause or reason for Termination.

 

3.5                               No Obligation to Employ.  Nothing in the
Plan or this Agreement shall confer on Optionee any right to continue in the
employ of, or other relationship with, the Company or any Parent or Subsidiary
of the Company, or limit in any way the right of the Company or any Parent or
Subsidiary of the Company to terminate Optionee’s employment or other
relationship at any time, with or without Cause.

 

2

 

4.                                      MANNER OF EXERCISE.

 

Stock Option Exercise Agreement.  To exercise
this Option, Optionee (or in the case of exercise after Optionee’s death or
incapacity, Optionee’s executor, administrator, heir or legatee, as the case
may be) must deliver to the Company an executed stock option exercise agreement
in a form as required by the Company (the “Exercise Agreement”),
which shall set forth, inter alia, (i) Optionee’s election to
exercise the Option, (ii) the number of Shares being purchased, (iii) any
restrictions imposed on the Shares and (iv) any representations,
warranties and agreements regarding Optionee’s investment intent and access to
information as may be required by the Company to comply with applicable
securities laws.  If someone other than
Optionee exercises the Option, then such person must submit documentation
reasonably acceptable to the Company verifying that such person has the legal
right to exercise the Option and such person shall be subject to all of the
restrictions contained herein as if such person were the Optionee.  The date of exercise of the Option shall be
the date on which written notice of exercise is hand delivered to the Company,
during normal business hours or, if sent electronically, the date on which it
is actually transmitted, during normal business hours, or if mailed, the date
on which it is postmarked, provided such notice is actually received.

 

4.1                               Limitations on Exercise.  The Option may
not be exercised unless such exercise is in compliance with all applicable
federal and state securities laws, as they are in effect on the date of
exercise.  The Option may not be
exercised as to fewer than one hundred (100) Shares unless it is exercised as
to all Shares as to which the Option is then exercisable.

 

4.2                               Payment.  The Exercise
Agreement shall be accompanied by full payment of the Exercise Price for the
shares being purchased in cash (by check), or where permitted by law:

 

(a)                                  if the Company so allows, in its sole
discretion, by cancellation of indebtedness of the Company to the Optionee;

 

(b)                                 if the Company so allows, in its sole
discretion, by surrender of shares of the Company’s Common Stock that (i) either
(A) have been owned by Optionee for more than six (6) months and have
been paid for within the meaning of SEC Rule 144 (and, if such shares were
purchased from the Company by use of a promissory note, such note has been
fully paid with respect to such shares); or (B) were obtained by Optionee
in the open public market; and (ii) are clear of all liens, claims,
encumbrances or security interests;

 

(c)                                  if the Company so allows, in its sole
discretion, by waiver of compensation due or accrued to Optionee for services
rendered;

 

(d)                                 if the Company so allows, in its sole
discretion, and provided that a public market for the Company’s stock exists: (i) through
a “same day sale” commitment from Optionee and a broker-dealer that is a member
of the National Association of Securities Dealers (an “NASD Dealer”) whereby
Optionee irrevocably elects to exercise the Option and to sell a portion of the
Shares so purchased sufficient to pay for the total Exercise Price and whereby the
NASD Dealer irrevocably commits upon receipt of such Shares to forward the
total Exercise Price directly to the Company, or (ii) through a “margin”
commitment from Optionee and an 

 

3

 

NASD Dealer whereby Optionee irrevocably elects to
exercise the Option and to pledge the Shares so purchased to the NASD Dealer in
a margin account as security for a loan from the NASD Dealer in the amount of
the total Exercise Price, and whereby the NASD Dealer irrevocably commits upon
receipt of such Shares to forward the total Exercise Price directly to the
Company; or

 

(e)                                  in cash; or by check;

 

(f)                                    if the Company so allows, in its sole
discretion, by promissory note, or by;

 

(g)                                 by any combination of the foregoing.

 

4.3                               Tax Withholding.  Prior to the
issuance of the Shares upon exercise of the Option, Optionee must pay or
provide for any applicable federal, state and local withholding obligations of
the Company.  If the Committee permits,
Optionee may provide for payment of withholding taxes upon exercise of the
Option by requesting that the Company retain the minimum number of Shares with
a Fair Market Value equal to the minimum amount of taxes required to be
withheld; but in no event will the Company withhold Shares if such withholding
would result in adverse accounting consequences to the Company.  In such case, the Company shall issue the net
number of Shares to the Optionee by deducting the Shares retained from the
Shares issuable upon exercise.

 

4.4                               Issuance of Shares.  Provided that
the Exercise Agreement and payment are in form and substance satisfactory to
the Company, the Company shall issue the Shares registered in the name of
Optionee, Optionee’s authorized assignee, or Optionee’s legal representative,
and shall deliver certificates representing the Shares with the appropriate
legends affixed thereto.

