Document:

exv4w1

Exhibit 4.1

 

 

Exhibit 4.1

     A statement of the powers, designations, preferences and relative, participating, optional or
other special rights of each class of stock or series thereof and the qualifications, limitations
or restrictions of such preferences and/or rights as established, from time to time, by the
Certificate of Incorporation of the Corporation and by any certificate of determination, the number
of shares constituting each class and series, and the designations thereof, may be obtained by the
holder hereof upon request and without charge from the Transfer Agent of the Corporation.

     The following abbreviations, when used in the inscription on the face of this certificate,
shall be construed as though they were written out in full according to applicable laws or
regulations:

	 	 	 	 	 	 	 	 	 	 
	TEN COM 	—	as tenants in common	UNIF GIFT MIN ACT- Custodian	 	 
	TEN ENT

	—	 as tenants by the entireties	 	 	(Cust)
	 	 	 	(Minor)
	JT TEN	—	as joint tenants with right	 	 	under Uniform Gifts to Minors	 	 
	 

	 	of survivorship and not as tenants	 	 	Act	 	 	 	 
	 

	 	in common 	 	 	 	 	(State)	 	 
	 	 	 	UNIF TRF MIN ACT- Custodian (until age     )	 	 
	 	 	 	 	 	 	 	under Uniform Transfers
	 

	 	 	 	 	(Minor)	 	 	 	 
	 

	 	 	 	 	to Minors Act
	 	 	 	 
	 

	 	 	 	 	 	 	(State)	 	 

Additional abbreviations may also be used though not in the above list.

     FOR VALUE RECEIVED,                                                              hereby
sell, assign and transfer unto

	 	 	 
	PLEASE INSERT SOCIAL SECURITY OR OTHER 

IDENTIFYING NUMBER OF ASSIGNEE

	 	 
	
 
	 	 

 
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)

 

 

 
 Shares
of the common stock represented by the within Certificate, and do hereby irrevocably constitute and
appoint

 
 Attorney
to transfer the said stock on the books of the within named Corporation with full power of
substitution in the premises.

Dated                                                             

	 	 	 	 	 
	 	 	 
	 

	 	NOTICE:
	 	THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME
AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR. WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE
WHATEVER.exv10w1

Exhibit 10.1

SUPERCONDUCTOR TECHNOLOGIES INC.

1992 STOCK OPTION PLAN

(Amended and Restated through July 1997)

1. Purposes of the Plan. The purposes of this Stock Option Plan are:

	 	•	 	to attract and retain the best available personnel for positions of substantial
responsibility,
	 
	 	•	 	to provide additional incentive to Employees 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.

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

	 	(a)	 	“Administrator” means the Board or any of its Committee as shall be
administering the Plan, in accordance with Section 4 of the Plan.
	 
	 	(b)	 	“Applicable Laws” means the legal requirements relating to the
administration of stock option plans under state corporate and securities laws and the
Code.
	 
	 	(c)	 	“Board” means the Board of Directors of the Company.
	 
	 	(d)	 	“Code” means the Internal Revenue Code of 1986, as amended.
	 
	 	(e)	 	“Committee” means a Committee appointed by the Board in accordance
with Section 4 of the Plan.
	 
	 	(f)	 	“Common Stock” means the Common Stock of the Company.
	 
	 	(g)	 	“Company” means Superconductor Technologies Inc., a Delaware
Corporation.
	 
	 	(h)	 	“Consultant” means any person, including an advisor, engaged by the
Company or a Parent or Subsidiary to render services and who is compensated for such
services.

	 	(i)	 	“Continuous Status as an Employee or Consultant” means that the
employment or consulting relationship is not interrupted or terminated by the

 

 

	 	 	 	Company, any Parent or Subsidiary. Continuous Status as an Employee or Consultant shall
not be considered interrupted in the case of: (i) any leave of absence approved by the
Board, including sick leave, military leave, or any other personal leave; provided,
however, that for purposes of Incentive Stock Options, any such leave may not exceed
ninety (90) days, unless reemployment upon the expiration of such leave is guaranteed
by contract (including certain Company policies) or statute; or (ii) transfer between
locations of the Company or between the Company, its Parent, its Subsidiaries or its
successor.

	 	(j)	 	“Director” means a member of the Board.
	 
	 	(k)	 	“Disability” means total and permanent disability as defined in
Section 22(e)(3) of the Code.
	 
	 	(l)	 	“Employee” means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. Neither service as
a Director nor payment of a director’s fee by the Company shall be sufficient to
constitute “employment” by the Company.
	 
