Document:

exv10w5

Exhibit 10.5

INDEPENDENT CONTRACTOR AGREEMENT

INDEPENDENT CONTRACTOR AGREEMENT between AbTech Industries, Inc., a Delaware Corporation
(hereinafter “COMPANY”), and Gordon Brown (hereinafter “CONTRACTOR”). Each of CONTRACTOR and
COMPANY may from time to time be referred to individually as a “Party” and collectively as the
“Parties.”

COMPANY desires to obtain the benefit of the services of CONTRACTOR, and CONTRACTOR desires to
provide such services on the terms and conditions set forth in this Independent Contractor
Agreement (the “AGREEMENT”). The parties acknowledge that it is their intent that the relationship
between them will be an independent contractor relationship and not an employment relationship.

In consideration of the promises and mutual obligations hereafter set forth, the parties hereto
agree as follows:

AGREEMENT

1. Effective Date and General Scope of Engagement

	 	A.	 	AGREEMENT is entered into as of May 1, 2010 by and between COMPANY and CONTRACTOR.
	 
	 	B.	 	During the Term (as defined below) of this AGREEMENT, CONTRACTOR will perform those
services (hereinafter referred to as the “Services”) described in the statement of work
contained in Appendix A (the “Scope of Work”).
	 
	 	C.	 	AGREEMENT consists of this AGREEMENT and Appendix A-C. The Parties acknowledge that a
separate agreement shall be entered into entitling CONTRACTOR to stock options or other
equity instruments, pursuant to the terms described in Section 3(D) and 3(E), below, of
this AGREEMENT.

2. Term

The term of this AGREEMENT (the “Term”) shall commence on May 1, 2010 and continue until
termination as provided herein. This AGREEMENT may be terminated (a) at any time by either party
for any reason upon thirty (30) days prior written notice to the other party of its intention to
terminate the AGREEMENT, (b) upon written notice in the event of a termination for cause, or (c) on
December 31, 2010.

3. Fees, Expenses, Incentive Compensation, and Equity

	 	A.	 	COMPANY shall pay to CONTRACTOR a monthly retainer for his services under this
AGREEMENT. During the first eight (8) months of the term of this AGREEMENT the

 

 

	 	 	 	monthly retainer will be fifteen thousand dollars ($15,000.00) per month (the “Professional
Fee”). The Professional Fee is non-refundable and shall be paid on or before the
1st day of each calendar month for professional services to be provided that
month. In the event a full month is not earned due to mid-month start or termination, the
Professional Fee shall be prorated. During the first eight (8) months of the Term of this
AGREEMENT, five thousand dollars ($5,000.00) of each monthly retainer shall be guaranteed.
The payment of this guaranteed portion of the monthly retainer will be secured by the
COMPANY issuing to CONTRACTOR a non-interest bearing Convertible Promissory Note, in the
same form as such notes currently being offered by COMPANY TO INVESTORS, IN THE PRINCIPAL
amount of forty thousand dollars ($40,000.00) (the “Note”). Until the Note is paid in full,
five thousand dollars ($5,000.00) of each monthly retainer paid by COMPANY will be applied
as a payment on the Note so that at the end of eight (8) monthly retainer payments of at
least five thousand dollars ($5,000.00) each, the Note will be paid in full and CONTRACTOR
will return the Note to COMPANY for cancellation.

	 	B.	 	COMPANY shall pay to CONTRACTOR up to thirty thousand dollars ($30,000.00) in travel
and living expense reimbursement during calendar year 2010 for travel to and from Phoenix
and Sacramento. CONTRACTOR may incur additional travel and other related business expenses
on behalf of the COMPANY, additional expenses incurred by the CONTRACTOR must conform to
the travel and expense policy of the COMPANY attached as Appendix B. International travel
and expenses in aggregate exceeding one thousand five hundred dollars ($1,500.00) in any
given month require prior approval from COMPANY before those expenses are incurred.

	 	C.	 	COMPANY shall pay to CONTRACTOR incentive compensation on revenue derived from his
activities with the COMPANY. The incentive payments to CONTRACTOR shall include: (i)
payments of 2.5% of gross revenue collected by the COMPANY from all customer accounts that
CONTRACTOR is designated as the primary relationship manager, and (ii) payments of 0.5% of
gross revenue collected by the COMPANY from all customer accounts during the term of this
AGREEMENT. Incentive payments due under section 3(C)(i) and 3(C)(ii) of this paragraph will
be made by the COMPANY to CONTRACTOR within 30 days of the end of each calendar quarter
based on the gross revenue payments received by COMPANY.

