Document:

exv4w1

Exhibit 4.1

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD
OR TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE AND CURRENT REGISTRATION STATEMENT OR POST-EFFECTIVE
AMENDMENT THERETO FOR SUCH SHARES UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY THAT REGISTRATION IS
NOT REQUIRED UNDER THE ACT. THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR
FINANCING ARRANGEMENT SECURED BY SUCH SECURITIES.

			
	 	 	 
	Warrant No. ___
	 	Date of Issuance: December__, 2008
	 	 	 
	 
	 	Number of Shares: ___

(subject to adjustment)

VIRNETX HOLDING CORPORATION

COMMON
STOCK PURCHASE
WARRANT1

     VirnetX Holding Corporation, a Delaware corporation (the “Company”), for value
received, hereby certifies that ___, or its registered assigns (the
“Registered Holder”), is entitled, subject to the terms set forth below, to purchase from
the Company, at any time after the date hereof and on or before June
__, 2010 (the
“Expiration Date”) shares of the Company’s Common Stock (the “Common Stock”) at a
per share purchase price equal to
___ dollars ($___) (the “Purchase Price”), as adjusted
from time to time pursuant to the provisions of this Warrant. The shares purchasable upon exercise
of this Warrant, as adjusted from time to time pursuant to the provisions of this Warrant, are
hereinafter referred to as the “Warrant Stock”.

     This Warrant is issued pursuant to, and is subject to the terms and conditions of:

     1. Number of Shares. Subject to the terms and conditions hereinafter set forth, the
Registered Holder is entitled, upon surrender of this Warrant, to purchase from the Company the
number of shares (subject to adjustment as provided herein) of Warrant Stock first set forth above.

     2. Exercise.

          (a) Manner of Exercise. This Warrant may be exercised by the Registered Holder, in
whole or in part, by surrendering this Warrant, with the purchase/exercise form appended hereto as
Exhibit A duly executed by such Registered Holder or by such Registered Holder’s duly
authorized attorney, at the principal office of the Company, or at such other office or agency as
the Company may designate, accompanied by payment in full of the Purchase Price payable in respect
of the number of shares of Warrant Stock purchased upon such exercise. The Purchase Price may be
paid by cash, check, wire transfer or pursuant to the cashless exercise provisions of Section 2(b).

          (b) Cashless Exercise. Notwithstanding anything contained herein to the contrary, if
an effective registration statement covering the Warrant Stock that is the subject of the Exercise
Notice

			
	
    1
    		
    This form of common stock purchase
warrant will be used for the three types of warrants offered by
VirnetX Holding Corporation in this offering. Each warrant will have
a different Purchase Price. Warrants covering 1,500,000 shares of
common stock will have a Purchase Price of $2.00 per share. Warrants
covering 1,500,000 shares of common stock will have a Purchase Price
of $3.00 per share. Warrants covering 1,500,000 shares of common
stock will have a Purchase Price of $4.00 per share.

 

 

is not available for the resale of such
Warrant Stock (the “Unavailable Warrant Shares”), the Holder may, in its sole discretion, exercise this Warrant in whole or in part
and, in lieu of making the cash payment otherwise contemplated to be made to the Company upon such
exercise in payment of the Purchase Price, elect instead to receive upon such exercise
the “Net Number” of shares of Common Stock determined according to the following formula (a
“Cashless Exercise”):

	 	 	 
	Net Number =

	 	(A x B) — (A x C)
	 

	 	             B

               For purposes of the foregoing formula:

          A= the total number of shares with respect to which this Warrant is then being exercised.

          B= the closing sale price of the shares of Common Stock on the date immediately preceding the
date of the Exercise Notice.

          C= the Purchase Price then in effect for the applicable Warrant Stock at the time of such
exercise.

          (c) Effective Time of Exercise. Each exercise of this Warrant shall be deemed to have
been effected immediately prior to the close of business on the day on which this Warrant shall
have been surrendered to the Company as provided in Section 2(a). At such time, the person or
persons in whose name or names any certificates for Warrant Stock shall be issuable upon such
exercise as provided in Section 2(d) shall be deemed to have become the holder or holders of record
of the Warrant Stock represented by such certificates.

          (d) Delivery to Holder. As soon as practicable after the exercise of this Warrant in
whole or in part, and in any event. Within twenty (20) days thereafter, the Company at its expense will
cause to be issued in the name of, and delivered to, the Registered Holder, or as such Holder (upon
payment by such Holder of any applicable transfer taxes) may direct:

               (i) a certificate or certificates, or book-entry position, for the number of shares of Warrant
Stock to which such Registered Holder shall be entitled, and

               (ii) in case such exercise is in part only, a new warrant or warrants (dated the date hereof)
of like tenor, calling in the aggregate on the face or faces thereof for the number of shares of
Warrant Stock equal (without giving effect to any adjustment therein) to the number of such shares
called for on the face of this Warrant minus the number of such shares purchased by the Registered
Holder upon such exercise as provided in Section 2(a).

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     3. Company Call. If, prior to the exercise or earlier expiration of this Warrant
pursuant to the terms hereof, the Company's average closing stock price of the Common Stock on the American Stock
Exchange, or any successor national securities exchange thereto, equals or exceeds two (2) times
the Purchase Price on any five (5) consecutive trading days, the Company shall be
entitled at its
option, to issue a notice (a “Call Notice”) to the Registered Holder of this Warrant to the effect
that the Company is exercising its rights pursuant to this Section 3. Upon receipt of a Call Notice
(which receipt will be deemed to occur on the one (1) business day following the dispatch of such
Call Notice by the Company by a nationally recognized overnight courier), the Registered Holder
shall have until 5:00 p.m., Scotts Valley, California time, on the 10th business day following
receipt of the Call Notice to exercise the Warrant, for that number of shares of Warrant Stock covered by the Call
Notice, in accordance with Section 2 hereof.
Upon the expiration of such 10 day period, if not sooner exercised, this Warrant will terminate and
the Registered Holder’s and the Company’s rights and obligations hereunder will cease without
payment of consideration. Notwithstanding the foregoing provisions of this Section 3, the Company
may not issue a Call Notice unless and until a registration statement is effective, or no longer
required, with respect to the resale of the Warrant Stock.

     4. Adjustments.

          (a) Stock Splits and Dividends. If outstanding shares of the Company’s Common Stock
shall be subdivided into a greater number of shares or a dividend in Common Stock shall be paid in
respect of Common Stock, the Purchase Price in effect immediately prior to such subdivision or at
the record date of such dividend shall simultaneously with the effectiveness of such subdivision or
immediately after the record date of such dividend be proportionately reduced. If outstanding
shares of Common Stock shall be combined into a smaller number of shares, the Purchase Price in
effect immediately prior to such combination shall, simultaneously with the effectiveness of such
combination, be proportionately increased. When any adjustment is required to be made in the
Purchase Price, the number of shares of Warrant Stock purchasable upon the exercise of this Warrant
shall be changed to the number determined by dividing (i) an amount equal to the number of shares
issuable upon the exercise of this Warrant immediately prior to such adjustment, multiplied by the
Purchase Price in effect immediately prior to such adjustment, by (ii) the Purchase Price in effect
immediately after such adjustment.

          (b) Reclassification, Etc. In case there occurs any reclassification or change of the
outstanding securities of the Company or of any reorganization of the Company (or any other
corporation the stock or securities of which are at the time receivable upon the exercise of this
Warrant) or any similar corporate reorganization on or after the date hereof, then and in each such
case the Registered Holder, upon the exercise hereof at any time after the consummation of such
reclassification, change, or reorganization shall be entitled to receive, in lieu of the stock or
other securities and property receivable upon the exercise hereof prior to such consummation, the
stock or other securities or property to which such Holder would have been entitled upon such
consummation if such Holder had exercised this Warrant immediately prior thereto, all subject to
further adjustment pursuant to the provisions of this Section 4.

          (c) Adjustment Certificate. When any adjustment is required to be made in the Warrant
Stock or the Purchase Price pursuant to this Section 4, the Company shall promptly mail to the
Registered Holder a certificate setting forth (i) a brief statement of the facts requiring such
adjustment, (ii) the Purchase Price after such adjustment and (iii) the kind and amount of stock or
other securities or property into which this Warrant shall be exercisable after such adjustment.