	 	(m)	 	“Exchange Act” means the Securities Exchange Act of 1934, as amended.
	 
	 	(n)	 	“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 National Market System of the National
Association of Securities Dealers, Inc. Automated Quotation
(“NASDAQ”) System, the Fair Market Value of a Share of Common Stock
shall be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such system or
exchange (or the exchange with the greatest volume of trading in
Common Stock) on 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 quoted on the
NASDAQ Systems (but not on the National Market System thereof) or
is regularly quoted by a recognized securities dealer but selling
prices are not reported, the Fair Market Value of a Share of Common
Stock 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, as reported in the Wall Street

 

 

	 	 	 	Journal or such other source as the Administrator deems reliable;
	 
	 	iii.	 	In the absence of an established market
for Common Stock, the Fair Market Value shall be determined in good
faith by the Administrator.

	 	(o)	 	“Incentive Stock Option” means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
	 
	 	(p)	 	“Nonstatutory Stock Option” means an Option not intented to qualify
as an Incentive Stock Option.
	 
	 	(q)	 	“Notice of Grant” means a written notice evidencing certain terms and
conditions of an individual Option. The Notice of Grant is part of the Option
Agreement.
	 
	 	(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.
	 
	 	(t)	 	“Option Agreement” means a written 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.
	 
	 	(u)	 	“Option Exchange Program” means a program whereby outstanding options
are surrendered in exchange for options with a lower exercise price.
	 
	 	(v)	 	“Optioned Stock” means the Common Stock subject to an Option.
	 
	 	(w)	 	“Optionee” means an Employee or Consultant who holds an outstanding
Option.
	 
	 	(x)	 	“Parent” means a “parent corporation,” whether now or hereafter
existing, as defined in Section 424(e) of the Code.
	 
	 	(y)	 	“Plan” means this Amended and Restated 1988 Stock Option Plan.
	 
	 	(z)	 	“Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to
Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan.

 

 

	 	(aa)	 	“Share” means a share of the Common Stock, as adjusted in accordance
with Section 12 of the Plan.
	 
	 	(bb)	 	“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 12 of the Plan, the
maximum aggregate number of Shares which may be optioned and sold under the Plan is 240,293 Shares
(after giving effect to the 1-for-2 reverse stock split to be effected in January 1993). The Shares
may be authorized, but unissued or reacquired Common Stock. However, should the Company reacquire
Shares which were issued pursuant to the exercise of an Option, such Shares shall not become
available for future grant under the Plan.

     If an Option 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).

4. Administration of the Plan.

     (a) Procedure.

          (i) Multiple Administrative Bodies. The Plan may be administered by different
Committees with respect to different groups of Service Providers.

          (ii) Section 162(m). To the extent that the Administrator determines it to be
desirable to qualify Options granted hereunder as “performance-based compensation” within the
meaning of Section 162(m) of the Code, the Plan shall be administered by a Committee of two or more
“outside directors” within the meaning of Section 162(m) of the Code.

          (iii) Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt
under Rule 16b-3, the transactions contemplated hereunder shall be structured to satisfy the
requirements for exemption under Rule 16b-3.

          (iv) Other Administration. Other than as provided above, the Plan shall be
administered by (A) the Board or (B) a Committee, which committee shall be constituted to satisfy
Applicable Laws.

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

          (i) to determine the Fair Market Value of the Common Stock, in accordance with Section 2(n) of
the Plan;

 

 

          (ii) to select the Consultants and Employees to whom Options may be granted hereunder;

          (iii) to determine whether and to what extent Options are granted hereunder;

          (iv) to determine the number of shares of Common Stock to be covered by each Option granted
hereunder;

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

          (vi) to determine the terms and conditions, not inconsistent with the terms of the Plan, of
any award granted hereunder. Such terms and conditions include, but are not limited to, the
exercise price, the time or times when Options may be exercised (which may be based on performance
criteria) and any restriction or limitation regarding any Option or the shares of Common Stock
relating thereto, based in each case on such factors as the Administrator, in its sole discretion,
shall determine;

          (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 shall have declined since the date the
Option was granted;

          (viii) to construe and interpret the terms of the Plan;

          (iv) to prescribe, amend and rescind rules and regulations relating to the Plan;

          (x) to modify or amend each Option (subject to Section 14(c) of the Plan);

          (xi) to allow Optionees to satisfy withholding tax obligations by electing to have the Company
withhold from the Shares to be issued upon exercise of an Option 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 an Optionee 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;

          (xii) to authorize any person to execute on behalf of the Company any instrument required to
effect the grant of an Option previously granted by the Administrator;

          (xiii) to institute an Option Exchange Program;

          (xiv) to determine the terms and restrictions applicable to Options;

 

 

          (xv) to make all other determinations deemed necessary or advisable for administering the
Plan; and

          (xvi) the Administrator shall have the authority, in its discretion, to determine any vesting
acceleration or waiver of forfeiture restrictions regarding any Option or the shares of Common
Stock relating thereto, based in each case on such factors as the Administrator, in its sole
discretion, shall determine.

