Document:

Exhibit 4.05

 

AXCELERANT, INC.

2001 STOCK INCENTIVE PLAN

 

This 2001 Stock Incentive Plan (the “Plan”) is
hereby established by Axcelerant, Inc., a Delaware corporation (the “Company”),
and adopted by its Board of Directors as of the 13th day of
February 2001 (the “Effective Date”).

Article 1.

PURPOSES OF THE PLAN

1.1          Purposes.  The purposes of the Plan are (a) to enhance
the Company’s ability to attract and retain the services of qualified
employees, officers and directors (including non-employee officers and
directors), and consultants and other service providers upon whose judgment,
initiative and efforts the successful conduct and development of the Company’s
business largely depends, and (b) to provide additional incentives to such
persons or entities to devote their utmost effort and skill to the advancement
and betterment of the Company, by providing them an opportunity to participate
in the ownership of the Company and thereby have an interest in the success and
increased value of the Company.

Article 2.

 

DEFINITIONS

For purposes of this Plan, the following terms
shall have the meanings indicated:

2.1          Administrator.  “Administrator” means the Board or, if the
Board delegates responsibility for any matter to the Committee, the term
Administrator shall mean the Committee.

2.2          Affiliated
Company.  “Affiliated
Company” means any “parent corporation” or “subsidiary corporation” of the
Company, whether now existing or hereafter created or acquired, as those terms
are defined in Sections 424(e) and 424(f) of the Code, respectively.

2.3          Board.  “Board” means the Board of Directors of the
Company.

2.4          Change in
Control.  “Change in Control”
shall mean (i) the acquisition, directly or indirectly, by any person or
group (within the meaning of Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended) of the beneficial ownership of securities of the
Company possessing more than fifty percent (50%) of the total combined voting
power of all outstanding securities of the Company; (ii) a merger or
consolidation in which the Company is not the surviving entity, except for a
transaction in which the holders of the outstanding voting securities of the
Company immediately prior to such merger or consolidation hold, in the
aggregate, securities possessing more than fifty percent (50%) of the total
combined voting power of all outstanding voting securities of the surviving
entity immediately after such merger or consolidation; (iii) a reverse merger
in which the Company is the surviving entity but in which securities possessing
more than fifty percent (50%) of the total combined voting power of all
outstanding voting securities of the Company are transferred to or acquired by
a person or persons different from the persons holding those securities
immediately prior to such merger; (iv) the sale, transfer or other
disposition (in one transaction or a series of related transactions) of all or
substantially all of the assets of the Company; or (v) the approval by the
stockholders of a plan or proposal for the liquidation or dissolution of the
Company.

2.5          Code.  “Code” means the Internal Revenue Code of
1986, as amended from time to time.

2.6          Committee.  “Committee” means a committee of two or more
members of the Board appointed to administer the Plan, as set forth in Section 7.1
hereof.

2.7          Common
Stock.  “Common Stock” means
the Common Stock, $.001 par value of the Company, subject to adjustment
pursuant to Section 4.2 hereof.

2.8          Disability.  “Disability” means permanent and total
disability as defined in Section 22(e)(3) of the Code.  The Administrator’s determination of a
Disability or the absence thereof shall be conclusive and binding on all
interested parties.

2.9          Effective
Date.  “Effective Date” means
the date on which the Plan is adopted by the Board, as set forth on the first
page hereof.

2.10        Exercise
Price.  “Exercise Price”
means the purchase price per share of Common Stock payable upon exercise of an
Option.

2.11        Fair Market
Value.   “Fair Market Value”
on any given date means the value of one share of Common Stock, determined as
follows:

a.             If
the Common Stock is then listed or admitted to trading on the New York Stock
Exchange, a NASDAQ market system or similar stock exchange which reports
closing sale prices, the Fair Market Value shall be the closing sale price on
the date of valuation on such stock exchange on which the Common Stock is then
listed or admitted to trading, or, if no closing sale price is quoted on such
day, then the Fair Market Value shall be the closing sale price of the Common
Stock on such exchange on the next preceding day for which a closing sale price
is reported.

b.             If
the Common Stock is not then listed or admitted to trading on the New York
Stock Exchange, a NASDAQ market system or similar stock exchange which reports
closing sale prices, the Fair Market Value shall be the average of the closing
bid and asked prices of the Common Stock in the over-the-counter
market on the date of valuation.

c.             If
neither (a) nor (b) is applicable as of the date of valuation, then the Fair
Market Value shall be determined by the Administrator in good faith using any
reasonable method of valuation, which determination shall be conclusive and
binding on all interested parties.

2.12        Incentive
Option.  “Incentive Option”
means any Option designated and qualified as an “incentive stock option” as
defined in Section 422 of the Code.

2.13        Incentive
Option Agreement.  “Incentive
Option Agreement” means an Option Agreement with respect to an Incentive
Option.

2.14        NASD Dealer.  “NASD Dealer” means a broker-dealer that is
a member of the National Association of Securities Dealers, Inc.

2.15        Nonqualified
Option.  “Nonqualified
Option” means any Option that is not an Incentive Option.  To the extent that any Option designated as
an Incentive Option fails in whole or in part to qualify as an Incentive
Option, including, without limitation, for failure to meet the limitations
applicable to a 10% Stockholder or because it exceeds the annual limit provided
for in Section 5.6 below, it shall to that extent constitute a Nonqualified
Option.

2.16        Nonqualified
Option Agreement. 
“Nonqualified Option Agreement” means an Option Agreement with respect
to a Nonqualified Option.

2.17        Offeree.  “Offeree” means a Participant to whom a
Right to Purchase has been offered or who has acquired Restricted Stock under
the Plan.

2.18        Option.  “Option” means any option to purchase Common
Stock granted pursuant to the Plan.

2.19        Option
Agreement.  “Option
Agreement” means the written agreement entered into between the Company and the
Optionee with respect to an Option granted under the Plan.

2.20        Optionee.  “Optionee” means a Participant who holds an
Option.

2.21        Participant.  “Participant” means an individual or entity
who holds an Option, a Right to Purchase or Restricted Stock under the Plan.

2.22        Purchase
Price.  “Purchase Price”
means the purchase price per share of Restricted Stock payable upon acceptance
of a Right to Purchase.

2.23        Restricted
Stock.  “Restricted Stock”
means shares of Common Stock issued pursuant to Article 6 hereof, subject to
any restrictions and conditions as are established pursuant to such Article 6.

2.24        Right to
Purchase.  “Right to
Purchase” means a right to purchase Restricted Stock granted to an Offeree
pursuant to Article 6 hereof.

2.25        Service
Provider.  “Service Provider”
means a consultant or other person or entity who provides services to the
Company or an Affiliated Company and who the Administrator authorizes to become
a  Participant in the Plan.

2.26        Restricted
Stock Purchase Agreement. 
“Restricted Stock Purchase Agreement” means the written agreement
entered into between the Company and the Offeree with respect to a Right to
Purchase offered under the Plan.

2.27        10%
Stockholder.  “10%
Stockholder” means a person who, as of a relevant date, owns or is deemed to
own (by reason of the attribution rules applicable under Section 424(d) of the
Code) stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company or of an Affiliated Company.

Article
3.

 

ELIGIBILITY

3.1          Incentive
Options.  Officers and other
key employees of the Company or of an Affiliated Company (including members of
the Board if they are employees of the Company or of an Affiliated Company) are
eligible to receive Incentive Options under the Plan.

3.2          Nonqualified
Options and Rights to Purchase. 
Officers and other key employees of the Company or of an Affiliated
Company, members of the Board (whether or not employed by the Company or an
Affiliated Company), and Service Providers are eligible to receive Nonqualified
Options or Rights to Purchase under the Plan.

 

3.3          Limitation
on Shares.  In no event shall
any Participant be granted Options or Rights to Purchase in any one calendar
year pursuant to which the aggregate number of shares of Common Stock that may
be acquired thereunder exceeds 1,500,000 shares.