 

5.                                      NOTICE OF DISQUALIFYING
DISPOSITION OF ISO SHARES.  If the Option is an ISO, and if Optionee
sells or otherwise disposes of any of the Shares acquired pursuant to the ISO
on or before the later of (i) the date two (2) years after the Date
of Grant, and (ii) the date one (1) year after transfer of such
Shares to Optionee upon exercise of the Option, Optionee shall immediately
notify the Company in writing of such disposition.  Optionee agrees that Optionee may be subject
to income tax withholding by the Company on the compensation income recognized
by Optionee from the early disposition by payment in cash or out of the current
wages or other compensation payable to Optionee.

 

6.                                      COMPLIANCE WITH LAWS AND
REGULATIONS.  The exercise of the Option and the issuance
and transfer of Shares shall be subject to compliance by the Company and
Optionee with all applicable requirements of federal and state securities laws
and with all applicable requirements of any stock exchange on which the Company’s
Common Stock may be listed at the time of such issuance or transfer.

 

7.                                      NONTRANSFERABILITY OF
OPTION.  The Option may not be transferred in any
manner other than by will or by the laws of descent and distribution, and, with
respect to NQSOs, by instrument to an inter vivos or testamentary trust in
which the options are to be passed to beneficiaries upon the death of the
trustor (senior), or by gift to “immediate family” as 

 

4

 

that term is defined in 17 C.F.R.  240.16a-1(e), and may be exercised during the
lifetime of Optionee only by Optionee or in the event of Optionee’s incapacity,
by Optionee’s legal representative.  The
terms of this Agreement and the Plan shall be binding upon the executors,
administrators, successors and assigns of Optionee.

 

8.                                      COMPANY’S RIGHT OF FIRST
REFUSAL.

 

8.1                               General Rule.  Before any
Shares acquired upon exercise of this Option held by Optionee or any transferee
(either being referred to herein as the “Holder”) may be sold or otherwise
transferred (including transfer by gift or operation of law), the Company or
its assignee(s) shall have a right of first refusal to purchase the Shares
on the terms and conditions set forth in this Section (the “Right of First
Refusal”).

 

8.2                               Notice of Proposed
Transfer.  The Holder of the Shares shall deliver to the
Company a written notice (the “Notice”) stating: (i) the Holder’s bona
fide intention to sell or otherwise transfer such Shares; (ii) the name of
each proposed purchaser or other transferee (“Proposed Transferee”); (iii) the
number of Shares to be transferred to each Proposed Transferee; and (iv) the
bona fide cash price or other consideration for which the Holder proposes to
transfer the Shares (the “Offered Price”), and the Holder shall offer
the Shares at the Offered Price to the Company or its assignee(s).

 

8.3                               Exercise of Right of First
Refusal.  At any time within thirty (30) days after
receipt of the Notice, the Company and/or its assignee(s) may, by giving
written notice to the Holder, elect to purchase all or part of the Shares
proposed to be transferred to any one or more of the Proposed Transferees, at
the Offered Price (“Purchase Price”).  If the Offered Price includes consideration
other than cash, the cash equivalent value of the non-cash consideration shall
be determined by the Board of Directors of the Company in good faith.

 

8.4                               Payment.  Payment of the
Purchase Price shall be made, at the option of the Company or its assignee(s), (i) by
cash or check, (ii) by cancellation of all or a portion of any outstanding
indebtedness of the Holder to the Company, or (iii) by any combination
thereof.

 

8.5                               Holder’s Right to Transfer.  If Shares
proposed in the Notice to be transferred to a given Proposed Transferee are not
purchased by the Company and/or its assignee(s) as provided in this
Section, then the Holder may sell or otherwise transfer such Shares to that
Proposed Transferee at the Offered Price or at a higher price, provided that
such sale or other transfer is consummated within one hundred twenty (120) days
after the date of the Notice and provided further that any such sale or other
transfer is effected in accordance with any applicable securities laws and the
Proposed Transferee agrees in writing that the obligations in this Agreement
shall continue to apply to the Shares. 
If the Shares described in the Notice are not transferred to the
Proposed Transferee within such period, a new Notice shall be given to the
Company, and the Company and/or its assignees shall again be offered the Right
of First Refusal before any Shares held by the Holder may be sold or otherwise
transferred.