     (c) Effect of Administrators Decision. The Administrator’s decisions, determinations
and interpretations shall be final and binding on all Optionees and any other holders of Options.

5. Eligibility. Nonstatutory Stock Options may be granted to Employees and Consultants.
Incentive Stock Options may be granted only to Employees. If otherwise eligible, an Employee or
Consultant who has been granted an Option may be granted additional Options.

6. Limitations.

     (a) Each Option shall be designated in the Notice of Grant as either an Incentive Stock Option
or a Nonstatutory Stock Option. However, notwithstanding such designations, to the extent that the
aggregate Fair Market Value: (i) of Shares subject to an Optionee’s incentive stock options granted
by the Company, any Parent or Subsidiary, which (ii) become exercisable for the first time during
any calendar year (under all plans of the Company or any Parent of Subsidiary) exceeds $100,000,
such excess Options shall be treated as Nonstatutory Stock Options. For purposes of this Section
6(a), incentive stock options shall be taken into account in the order in which they were granted,
and the Faire Market Value of the Shares shall be determined as of the time of grant.

     (b) Neither the Plan nor any Option shall confer upon an Optionee any right with respect to
continuing the Optionee’s employment or consultant relationship with the Company, nor shall they
interfere in any way with the Optionee’s right or the Company’s right to terminate such employment
or consulting relationship at any time, with or without cause.

     (c) The following limitations shall apply to grants of Options to Employees:

          (i) No Employee shall be granted, in any fiscal year of the Company, Options to purchase more
than 200,000 Shares.

          (ii) The foregoing limitations shall be adjusted proportionately in connection with any change
in the Company’s capitalization as described in Section 13.

          (iii) If an Option is cancelled in the same fiscal year of the Company in which it was granted
(other than in connection with a transaction described in Section

 

 

13), the cancelled Option will be counted against the limits set forth in subsection (i) above. For
this purpose, if the exercise price of an Option is reduced, the transaction will be treated as a
cancellation of the Option and the grant of a new Option.

7. Term of Plan. Subject to Section 19 of the Plan, the Plan shall become effective upon
the earlier to occur of its adoption by the Board or its approval by the stockholders of the
Company as described in Section 18 of the Plan. It shall continue in effect for a term of ten (10)
years unless terminated earlier under Section 14 of the Plan.

8. Term of Option. The term of each Option shall be stated in the Notice of Grant. Such
term shall be ten (10) years from the date of grant or such shorter term as may be provided in the
Notice of Grant. Moreover, in the case of an Incentive Stock Option granted to an Optionee who, at
the time the Incentive Stock 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 of Subsidiary (a “10%
Owner”), the term of the Incentive Stock Option shall be five (5) years from the date of grant or
such shorter term as may be provided in the Notice of Grant.

9. Option Exercise Price and Consideration.

     (a) Exercise Price. The per share exercise price for the Share to be issued pursuant
to exercise of an Option shall be determined by the Administrator, subject to the following:

          (i) In the case of an Incentive Stock Option

               (A) granted to an Employee who, at the time of the Incentive Stock 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 per Share exercise price shall be no less than 110% of the
Fair Market Value per Share on the date of grant.

               (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) In the case of a Nonstatutory Stock Option, the per Share exercise price shall be
determined by the Administrator but in no event shall be less than 50% of the Fair Market Value per
Share on the date of grant. In the case of a Nonstatutory Stock Option intended to qualify as
“performance-based compensation” within the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.

          (iii) Notwithstanding the foregoing, Options may be granted with a per Share exercise price of
less than 100% of the Fair Market Value per Share on the date of grant pursuant to a merger or
other corporation transaction.

 

 

     (b) Waiting Period and Exercise Dates. At the time an Option is granted, the
Administrator shall fix the period within which the Option may be exercised and shall determine any
conditions which must be satisfied before the Option may be exercised. In so doing, the
Administrator may specify that an Option may not be exercised until the completion of a service
period.