Article
4.

PLAN SHARES

4.1          Shares
Subject to the Plan.  A total
of 3,000,000 shares of Common Stock may be issued under the Plan, subject to
adjustment as to the number and kind of shares pursuant to Section 4.2
hereof.  For purposes of this
limitation, in the event that (a) all or any portion of any Option or Right to
Purchase granted or offered under the Plan can no longer under any
circumstances be exercised, or (b) any shares of Common Stock are reacquired by
the Company pursuant to the terms of an Option Agreement or Restricted Stock
Purchase Agreement, the shares of Common Stock allocable to the unexercised
portion of such Option or such Right to Purchase, or the shares so reacquired,
shall again be available for grant or issuance under the Plan.

4.2          Changes in
Capital Structure.  In the
event that the outstanding shares of Common Stock are hereafter increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Company by reason of a recapitalization, stock
split, combination of shares, reclassification, stock dividend, or other change
in the capital structure of the Company, then appropriate adjustments shall be
made by the Administrator to the aggregate number and kind of shares subject to
this Plan, and the number and kind of shares and the price per share subject to
outstanding Option Agreements, Rights to Purchase and Restricted Stock Purchase
Agreements in order to preserve, as nearly as practical, but not to increase,
the benefits to Participants.

Article 5.

 

OPTIONS

5.1          Option
Agreement.  Each Option
granted pursuant to this Plan shall be evidenced by an Option Agreement which
shall specify the number of shares subject thereto, the Exercise Price per
share, and whether the Option is an Incentive Option or Nonqualified
Option.  As soon as is practical
following the grant of an Option, an Option Agreement shall be duly executed
and delivered by or on behalf of the Company to the Optionee to whom such
Option was granted.  Each Option
Agreement shall be in such form and contain such additional terms and
conditions, not inconsistent with the provisions of this Plan, as the
Administrator shall, from time to time, deem desirable, including, without
limitation, the imposition of any rights of first refusal and resale
obligations upon any shares of Common Stock acquired pursuant to an Option
Agreement.  Each Option Agreement may be
different from each other Option Agreement.

5.2          Exercise
Price.  The Exercise Price
per share of Common Stock covered by each Option shall be determined by the
Administrator, subject to the following: 
(a) the Exercise Price of an Incentive Option shall not be less than
100% of Fair Market Value on the date the Incentive Option is granted, (b) the
Exercise Price of a Nonqualified Option shall not be less than 85% of Fair
Market Value on the date the Nonqualified Option is granted, and (c) if the
person to whom an Option is granted is a 10% Stockholder on the date of grant,
the Exercise Price shall not be less than 110% of Fair Market Value on the date
the Option is granted.

5.3          Payment of
Exercise Price.  Payment of
the Exercise Price shall be made upon exercise of an Option and may be made, in
the discretion of the Administrator, subject to any legal restrictions,
by:  (a) cash; (b) check;
(c) the surrender of shares of Common Stock owned by the Optionee that
have been 

held by the Optionee for
at least six (6) months, which surrendered shares shall be valued at Fair Market
Value as of the date of such exercise; (d) the Optionee’s promissory note
in a form and on terms acceptable to the Administrator; (e) the
cancellation of indebtedness of the Company to the Optionee; (f) the
waiver of compensation due or accrued to the Optionee for services rendered;
(g) provided that a public market for the Common Stock exists, a “same day
sale” commitment from the Optionee and an NASD Dealer whereby the Optionee
irrevocably elects to exercise the Option and to sell a portion of the shares
so purchased to pay for the Exercise Price and whereby the NASD Dealer
irrevocably commits upon receipt of such shares to forward the Exercise Price
directly to the Company; (h) provided that a public market for the Common
Stock exists, a “margin” commitment from the Optionee and an NASD Dealer
whereby the 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 Exercise Price, and whereby
the NASD Dealer irrevocably commits upon receipt of such shares to forward the
Exercise Price directly to the Company; or (i) any combination of the
foregoing methods of payment or any other consideration or method of payment as
shall be permitted by applicable corporate law.

5.4          Term and
Termination of Options.  The
term and provisions for termination of each Option shall be as fixed by the
Administrator, but no Option may be exercisable more than ten (10) years after
the date it is granted.  An Incentive
Option granted to a person who is a 10% Stockholder on the date of grant shall
not be exercisable more than five (5) years after the date it is granted.

5.5          Vesting and
Exercise of Options.  Each
Option shall vest and become exercisable in one or more installments at such
time or times and subject to such conditions, including without limitation the
achievement of specified performance goals or objectives, as shall be
determined by the Administrator; provided, however that Options granted to
employees who are not officers, directors or Service Providers shall vest and
become exercisable in installments of a minimum of 20% per year over a period
of five (5) years from the date the Option is granted.

5.6          Annual Limit
on Incentive Options.  To the
extent required for “incentive stock option” treatment under Section 422 of the
Code, the aggregate Fair Market Value (determined as of the time of grant) of
the Common Stock shall not, with respect to which Incentive Options granted
under this Plan and any other plan of the Company or any Affiliated Company
become exercisable for the first time by an Optionee during any calendar year,
exceed $100,000.

5.7          Nontransferability
of Options.  No Option shall
be assignable or transferable except by will or the laws of descent and
distribution, and during the life of the Optionee shall be exercisable only by
such Optionee.

5.8          Rights as
Stockholder.  An Optionee or
permitted transferee of an Option shall have no rights or privileges as a
stockholder with respect to any shares covered by an Option until such Option
has been duly exercised and certificates representing shares purchased upon
such exercise have been issued to such person.

5.9          Company’s
Repurchase Plan.  In the
event of termination of a Participant’s employment or service as a director of
the Company for any reason whatsoever (including death or disability), the
Option Agreement may provide, in the discretion of the Administrator, that the
Company, or its assignee, shall have the right, exercisable at the discretion
of the Administrator, to repurchase shares of Common Stock acquired pursuant to
the exercise of an Option at any time prior to the consummation of the
Company’s initial public offering of securities in an offering registered under
the Securities Act of 1933, as amended, and at the price equal to the Fair
Market Value per share of Common Stock (determined in accordance with Section
2.12 hereof) as of the date of termination of Optionee’s employment.

5.10        Restrictions
on Underlying Shares of Common Stock.  Shares
of Common Stock issued pursuant to the exercise of an Option may not be sold,
assigned, transferred, pledged or otherwise encumbered or disposed of except as
specifically provided in the Option Agreement.

Article 6.

RIGHTS TO PURCHASE

6.1          Nature of
Right to Purchase.  A Right
to Purchase granted to an Offeree entitles the Offeree to purchase, for a
Purchase Price determined by the Administrator, shares of Common Stock subject
to such terms, restrictions and conditions as the Administrator may determine
at the time of grant (“Restricted Stock”). 
Such conditions may include, but are not limited to, continued
employment or the achievement of specified performance goals or objectives.

6.2          Acceptance
of Right to Purchase.  An
Offeree shall have no rights with respect to the Restricted Stock subject to a
Right to Purchase unless the Offeree shall have accepted the Right to Purchase
within ten (10) days (or such longer or shorter period as the Administrator may
specify) following the grant of the Right to Purchase by making payment of the
full Purchase Price to the Company in the manner set forth in Section 6.3
hereof and by executing and delivering to the Company a Restricted Stock
Purchase Agreement.  Each Restricted
Stock Purchase Agreement shall be in such form, and shall set forth the
Purchase Price and such other terms, conditions and restrictions of the
Restricted Stock, consistent with the provisions of this Plan, as the
Administrator shall, from time to time, deem desirable.  Each Restricted Stock Purchase Agreement may
be different from each other Restricted Stock Purchase Agreement.