          (d) Reorganizations, Mergers and Consolidations. 
If at any time or from time to time after the date hereof there is a reorganization of the Company
(other than a recapitalization, subdivision, combination, reclassification or exchange of shares
provided for elsewhere in this Section 4) or a merger or consolidation of the Company with or into
another corporation, then, as a part of such reorganization, merger or consolidation, provision
shall be made so that the Registered Holder of this Warrant thereafter shall be entitled to
receive, upon exercise of this Warrant, the number of shares of stock or other securities or
property of the Company, or of such successor corporation resulting from such reorganization,
merger or consolidation, to which a holder of Common Stock would have been entitled on such
reorganization, merger or consolidation. In any such case, appropriate adjustment shall be made in
the application of the provisions of this Section 4 with respect to the rights of the Registered
Holder of this Warrant after the reorganization, merger or consolidation to the end that the
provisions of this Section 4 (including adjustment of the Purchase Price then in effect and number
of shares issuable upon exercise of this Warrant, as applicable) shall be applicable after that
event and be as nearly equivalent to the provisions hereof as may be
practicable. This Section 4(d)
shall similarly apply to successive reorganizations, mergers and consolidations. Notwithstanding
the foregoing, if any such reorganization, merger or consolidation constitutes or results in (a) a
“going private” transaction as defined in Rule 13e-3 under the Exchange Act, (b) an acquisition of
the Company primarily for cash, or (c) an acquisition, merger or sale with or into a Person not
traded on an Eligible Market (as defined below), then the Company (or any such successor or
surviving entity) shall require that the Registered Holder waive the above requirements of this
Section 4(d) in exchange for a payment of cash on the closing date of such reorganization, merger
or consolidation, equal to the Black Scholes Value of the remaining unexercised portion of this
Warrant on the closing date of such reorganization, merger or consolidation, provided that the per
share consideration to be received by the holders of shares of Common Stock upon the consummation
of such reorganization, merger or consolidation is less than the Exercise Price. Concurrently with
such payment, this Warrant shall be cancelled. “Black Scholes Value” means the value of
this Warrant based on the Black and Scholes Option Pricing Model obtained from the “OV” function on
Bloomberg determined as of the day immediately following the public announcement of the applicable
reorganization, merger or consolidation and reflecting (i) a risk-free interest rate corresponding
to the U.S. Treasury rate for a period equal to the remaining term of this Warrant as of such date
and (ii) an expected volatility equal to the 100 day volatility obtained from the HVT function on
Bloomberg. “Eligible Market” means the American Stock Exchange, The New York Stock
Exchange, Inc., The Nasdaq Capital Market, The NASDAQ Global Market or The NASDAQ Global Select
Market.

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          (e) Pro
Rata Rights Upon Distributions of Assets. If the Company shall declare or make
any dividend or other distribution of its assets (or rights to acquire its assets) to holders of
shares of Common Stock (which dividend or other distribution has not already been given to the
Registered Holders of the Warrants), including, without limitation, any distribution of cash,
equity or debt securities or rights or warrants to subscribe for or purchase any equity or debt
security, or other property or assets at any time after the issuance of this Warrant and prior to
the Expiration Date, then, in each such case (in each case, “Distributed Property”), the Registered
Holder shall be entitled upon exercise of this Warrant for the purchase of any or all of the
Warrant Stock, to receive the amount of Distributed Property which would have been payable to the
Registered Holder had such Registered Holder been the holder of such Warrant Stock on the record
date for the determination of shareholders entitled to such Distributed Property. The Company will
at all times set aside and keep available for distribution to such holder upon exercise of this
Warrant a portion of the Distributed Property to satisfy the distribution to which such Registered
Holder is entitled pursuant to the preceding sentence.

     5. Transfers.

          (a) Registration Statement. Each holder of this Warrant acknowledges that this Warrant
and the Warrant Stock have been registered under the Securities Act of 1933, as amended (the
“Securities Act”), pursuant to a registration statement on Form S-1 which must be amended on a post-effective basis
from time to time in order to maintain its accuracy and keep it
up-to-date, and agrees not to sell, pledge, distribute, offer for sale, transfer or
otherwise dispose of this Warrant or any Warrant Stock issued upon its exercise in the absence of
(i) an effective registration statement under the Securities Act as to the sale of any such
securities and registration or qualification of such securities under any applicable U.S. federal
or state securities law then in effect, or (ii) an opinion of counsel, satisfactory to the Company,
that such registration and qualification are not required. Each certificate or other instrument
for Warrant Stock issued upon the exercise of this Warrant shall bear a legend substantially to the
foregoing effect and as described in Section 15.

          (b) Transferability. Prior to the Expiration Date and subject to compliance with any
applicable securities laws and the conditions set forth in this
Section 5, this Warrant and all
rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the
principal office of the Company, together with a written assignment of this Warrant substantially
in the form attached hereto as Exhibit B duly executed by the Registered Holder or its
agent or attorney, and funds sufficient to pay any transfer taxes payable upon the making of such
transfer. The transferee shall also sign an investment letter in form and substance reasonably
satisfactory to the Company. Upon such surrender and, if required, such payment, the Company shall
execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the
denomination or denominations specified in such instrument of assignment, and shall issue to the
assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant
shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder for
the purchase of Warrant Stock without having a new Warrant issued.

          (c) Warrant Register. The Company will maintain a register containing the names and
addresses of the Registered Holders of this Warrant. Until any transfer of this Warrant is made in
the warrant register, the Company may treat the Registered Holder of this Warrant as the absolute
owner hereof for all purposes; provided, however, that if this Warrant is properly
assigned in blank, the Company may (but shall not be required to) treat the bearer hereof as the
absolute owner hereof for all purposes, notwithstanding any notice to the contrary. Any Registered
Holder may change such Registered Holder’s address as shown on the warrant register by written
notice to the Company requesting such change.

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     6. No Impairment. The Company will not, by amendment of its charter or through
reorganization, consolidation, merger, dissolution, sale of assets or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will
(subject to Section 13) at all times in good faith assist in the carrying out of all such terms and
in the taking of all such action as may be necessary or appropriate in order to protect the rights
of the holder of this Warrant against impairment.

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     7. Notices of Certain Transactions. In case:

          (a) the Company shall take a record of the holders of its Common Stock (or other stock or
securities at the time deliverable upon the exercise of this Warrant) for the purpose of entitling
or enabling them to receive any dividend or other distribution, or to receive any right to
subscribe for or purchase any shares of stock of any class or any other securities, or to receive
any other right, to subscribe for or purchase any shares of stock of any class or any other
securities, or to receive any other right, or

          (b) of any capital reorganization of the Company, any reclassification of the capital stock of
the Company, any consolidation or merger of the Company, any consolidation or merger of the Company
with or into another corporation (other than a consolidation or merger in which the Company is the
surviving entity), or any transfer of all or substantially all of the assets of the Company, or

          (c) of
the voluntary or involuntary dissolution, liquidation or winding-up
of the
Company,

then, and in each such case, the Company will mail or cause to be mailed to the Registered Holder
of this Warrant a notice specifying, as the case may be, (i) the date on which a record is to be
taken for the purpose of such dividend, distribution or right, and stating the amount and character
of such dividend, distribution or right, or (ii) the effective date on which such reorganization,
reclassification, consolidation, merger, transfer, dissolution, liquidation, winding-up, redemption
or conversion is to take place, and the time, if any is to be fixed, as of which the holders of
record of Common Stock (or such other stock or securities at the time deliverable upon such
reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation,
winding-up, redemption or conversion) are to be determined. Such notice shall be mailed at least
ten (10) days prior to the record date or effective date for the event specified in such notice.

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     8. Reservation of Stock. The Company will at all times reserve and keep available,
solely for the issuance and delivery upon the exercise of this Warrant, such shares of Warrant
Stock and other stock, securities and property, as from time to time shall be issuable upon the
exercise of this Warrant.

     9. Fully Paid and Non-assessable. The Company covenants that all Warrant Stock
shall, upon issuance and the payment of the applicable Purchase Price in accordance with the terms
hereof, be duly and validly authorized, issued and fully paid and non-assessable.

     10. Exchange of Warrants. Upon the surrender by the Registered Holder of any Warrant
or Warrants, properly endorsed, to the Company at the principal office of the Company, the Company
will, subject to the provisions of Section 5, issue and deliver to or upon the order of such
Registered Holder, at the Company’s expense, a new Warrant or Warrants of like tenor, in the name
of such Registered Holder or as such Registered Holder (upon payment by such Registered Holder of
any applicable transfer taxes) may direct, calling in the aggregate on the face or faces thereof
for the number of shares of Warrant Stock called for on the face or faces of the Warrant or
Warrants so surrendered.