     (c) Form of Consideration. The Administrator shall determine the acceptable form of
consideration for exercising an Option, including the method of payment. In the case of an
Incentive Stock Option, the Administrator shall determine the acceptable form of consideration at
the time of grant. Such consideration may consist entirely of:

          (i) cash;

          (ii) check;

          (ii) promissory note;

          (iv) other Shares which (A) in the case of Shares acquired upon exercise of an option, have
been owned by the Optionee for more than six months on the date of surrender, and (B) have a Fair
Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised;

          (v) delivery of a properly executed exercise notice together with such other documentation as
the Administrator and the broker, if applicable, shall require to effect an exercise of the Option
and delivery to the Company of the sale or loan proceeds required to pay the exercise price;

          (vi) any combination of the foregoing methods of payment; or

          (vii) such other consideration and method of payment for the issuance of Shares to the extent
permitted by Applicable Laws.

10. Exercise of Option.

     (a) Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder
shall be exercisable according to the terms of the Plan and at such times and under such conditions
as determined by the Administrator and set forth in the Option Agreement. An Option may be
exercised for a fraction of a Share.

     An Option shall be deemed exercised when the Company receives: (i) written notice of exercise
(in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii)
full payment for the Shares with respect to which the Option is exercised. Full payment may
consider 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

 

 

stock certificate evidencing such Shares is issued (as 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 Optioned
Stock, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued)
such stock certificate 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 stock certificate is
issued, except as provided in Section 12 of the Plan.

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

     (b) Termination of Employment or Consulting Relationship. In the event that an
Optionee’s Continuous Status as an Employee or Consultant terminates (other than upon the
Optionee’s death or Disability), the Optionee may exercise his or her Option, but only within such
period of time as is determined by the Administrator, and only to the extent that the Optionee was
entitled to exercise it at the date of termination (but in no event later than the expiration of
the term of such Option as set forth in the Notice of Grant). In the case of an Incentive Stock
Option, the Administrator shall determine such period of time (in no event to exceed ninety (90)
days from the date of termination) when the Option is granted. If, at the date of termination, the
Optionee is not entitled to exercise his or her entire Option, the Shares covered by the
unexercisable 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 by the Administrator, the Option
shall terminate, and the Shares covered by such Option shall revert to the Plan.

     (c) Disability of Optionee. In the even that an Optionee’s Continuous Status as an
Employee or Consultant terminates as a result of the Optionee’s Disability, the Optionee may
exercise his or her Option at any time within twelve (12) months from the date of such termination,
but only to the extent that the Optionee was entitled to exercise it at the date of such
termination (but in no event later than the expiration of the term of such Option as set forth in
the Notice of Grant). If, at the date of termination, the Optionee is not entitled to exercise his
or her entire Option, the Shares covered by the unexercisable 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) Death of Optionee. In the event of the death of an Optionee, the Option may be
exercised at any time within twelve (12) months following the date of death (but in no event later
than the expiration of the term of such Option as set forth in the Notice of Grant), by the
Optionee’s estate or by the person who acquired the right to exercise the Optoin by bequest or
inheritance, but only to the extent that the Optionee was entitled to exercise the Option at the
date of death. If, at the time of death, the Optionee was not entitled to exercise his or her
entire Option, the Shares covered by the unexercisable portion fo the Option shall immediately
revert to the Plan. If, after death, the Optionee’s

 

 

estate or a person who acquired the right to exercise the Option by bequest or inheritance does not
exercise the Option within the time specified herein, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.

11. Non-Transferability of Options. Unless determined otherwise by the Administrator, an
Option 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 may be exercised, during the
lifetime of the Optionee, only by the Optionee. If the Administrator makes an Option transferable,
such Option shall contain such additional terms and conditions as the Administrator deems
appropriate.

12. Adjustments Upon Changes in Capitalization, Dissolution, Merger, Asset Sale or Change of
Control.

     (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, and the
number of shares of Common Stock which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered by each such
outstanding Option, 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;
provided, however, that 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 of price of shares of Common Stock subject to an
Option.

     (b) Dissolution or Liquidation. In the even of the proposed dissolution or liquidation
of the Company, to the extend that an Option has not been previously exercised, it will terminate
immediately prior to the consummation of such proposed action. However, in such event, the Board
may, alternatively and in the exercise of its sole discretion, declare that any Option shall
terminate as of a date fixed by the Board and give each Optionee the right to exercise his or her
Option as to all or any part of the Optioned Stock, including Shares as to which the Option would
not otherwise be exercisable.