6.3          Payment of
Purchase Price.  Subject to
any legal restrictions, payment of the Purchase Price upon acceptance of a
Right to Purchase Restricted Stock may be made, in the discretion of the
Administrator, by:  (a) cash;
(b) check; (c) the surrender of shares of Common Stock owned by the
Offeree that have been held by the Offeree for at least six (6) months, which
surrendered shares shall be valued at Fair Market Value as of the date of such
exercise; (d) the Offeree’s promissory note in a form and on terms
acceptable to the Administrator; (e) the cancellation of indebtedness of
the Company to the Offeree; (f) the waiver of compensation due or accrued
to the Offeree for services rendered; or (g) any combination of the
foregoing methods of payment or any other consideration or method of payment as
shall be permitted by applicable corporate law.

6.4          Rights as a
Stockholder.  Upon complying
with the provisions of Section 6.2 hereof, an Offeree shall have the rights of
a stockholder with respect to the Restricted Stock purchased pursuant to the
Right to Purchase, including voting and dividend rights, subject to the terms,
restrictions and conditions as are set forth in the Restricted Stock Purchase
Agreement.  Unless the Administrator
shall determine otherwise, certificates evidencing shares of Restricted Stock
shall remain in the possession of the Company until such shares have vested in
accordance with the terms of the Restricted Stock Purchase Agreement.

6.5          Restrictions.  Shares of Restricted Stock may not be sold,
assigned, transferred, pledged or otherwise encumbered or disposed of except as
specifically provided in the Restricted Stock Purchase Agreement.  In the event of termination of a
Participant’s employment, service as a director of the Company or Service
Provider status for any reason whatsoever (including death or disability), the
Restricted Stock Purchase Agreement may provide, in the discretion of the
Administrator, that the Company shall have the right, exercisable at the
discretion of the Administrator, to repurchase (i) at the original
Purchase Price, any shares of Restricted Stock which have not vested as of the
date of termination, and (ii) at Fair Market Value, any shares of
Restricted Stock which have vested as of such 

date, on such terms as
may be provided in the Restricted Stock Purchase Agreement; provided that the
right to repurchase at the original purchase price lapses at the rate of at
least 20% of the shares per year over five (5) years from the date the Right to
Purchase was granted.

6.6          Vesting of
Restricted Stock.  The
Restricted Stock Purchase Agreement shall specify the date or dates, the
performance goals or objectives which must be achieved, and any other
conditions on which the Restricted Stock may vest.

6.7          Dividends.  If payment for shares of Restricted Stock is
made by promissory note, any cash dividends paid with respect to the Restricted
Stock may be applied, in the discretion of the Administrator, to repayment of
such note.

6.8          Nonassignability
of Rights.  No Right to
Purchase shall be assignable or transferable except by will or the laws of
descent and distribution.

Article 7.

 

ADMINISTRATION OF THE PLAN

7.1          Administrator.  Authority to control and manage the
operation and administration of the Plan shall be vested in the Board, which
may delegate such responsibilities in whole or in part to a committee
consisting of two (2) or more members of the Board (the “Committee”).  Members of the Committee may be appointed
from time to time by, and shall serve at the pleasure of, the Board.  As used herein, the term “Administrator”
means the Board or, with respect to any matter as to which responsibility has
been delegated to the Committee, the term Administrator shall mean the
Committee.

7.2          Powers of
the Administrator.  In
addition to any other powers or authority conferred upon the Administrator
elsewhere in the Plan or by law, the Administrator shall have full power and
authority:  (a) to determine the
persons to whom, and the time or times at which, Incentive Options or
Nonqualified Options shall be granted and Rights to Purchase shall be offered,
the number of shares to be represented by each Option and Right to Purchase and
the consideration to be received by the Company upon the exercise thereof;
(b) to interpret the Plan; (c) to create, amend or rescind rules and
regulations relating to the Plan; (d) to determine the terms, conditions
and restrictions contained in, and the form of, Option Agreements and
Restricted Stock Purchase Agreements; (e) to determine the identity or
capacity of any persons who may be entitled to exercise a Participant’s rights
under any Option or Right to Purchase under the Plan; (f) to correct any defect
or supply any omission or reconcile any inconsistency in the Plan or in any
Option Agreement or Restricted Stock Purchase Agreement; (g) to accelerate
the vesting of any Option or release or waive any repurchase rights of the
Company with respect to Restricted Stock; (h) to extend the exercise
date of any Option or acceptance date of any Right to Purchase; (i) to
provide for rights of first refusal and/or repurchase rights; (j) to amend
outstanding Option Agreements and Stock Purchase Agreements to provide for,
among other things, any change or modification which the Administrator could
have provided for upon the grant of an Option or Right to Purchase or in
furtherance of the powers provided for herein; and (k) to make all other
determinations necessary or advisable for the administration of the Plan, but
only to the extent not contrary to the express provisions of the Plan.  Any action, decision, interpretation or
determination made in good faith by the Administrator in the exercise of its
authority conferred upon it under the Plan shall be final and binding on the
Company and all Participants.

7.3          Limitation
on Liability.  No employee of
the Company or member of the Board or Committee shall be subject to any
liability with respect to duties under the Plan unless the person acts
fraudulently or in bad faith.  To the
extent permitted by law, the Company shall indemnify each member of the Board
or Committee, and any employee of the Company with duties under the Plan, who
was or is a 

party, or is threatened
to be made a party, to any threatened, pending or completed proceeding, whether
civil, criminal, administrative or investigative, by reason of such person’s
conduct in the performance of duties under the Plan.

Article
8.

 

CHANGE IN
CONTROL

8.1          Change in
Control.

a.             In
the event of a Change in Control of the Company, unless otherwise provided in
the following sentence, each Option outstanding under the Plan shall
automatically vest in full so that each such Option shall, immediately prior to
the effective date of the Change in Control, become fully exercisable for all
of the shares of Common Stock at the time subject to that Option, and may be
exercised for any or all of those shares as fully-vested shares of Common
Stock.  However, the foregoing notwithstanding,
the shares subject to an outstanding Option shall not vest on such an
accelerated basis if and to the extent: 
(i) such Option is assumed by the successor corporation (or parent
thereof) in connection with the Change in Control or (ii) such Option is to be
replaced with a cash incentive program of the successor corporation which
preserves the spread between the exercise price and the per share consideration
received by the stockholders of the Corporation in connection with the Change
in Control on the unvested Option shares and provides for subsequent payout in
accordance with the same vesting schedule applicable to those unvested Option
shares or (iii) the acceleration of such Option is subject to other limitations
imposed by the Administrator at the time of grant.

b.             All
outstanding repurchase rights for shares of Restricted Stock shall also
terminate automatically, and the shares of Common Stock subject to those
terminated rights shall immediately vest in full, in the event of any Change in
Control, except to the extent:  (i)
those repurchase rights are assigned to the successor corporation (or parent
thereof) in connection with such Change in Control, (ii) such repurchase rights
are exercised and replaced with a cash incentive program of the successor
corporation (or parent thereof) which preserves the spread between the purchase
price and the per share consideration received by the stockholders of the
Corporation in connection with the Change in Control and provides for the
subsequent payout of the spread in accordance with the same vesting schedule
applicable to the shares subject to the repurchase rights, or (iii) such
accelerated vesting is precluded by other limitations imposed by the
Administrator at the time the repurchase right is issued.

c.             Immediately
following the consummation of the Change in Control, all outstanding Options
shall terminate and cease to be outstanding, except to the extent assumed by
the successor corporation (or parent thereof).

d.             Each
Option which is assumed in connection with a Change in Control shall be
appropriately adjusted, immediately after such Change in Control, to apply to
the number and class of securities which would have been issuable to the
Optionee in consummation of such Change in Control, had the Option been
exercised immediately prior to such Change in Control.  Appropriate adjustments shall also be made
to (i) the number and class of securities available for issuance under the Plan
following the consummation of such Change in Control and (ii) the exercise
price payable per share under each outstanding Option, provided the
aggregate exercise price payable for such securities shall remain the same.