     11. Replacement of Warrants. Upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and (in the case of loss,
theft or destruction) upon delivery of an indemnity agreement (with surety if reasonably required)
in an amount reasonably satisfactory to the Company, or (in the case of mutilation) upon surrender
and cancellation of this Warrant, the Company will issue, in lieu thereof, a new Warrant of like
tenor.

     12. Notices. Any notice required or permitted pursuant to this Warrant shall be in
writing and shall be deemed sufficient upon receipt, when delivered personally or by overnight
courier or sent by email or fax (upon customary confirmation of receipt), or forty-eight (48) hours
after being deposited in the regular mail, as certified or registered mail (airmail if sent
internationally), with postage prepaid, addressed (a) if to the Registered Holder, to the address
of the Registered Holder most recently furnished in writing to the Company and (b) if to the
Company, to the address set forth below or subsequently modified by written notice to the
Registered Holder.

     13. No Rights as Stockholder. Until the exercise of this Warrant, the Registered
Holder of this Warrant shall not have or exercise any rights by virtue hereof as a stockholder of
the Company. Notwithstanding the foregoing, the Company shall provide the Registered Holder with
copies of the same notices and other information given to the stockholders of the Company
generally, contemporaneously with the giving thereof to the stockholders.

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     14. No Fractional Shares. No fractional shares of Common Stock shall be issued upon
exercise of this Warrant. In lieu of any fractional shares which would otherwise be issuable upon
exercise of this Warrant, the Company shall round up such fractional interest to the next whole
share.

     15. Warrant Legends. 

     (a) Each Warrant shall contain a legend in substantially the following form:

“THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE AND CURRENT REGISTRATION STATEMENT OR POST-EFFECTIVE AMENDMENT
THERETO FOR SUCH SHARES UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “ACT”) OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE ACT AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE
COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER THE ACT. THIS WARRANT
AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN OR FINANCING ARRANGEMENT SECURED BY SUCH SECURITIES.”

     (b) Each certificate representing the Warrant Stock, unless registered under the Securities
Act shall contain a legend substantially in the following form:

“THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD OR
TRANSFERRED WITHOUT AN EFFECTIVE AND CURRENT REGISTRATION STATEMENT OR
POST-EFFECTIVE AMENDMENT THERETO FOR SUCH SHARES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, (THE “ACT”) OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY THAT REGISTRATION IS NOT
REQUIRED UNDER THE ACT. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY
BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
OR FINANCING ARRANGEMENT SECURED BY SUCH SECURITIES.”

     16. Amendment or Waiver. Any term of this Warrant may be amended or waived upon
written consent of the Company and the holders of at least a majority of the shares of the
Company’s

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equity securities issuable upon exercise of outstanding warrants purchased pursuant to that
certain Subscription Agreement, dated
December __, 2008, among the Company and the investors
signatory thereto (the “Agreement”). By acceptance hereof, the Registered Holder
acknowledges that in the event the required consent is obtained, any term of this Warrant may be
amended or waived with or without the consent of the Registered Holder; provided,
however, that any amendment hereof that would materially adversely affect the Registered
Holder in a manner different from the holders of the remaining warrants issued pursuant to the
Agreement shall also require the consent of Registered Holder.

     17. Headings. The headings in this Warrant are for purposes of reference only and
shall not limit or otherwise affect the meaning of any provision of this Warrant.

     18. Governing Law. This Warrant shall be governed, construed and interpreted in
accordance with the laws of the State of New York, without giving effect to principles of conflicts
of law.

     19. Survival of Representations. Unless otherwise set forth in this Warrant, the
representations, warranties and covenants contained in or made pursuant to this Warrant shall
survive the execution and delivery of this Warrant.

     20. Successors and Assigns. The terms and conditions of this Warrant shall inure to
the benefit of and be binding upon the respective successors and assigns of the parties. Nothing
in this Warrant, express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities
under or by reason of this Warrant, except as expressly provided in this Warrant.

     21. Counterparts. This Warrant may be executed in one or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one instrument.

     22. Attorney’s Fees. If any action at law or in equity (including arbitration) is
necessary to enforce or interpret the terms of any of this Warrant, the prevailing party shall be
entitled to reasonable attorney’s fees, costs and necessary disbursements in addition to any other
relief to which such party may be entitled.

     23. Severability. If one or more provisions of this Warrant are held to be
unenforceable under applicable law, the parties agree to renegotiate such provision in good faith.
In the event that the parties cannot reach a mutually agreeable and enforceable replacement for
such provision, then (a) such provision shall be excluded from this Warrant, (b) the balance of
this Warrant shall be interpreted as if such provision were so excluded and (c) the balance of this
Warrant shall be enforceable in accordance with its terms.

     24. Delays or Omissions. No delay or omission to exercise any right, power or remedy
accruing to any party under this Warrant, upon any breach or default of any other party under this
Warrant, shall impair any such right, power or remedy of such non-breaching or non-defaulting party
nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein,
or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character on the part of any
party of any breach or default under this Warrant, or any waiver on the part of any party of any
provisions or conditions of this Warrant, must be in writing and shall be effective only to the
extent specifically set forth in such writing. All remedies, either under this Warrant or by law
or otherwise afforded to any party, shall be cumulative and not alternative.

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     25. Remedies, Other Obligations, Breaches and Injunctive Relief. The remedies
provided in this Warrant shall be cumulative and in addition to all other remedies available under
this Warrant, at law or in equity (including a decree of
specific performance and/or other injunctive relief), and nothing herein shall limit the right of
the Registered Holder to pursue actual damages for any failure by the Company to comply with the terms of this
Warrant. The Company acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Registered Holder and that the remedy at law for any such breach may be inadequate.
The Company therefore agrees that, in the event of any such breach or
threatened breach, the Registered Holder shall be entitled to seek, in addition to all other available remedies, to an
injunction restraining any breach, without the necessity of showing economic loss and without any
bond or other security being required

     26. Entire Agreement. This Warrant, and the documents referred to herein constitute
the entire agreement between the parties hereto pertaining to the subject matter hereof, and any
and all other written or oral agreements relating to the subject matter hereof existing between the
parties hereto are expressly canceled.

[Signature Page Follows]

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     IN
WITNESS WHEREOF, the Company and the Registered Holder have executed this Warrant as of the date first
set forth above.

	 	 	 	 	 
	 	 	THE COMPANY:
	 
	 	 	 	 
	 	 	VIRNETX HOLDING CORPORATION
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	(Signature)
	 
	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 

	 	Address:	 	 
	 
	 	 	 	 
	 	 	5615 Scotts Valley Drive, Suite 110
	 	 	Scotts Valley, California 95066
	 	 	Fax: (831) 438-8700

	 	 	 	 	 
	ACKNOWLEDGED AND
AGREED TO BY THE REGISTERED HOLDER:	 	 
	 
	 	 	 	 
	 	 	 
	(Registered Holder)	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	(Signature)
	 	 
	Name:
	 	 	 	 
	 

	 	 	 	 
	Title:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Address:
	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	Fax:
	 	 	 	 
	 

	 	 	 	 

 

 

EXHIBIT A

PURCHASE/EXERCISE FORM

	 	 	 
	To: VirnetX Holding Corporation

	 	Dated:

     The undersigned, pursuant to the provisions set forth in the attached Warrant No. ___, hereby
irrevocably elects to purchase ___shares of the Common Stock covered by such
Warrant and herewith makes payment of $___, representing the full Purchase Price
for such shares at the price per share provided for in such Warrant.

     Payment shall take the form of (check applicable box):

	 	 	 	 
	 	 ̈ 	 	in lawful money of the United States; or
	 
	 	 	 
	 	 ̈ 	 	the cancellation of such amount of Warrant Stock as is necessary, in accordance
with the formula set forth in Section 2(b), to exercise this Warrant with respect to
the maximum amount of Warrant Stock purchasable pursuant to the cashless exercise
procedure set forth in Section 2(b).

     The undersigned acknowledges that it has reviewed the representations and warranties of the
Registered Holder set forth in the Warrant and by its signature below hereby makes such
representations and warranties to the Company. Defined terms contained in such representations and
warranties shall have the meanings assigned to them in the Warrant, provided that the term
“Securities” shall refer to the Warrant Stock.