 

8.6                               Exception for Certain
Family Transfers.  Notwithstanding anything to the contrary
contained in this Section, the transfer of any or all of the Shares during the
Purchaser’s lifetime or on the Purchaser’s death by will or intestacy to the
Purchaser’s 

 

5

 

Immediate Family or a trust for the benefit of one or
more members of the Purchaser’s Immediate Family or to a trust, partnership,
limited liability company, custodianship or other fiduciary account for the
benefit of the Purchaser or one or more members of the Purchaser’s Immediate
Family, or the disbursement therefrom to Purchaser or one or more members of
his Immediate Family, shall be exempt from the provisions of this Section,
provided that the Purchaser notifies the Company in writing within thirty (30)
days of said transfer.  “Immediate
Family” as used herein shall mean spouse, lineal descendant or antecedent,
father, mother, brother or sister.  In
such case, the transferee or other recipient shall receive and hold the Shares
so transferred subject to the provisions of this Agreement and there shall be
no further transfer of such Shares except in accordance with the terms of this
Section.

 

8.8                               Termination of Right of
First Refusal.  The Right of First Refusal shall terminate as
to any Shares upon the date of the first sale of Common Stock of the Company to
the general public pursuant to a registration statement filed with and declared
effective by the Securities and Exchange Commission under the 1933 Act.

 

9.                                      INVESTMENT REPRESENTATIONS

 

The
Optionee hereby represents and warrants to and agrees with the Company as
follows:

 

9.1                               Acquisition of Shares for
Own Account.  The Optionee will acquire the Shares, if at
all, pursuant to this Agreement with the Optionee’s own funds.  The Shares will be acquired, if at all, for
the Optionee’s own account, not as a nominee or agent for any other person or
firm.  No one else has or will have on
any exercise of the Option or any portion thereof any interest, beneficial or
otherwise, in any of the Shares to be acquired on such exercise.  The Optionee is not, and prior to any
exercise of the Option will not be, obligated to transfer any of the Shares or
any interest therein to anyone else and the Optionee does not and will not have
any agreement or understandings to do so.

 

9.2                               Shares May Be “Restricted
Securities” and Certificates Legended.

 

The Optionee understands and agrees that:

 

9.2.1.                     The Shares, if and when issued, may be “restricted
securities,” as that term is defined in Rule 144 under the Securities Act
of 1933, as amended (the “Act”), and, accordingly, the Optionee may be required
to hold the Shares indefinitely unless they are registered under the Act or an
exemption from such registration is available;

 

9.2.2                        The Company is not under any obligation
to register the Shares under the Act, with any state securities commission or
with any stock exchange or to comply with any exemptions thereunder; and

 

9.2.3.                     The Company shall cause legends set forth
below or legends substantially equivalent thereto, to be placed upon any
certificates representing any Shares received by the Optionee on exercise of
the Option, which legend restricts the sale, transfer or disposition of the
Shares otherwise than in accordance with this Agreement, as well as any other
legends as the Company may deem appropriate or that may be required by the
Company or by the applicable state or federal securities laws:

 

6

 

THE SECURITIES
REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “ACT”), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT
OR, IN THE OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES,
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR SUCH TRANSACTION
COMPLIES WITH RULES PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION UNDER
SAID ACT.

 

IN ADDITION, SALE,
TRANSFER, ENCUMBRANCE, HYPOTHECATION, GIFT OR OTHER DISPOSITION OR ALIENATION
OF SUCH SHARES OR ANY INTEREST THEREIN IS RESTRICTED BY AND SUBJECT TO A STOCK
OPTION AGREEMENT A COPY OF WHICH MAY BE INSPECTED AT THE PRINCIPAL OFFICE
OF THE ISSUER AND ALL OF THE PROVISIONS OF WHICH ARE INCORPORATED BY REFERENCE
IN THIS CERTIFICATE.

 

9.3                               Agreement to Refrain from
Resales.  The Optionee agrees that, notwithstanding any
provision hereof or in the Plan to the contrary, the Optionee shall in no event
make any disposition of all or any part of or interest in the Shares and that
such Shares shall not be encumbered, pledged, hypothecated, sold or transferred
by the Optionee nor shall the Optionee receive any consideration for such
Shares or for any interest therein from any person, unless and until prior to
any proposed transfer, encumbrance, disposition, pledge, hypothecation or sale of
any Shares, either (1) a registration statement on form S-1 or S-8 (or any
other form replacing such form or appropriate for the purpose under the Act)
with respect to such shares proposed to be transferred or otherwise disposed of
shall be then effective or (2) (i) the Optionee shall have notified
the Company of the proposed disposition and shall have furnished the Company
with a detailed statement of the circumstances surrounding the proposed
disposition, (ii) the Optionee shall have furnished the Company with an
opinion of counsel in form and substance satisfactory to the Company to the
effect that such disposition will not require registration of any such Shares
under the Act or qualification of any such shares under any other securities
law, (iii) such opinion of counsel shall have been concurred in by counsel
for the Company and (iv) the Company shall have advised the Optionee of
such concurrence.