	 	D.	 	CONTRACTOR shall be entitled to earn COMPANY stock options or other COMPANY equity
instruments in a form and with terms to be determined by the Parties. A separate agreement
(the “Equity Agreement”) shall be executed by the Parties entitling CONTRACTOR to such
stock options or other equity instruments and the Equity Agreement shall be independent
from this AGREEMENT. Though the form and terms shall be determined at a later date,
COMPANY agrees that the CONTRACTOR shall participate at a stock option or equity instrument
level commensurate with, and no less than that of, a vice president of the COMPANY. Vesting
of the stock option or equity instrument shall conform to the expiration date of this
AGREEMENT. The Parties shall execute the Equity Agreement entitling CONTRACTOR to stock
options or other equity instruments according to the terms set forth in this paragraph no
later than July 31, 2010

 

 

	 	 	 	or before a significant event such as an IPO, whichever occurs first.

	 	E.	 	In addition to the stock options described in 3(D), CONTRACTOR shall be entitled to a
one-time grant of 9,000 stock options. The options shall be issued under a separate stock
option grant form and agreement. The options shall be fully vested at the time of
issuance.

	 	F.	 	Amounts owed to CONTRACTOR for more than thirty (30) days beyond invoicing or date due
as described above shall accrue interest each day that any such amount is not paid and
received by CONTRACTOR at a rate equal to one percent (1.0%) per month.

4. Methodology, Status of Independent Contractor, and Computer Use

	 	A.	 	The parties intend this AGREEMENT to create an independent contractor relationship.
Neither this AGREEMENT nor CONTRACTOR’S performance hereunder shall constitute or create an
employee/employer relationship. CONTRACTOR shall not be eligible for any benefits
applicable to active employees of COMPANY. CONTRACTOR shall act solely as an independent
contractor, not as an employee or agent of COMPANY. CONTRACTOR’s authority is limited to
providing professional consulting services, and CONTRACTOR shall have no authority, without
the express written consent of COMPANY, to incur any obligation or liability, or make any
commitments on behalf of the COMPANY.

	 	B.	 	CONTRACTOR may be assigned a user ID and password for access to a COMPANY computer. All
information sent, received or stored on COMPANY equipment is COMPANY property. COMPANY
reserves the right to access and disclose all information within its computer network for
any purpose and to monitor the use of its computers and telecommunications equipment.
Independent contractors do not have any right to privacy with respect to their use of
COMPANY computers, networks, telephones, voice mail or other systems. User passwords to
COMPANY computer systems are confidential and sharing passwords is strictly forbidden.
Where it is necessary to share a password under emergency circumstances, CONTRACTOR agrees
to change its password within 24 hours of sharing it. CONTRACTOR agrees to use COMPANY
systems for the sole benefit of performing Services and to use such systems in a
professional manner.

5. Proprietary and Sensitive Information

Proprietary and sensitive information shall be governed by the Parties’ separately executed
Confidentiality Agreement, which is incorporated into this AGREEMENT by reference, as Appendix C.

 

 

6. Services

CONTRACTOR agrees to perform for COMPANY the Services described in this AGREEMENT with that degree
of skill and judgment normally exercised by recognized professional persons performing services of
a similar nature.

CONTRACTOR’S recommendations and conclusions will be made to the best of his/its knowledge and
belief based on information furnished to it by COMPANY at the time the Services are performed and
CONTRACTOR shall be entitled to rely upon such information.

7. Responsibility

CONTRACTOR shall perform the Services as an independent contractor in accordance with its own
methods, the terms of this AGREEMENT, and applicable laws and regulations. CONTRACTOR’s liability
arising out of or in connection with the Services shall be limited to re-performing at its own
expense any such Services which are (a) deficient because of CONTRACTOR’s failure to perform such
Services in accordance with the standards imposed by law upon professionals performing services of
a similar nature, and (b) reported in writing to CONTRACTOR within a reasonable time, not to exceed
thirty (30) days after the discovery thereof, but in no event later than ninety (90) days from the
completion of the Services.