	 	 	 	 	 
	ACKNOWLEDGED AND
AGREED TO BY THE REGISTERED HOLDER:	 	 
	 
	 	 	 	 
	 	 	 
	(Registered Holder)	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	(Signature)
	 	 
	Name:
	 	 	 	 
	 

	 	 	 	 
	Title:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Address:
	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
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EXHIBIT B

ASSIGNMENT FORM

     FOR VALUE RECEIVED, ___hereby sells, assigns and transfers all of the
rights of the undersigned under the attached Warrant with respect to the number of shares of
capital stock covered thereby set forth below, unto:

	 	 	 	 	 
	Name of Assignee
	 	Address/Facsimile Number
	 	No. of Shares

	 	 	 	 	 
	ACKNOWLEDGED AND
AGREED TO BY THE REGISTERED HOLDER:	 	 
	 
	 	 	 	 
	 	 	 
	(Registered Holder)	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	(Signature)
	 	 
	Name:
	 	 	 	 
	 

	 	 	 	 
	Title:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Address:
	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	Fax:ex43.htm

    EXHIBIT
4.3

    

    HEMAGEN
DIAGNOSTICS, INC.

    

    2007
STOCK INCENTIVE PLAN

    

    ARTICLE
1

    OBJECTIVES

    

    The
objectives of this 2007 Stock Incentive Plan (the “Plan”) are to enable HEMAGEN
DIAGNOSTICS, INC. (the “Company”) to compete successfully in retaining and
attracting key employees of outstanding ability, to stimulate the efforts of
such employees toward the Company’s objectives and to encourage the
identification of their interests with those of the Company’s
shareholders.

     

    ARTICLE
2

    DEFINITIONS

    

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

     

    2.1   “Award” means an award of
a Stock Option, Stock Appreciation Right, Restricted Stock Award, Stock Unit
Award or Stock Award granted under the Plan.

     

    2.2   “Award Agreement” means a
written or electronic agreement entered into between the Company and a
Participant setting forth the terms and conditions of an Award granted to a
Participant.

     

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

     

    2.4   “Code” means the Internal
Revenue Code of 1986, as amended, or any successor legislation.

     

    2.5   “Committee” means a
committee designated by the Board of the Company. The Committee shall be
comprised of two or more directors, each of whom shall be (1) a “non-employee
director” as defined in Rule 16b-3 promulgated under the Exchange Act, (2) an
“outside director” under Section 162(m) of the Code (“Section 162(m)”) and (3)
an “independent director” under rules adopted by the Nasdaq Stock Market, in
each case as such rules and sections may be amended, superseded or interpreted
hereafter.

     

    2.6   “Common Stock” means the
Company’s common stock, no par value.

     

    2.7   “Disability” means a
Participant being considered “disabled” within the meaning of Section
409A(a)(2)(C) of the Code, unless otherwise provided in an Award
Agreement.

     

    2.8   “Eligible Employee” means
any individual who performs services for the Company or any Subsidiary of the
Company and is treated as an “employee” for federal income tax purposes or any
individual or firm who performs services for the Company as a
consultant.

     

    2.9   “Exchange Act” means the
Securities Exchange Act of 1934.

     

    2.10   
 “Fair Market Value” of a Share
as of a given date shall, if the Common Stock is quoted on the Over-the-Counter
Bulletin Board (“OTCBB”), be the reported closing price for a Share on the date
as of which Fair Market Value is to be determined. If Common Stock is not quoted
on the OTCBB on the date as
of which Fair Market Value is to be determined, the Committee shall determine in
good faith the Fair Market Value in whatever manner it considers
appropriate.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    2.11  “Grant Date” means the
date designated by the Committee as the date upon which an Award is
granted.

     

    2.12  “Incentive Option” means
any Stock Option intended to be and designated as an “Incentive Stock Option”
within the meaning of Section 422 of the Code or any successor
provision.

     

    2.13  “Non-Qualified Option” means
any Stock Option that is not an Incentive Option.

     

    2.14  “Option Price” or
“Exercise Price” means the price per Share at which Common Stock may be
purchased upon the exercise of an Option.

     

    2.15  “Participant” means a
person to whom an Award has been granted pursuant to this Plan.

     

    2.16  “Restricted Stock Award”
means a grant of Shares to an Eligible Employee under Article 7 that are issued
subject to such vesting and transfer restrictions as the Committee shall
determine and set forth in an Award Agreement.

     

    2.17  “Retirement” means any
termination of employment (other than by death or Disability) by an employee who
is at least 65 years of age, or 55 years of age with at least ten years of
employment with the Company or a Subsidiary of the Company.

     

    2.18  “Share” means one share
of the Common Stock.

     

    2.19  “Stock Appreciation
Right” means a contractual right granted to an Eligible Employee under ARTICLE 6
entitling such Eligible Employee to receive a payment, representing the
difference between the base price per Share of the right and the Fair Market
Value of a Share, at such time, and subject to such conditions, as are set forth
in the Plan and the applicable Award Agreement.

     

    2.20  “Stock Award” means a
grant of Shares to an Eligible Employee under Article 9 that are issued free of
transfer restrictions and forfeiture conditions.

     

    2.21   
  “Stock Option” or “Option” means the right to purchase Shares
granted pursuant to this Plan.

     

    2.22   
  “Stock Unit Award” means a contractual right granted to an Eligible
Employee under Article 8 representing notional unit interests equal in value to
a Share to be paid or distributed at such times, and subject to such conditions,
as set forth in the Plan and the applicable Award Agreement.

     

    2.23  “Subsidiary” has the
meaning set forth in Section 424(f) of the Code.

     

    2.24  “Term” means the period
beginning on a Grant Date and ending on the expiration date of such
Award.

     

    2.25  “Transfer” means sale,
assignment, pledge, encumbrance, alienation, attachment, charge or other
disposition, whether or not for consideration; and the terms “Transferred” or
“Transferable” have corresponding meanings.

     

    
      
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    ARTICLE
3

     

    ADMINISTRATION,
PARTICIPATION AND AWARDS

    

    3.1  The Committee. This Plan
shall be administered and interpreted by the Committee.

     

    3.2  Committee Authority. The
Committee shall have such powers and authority as may be necessary or
appropriate for the Committee to carry out its functions as described in the
Plan. Subject to the express limitations of the Plan, the Committee shall have
authority in its discretion to determine, after considering management’s
recommendations with respect to Eligible Employees excluding the Company’s
executive officers, the Eligible Employees to whom, and the time or times at
which, Awards may be granted, the number of Shares, units or other rights
subject to each Award, the exercise, base or purchase price of an Award (if
any), the time or times at which an Award will become vested, exercisable or
payable, the performance goals and other conditions of an Award, the duration of
the Award, and all other terms of the Award. The Committee shall determine the
terms and conditions of all Awards granted to Participants. Subject to the terms
of the Plan, the Committee shall have the authority to amend the terms of an
Award in any manner that is not inconsistent with the Plan, provided that no
such action shall adversely affect the rights of a Participant with respect to
an outstanding Award without the Participant’s consent. The Committee shall also
have discretionary authority to interpret the Plan, to make factual
determinations under the Plan, and to make all other determinations necessary or
advisable for Plan administration, including, without limitation, to correct any
defect, to supply any omission or to reconcile any inconsistency in the Plan or
any Award Agreement hereunder. The Committee may prescribe, amend, and rescind
rules and regulations relating to the Plan. The Committee’s determinations under
the Plan need not be uniform and may be made by the Committee selectively among
Participants and Eligible Employees, whether or not such persons are similarly
situated. The Committee shall, in its discretion, consider such factors as it
deems relevant in making its interpretations, determinations and actions under
the Plan including, without limitation, the recommendations or advice of any
officer or employee of the Company or such attorneys, consultants, accountants
or other advisors as it may select. All interpretations, determinations and
actions by the Committee shall be final, conclusive, and binding upon all
parties.

     

    3.3  Delegation of Authority.
The Committee shall be permitted to delegate to any appropriate officer or
employee of the Company responsibility for performing certain ministerial
functions under the Plan. In the event that the Committee’s authority is
delegated to officers or employees in accordance with the foregoing, all
provisions of the Plan relating to the Committee shall be interpreted in a
manner consistent with the foregoing by treating any such reference as a
reference to such officer or employee for such purpose. Any action undertaken in
accordance with the Committee’s delegation of authority hereunder shall have the
same force and effect as if such action was undertaken directly by the Committee
and shall be deemed for all purposes of the Plan to have been taken by the
Committee.