e.             The
Administrator shall have the discretion, exercisable either at the time the
Option is granted or at any time while the Option remains outstanding, to
structure one or more Options so that those Options shall automatically
accelerate and vest in full or in part (and any repurchase rights of the
Corporation with respect to shares of Restricted Stock shall immediately
terminate in full or in part) upon

 the occurrence of a change in Control,
whether or not those Options are to be assumed in the Change in Control.

f.              The
Administrator shall also have the discretion, exercisable either at the time
the Option is granted or any time while the Option remains outstanding, to
structure such Option so that the shares subject to that Option will
automatically vest on an accelerated basis (and any repurchase rights of the
Corporation with respect to shares of Restricted Stock shall automatically vest
on an accelerated basis) by reason of a termination, other than for cause as
defined by applicable law, the terms of the Plan, the terms of an Option
Agreement or Restricted Stock Purchase Agreement, or the terms of a contract of
employment, of the Participant’s employment with the Corporation within a
designated period following the effective date of any Change in Control in
which the Option is assumed.  Any Option
so accelerated shall remain exercisable for the fully-vested Option shares
until the expiration or sooner termination of the Option term.

g.             The
portion of any Incentive Option accelerated in connection with a Change in
Control shall remain exercisable as an Incentive Option only to the extent the
applicable One Hundred Thousand Dollar limitation is not exceeded.  To the extent such dollar limitation is
exceeded, the accelerated portion of such Option shall be exercisable as a
Nonqualified Option under the Code.

h.             The
grant of Options under the Plan shall in no way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital
or business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.

Article 9.

 

AMENDMENT AND TERMINATION OF THE PLAN

9.1          Amendments.  The Board may from time to time alter,
amend, suspend or terminate the Plan in such respects as the Board may deem
advisable.  No such alteration,
amendment, suspension or termination shall be made which shall substantially
affect or impair the rights of any Participant under an outstanding Option
Agreement or Restricted Stock Purchase Agreement without such Participant’s
consent.  The Board may alter or amend
the Plan to comply with requirements under the Code relating to Incentive
Options or other types of options which give Optionees more favorable tax
treatment than that applicable to Options granted under this Plan as of the
date of its adoption.  Upon any such
alteration or amendment, any outstanding Option granted hereunder may, if the
Administrator so determines and if permitted by applicable law, be subject to
the more favorable tax treatment afforded to an Optionee pursuant to such terms
and conditions.

9.2          Plan
Termination.  Unless the Plan
shall theretofore have been terminated, the Plan shall terminate on the tenth
(10th) anniversary of the Effective Date and no Options or Rights to Purchase
may be granted under the Plan thereafter, but Option Agreements, Restricted
Stock Purchase Agreements and Rights to Purchase then outstanding shall
continue in effect in accordance with their respective terms.

Article
10.

 

TAX
WITHHOLDING

10.1        Withholding.  The Company shall have the power to
withhold, or require a Participant to remit to the Company, an amount sufficient
to satisfy any applicable Federal, state, and local tax withholding
requirements with respect to any Options exercised or Restricted Stock issued
under the Plan.  To the extent
permissible under applicable tax, securities and other laws, the Administrator
may, in its sole discretion and upon such terms and conditions as it may deem
appropriate, permit a Participant to satisfy 

his or her obligation to
pay any such tax, in whole or in part, up to an amount determined on the basis
of the highest marginal tax rate applicable to such Participant, by
(a) directing the Company to apply shares of Common Stock to which the
Participant is entitled as a result of the exercise of an Option or as a result
of the purchase of or lapse of restrictions on Restricted Stock or
(b) delivering to the Company shares of Common Stock owned by the
Participant.  The shares of Common Stock
so applied or delivered in satisfaction of the Participant’s tax withholding
obligation shall be valued at their Fair Market Value as of the date of
measurement of the amount of income subject to withholding.

Article 11.

 

MISCELLANEOUS

11.1        Benefits Not
Alienable.  Other than as
provided above, benefits under the Plan may not be assigned or alienated,
whether voluntarily or involuntarily.  Any
unauthorized attempt at assignment, transfer, pledge or other disposition shall
be without effect.

11.2        No
Enlargement of Employee Rights. 
This Plan is strictly a voluntary undertaking on the part of the Company
and shall not be deemed to constitute a contract between the Company and any
Participant to be consideration for, or an inducement to, or a condition of,
the employment of any Participant. 
Nothing contained in the Plan shall be deemed to give the right to any
Participant to be retained as an employee of the Company or any Affiliated
Company or to limit the right of the Company or any Affiliated Company to
discharge any Participant at any time.

11.3        Application
of Funds.  The proceeds
received by the Company from the sale of Common Stock pursuant to Option
Agreements and Restricted Stock Purchase Agreements, except as otherwise
provided herein, will be used for general corporate purposes.

AXCELERANT,
INC.

STOCK OPTION
AGREEMENT

Type of Option (check one):  ý  Incentive        oNonqualified

This
Stock Option Agreement (“Agreement”) is entered into as of ___________, by and
between AXCELERANT, INC., a Delaware corporation (the “Company”), and                                    (the “Optionee”) pursuant to the Company’s
2001 Stock Incentive Plan (the “Plan”).

12.          Grant of
Option.  The Company hereby
grants to Optionee an option (the “Option”) to purchase all or any portion of a
total of _________ shares (the “Shares”) of the Common Stock of the Company at
a purchase price of $______ per share (the “Exercise Price”), subject to the
terms and conditions set forth herein and the provisions of the Plan.  If the box marked “Incentive” above is
checked, then this Option is intended to qualify as an “incentive stock option”
as defined in Section 422 of the Internal Revenue Code of l986, as amended (the
“Code”).  If this Option fails in whole
or in part to qualify as an incentive stock option, or if the box marked
“Nonqualified” is checked, then this Option shall to that extent constitute a
nonqualified stock option.

13.          Vesting of
Option.  The right to
exercise this Option shall vest in installments, and this Option shall be
exercisable from time to time in whole or in part as to any vested installment,
as follows:

(i)            Except as may otherwise be provided
in this Agreement, prior to the first anniversary of the date hereof, none of
the Shares shall be vested shares;

 

(ii)           On __________, twenty-five percent
(25%) of the aggregate number of Shares, or _______________ (________) shall
become vested shares; and

 

(iii)          The balance of the Shares shall become
vested shares on a cumulative basis in equal monthly installments of _______
Shares on the first day of each month commencing _______________ and continuing
on the first day of each month thereafter for a period of thirty-six months
until _______________, at which time all of the Shares will be Vested Shares.

 

No
additional Shares shall vest after the date of termination of Optionee’s
“Continuous Service” (as defined in Section 3 below), but this Option shall
continue to be exercisable in accordance with Section 3 hereof with respect to
that number of shares that have vested as of the date of termination of
Optionee’s Continuous Service.

14.          Term of
Option.  Optionee’s right to
exercise this Option shall terminate upon the first to occur of the following:

(a)           the
expiration of ten (10) years from the date of this Agreement;

(b)           the
expiration of three (3) months from the date of termination of Optionee’s
Continuous Service if such termination occurs for any reason other than
permanent disability, death or voluntary resignation; provided, however, that
if Optionee dies during such three-month period the provisions of Section 3(e)
below shall apply;

(c)           the
expiration of one (1) month from the date of termination of Optionee’s
Continuous Service if such termination occurs due to voluntary resignation;
provided, however, that if Optionee dies during such one-month period the
provisions of Section 3(e) below shall apply;

(d)           the
expiration of one (1) year from the date of termination of Optionee’s
Continuous Service if such termination is due to permanent disability of the
Optionee (as defined in Section 22(e)(3) of the Code);

(e)           the
expiration of one (1) year from the date of termination of Optionee’s
Continuous Service if such termination is due to Optionee’s death or if death
occurs during either the three-month or one-month period following termination
of Optionee’s Continuous Service pursuant to Section 3(b) or 3(c) above,
as the case may be; or

(f)            upon
the consummation of a “Change in Control” (as defined in Section 2.4 of the
Plan), unless otherwise provided pursuant to Section 11 below.