 

10.                               LOCK-UP PERIOD.

 

Optionee hereby agrees that, if so requested by the Company or any
representative of the underwriters (the “Managing Underwriter”) in connection
with any registration of the offering of any securities of the Company under
the Securities Act, Optionee (or any transferee) shall not sell or otherwise
transfer any Shares or other securities of the Company during the 180-day
period (or such shorter period as may be requested in writing by the Managing
Underwriter and agreed to in writing by the Company) (the “Market Standoff
Period”) following the effective date of a registration statement of the
Company filed under the Securities Act. 
Such restriction shall apply only to the first registration statement of
the Company to become effective under the Securities Act that includes
securities to be sold on behalf of the Company to the public in an underwritten
public offering under the Securities Act. 
The Company may impose stop-transfer 

 

7

 

instructions with respect to securities subject to the foregoing
restrictions until the end of such Market Standoff Period.

 

11.                               PLAN PROVISIONS TO PREVAIL.

 

This
Agreement is subject to all of the terms and provisions of the Plan.  By entering into this Agreement the Optionee
agrees that no member of the Board or the Committee nor any employee of the
Company.  Parent Corporation or any of
the Company’s subsidiaries shall be liable for any action or determination made
in good faith with respect to the Plan or this Agreement.  In the event that there is any inconsistency
between the provisions of this Agreement and of the Plan, the provisions of the
Plan shall govern.  Any dispute regarding
the interpretation of this Agreement shall be submitted by Optionee or the
Company to the Committee for review.  The
resolution of such a dispute by the Committee shall be final and binding on the
Company and Optionee.

 

12.                               PRIVILEGES OF STOCK
OWNERSHIP.  Optionee shall not have any of the rights of
a shareholder with respect to any Shares until the Shares are issued to
Optionee.

 

13.                               ENTIRE AGREEMENT AND
SEVERABILITY.  The Plan is incorporated herein by
reference.  This Agreement and the Plan
constitute the entire agreement of the parties and supersede all prior
undertakings and agreements with respect to the subject matter hereof.  If any provision of this Agreement (including
any provision of the Plan that is incorporated herein by reference) shall
hereafter be held to be invalid, unenforceable or illegal in whole or in part
for any reason, (i) such provision shall be reformed to the minimum extent
necessary to cause such provision to be valid, enforceable and legal while
preserving the intent of the parties or (ii) if such provision cannot be
so reformed, such provision shall be severed from this Agreement and an
equitable adjustment shall be made to this Agreement so as to give effect to
the intent of the parties.  Neither such
reformation nor severance shall affect or impair the legality, validity or
enforceability of any other provision of this Agreement or the Plan.

 

14.                               NOTICES.  Any notice
required to be given or delivered to the Company under the terms of this
Agreement shall be in writing and addressed to the CEO of the Company at its
principal corporate offices.  Any notice
required to be given or delivered to Optionee shall be in writing and addressed
to Optionee at the address indicated herein or to such other address as such
party may designate in writing from time to time to the Company.  All notices shall be deemed to have been
given or delivered upon: (i) personal delivery; (ii) three (3) days
after deposit in the United States mail by certified or registered mail (return
receipt requested); (iii) one (1) business day after deposit with any
express courier (prepaid); or (iv) one (1) business day after
transmission by facsimile, rapifax or telecopier.

 

15.                               SUCCESSORS AND ASSIGNS.  The Company
may assign any of its rights under this Agreement including its Right of First
Refusal.  This Agreement shall be binding
upon and inure to the benefit of the successors and assigns of the
Company.  Subject to the restrictions on
transfer set forth herein, this Agreement shall be binding upon Optionee and
Optionee’s heirs, executors, administrators, legal representatives, successors
and assigns.

 

8

 

16.                               GOVERNING LAW.  This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York as such laws are applied to agreements to be performed entirely within
New York.

 

17.                               ACCEPTANCE.  Optionee
hereby acknowledges receipt of a copy of the Plan and this Agreement.  Optionee has read and understands the terms
and provisions thereof, and accepts the Option subject to all the terms and
conditions of the Plan and this Agreement. 
Optionee acknowledges that there may be adverse tax consequences upon
exercise of the Option or disposition of the Shares and that Optionee should
consult a tax adviser prior to such exercise or disposition.

 

IN
WITNESS WHEREOF,
the Company has caused this Agreement to be executed by its duly authorized
representative and Optionee has executed this Agreement, effective as of the
Date of Grant.

 

	
  NEXSAN
  CORPORATION

  	
   

  	
  OPTIONEE

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Please
  print name)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Please
  print title)

  	
   

  	
   

  

 

                                                                                                                                                                                    M.T.C.

 

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