     

    3.4  Designation of
Participants. All Eligible Employees are eligible to be designated by the
Committee to receive Awards and become Participants under the Plan. The
Committee has the authority, in its discretion, to determine and designate from
time to time those Eligible Employees who are to be granted Awards, the types of
Awards to be granted and the number of Shares or rights subject to Awards
granted under the Plan. In selecting Eligible Employees to be Participants and
in determining the type and amount of Awards to be granted under the Plan, the
Committee shall consider any and all factors that it deems relevant or
appropriate.

     

    
      
        -3- 

      

      
         

        
          

        

      

      
         

      

    

    ARTICLE
4

     

    SHARES
SUBJECT TO PLAN

    

    4.1  Shares. Subject to
adjustment as provided in Section 4.2, the number of Shares which may be issued
under this Plan shall not exceed One Million Five Hundred Thousand (1,500,000)
Shares. Shares issued and sold under the Plan may be either authorized but
unissued Shares or Shares held in the Company’s treasury. To the extent that any
Award involving the issuance of Shares is forfeited, cancelled, returned to the
Company for failure to satisfy vesting requirements or other conditions of the
Award, or is otherwise terminated without an issuance of Shares being made
thereunder, the Shares covered thereby will no longer be counted against the
foregoing maximum Share limitations and may again be made subject to Awards
under the Plan pursuant to such limitations. Any Awards or portions thereof that
are settled in cash and not in Shares shall not be counted against the foregoing
maximum Share limitations.

     

    4.2  Adjustment Provisions. If
there shall occur any change with respect to the outstanding Shares by reason of
any recapitalization, reclassification, stock dividend, extraordinary dividend,
stock split, reverse stock split or other distribution with respect to the
Shares, or any merger, reorganization, consolidation, combination, spin-off or
other similar corporate change, or any other change affecting the Common Stock,
the Committee may, in the manner and to the extent that it deems appropriate and
equitable to the Participants and consistent with the terms of the Plan, cause
an adjustment to be made in (i) the maximum number and kind of Shares provided
in Section 4.1hereof, (ii) the number and kind of Shares, units or other rights
subject to then outstanding Awards, (iii) the exercise or base price for each
Share, unit or other right subject to then outstanding Awards, and (iv) any
other terms of an Award that are affected by the event. Notwithstanding the
foregoing, in the case of Incentive Stock Options, any such adjustments shall,
to the extent practicable, be made in a manner consistent with the requirements
of Section 424(a) of the Code.

     

    ARTICLE
5

    STOCK
OPTIONS

    

    5.1  Grants. Each Option
granted shall be designated as either a Non-Qualified Option or an Incentive
Option. One or more Stock Options may be granted to any Eligible
Employee.

     

    5.2  Incentive Options. Any
Option designated by the Committee as an Incentive Option will be subject to the
general provisions applicable to all Options granted under the Plan plus the
following specific provisions:

     

       5.2.1  If an Incentive Option is granted
to a person who owns, directly or indirectly, stock representing more than 10%
of (i) the total combined voting power of all classes of stock of the Company
and its Subsidiaries, or (ii) a corporation that owns 50% or more of the total
combined voting power of all classes of stock of the Company, then

     

             5.2.1.1  the Option Price must equal at
least 110% of the Fair Market Value on the Grant Date; and

     

          5.2.1.2  the term of the Option
shall not be greater than five years from the Grant Date.

     

          5.2.2  The aggregate Fair Market Value
of Shares, determined at the Grant Date, with respect to which Incentive Options
that may become exercisable for the first time during any calendar year under
this Plan or any other plan maintained by the Company and its Subsidiaries shall
not exceed $100,000 determined
in accordance with Section 422(d) of the Code. To the extent that the aggregate
Fair Market Value of Shares with respect to which Incentive Options become
exercisable for the first time by any individual during any calendar year, under
all plans of the Company and its Subsidiaries, exceeds $100,000, such Options
shall be treated as Non-Qualified Options.

     

    
      
        -4- 

      

      
         

        
          

        

      

      
         

      

    

     

       5.2.3  Notwithstanding anything in this
Plan to the contrary, no term of this Plan relating to Incentive Options shall
be interpreted, amended or altered, nor shall any discretion or authority
granted under this Plan be exercised, so as to disqualify this Plan under
Section 422 of the Code, or, without the consent of the Participants affected,
to disqualify any Incentive Option under Section 422 of the Code.

     

        5.3  Terms of Options. Except
as otherwise required by Sections 5.2 and subject to Section 5.5.2 and ARTICLE
11, Options granted under this Plan shall be subject to the following terms and
conditions and shall be in such form and contain such additional terms and
conditions, not inconsistent with the terms of this Plan, as the Committee shall
deem desirable:

     

       5.3.1  The Option Price shall be
determined by the Committee at the Grant Date, except that no Incentive Option
may be granted for an Option Price less than 100% of Fair Market Value on the
Grant Date.

     

       5.3.2  The Option Term shall be fixed by
the Committee, but no Option shall be exercisable more than ten years after its
Grant Date.

     

       5.3.3  An Option shall be exercisable at
such time or times and subject to such terms and conditions as shall be
specified in the Award Agreement, provided, however, that an Option may not be
exercised as to the lesser of 100 Shares at any one time or the total number
available for exercise at that time.

     

       5.3.4  Stock Options shall terminate in
accordance with Section 5.5.2.

     

        5.4  Vesting of Stock Options. The
Committee shall, in its discretion, prescribe the time or times at which, or the
conditions upon which, a Stock Option or portion thereof shall become vested
and/or exercisable, and may accelerate the vesting or exercisability of any
Stock Option at any time. The requirements for vesting and exercisability of a
Stock Option may be based on the continued employment of a Participant with the
Company or a Subsidiary of the Company for a specified period (or periods) or on
the attainment of performance goals established by the Committee in its sole
discretion.

     

        5.5  Exercise of Options. Any
Participant entitled to exercise an Option in whole or in part, may do so by
delivering a written notice of exercise to the Company at its principal
office. The written notice shall specify the number of Shares for which an
Option is being exercised and the Grant Date of the Option being exercised and
shall be accompanied by full payment in cash or by check of the Option Price for
the Shares being purchased and any withholding taxes. In addition, at the
discretion of the Committee, either as set forth in an Option Agreement or
determined at the time of exercise, the exercise price and withholding taxes may
be paid:

     

       5.5.1  By tender to the Company of
Shares owned by the Participant having a Fair Market Value not less than the
exercise price (the Committee shall have the discretion to require that the
Participant own such shares for six (6) months);

     

       5.5.2  By the assignment of the proceeds
of a sale or loan with respect to some or all of the Shares being acquired upon
the exercise of the Option;

     

    
      
        -5- 

      

      
         

        
          

        

      

      
         

      

    

       5.5.3  By such other consideration as
may be approved by the Committee from time to time to the extent permitted by
applicable law; or

     

       5.5.4  By any combination of the methods
described above in Sections 5.5.1 to 5.3.3.

     

        5.6  Limited Transferability of
Non-Qualified Options. Except as otherwise provided in Section 13.4, no Stock
Option shall be Transferable or exercisable by any person other than the
Participant except (i) upon the Participant’s death, in accordance with Sections
5.7.3 and 5.7.5 hereof or (ii) in the case of Non-Qualified Stock Options only,
for the Transfer of all or part of the Stock Option to a Participant’s “family
member” (as defined for purposes of the Form S-8 registration statement under
the Securities Act of 1933), as may be approved by the Committee in its sole and
absolute discretion at the time of proposed Transfer. The Transfer of a
Non-Qualified Stock Option may be subject to such terms and conditions as the
Committee may in its discretion impose from time to time. Subsequent Transfers
of a Non-Qualified Stock Option shall be prohibited other than in accordance
with Sections 5.7.3, 5.7.4 and 5.7.5 hereof.

        

          5.7  Termination of Stock Options.
All Stock Options issued under this Plan shall terminate as
follows:

     

       5.7.1  During any period of continuous
employment or business relationship with the Company or any Subsidiary of the
Company, a Stock Option will be terminated only if it is fully exercised or if
it has expired by its terms or by the terms of this Plan, including this Section
5.7.1. For purposes of this Plan, any leave of absence approved by the Company
or the Subsidiary of the Company shall not be deemed to be a termination of
employment.