CONTRACTOR’s total liability to COMPANY arising out of or in connection with this AGREEMENT shall
not exceed the total Professional Fees paid to CONTRACTOR under the AGREEMENT; COMPANY agrees to
release CONTRACTOR from any liability in excess thereof. COMPANY agrees to release CONTRACTOR from
any liability for loss of or damage to COMPANY’s property.

Under no circumstances shall CONTRACTOR be liable to COMPANY for any consequential or incidental
damages, including but not limited to loss of use or loss of profit. NEITHER PARTY TO THIS
AGREEMENT SHALL BE LIABLE FOR THE OTHER’S LOST PROFITS OR SPECIAL, INCIDENTAL, OR CONSEQUENTIAL
DAMAGES, WHETHER IN AN ACTION IN CONTRACT OR TORT, EVEN IF THE PARTY HAS BEEN HAS BEEN ADVISED BY
THE OTHER PARTY OF THE POSSIBILITY OF SUCH DAMAGES.

Releases from and limitations of liability expressed in this AGREEMENT shall apply even in the
event of the fault or negligence of the Party released or whose liability is limited, and shall
extend to the directors, officers, employees, subcontractors and related entities of such Party.

COMPANY hereby agrees to defend, indemnify and hold harmless CONTRACTOR, its respective officers,
employees, agents, assigns and successors in interest from and against any and all third Party
liability, damages, losses, claims, demands, actions, causes of action, costs including attorney’s
fees and expenses for death or injury to person or damage to property arising out of or in
connection with this AGREEMENT, to the extent caused by COMPANY’s acts or omissions of any kind,
including negligence.

 

 

8. Reports and Other Written Materials

Reports and other written materials that are prepared specifically for the COMPANY (and are
indicated to be prepared for COMPANY) may not be reproduced, distributed or used by third Parties
without first obtaining prior written consent by CONTRACTOR. COMPANY shall own such reports and
written materials provided to it and data in the form in which it is supplied. Provided however
that CONTRACTOR will own the materials and know-how it brings to, and the general know-how it gains
from this engagement. CONTRACTOR shall retain all rights to its pre-existing methodologies and data
used in, and non-confidential methodologies and data developed during, this engagement. This
requirement shall be subject to confidentiality obligations, described in Section 5 above.

Reports and other written materials provided to COMPANY by CONTRACTOR may not be relied upon by
others. Neither CONTRACTOR, COMPANY nor any person acting on behalf of either assumes any
liabilities with respect to the use of or for damages resulting from the use of any information
contained in any written materials provided by CONTRACTOR or disseminated, expressed, or conveyed
by any other means including but not limited to verbal communication. CONTRACTOR does not represent
or warrant that any assumed conditions will come to pass.

9. Changes

COMPANY may from time to time request or approve changes to the scope of work or otherwise within
the general scope of the services, or may request or approve that CONTRACTOR perform additional
services or extra work, or CONTRACTOR may suggest or request such changes. In any such event,
CONTRACTOR shall notify COMPANY that such changes or additions are necessary or being requested.
Any such changes or additions shall be agreed to in writing by both Parties. In the event that any
such change or additional services or extra work results in increased costs to CONTRACTOR or in an
increase in the time for completion of the Services, CONTRACTOR’S compensation and the schedule
shall be equitably adjusted.

10. Force Majeure

Neither Party shall be considered in default in the performance of its obligations hereunder to the
extent that the performance of any such obligation is prevented or delayed by any cause, existing
or future, which is beyond the reasonable control of such Party. In such event, the schedule and
compensation for the performance of the services shall be equitably adjusted.

11. Subcontract Rights

CONTRACTOR shall not have the right to subcontract any portion of the services to its related
entities without the prior approval of COMPANY. CONTRACTOR guarantees the compliance

 

 

of such related entities with the terms of this AGREEMENT and that COMPANY will not incur any
duplication of costs by reason of such subcontracts.

12. Use of Name and Publicity

Each Party agrees that it will not, without the prior written consent of the other Party in each
instance use in advertising, publicity, or otherwise the name of the other Party, or any affiliate,
partner, employee or agent of the other Party, or any trade name, trademark, trade device, service
mark, symbol or any abbreviation, contraction, or simulation thereof owned by the other Party or
its affiliates. Provided, however, that either Party may disclose the existence of a contractual
relationship between the Parties for promotional purposes.

13. Termination

AGREEMENT may be terminated according to the terms set forth in Section 2 above.