     (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 Option
shall be assumed or an equivalent option or right to receive an equivalent amount of Common Stock
shall be substituted by the successor corporation or

 

 

a Parent or Subsidiary of the successor corporation. Moreover, subject to subsection (d) below, in
the further event that the successor corporation does not agree to assume the Option or to
substitute an equivalent option or right, the Optionee shall vest in and have the right to exercise
the Option as to all of the Optioned Stocked, including Shares as to which it would not otherwise
be vested or exercisable. If the Option becomes 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 that the Option shall be fully vested and exercisable for a period of fifteen (15) days
from the date of such notice, and the Option will terminate upon the expiration of such period. For
the purposes of this paragraph, the Option shall be considered assumed if, following the merger or
sale of assets, the option or right confers the right to purchase, for each Share of Optioned Stock
subject to the Option 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 was not solely common stock of the successor corporation or its Parent, the
Administrator may, with the consent of the successor corporation and the participant, provide for
the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock
subject to the Option, 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.

     (d) Change in Control. In the event of a Change of Control (as defined below), except
as otherwise determined by the Board, the Optionee shall fully vest in and have the right to
exercise the Option as to all of the Optioned Stock, including Shares as to which it would not
otherwise be vested or exercisable. If an Option becomes fully vested and exercisable as the result
of a Change of Control, the Administrator shall notify the Optionee in writing or electronically
prior to the Change of Control that the Option shall be fully vested and exercisable for a period
of fifteen (15) days from the date of such notice, and the Option shall terminate upon the
expiration of such period. For purposes of this Agreement, a “Change of Control” means the
happening of any of the following events:

          (i) When any “person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act
(other than the Company, a Subsidiary or a Company employee benefit plan, including any trustee of
such plan acting as trustee) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent
(50%) or more of the combined voting power of the Company’s ten outstanding securities entitled to
vote generally in the election of directors: or

          (ii) The stockholders of the Company approve a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation which would result in the voting securities
of the Company outstanding immediately prior

 

 

thereto continuing to represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the stockholders of the Company approve an
agreement for the sale or disposition by the Company of all or substantially all the Company’s
assets; or

          (iii) A change in the composition of the Board of Directors of the Company, as a result of
which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors” shall
mean directors who are either (A) are directors of the Company as of the date the Plan is approved
by the stockholders, or (B) are elected, or nominated for election, to the Board of Directors of
the Company with the affirmative votes of at least a majority of the Incumbent Directors at the
time of such election or nomination (but shall not include an individual whose election or
nomination is in connection with an actual or threatened proxy contest relating to the election of
directors to the Company).

13. Date of Grant. The date of grant of an Option shall be, for all purposes, the date on
which the Administrator makes the determination granting such Option, or such other later date as
is determined by the Administrator. Notice of the determination shall be provided to each Optionee
within a reasonable time after the date of such grant.

14. 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 Company shall obtain stockholder approval of any Plan
amendment to the extent necessary and desirable to comply with Rule 16b-3 or with Section 422 of
the Code (or any successor rule or statue or other applicable law, rule or regulation, including
the requirements of any exchange or quotation system on which the Common Stock is listed or
quoted). Such stockholder approval, if required, shall be obtained in such a manner and to such a
degree as is required by the applicable law, rule or regulation.

     (c) Effect of Amendment or Termination. No amendment, alteration, suspension or
termination of the Plan shall impair the rights of any Optionee, unless mutually agreed otherwise
between the Optionee and the Administrator, which agreement must be in writing and signed by the
Optionee and the Company.

15. Conditions Upon Issuance of Shares.

     (a) Legal Compliance. Shares shall not be issued pursuant to the exercise of any
Option unless the exercise of such Option and the issuance and delivery of such Shares shall comply
with all relevant provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations

 

 

promulgated thereunder, Applicable Laws, and the requirements of any stock exchange or quotation
system upon which the Shares may than be listed or quoted, an 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, the
Company may require the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchase 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.

16. Liability of Company.

     (a) 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.

     (b) Grants Exceeding Allotted Shares. If the Optioned Stock covered by an Option
exceeds, as of the date of the grant, the number of Shares which may be issued under the Plan
without additional stockholder approval of an amendment sufficiently increasing the number of
Shares subject to the Plan is timely obtained in accordance with Section 14(b) of the Plan.

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

18. Stockholder Approval. Continuance of the Plan shall be subject to approval by the
stockholders of the Company within twelve (12) months before or after the date the Plan is adopted.
Such stockholder approval shall be obtained in the manner and to the degree required under
applicable federal and state law.

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