As used
herein, the term “Continuous Service” means (i) employment by either the
Company or any parent or subsidiary corporation of the Company, or by a
corporation or a parent or subsidiary of a corporation issuing or assuming a
stock option in a transaction to which Section 424(a) of the Code applies,
which is uninterrupted except for vacations, illness (except for permanent
disability, as defined in Section 22(e)(3) of the Code), or leaves of absence
which are approved in writing by the Company or any of such other employer
corporations, if applicable, (ii) service as a member of the Board of Directors
of the Company until Optionee resigns, is removed from office, or Optionee’s
term of office expires and he or she is not reelected, or (iii) so long as
Optionee is engaged as a consultant or service provider to the Company or other
corporation referred to in clause (i) above.

15.          Exercise of
Option.  On or after the vesting
of any portion of this Option in accordance with Sections 2 or 11 hereof, and
until termination of the right to exercise this Option in accordance with
Section 3 above, the portion of this Option which has vested may be exercised
in whole or in part by the Optionee (or, after his or her death, by the person
designated in Section 5 below) upon delivery of the following to the Company at
its principal executive offices:

(a)           a
written notice of exercise which identifies this Agreement and states the
number of Shares then being purchased (but no fractional Shares may be
purchased);

(b)           a
check or cash in the amount of the Exercise Price (or payment of the Exercise
Price in such other form of lawful consideration as the Administrator may
approve from time to time under the provisions of Section 5.3 of the Plan);

(c)           a
check or cash in the amount reasonably requested by the Company to satisfy the
Company’s withholding obligations under federal, state or other applicable tax
laws with respect to the taxable income, if any, recognized by the Optionee in
connection with the exercise of this Option (unless the Company and Optionee
shall have made other arrangements for deductions or withholding from
Optionee’s wages, bonus or other compensation payable to Optionee, or by the
withholding of Shares issuable upon exercise of this Option or the delivery of
Shares owned by the Optionee in accordance with Section 10.1 of the Plan,
provided such arrangements satisfy the requirements of applicable tax laws);
and

(d)           a
letter, if requested by the Company, in such form and substance as the Company
may require, setting forth the investment intent of the Optionee, or person
designated in Section 5 below, as the case may be.

 

16.          Death of
Optionee; No Assignment.  The
rights of the Optionee under this Agreement may not be assigned or transferred
except by will or by the laws of descent and distribution, and may be exercised
during the lifetime of the Optionee only by such Optionee.  Any attempt to sell, pledge, assign,
hypothecate, transfer or dispose of this Option in contravention of this
Agreement or the Plan shall be void and shall have no effect.  If the Optionee’s Continuous Service
terminates as a result of his or her death, and provided Optionee’s rights
hereunder shall have vested pursuant to Section 2 hereof, Optionee’s legal
representative, his or her legatee, or the person who acquired the right to
exercise this Option by reason of the death of the Optionee (individually, a
“Successor”) shall succeed to the Optionee’s rights and obligations under this
Agreement.  After the death of the
Optionee, only a Successor may exercise this Option.

17.          Representations
and Warranties of Optionee.

(a)           Optionee
represents and warrants that this Option is being acquired by Optionee for
Optionee’s personal account, for investment purposes only, and not with a view
to the distribution, resale or other disposition thereof.

(b)           Optionee
acknowledges that the Company may issue Shares upon the exercise of the Option
without registering such Shares under the Securities Act of l933, as amended
(the “Securities Act”), on the basis of certain exemptions from such
registration requirement.  Accordingly,
Optionee agrees that his or her exercise of the Option may be expressly
conditioned upon his or her delivery to the Company of an investment
certificate including such representations and undertakings as the Company may
reasonably require in order to assure the availability of such exemptions,
including a representation that Optionee is acquiring the Shares for investment
and not with a present intention of selling or otherwise disposing thereof and
an agreement by Optionee that the certificates evidencing the Shares may bear a
legend indicating such non-registration under the Securities Act and the resulting
restrictions on transfer.  Optionee
acknowledges that, because Shares received upon exercise of an Option may be
unregistered, Optionee may be required to hold the Shares indefinitely unless
they are subsequently registered for resale under the Securities Act or an
exemption from such registration is available.

(c)           Optionee
acknowledges receipt of a copy of the Plan and understands that all rights and
obligations connected with this Option are set forth in this Agreement and in
the Plan.

18.          Right of
First Refusal.

(a)           The
Shares acquired pursuant to the exercise of this Option may be sold by the
Optionee only in compliance with the provisions of this Section 7, and subject
in all cases to compliance with the provisions of Section 6(b) hereof.  Prior to any intended sale, Optionee shall
first give written notice (the “Offer Notice”) to the Company specifying (i)
his or her bona fide intention to sell or otherwise transfer such Shares, (ii)
the name and address of the proposed purchaser(s), (iii) the number of Shares
the Optionee proposes to sell (the “Offered Shares”), (iv) the price for which
he or she proposes to sell the Offered Shares, and (v) all other material terms
and conditions of the proposed sale.

(b)           Within
thirty (30) days after receipt of the Offer Notice, the Company or its
nominee(s) may elect to purchase all or any portion of the Offered Shares at
the price and on the terms and conditions set forth in the Offer Notice by
delivery of written notice (the “Acceptance Notice”) to the Optionee specifying
the number of Offered Shares that the Company or its nominees elect to
purchase. Within fifteen (15) days after delivery of the Acceptance Notice to
the Optionee, the Company and/or its nominee(s) shall deliver to the Optionee
payment of the amount of the purchase price of the Offered Shares to be
purchased pursuant to this Section 7, against delivery by the Optionee of a
certificate or certificates representing the Offered Shares to be purchased,
duly endorsed for transfer to the Company or

such nominee(s), as the
case may be.  Payment shall be made on
the same terms as set forth in the Offer Notice or, at the election of the
Company or its nominees(s), by check or wire transfer of funds.  If the Company and/or its nominee(s) do not
elect to purchase all of the Offered Shares, the Optionee shall be entitled to
sell the balance of the Offered Shares to the purchaser(s) named in the Offer
Notice at the price specified in the Offer Notice or at a higher price and on
the terms and conditions set forth in the Offer Notice; provided, however, that
such sale or other transfer must be consummated within 60 days from the date of
the Offer Notice and any proposed sale after such 60-day period may be
made only by again complying with the procedures set forth in this
Section 7.

(c)           The
Optionee may transfer all or any portion of the Shares to a trust established
for the sole benefit of the Optionee and/or his or her spouse or children
without such transfer being subject to the right of first refusal set forth in
this Section 7, provided that the Shares so transferred shall remain subject to
the terms and conditions of this Agreement and no further transfer of such
Shares may be made without complying with the provisions of this Section 7.

(d)           Any
Successor of Optionee pursuant to Section 5 hereof, and any transferee of the
Shares pursuant to this Section 7, shall hold the Shares subject to the terms
and conditions of this Agreement and no further transfer of the Shares may be
made without complying with the provisions of this Section 7.

(e)           The
provisions of this Section 7 shall not apply to a sale of the Shares to the
Company pursuant to Section 8 below.

(f)            The
rights provided the Company and its nominee(s) under this Section 7 shall
terminate upon the closing of the initial public offering of shares of the
Company’s Common Stock pursuant to a registration statement filed with and
declared effective by the Securities and Exchange Commission under the
Securities Act.