Payments obligated to CONTRACTOR under Section 3 above, which reasonably reflects the portion of
the Services performed to the date of termination, plus all reasonable costs incurred as a result
of such termination, shall be payable by COMPANY to CONTRACTOR on the date of termination.
Incentive Payments pursuant to the terms described in Section 3 that are earned based on revenue
received by COMPANY during the quarter in which the date of termination occurs shall be paid at the
end of the quarter.

Upon such termination, CONTRACTOR’S liability to COMPANY arising out of or in connection with the
performance of the services shall cease.

14. Dispute Fees and Costs

In the event of a dispute under this AGREEMENT, the prevailing Party shall be entitled to recover
its reasonable and necessary attorney’s fees and costs incurred in connection with such dispute.

If in the future CONTRACTOR is requested by COMPANY to provide assistance, give testimony, review
documents or the like in connection with claims, disputes, investigations or litigation involving
the project or facilities to which this AGREEMENT pertains, then COMPANY shall compensate
CONTRACTOR time and expenses (including reasonable and necessary attorney’s fees) incurred by
CONTRACTOR in connection with such activities.

15. Complete Agreement

This signed AGREEMENT, Appendix A-C, shall constitute the entire Independent Contractor Agreement
between COMPANY and CONTRACTOR with respect to the subject matter

 

 

referenced herein and merge all of the previous and contemporaneous discussions, representations,
and understandings between the Parties with respect to the subject matter of this AGREEMENT. This
AGREEMENT shall not be altered except in writing, signed by both Parties.

This AGREEMENT shall be binding upon and inure to the benefit of the executors, administrators,
successors, and assigns of the Parties hereto. Neither Party shall assign, transfer or delegate any
of the rights or obligations hereunder without prior written consent of the other Party, except
that either Party may assign its rights and obligations in connection with a sale of substantially
all its assets or pursuant to a merger.

16. Third Party Liability

A person who is not a Party to this AGREEMENT shall have no right to enforce any of its terms.

17. Applicable Law

This AGREEMENT and the relationship between the Parties shall be governed by and interpreted in
accordance with the laws of Arizona, without reference to its conflicts of law principles. The
Parties further agree that no claim may be brought against any Party in contract, tort or otherwise
save in so far as such claim could be brought under the laws of the State of Arizona or any
applicable US federal law without reference to the law of any other country.

	 	 	 	 	 	 	 

	ABTECH INDUSTRIES, INC.

	 	 	CONTRACTOR (GORDON BROWN)	 	 
	 
	 	 	 	 	 	 
	By:

	/s/ Glenn R. Rink	 	 	/s/ Gordon Brown	 	 
	 	 

Title: President

	 
	 	 

Date: 5/20/10
	 	 
	 	Date: 5/20/2010
	 	 	 	 	 

 

 

APPENDIX A

SCOPE OF WORK

Services:

	 	•	 	Advisory role regarding general strategic planning for COMPANY (including
analysis support of new customer opportunities, new market segments and business
model analysis).
	 
	 	•	 	Develop a sales infrastructure within the COMPANY. Activities may include
training in sales techniques, establish goals to monitor performance, establish a
defined reporting system, and implement an electronic sales tracking system.
	 
	 	•	 	Other tasks as agreed to by both Parties

	Reporting: 	 	CONTRACTOR agrees to participate in developing an annual
plan of activities that will be broken down into
quarterly objectives. Progress and objectives will be
reviewed on a no less than quarterly basis.

 

 

APPENDIX B

TRAVEL AND EXPENSE POLICY

 

 

APPENDIX C

CONFIDENTIALITY AGREEMENTexv10w6

Exhibit 10.6

ABTECH INDUSTRIES, INC.

2007 STOCK PLAN

	1.	 	Purposes of the Plan. The purposes of this Stock Plan are to attract and
retain the best available personnel for positions of substantial responsibility, to provide
additional incentives to Employees, Directors and Consultants and to promote the success of the
Company’s business. Options granted under the Plan may be Incentive Stock Options or Nonstatutory
Stock Options, as determined by the Administrator at the time of grant. Stock Purchase Rights may
also be granted under the Plan.

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

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

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

          (c) “Approval Date” means the date on which the stockholders of the Company approve
the Plan pursuant to Section 19.

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

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

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

          (g) “Common Stock” means the Common Stock of the Company.

          (h) “Company” means AbTech Industries, Inc., a Delaware corporation.