     

       5.7.2  If a Participant violates any
terms of any written employment, confidentiality or noncompetition agreement
between the Company or any Subsidiary of the Company and the Participant, all
existing Stock Options granted to such Participant will terminate. In addition,
if at the time of such violation such Participant has exercised Stock Options
but has not received certificates for the Shares to be issued, the Company may
void the Award and its exercise. Any such actions by the Company shall be in
addition to any other rights or remedies available to the Company or the
Subsidiaries of the Company in such circumstances. In the event Section 5.7.2
and 5.7.4 both apply to a situation, the provisions of Section 5.7.2 shall take
precedence over the provisions of Section 5.7.4 and govern the
situation.

     

       5.7.3  If a Participant’s employment by
the Company or any Subsidiary of the Company terminates by reason of death,
unless otherwise determined by the Committee, all Stock Options shall be fully
vested and may thereafter be exercised by the Participant’s beneficiary or legal
representative, for a period of one year or such longer period as the Committee
may specify at or after grant in all cases other than Incentive Options, or
until the expiration of the stated term of such Stock Option, whichever period
is shorter.

     

       5.7.4  If Participant’s employment by
the Company or a Subsidiary of the Company terminates by reason of Disability or
Retirement, unless otherwise determined by the Committee based upon, among other
factors, the Participant’s contributions to, and longevity with, the Company or
any Subsidiary, all Stock Options shall terminate (i) on the date which is 90
days after the date of such termination of employment or on the expiration of
the stated term of the Stock Option, whatever shall first occur, in the case of
a Participant which has been employed by the Company or any of its subsidiaries
for ten full years or less, (ii) on the date which is one year after the date of
such termination of employment or on the expiration of the stated term of the
Stock Option, whichever shall first occur, in the case of a Participant who has
been employed by the Company or any of its Subsidiaries for more than ten full
years, but less than twenty full years, or (iii) on the date which is two years
after the date of termination of employment or on the expiration of the stated
term of the Stock Option, whichever shall first occur, in the case of a
Participant
who has been employed by the Company or any of its Subsidiaries for twenty full
years or more.

    
      
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            5.7.5  Unless otherwise determined by
the Committee at or after grant, if a Participant’s employment by the Company or
any Subsidiary of the Company terminates for any reason other than death,
Disability or Retirement, the Stock Option will terminate immediately on the
date of termination of the employment.

     

          5.8  Repricing Prohibited. Subject to
the anti-dilution adjustment provisions contained in Section 0 hereof, without
the prior approval of the Company’s shareholders, evidenced by a majority of
votes cast, neither the Committee nor the Board shall cause the cancellation,
substitution or amendment of a Stock Option that would have the effect of
reducing the exercise price of such a Stock Option previously granted under the
Plan, or otherwise approve any modification to such a Stock Option that would be
treated as a “repricing” under the then applicable rules, regulations or listing
requirements adopted by the Nasdaq Stock Market.

     

          5.9  Awards to Non-Employee Directors.
Notwithstanding any other provisions herein, members of the Board of Directors
who are not otherwise employees of the Company shall be entitled to receive
Awards (other than Incentive Options) in forms and amounts as determined by the
Committee in its discretion under this Plan from time to time and at the
following times:

     

        5.9.1  On the date on which a
person first becomes a member of the Board of Directors, whether by election or
appointment; and

     

        5.9.2  On the date of
re-election by shareholders to the Board of Directors.

     

        5.9.3  On each annual
anniversary of election as a member of the Board of Directors
therafter.

     

    ARTICLE
6

    STOCK
APPRECIATION RIGHTS.

     

          6.1  Grant of Stock Appreciation
Rights. A Stock Appreciation Right may be granted to any Eligible Employee
selected by the Committee. Stock Appreciation Rights may be granted on a basis
that allows for the exercise of the right by the Participant or that provides
for the automatic payment of the right upon a specified date or event. Stock
Appreciation Rights shall be exercisable or payable at such time or times and
upon conditions as may be approved by the Committee, provided that the Committee
may accelerate the exercisability or payment of a Stock Appreciation Right at
any time.

     

          6.2  Freestanding Stock Appreciation
Rights. A Stock Appreciation Right may be granted without any related Stock
Option and may be subject to such vesting and exercisability requirements as
specified by the Committee in an Award Agreement. Such vesting and
exercisability requirements may be based on the continued service of the
Participant with the Company or its Subsidiaries for a specified time period (or
periods) or on the attainment of specified performance goals established by the
Committee in its discretion. A Stock Appreciation Right will be exercisable or
payable at such time or times as determined by the Committee, provided that the
maximum term of a Stock Appreciation Right shall be ten years from the Grant
Date. The base price of a Stock Appreciation Right granted without any related
Stock Option shall be determined by the Committee in its sole discretion;
provided, however, that the base price per Share of any such freestanding Stock
Appreciation Right shall not be less than 100% of the Fair Market Value of the
Shares on the Grant Date.

     

    
      
        -7- 

      

      
         

        
          

        

      

      
         

      

    

     

          6.3  Tandem Stock Option/Stock
Appreciation Rights. A Stock Appreciation Right may be granted in tandem with a
Stock Option, either at the time of grant or at any time thereafter during the
term of the Stock Option. A tandem Stock Option/Stock Appreciation Right will
entitle the holder to elect, as to all or any portion of the number of Shares
subject to such Stock Option/Stock Appreciation Right, to exercise either the
Stock Option or the Stock Appreciation Right, resulting in the reduction of the
corresponding number of Shares subject to the right so exercised as well as the
tandem right not so exercised. A Stock Appreciation Right granted in tandem with
a Stock Option hereunder shall have a base price per Share equal to the Exercise
Price of the Stock Option, will be vested and exercisable at the same time or
times that a related Stock Option is vested and exercisable, and will expire no
later than the time at which the related Stock Option expires.

     

          6.4  Payment of Stock Appreciation
Rights.  A Stock Appreciation Right will entitle the holder, upon
exercise or other payment of the Stock Appreciation Right, as applicable, to
receive an amount determined by multiplying: (i) the excess of the Fair Market
Value of a Share on the date of exercise or payment of the Stock Appreciation
Right over the base price of such Stock Appreciation Right, by (ii) the number
of Shares as to which such Stock Appreciation Right is exercised or paid.
Subject to the requirements of Section 409A of the Code, payment of the amount
determined under the foregoing may be made, as approved by the Committee and set
forth in the Award Agreement, in Shares valued at their Fair Market Value on the
date of exercise or payment, in cash, or in a combination of Shares and cash,
subject to applicable tax withholding requirements.

     

           6.5  Repricing
Prohibited.   Subject to the anti-dilution adjustment provisions
contained in Section 4.2 hereof, without the prior approval of the Company’s
shareholders, evidenced by a majority of votes cast, neither the Committee nor
the Board shall cause the cancellation, substitution or amendment of a Stock
Appreciation Right that would have the effect of reducing the base price of such
a Stock Appreciation Right previously granted under the Plan, or otherwise
approve any modification to such a Stock Appreciation Right that would be
treated as a “repricing” under the then applicable rules, regulations or listing
requirements adopted by the Nasdaq Stock Market.

     

    ARTICLE
7

    RESTRICTED
STOCK AWARDS

     

          7.1  Grant of Restricted Stock
Awards.  A Restricted Stock Award may be granted to any Eligible
Employee selected by the Committee. The Committee may require the payment by the
Participant of a specified purchase price in connection with any Restricted
Stock Award.

     

          7.2  Vesting
Requirements.  The restrictions imposed on Shares granted under a
Restricted Stock Award shall lapse in accordance with the vesting requirements
specified by the Committee in the Award Agreement, provided that the Committee
may accelerate the vesting of a Restricted Stock Award at any time. Such vesting
requirements may be based on the continued employment of the Participant with
the Company or its Subsidiaries for a specified time period (or periods) or on
the attainment of specified performance goals established by the Committee in
its discretion. If the vesting requirements of a Restricted Stock Award shall
not be satisfied, the Award shall be forfeited and the Shares subject to the
Award shall be returned to the Company.

     

          7.3  Restrictions.  Shares
granted under any Restricted Stock Award may not be transferred, assigned or
subject to any encumbrance, pledge, or charge until all applicable restrictions
are removed or have expired, unless otherwise allowed by the Committee. Failure
to satisfy any applicable restrictions shall result in the subject shares of the
Restricted Stock Award being forfeited and returned to the Company. The
Committee may require in an Award Agreement that certificates representing the
shares granted under a Restricted Stock Award bear a legend making appropriate
reference to the restrictions imposed,
and that certificates representing the shares granted or sold under a Restricted
Stock Award will remain in the physical custody of an escrow holder until all
restrictions are removed or have expired.