19.          Company’s
Repurchase Right.

(a)           The
Company shall have the right (but not the obligation) to repurchase (the
“Repurchase Right”) any or all of the Shares acquired pursuant to the exercise
of this Option in the event that the Optionee’s Continuous Service (as defined
in Section 3 above) should terminate for any reason whatsoever, including
without limitation Optionee’s death, disability, voluntary resignation or
termination by the Company with or without cause.  Upon exercise of the Repurchase Right, the Optionee shall be
obligated to sell his or her Shares to the Company, as provided in this Section
8.  The Repurchase Right may be
exercised by the Company at any time during the period commencing on the date
of termination of Optionee’s Continuous Service and ending sixty (60) days
after the last to occur of the following:

(i)            the
termination of Optionee’s Continuous Service;

(ii)           the
expiration of Optionee’s right to exercise this Option pursuant to Section 3
hereof; or

(iii)          in
the event of Optionee’s death, receipt by the Company of notice of the identity
and address of Optionee’s Successor (as defined in Section 5 hereof).

(b)           The
purchase price for Shares repurchased hereunder (the “Repurchase Price”) shall
be the Fair Market Value per share of Common Stock (determined in accordance
with Section 2.11 of the Plan) as of the date of termination of Optionee’s
Continuous Service.

 

(c)           Written
notice of exercise of the Repurchase Right, stating the number of Shares to be
repurchased and the Repurchase Price per Share, shall be given by the Company
to the Optionee or his or her Successor, as the case may be, during the period
specified in Section 8(a) above.

(d)           The
Repurchase Price shall be payable, at the option of the Company, by check or by
cancellation of all or a portion of any outstanding indebtedness of Optionee to
the Company, or by any combination thereof. 
The Repurchase Price shall be paid without interest within thirty (30)
days after delivery of the notice of exercise of the Repurchase Right, against
delivery by the Optionee or his or her Successor of a certificate or
certificates representing the Shares to be repurchased, duly endorsed for
transfer to the Company.

(e)           Notwithstanding
anything to the contrary contained in this Agreement, all repurchases of the
Shares by the Company shall be subject to applicable restrictions contained in
the applicable state law and in the Company’s and its subsidiaries’ debt and
equity financing agreements.  If any
such restrictions prohibit the repurchase of Shares hereunder that the Company
has otherwise elected to make, the Company may make such repurchases as soon as
it is permitted to do so under such restrictions; provided, however, that,
notwithstanding such restrictions, the Company shall deliver a notice as
provided in paragraph 8(c) above, and shall remain bound by the terms of such
notice until such time as the Shares are actually purchased by the Company
pursuant to such notice.

(f)            The
rights provided the Company under this Section 8 shall terminate upon the
closing of the initial public offering of shares of the Company’s Common Stock
pursuant to a registration statement filed with and declared effective by the
Securities and Exchange Commission under the Securities Act.

20.          Restrictive
Legends.

(a)           Optionee
hereby acknowledges that federal securities laws and the securities laws of the
state in which he or she resides may require the placement of certain
restrictive legends upon the Shares issued upon exercise of this Option, and
Optionee hereby consents to the placing of any such legends upon certificates
evidencing the Shares as the Company, or its counsel, may deem necessary or
advisable.

(b)           In
addition, all stock certificates evidencing the Shares shall be imprinted with
a legend substantially as follows:

“THE SHARES OF STOCK
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON
TRANSFER, REPURCHASE RIGHTS AND A RIGHT OF FIRST REFUSAL IN FAVOR OF THE
CORPORATION AND/OR ITS NOMINEE(S), AS SET FORTH IN A STOCK OPTION AGREEMENT
DATED AS OF ___________.  TRANSFER OF
THESE SHARES MAY BE MADE ONLY IN COMPLIANCE WITH THE PROVISIONS OF SAID
AGREEMENT, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF SAID
CORPORATION.  SUCH TRANSFER
RESTRICTIONS, REPURCHASE RIGHTS AND RIGHT OF FIRST REFUSAL ARE BINDING ON
TRANSFEREES OF THESE SHARES.”

21.          Adjustments
Upon Changes in Capital Structure. 
In the event that the outstanding shares of Common Stock of the Company
are hereafter increased or decreased or changed into or exchanged for a
different number or kind of shares or other securities of the Company by reason
of a recapitalization, stock split, combination of shares, reclassification,
stock dividend or other change in the capital structure of the Company, then
appropriate adjustment shall be made by the Administrator to the number of
Shares subject

to the unexercised
portion of this Option and to the Exercise Price per share, in order to
preserve, as nearly as practical, but not to increase, the benefits of the
Optionee under this Option, in accordance with the provisions of Section 4.2 of
the Plan.

22.          Change in
Control.

(a)           In
the event of a Change in Control of the Company, unless otherwise provided in
the following sentence, each Option outstanding under the Plan shall
automatically vest in full so that each such Option shall, immediately prior to
the effective date of the Change in Control, become fully exercisable for all
of the shares of Common Stock at the time subject to that Option and may be
exercised for any or all of those shares as fully-vested shares of Common Stock.
 However, the foregoing notwithstanding,
the shares subject to an outstanding Option shall not vest on such an
accelerated basis if and to the extent: 
(i) such Option is assumed by the successor corporation  (or parent thereof) in the Change in Control
or (ii) such Option is to be replaced with a cash incentive program of the
successor corporation which preserves the spread between the exercise price and
the per share consideration received by the stockholders of the Corporation in
connection with the Change in Control on the unvested Option shares and
provides for subsequent payout in accordance with the same vesting schedule
applicable to those unvested Option shares or (iii) the acceleration of such
Option is subject to other limitations imposed by the Administrator at the time
of grant.

(b)           Immediately
following the consummation of the Change in Control, all outstanding Options
shall terminate and cease to be outstanding, except to the extent assumed by
the successor corporation (or parent thereof).

(c)           Each
Option which is assumed in connection with a Change in Control shall be
appropriately adjusted, immediately after such Change in Control, to apply to
the number and class of securities which would have been issuable to the
Optionee in consummation of such Change in Control, had the Option been
exercised immediately prior to such Change in Control.  Appropriate adjustments shall also be made
to (i) the number and class of securities available for issuance under the Plan
following the consummation of such Change in Control and (ii) the exercise
price payable per share under each outstanding Option, provided the aggregate
exercise price payable for such securities shall remain the same.

(d)           The
portion of any Incentive Option accelerated in connection with a Change in
Control shall remain exercisable as an Incentive Option only to the extent the
applicable One Hundred Thousand Dollar limitation is not exceeded.  To the extent such dollar limitation is
exceeded, the accelerated portion of such Option shall be exercisable as a
Nonqualified Option under the Code.

23.          No
Employment Contract Created. 
Neither the granting of this Option nor the exercise hereof shall be
construed as granting to the Optionee any right with respect to continuance of
employment by the Company or any of its subsidiaries.  The right of the Company or any of its subsidiaries to terminate
at will the Optionee’s employment at any time (whether by dismissal, discharge
or otherwise), with or without cause, is specifically reserved.

24.          Rights as
Stockholder.  The Optionee
(or transferee of this option by will or by the laws of descent and
distribution) shall have no rights as a stockholder with respect to any Shares
covered by this Option until the date of the issuance of a stock certificate or
certificates to him or her for such Shares, notwithstanding the exercise of
this Option.

25.          “Market
Stand-Off” Agreement. 
Optionee agrees that, if requested by the Company or the managing
underwriter of any proposed public offering of the Company’s securities,
Optionee will not sell or otherwise transfer or dispose of any Shares held by
Optionee without the prior written consent of the 

Company or such
underwriter, as the case may be, during such period of time, not to exceed 180
days following the effective date of the registration statement filed by the
Company with respect to such offering, as the Company or the underwriter may
specify.

26.          Interpretation.  This Option is granted pursuant to the terms
of the Plan, and shall in all respects be interpreted in accordance
therewith.  The Administrator shall
interpret and construe this Option and the Plan, and any action, decision,
interpretation or determination made in good faith by the Administrator shall
be final and binding on the Company and the Optionee.  As used in this Agreement, the term “Administrator” shall refer
to the committee of the Board of Directors of the Company appointed to
administer the Plan, and if no such committee has been appointed, the term
Administrator shall mean the Board of Directors.

27.          Notices.  Any notice, demand or request required or
permitted to be given under this Agreement shall be in writing and shall be
deemed given when delivered personally or three (3) days after being deposited
in the United States mail, as certified or registered mail, with postage
prepaid, and addressed, if to the Company, at its principal place of business,
attention: the Chief Financial Officer, and if to the Optionee, at his or her
most recent address as shown in the employment or stock records of the Company.

28.          Annual and
Other Periodic Reports. 
During the term of this Agreement, the Company will furnish to the
Optionee copies of all annual and other periodic financial and informational
reports that the Company distributes generally to its shareholders.

29.          Governing
Law.  The validity,
construction, interpretation, and effect of this Option shall be governed by
and determined in accordance with the laws of the State of California.

30.          Severability.  Should any provision or portion of this
Agreement be held to be unenforceable or invalid for any reason, the remaining
provisions and portions of this Agreement shall be unaffected by such holding.

31.          Counterparts.  This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
together shall be deemed one instrument.

32.          California
Corporate Securities Law. 
The sale of the shares that are the subject of this Agreement has not
been qualified with the Commissioner of Corporations of the State of California
and the issuance of such shares or the payment or receipt of any part of the
consideration therefore prior to such qualification is unlawful, unless the
sale of such shares is exempt from such qualification by Section 25100, 25102
or 25105 of the California Corporate Securities Law of l968, as amended.  The rights of all parties to this Agreement
are expressly conditioned upon such qualification being obtained, unless the
sale is so exempt.

IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.

	
  AXCELERANT,
  INC.

  	
   

  	
  OPTIONEE

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Type or print name)

  
					

 

 

NOTICE OF
EXERCISE OF STOCK OPTION

AND INVESTMENT REPRESENTATIONS

Name of Optionee:  _________________________

Axcelerant, Inc.

130 Theory, Suite 100

Irvine, California  92612

 

Ladies
and Gentlemen:

 

I hereby exercise my right to purchase shares of
Common Stock (the “Shares”) of Axcelerant, Inc. (the “Company”) pursuant to the
Stock Option Agreement dated                     ,
______, granted to me under the Company’s 2001 Stock Incentive Plan.  The number of shares that I am purchasing at
this time is set forth below, and my check payable to the Company in the amount
of the total Exercise Price set forth below is enclosed with this Notice:

	
  Number
  of Shares purchased hereby:

  	
   

  
	
  Exercise
  Price per Share:

  	
   

  	
  $

  
	
  Total
  Exercise Price:

  	
   

  	
  $

  

In connection with the
exercise of my option, I hereby represent to the Company that:

1.             I
am acquiring the Shares for my own account, for investment purposes only, and
not with a view to the distribution, resale or other disposition thereof.

2.             I
understand that the Shares are being issued by the Company without having first
registered them under the Securities Act of 1933, as amended (the “Securities
Act”), the California Corporate Securities Law of 1968, or the securities laws
of any other state, on the basis of certain exemptions from such registration
requirements which depend, in part, upon the truth and accuracy of my
representations made herein.

3.             Without
in any way limiting the representations set forth above, I agree that I will
not dispose of any interest in the Shares unless and until (i) I shall
have notified the Company of the proposed disposition; (ii) I shall have
furnished the Company with an opinion of counsel to the effect that such
disposition will not require registration under the Securities Act, and
(iii) such opinion of counsel shall have been concurred in by the
Company’s counsel.

4.             I
acknowledge receipt of all information as I deem necessary and appropriate to
enable me to evaluate the merits and risks of my investment in the Shares,
including information concerning the business and financial condition of the
Company, and that I have had the opportunity to discuss such information with,
and ask questions of, an officer of the Company.

5.             I
am an investor of sufficient sophistication and experience to make an informed
investment decision regarding my purchase of the Shares, and I am able to bear
the economic risk of an investment in the Shares.

6.             I
understand and agree that the certificate(s) evidencing the Shares will bear
legends substantially in the following form:

 

 

THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933; THEY HAVE BEEN ACQUIRED BY THE HOLDER FOR INVESTMENT
AND MAY NOT BE PLEDGED, HYPOTHECATED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED
OF EXCEPT AS MAY BE AUTHORIZED UNDER THE SECURITIES ACT OF 1933, AND THE RULES
AND REGULATIONS PROMULGATED THEREUNDER.

 

THE SHARES OF STOCK
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON
TRANSFER, REPURCHASE RIGHTS AND A RIGHT OF FIRST REFUSAL IN FAVOR OF THE
CORPORATION AND/OR ITS NOMINEE(S), AS SET FORTH IN A STOCK OPTION AGREEMENT
DATED AS OF ________________.  TRANSFER
OF THESE SHARES MAY BE MADE ONLY IN COMPLIANCE WITH THE PROVISIONS OF SAID
AGREEMENT, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF SAID
CORPORATION.  SUCH TRANSFER
RESTRICTIONS, REPURCHASE RIGHTS AND RIGHT OF FIRST REFUSAL ARE BINDING ON
TRANSFEREES OF THESE SHARES.

 

7.             I
recognize that the Shares must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available, and further recognize that the Company is under no
obligation to register the Shares or to comply with any exemption from such
registration.

8.             I
understand that Rule 144 under the Securities Act (an exemption under which
securities may be sold without registration under the Securities Act) is not presently
available.  I understand that the
availability of Rule l44 requires, among other things, that I hold the Shares
for a minimum period of two years.  I
further understand that, in the case of securities to which said Rule is not
applicable, compliance with some other exemption under the Securities Act will
be required.

 

 

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature of Optionee)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Print Name of Optionee)Filed by Automated Filing Services Inc. (604) 609-0244 - REGI U.S., INC. - Exhibit 4.1

 Exhibit 4.1

CONSULTING AGREEMENT (AMENDED) 

      This is an extension and amendment
  to the consulting agreement dated and effective 31st day of July,
  2003 by and between JOSEPH PETTENELLI of 321 York Rd. 2nd Floor Towson,
  MD 21204 (hereinafter referred to as The Consultant), and REGI U.S.,
  Inc. (RGUS) (hereinafter referred to as The Client). This amended consulting
  agreement is dated November 1, 2003. 

Terms of Commitments

	
     The Consultant shall perform consulting services for
      the client for 90 days as per the Consulting Agreement dated July 31, 2003.
      

        

  
	
     The Client will issue 100,000 shares of REGI U.S., Inc.
      free trading shares upon filing of the S-8 and upon receipt of US$25,000
      for the purchase of *125,000 warrants at US$0.20 per warrant, no later than
      10 days from the signing of this Consulting Agreement. 

        

  
	
     The Client will issue an additional 50,000 shares of
      REGI U.S., Inc. based on the Client receiving US$37,500 for the exercise
      of **125,000 warrants at US$0.30 per share of REGI no later than 60 days
      from the date of this Amended Agreement. 

  

* The warrants for 125,000 at US$0.20 was approved through the Consulting Agreement dated July 31, 2003.

 ** The warrants for 125,000 exercisable at US$0.30 is to be filed through
  the S-8 within 10 days from this Consulting Agreement. 

 	IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day and year first above written.

	REGI U.S., INC.	JOSEPH PETTENELLI
	 	 
	/s/ “John Robertson”	/s/ “Joseph Pettentlli”
	Signature	Signature
	 	 
	John Robertson	Joseph Pettenelli
	Print Name	Print Name
	 	 
	President	Partner
	Title	Title

1

 THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
  UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("1933 ACT"), OR ANY STATE SECURITIES
  LAWS AND SHALL NOT BE SOLD, PLEDGED, HYPOTHECATED, DONATED, OR OTHERWISE TRANSFERRED,
  WHETHER OR NOT FOR CONSIDERATION, BY THE HOLDER EXCEPT UPON THE ISSUANCE TO
  THE COMPANY OF A FAVORABLE OPINION OF ITS COUNSEL OR THE SUBMISSION TO THE COMPANY
  OF SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO COUNSEL FOR THE COMPANY, IN
  EITHER CASE, TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION
  OF THE 1933 ACT AND APPLICABLE STATE SECURITIES LAWS. 