     

    
      
        -8- 

      

      
         

        
          

        

      

      
         

      

    

          7.4  Rights as
Shareholder.  Subject to the foregoing provisions of this Section 8
and the applicable Award Agreement, the Participant shall have all rights of a
shareholder with respect to the Shares granted to the Participant under a
Restricted Stock Award, including the right to vote the Shares and receive all
dividends and other distributions paid or made with respect thereto. The
Committee may provide in an Award Agreement for the payment of dividends and
distributions to the Participant at such times as paid to shareholders generally
or at the times of vesting or other payment of the Restricted Stock
Award.

     

          7.5  Section 83(b)
Election.  If a Participant makes an election pursuant to Section
83(b) of the Code with respect to a Restricted Stock Award, the Participant
shall file, within 30 days following the Grant Date, a copy of such election
with the Company and with the Internal Revenue Service, in accordance with the
regulations under Section 83 of the Code. The Committee may provide in an Award
Agreement that the Restricted Stock Award is conditioned upon the Participant’s
making or refraining from making an election with respect to the Award under
Section 83(b) of the Code.

     

    ARTICLE
8

    STOCK
UNIT AWARDS

     

          8.1  Grant of Stock Unit
Awards.  A Stock Unit Award may be granted to any Eligible Employee
selected by the Committee. The value of each stock unit under a Stock Unit Award
is equal to the Fair Market Value of a Share on the applicable date or time
period of determination, as specified by the Committee. A Stock Unit Award shall
be subject to such restrictions and conditions as the Committee shall determine.
A Stock Unit Award may be granted together with a dividend equivalent right with
respect to the Shares subject to the Award, which may be accumulated and may be
deemed reinvested in additional stock units, as determined by the Committee in
its discretion.

     

          8.2  Vesting of Stock Unit
Awards.  On the Date of Grant, the Committee shall in its discretion
determine any vesting requirements with respect to a Stock Unit Award, which
shall be set forth in the Award Agreement, provided that the Committee may
accelerate the vesting of a Stock Unit Award at any time. Vesting requirements
may be based on the continued employment of the Participant with the Company or
its Subsidiaries for a specified time period (or periods) or on the attainment
of specified performance goals established by the Committee in its discretion. A
Stock Unit Award may also be granted on a fully vested basis, with a deferred
payment date.

     

    8.3  Payment of Stock Unit
Awards.  A Stock Unit Award shall become payable to a Participant at
the time or times determined by the Committee and set forth in the Award
Agreement, which may be upon or following the vesting of the Award. Payment of a
Stock Unit Award may be made, at the discretion of the Committee, in cash or in
Shares, or in a combination thereof, subject to applicable tax withholding
requirements. Any cash payment of a Stock Unit Award shall be made based upon
the Fair Market Value of the Common Stock, determined on such date or over such
time period as determined by the Committee.

     

          8.4  No Rights as
Shareholder.  The Participant shall not have any rights as a
shareholder with respect to the shares subject to a Stock Unit Award until such
time as Shares are delivered to the Participant pursuant to the terms of the
Award Agreement.

     

    
      
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    ARTICLE
9

    STOCK
AWARDS

     

          9.1  Grant of Stock
Awards.  A Stock Award may be granted to any Eligible Employee
selected by the Committee. A Stock Award may be granted for past services, in
lieu of bonus or other cash compensation or for any other valid purpose as
determined by the Committee. A Stock Award granted to an Eligible Employee
represents Shares that are issued without restrictions on transfer and other
incidents of ownership and free of forfeiture conditions, except as otherwise
provided in the Plan and the Award Agreement. The Committee may, in connection
with any Stock Award, require the payment of a specified purchase
price.

     

          9.2  Rights as
Shareholder.  Subject to the foregoing provisions of this ARTICLE 9
and the applicable Award Agreement, upon the issuance of the Shares under a
Stock Award the Participant shall have all rights of a shareholder with respect
to the Shares, including the right to vote the shares and receive all dividends
and other distributions paid or made with respect thereto.

     

    ARTICLE
10

    EXTRAORDINARY
EVENTS

     

          10.1  In the event of the dissolution
or liquidation of the Company or any merger, other than a merger for the purpose
of the redomestication of the Company not involving a change in control,
consolidation, exchange or other transaction in which the Company is not the
surviving corporation or in which the outstanding Shares of the Company are
converted into cash, other securities or other property, each outstanding Award
shall automatically become fully vested and fully exercisable immediately prior
to such event. Thereafter the holder of any Option shall, upon exercise of the
Option, receive, in lieu of the stock or other securities and property
receivable upon exercise of the Option prior to such transaction, the stock or
other securities or property to which such holder would have been entitled upon
consummation of such transaction if such holder had exercised such Option
immediately prior to such transaction.

     

          10.2  All outstanding Awards shall
become fully vested and immediately exercisable in full if a change in control
of the Company occurs. For purposes of this Agreement, a “change in control of
the Company” shall be deemed to have occurred if:

     

            10.21  there occurs an event or series
of events by which any person or group of persons become the “beneficial owners”
as defined in Rule 13d-3 under the Exchange Act of at least 40% of the Common
Stock; or

     

            10.2.2  during any period of one year
after January 1, 2007, individuals who at the beginning of such period
constitute the Board and any new director whose election by the Board or
nomination for election by the Company’s shareholders was approved by a vote of
at least two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute a
majority thereof.

     

    ARTICLE
11

    FORFEITURE
EVENTS

     

          11.1  General. In addition to the
termination provisions applicable to Stock Options as provided in Section 5.5.2,
the Committee may specify in an Award Agreement at the time of the Award that
the Participant’s rights, payments and benefits with respect to an Award shall
be subject to termination, reduction, cancellation, forfeiture or
recoupment upon the occurrence of certain specified events, in addition to any
otherwise applicable vesting or performance conditions of an Award. Such events
shall include, but shall not be limited to, termination of employment for cause,
violation of material Company policies, breach of noncompetition,
confidentiality or other restrictive covenants that may apply to the
Participant, or other conduct by the Participant that is detrimental to the
business or reputation of the Company.

    
      
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          11.2  Termination for Cause. Unless
otherwise provided by the Committee and set forth in an Award Agreement, if a
Participant’s employment with the Company or any Subsidiary of the Company shall
be terminated for cause, the Company may, in its sole discretion, immediately
terminate such Participant’s right to any further payments, vesting or
exercisability with respect to any Award in its entirety. In the event a
Participant is party to an employment (or similar) agreement with the Company or
any Subsidiary of the Company that defines the term “cause,” such definition
shall apply for purposes of the Plan. The Company shall have the power to
determine whether the Participant has been terminated for cause and the date
upon which such termination for cause occurs. Any such determination shall be
final, conclusive and binding upon the Participant. In addition, if the Company
shall reasonably determine that a Participant has committed or may have
committed any act which could constitute the basis for a termination of such
Participant’s employment for cause, the Company may suspend the Participant’s
rights to exercise any options, receive any payment or vest in any right with
respect to any Award pending a determination by the Company of whether an act
has been committed which could constitute the basis for a termination for
“cause” as provided in this Section 11.2.

     

    ARTICLE
12

    TERMINATION
OR AMENDMENT OF THIS PLAN

     

          12.1  The Board may at any time amend,
suspend, or terminate the Plan; provided, however, that no amendments by the
Board shall, without further approval of the shareholders of the
Company:

     

               12.1.1  Change the definition of Eligible
Employees;

     

               12.1.2  Except as provided in ARTICLE 4
hereof, increase the number of Shares which may be subject to Awards granted
under the Plan; or increase the maximum number of Shares with respect to which
Awards may be granted to any Participant during any fiscal year;

     

          12.1.3  Cause the Plan or any Award
granted under the Plan that would otherwise meet the conditions for exclusion of
application of the $1 million deduction limitation imposed by Section 162(m) of
the Code to fail to meet such conditions;

     

          12.1.4  Cause any Option granted as an
Incentive Stock Option to fail to qualify as an “Incentive Stock Option” as
defined by Section 422 of the Code; or

     

          12.1.5  Where, as determined by
the Board, the approval by the shareholders may be necessary or advisable for
purposes of compliance with Section 162(m) or Section 422 of the Code, the
listing requirements of the Nasdaq Stock Market or other exchange or market or
for any other purpose, amendments to the Plan shall be approved by the
shareholders.