REGI U.S., INC. 

 Common Stock Purchase Warrant to

  P urchase up to 125,000 Shares of Common Stock

This Common Stock Purchase Warrant is issued to:

 JOSEPH PETTENELLI

  321 York Road, 2nd Floor

  Towson, MD 21204 

 by REGI U.S., INC., an Oregon corporation (hereinafter called
  the "Company", which term shall include its successors and assignors, 

 FOR VALUE RECEIVED and subject to the terms and conditions
  hereinafter set out, the registered holder of this Warrant as set forth on the
  books and records of the Company (the "Holder") is entitled upon surrender of
  this Warrant to purchase from the Company up to 125,000 fully paid and nonassessable
  shares of Common Stock (the "Common Stock"), at the Exercise Price (as defined
  below) per share. 

 This Warrant shall expire at the close of business on January
  5, 2004. 

 1. (a) The right to purchase shares of Common Stock represented
  by this Warrant may be exercised by the Holder, in whole or in part, by the
  surrender of this Warrant (properly endorsed if required) at the principal office
  of the Company at #1103 – 11871 Horseshoe Way, Richmond, BC V7A 5H5 (or
  such other office or agency of the Company as it may designate by notice in
  writing to the Holder at the address of the Holder appearing on the books of
  the Company), and upon completion of provision of services as set out in the
  Consulting Agreement between the Company and Juan Campo dated July 31, 2003,
  as amended by the Consulting Agreement dated November 6, 2003. The Company agrees
  that the shares of Common Stock so earned shall be deemed to be issued to the
  Holder as the record owner of such shares of Common Stock as of the close of
  business on the date on which this Warrant shall have been surrendered and payment
  made for such shares of Common Stock as aforesaid. Certificates for the shares
  of Common Stock so purchased shall be delivered to the Holder within a reasonable
  time. 

 (b) This Warrant may be exercised to acquire, from and after
  the date hereof, the number of shares of Common Stock set forth on the first
  page hereof (subject to adjustments described in 

 2

 this Warrant); provided, however, the right hereunder to purchase
  such shares of Common Stock shall expire at 5:00 p.m. Pacific Standard time
  on January 5, 2004. 

 2. This Warrant is being issued by the Company pursuant
  to the terms of the Consulting Agreement dated November 6, 2003. 

 3. The Company covenants and agrees that all Common Stock
  upon issuance against payment in full of the Exercise Price by the Holder pursuant
  to this Warrant will be validly issued, fully paid and nonassessable and free
  from all taxes, liens and charges with respect to the issue thereof (except
  to the extent resulting from the Holder's own circumstances, actions or omissions).
  The Company covenants and agrees that during the period within which the rights
  represented by this Warrant may be exercised, the Company will have at all times
  authorized, and reserved for the purpose of issue or transfer upon exercise
  of the rights evidenced by this Warrant, a sufficient number of shares of Common
  Stock to provide for the exercise of the rights represented by this Warrant,
  and will procure at its sole expense upon each such reservation of shares the
  listing thereof (subject to issuance or notice of issuance) on all stock exchanges
  on which the Common Stock is then listed or inter-dealer trading systems on
  which the Common Stock is then traded. The Company will take all such action
  as may be necessary to assure that such shares of Common Stock may be so issued
  without violation of any applicable law or regulation, or of any requirements
  of any national securities exchange upon which the Common Stock may be listed
  or inter-dealer trading system on which the Common Stock is then traded. The
  Company will not take any action which would result in any adjustment in the
  number of shares of Common Stock purchasable hereunder if the total number of
  shares of Common Stock issuable pursuant to the terms of this Warrant after
  such action upon full exercise of this Warrant and, together with all shares
  of Common Stock then outstanding and all shares of Common Stock then issuable
  upon exercise of all options and other rights to purchase shares of Common Stock
  then outstanding, would exceed the total number of shares of Common Stock then
  authorized by the Company's Restated and Amended Articles of Incorporation,
  as then amended. 

 4. The exercise price of the warrants are as follows:

	   125,000 warrants exercisable @. 30 - to be exercised within
    60 days of November 6, 2003 

 5. The shares of Common Stock issuable upon the exercise of
  this Warrant shall be registered by the Company pursuant to a Form S-8 to be
  filed with the Securities and Exchange Commission on or about November 14, 2003.

 6. The terms defined in this paragraph, whenever used in this
  Warrant, shall, unless the context otherwise requires, have the respective meanings
  hereinafter specified. The term "Common Stock" shall mean and include the Company's
  Common Stock, authorized on the date of the original issue of this Warrant and
  shall also include in case of any reorganization, reclassification, consolidation,
  merger or sale of assets of the character referred to in Section 4 hereof, the
  stock, securities or assets provided for in such paragraph. The term "outstanding"
  when used with reference to Common Stock shall mean at any date as of which
  the number of shares thereof is to be determined, all issued shares of Common
  Stock, except shares then owned or held by or for the account of the Company.
  The term "1933 Act" shall mean the Securities Act of 1933, as amended, or any
  successor Federal statute, and the rules and regulations of the Securities and
  Exchange Commission, or any other Federal agency then administering the 1933
  Act, thereunder, all as the same shall be in effect at the time. 

 7. This Warrant is exchangeable, upon the surrender hereby
  by the Holder at the office or agency of the Company, for new Warrants of like
  tenor representing in the aggregate the right to 

 3

 subscribe for and purchase the number of shares of Common
  Stock which may be subscribed for and purchased hereunder, each of such new
  Warrants to represent the right to subscribe for and purchase such number of
  shares of Common Stock as shall be designated by the Holder at the time of such
  surrender. Upon receipt of evidence satisfactory to the Company of the loss,
  theft, destruction or mutilation of this Warrant or any such new Warrants and,
  in the case of any such loss, theft, or destruction, upon delivery of a bond
  of indemnity, reasonably satisfactory to the Company, or, in the case of any
  such mutilation, upon surrender or cancellation of this Warrant or such new
  Warrants, the Company will issue to the Holder a new Warrant of like tenor,
  in lieu of this Warrant or such new Warrants, representing the right to subscribe
  for and purchase the number of shares of Common Stock which may be subscribed
  for and purchased hereunder. 

 8. The Company will at no time close its transfer books against
  the transfer of this Warrant or of any shares of Common Stock issued or issuable
  upon the exercise of this Warrant in any manner which interferes with the timely
  exercise of this Warrant. This Warrant shall not entitle the Holder to any voting
  rights or any rights as a shareholder of the Company. The rights and obligations
  of the Company, of the Holder, and of any holder of shares of Common Stock issuable
  hereunder, shall survive the exercise of this Warrant. 

 9. This Warrant sets forth the entire agreement of the Company
  and the Holder of the Common Stock issuable upon the exercise of this Warrant
  with respect to the rights of the Holder and the Common Stock issuable upon
  the exercise of this Warrant, notwithstanding the knowledge of such Holder of
  any other agreement or the provisions of any agreement, whether or not known
  to the Holder, and the Company represents that there are no agreements inconsistent
  with the terms hereof or which purport in any way to bind the Holder of this
  Warrant or the Common Stock. 

 10. The validity, interpretation and performance of this Warrant
  and each of its terms and provisions shall be governed by the laws of the State
  of Oregon. 

 IN WITNESS WHEREOF, the Company has caused this Warrant to
  be signed by its duly authorized officer under its corporate seal and dated
  as of November 6, 2003. 

REGI U.S., INC.

/s/ John G. Robertson

	By:  “John G. Robertson”
	        Name: John G. Robertson
	        Title: President

 4

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