     

          12.2  No amendment or termination of
the Plan shall impair any Award granted under the Plan without the consent of
the holder thereof.

     

          12.3  This Plan shall continue in
effect until the expiration of all Awards granted under the Plan unless
terminated earlier in accordance with this ARTICLE 12; provided, however, that
it shall otherwise terminate
and no options shall be granted after ten (10) years from the date on which this
Plan became effective.

    
      
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    ARTICLE
13

    GENERAL
PROVISIONS

     

          13.1  Shareholder Approval. This Plan
shall become effective following its adoption by the Board and its approval by
the Company’s shareholders on the date of the 2007 Annual Meeting of
Shareholders.

     

          13.2  Award Agreements. An Award under
the Plan shall be evidenced by an Award Agreement in a written or electronic
form approved by the Committee setting forth the number of Shares, units or
rights subject to the Award, the exercise price, base price, or purchase price
of the Award, the time or times at which an Award will become vested,
exercisable or payable and the term of the Award. The Award Agreement may also
set forth the effect on an Award of termination of employment under certain
circumstances. The Award Agreement shall be subject to and incorporate, by
reference or otherwise, all of the applicable terms and conditions of the Plan,
and may also set forth other terms and conditions applicable to the Award as
determined by the Committee consistent with the limitations of the Plan. Award
Agreements evidencing Incentive Stock Options shall contain such terms and
conditions as may be necessary to meet the applicable provisions of Section 422
of the Code. The grant of an Award under the Plan shall not confer any rights
upon the Participant holding such Award other than such terms, and subject to
such conditions, as are specified in the Plan as being applicable to such type
of Award (or to all Awards) or as are expressly set forth in the Award
Agreement. The Committee need not require the execution of an Award Agreement by
a Participant, in which case, acceptance of the Award by the Participant shall
constitute agreement by the Participant to the terms, conditions, restrictions
and limitations set forth in the Plan and the Award Agreement as well as the
administrative guidelines of the Company in effect from time to
time.

     

          13.3  Deferrals. The Committee may
permit recipients of Awards to defer the distribution of all or part of any
Award in accordance with such terms and conditions as the Committee shall
establish.

     

          13.4  Transfer; Assignment. Except as
otherwise provided in Sections 5.6, 5.7.3, 5.7.4 and 5.7.5 hereof solely with
respect to Options and except as otherwise provided below, Awards under the Plan
shall not be Transferable by the Participant or exercisable by any person other
than the Participant, and Awards under the Plan shall not be subject in any
manner to assignment, alienation, pledge, encumbrance or charge:

     

          13.4.1  During the lifetime of a
Participant, an Award is not transferable voluntarily or by operation of law and
may be exercised only by such individual;

     

          13.4.2  Upon the death of a Participant,
an Award may be transferred to the beneficiaries or heirs of the Participant
will or by will or the laws of descent and distribution;

     

          13.4.3  An Award may be transferred
pursuant to a qualified domestic relations order as defined by the Code or Title
I of ERISA.

     

    Notwithstanding
the above, the Committee may, with respect to particular Awards, establish or
modify the terms of the Award to allow the Award to be transferred at the
request of a Participant to trusts established by a Participant or as to which a
Participant is a grantor or to lineal descendants of a Participant or otherwise
for personal and tax planning purposes of a Participant. If the Committee allows
such transfer, such Awards shall not be exercisable for a period of six months
following the action of the Committee

     

    
      
        -12- 

      

      
         

        
          

        

      

      
         

      

    

     

          13.5  Securities Laws. No Shares will
be issued or transferred pursuant to an Award unless and until all then
applicable requirements imposed by Federal and state securities and other laws,
rules and regulations and by any regulatory agencies having jurisdiction, and by
any exchanges upon which the Shares may be listed, have been fully met. As a
condition precedent to the issuance of Shares pursuant to the grant or exercise
of an Award, the Company may require the Participant to take any reasonable
action to meet such requirements. The Committee may impose such conditions on
any Shares issuable under the Plan as it may deem advisable, including, without
limitation, restrictions under the Securities Act of 1933, under the
requirements of any exchange upon which such shares of the same class are then
listed, and under any blue sky or other securities laws applicable to such
shares. The Committee may also require the Participant to represent and warrant
at the time of issuance or transfer that the Shares are being acquired only for
investment purposes and without any current intention to sell or distribute such
shares.

     

          13.6  No Right to Continued Employment.
Neither the establishment of the Plan nor the granting of any Award hereunder
shall confer upon any Eligible Employee any right to continue in the employ of
the Company or any Subsidiary of the Company, or interfere in any way with the
right of the Company or any Subsidiary of the Company to terminate such
employment at any time.

     

          13.7  No Rights as Shareholder. Except
as otherwise provided in Section 7.4, Participant shall have no rights as a
holder of Shares with respect to any unissued securities covered by an Award
until the date the Participant becomes the holder of record of such
securities.

     

          13.8  Other Plans. The value of, or
income arising from, any Awards issued under this Plan shall not be treated as
compensation for purposes of any pension, profit sharing, life insurance,
disability or other retirement or welfare benefit plan now maintained or
hereafter adopted by the Company or any Subsidiary of the Company, unless such
plan specifically provides to the contrary.

     

          13.9  Unfunded Plan. The adoption of
the Plan and any reservation of Shares or cash amounts by the Company to
discharge its obligations hereunder shall not be deemed to create a trust or
other funded arrangement. Except upon the issuance of Common Stock pursuant to
an Award, any rights of a Participant under the Plan shall be those of a general
unsecured creditor of the Company, and neither a Participant nor the
Participant’s permitted transferees or estate shall have any other interest in
any assets of the Company by virtue of the Plan. Notwithstanding the foregoing,
the Company shall have the right to implement or set aside funds in a grantor
trust, subject to the claims of the Company’s creditors or otherwise, to
discharge its obligations under the Plan.

     

          13.10  Withholding of Taxes. The
Participant shall be responsible for payment of any taxes or similar charges
required by law to be withheld from an Award or an amount paid in satisfaction
of an Award, which shall be paid by the Participant on or prior to the payment
or other event that results in taxable income in respect of an Award. The Award
Agreement may specify the manner in which the withholding obligation shall be
satisfied with respect to the particular type of Award.

     

          13.11  Compliance with Section 409A of
the Code. Except to the extent specifically provided otherwise by the Committee,
Awards under the Plan are intended to satisfy the requirements of Section 409A
of the Code (and the Treasury Department guidance and regulations issued
thereunder) so as to avoid the imposition of any additional taxes or penalties
under Section 409A of the Code. If the Committee determines that an Award, Award
Agreement, payment, distribution, deferral election, transaction or any other
action or arrangement contemplated by the provisions of the Plan would, if
undertaken, cause a Participant to become subject to any additional taxes or
other penalties under Section 409A of the Code, then unless the Committee
specifically provides otherwise, such Award, Award Agreement, payment,
distribution, deferral election, transaction or other action or arrangement
shall not be given effect to the extent it causes such result and the related
provisions of the Plan and/or Award Agreement
will be deemed modified, or, if necessary, suspended in order to comply with the
requirements of Section 409A of the Code to the extent determined appropriate by
the Committee, in each case without the consent of or notice to the
Participant.

     

    
      
        -13- 

      

      
         

        
          

        

      

      
         

      

    

          13.12  Severability. If any provision of
the Plan or any Award Agreement shall be determined to be illegal or
unenforceable by any court of law in any jurisdiction, the remaining provisions
hereof and thereof shall be severable and enforceable in accordance with their
terms, and all provisions shall remain enforceable in any other
jurisdiction.

     

          13.13  Liability. No employee of the
Company and no member of the Committee or the Board shall be liable for any
action or determination taken or made in good faith with respect to the Plan or
any Award granted hereunder and, to the fullest extent permitted by law, all
employees and members of the Committee or the Board shall be indemnified by the
Company for any liability and expenses which may occur through any claim or
cause of action arising under or in connection with this Plan or any Awards
granted under this Plan.

     

          13.14  Governing Law. This Plan and
actions taken in connection with it shall be governed by the laws of Delaware,
without regard to the principles of conflict of laws.

     

    As
adopted by the Board of Directors on March 14, 2007.

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    -14-

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