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

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

          (k) “Disability” means the definition under the long-term disability policy of the
Company to which the Optionee provides services regardless of whether the Optionee is covered by
such policy. If the Company to which the Optionee provides service does not have a long-term
disability plan in place, “Disability” means that an Optionee is unable to carry out the
responsibilities and functions of the position held by the Optionee by reason of any medically
determinable physical or mental impairment for a period of not less than ninety (90) consecutive
days. An Optionee will not be considered to have incurred a Disability unless he or she furnishes
proof of such impairment sufficient to satisfy the Administrator in its discretion.

          (l) “Employee” means any person, including Officers and Directors, employed by the
Company or any Parent or Subsidiary of the Company. A Service Provider shall not cease to be an
employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between
locations of the Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed three (3) months, unless
reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment
upon expiration of a leave of absence approved by the Company is not so guaranteed, then three (3)
months and one (1) day following the expiration of such three (3) month period, any Incentive
Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and shall
be treated for tax purposes as a Nonstatutory Stock Option. Neither service as a Director nor
payment of a director’s fee by the Company shall be sufficient to constitute “employment” by the
Company.

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

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

               (i) If the Common Stock granted, or to be granted to a Service Provider under this Plan, is
listed on any established stock exchange or a national market system, including without limitation
the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair
Market Value shall be the closing sales price for such stock (or

			
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the closing bid, if no sales were reported) as quoted on such exchange or system for the last
market trading day prior to the time of determination, as reported in The Wall Street Journal or
such other source as the Administrator deems reliable;

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

               (iii) In the absence of an established market for the Common Stock of the type described in
(i) and (ii), above, the Fair Market Value thereof shall be determined by the Administrator based
upon a reasonable application of a reasonable valuation method intended to prevent the Option or
Stock Purchase Right from being subject to Section 409A of the Code, with consideration given to
(A) the price at which securities of reasonably comparable corporations (if any) in the same
industry are being traded, or (B) if there are no securities of reasonably comparable corporations
in the same industry being traded, the earnings history, book value and prospects of the issuer in
light of market conditions generally.

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

          (p) “Issued and Outstanding Shares” means, as of a given date, the sum of (i) the
number of Shares issued and outstanding on such date, plus (ii) the number of Shares that would be
outstanding on such date if all shares of convertible preferred stock of the Company outstanding
on such date were converted into Shares as of such date.

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

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

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

          (t) “Option Agreement” means a written or electronic agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option grant. The Option
Agreement is subject to the terms and conditions of the Plan.

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

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

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

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

          (y) “Plan” means this 2007 Stock Plan.

          (z) “Registration Date” means the first to occur of (i) the closing of the first sale
to the general public pursuant to a registration statement filed with and declared effective by
the Securities and Exchange Commission under the Securities Act of (A) the Common Stock or (B) the
same class of securities of a successor corporation (or its Parent) issued pursuant to a merger or
consolidation of the Company in exchange for or in substitution of the Common Stock; and (ii) in
the event of such merger or consolidation, the date of the consummation of the merger or
consolidation if the same class of securities of the successor corporation (or its Parent)
issuable in such merger or consolidation shall have been sold to the general public pursuant to a
registration statement filed with and declared effective by the Securities and Exchange Commission
under the Securities Act of 1933, as amended, on or prior to the date of consummation of such
merger or consolidation.

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

          (bb) “SEC” means the Securities and Exchange Commission.

          (cc) “Section 16(b)” means Section 16(b) of the Exchange Act.

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

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

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

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

			
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          (hh) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter
existing, as defined in Section 424(f) of the Code. In addition, where not prohibited by the
Code, “subsidiary corporation” also means any non-corporate entities deemed to be “majority-owned”
subsidiaries under Rule 701 of the Securities Act, as interpreted by the SEC, including but not
limited to those set forth in the SEC no-action letter granted to Sutter Surgery Centers, Inc., on
November 10, 1993.

          (ii) “U.S.” means the United States of America.

     3. Stock Subject to the Plan. Subject to the provisions of Section 13 of the Plan,
the maximum aggregate number of Shares which may be subject to Options and Stock Purchase Rights
granted under the Plan or issued upon exercise of Options and Stock Purchase Rights granted under
the Plan shall not exceed 15% of the number of Issued and Outstanding Shares as of the Approval
Date; provided that if the number of Issued and Outstanding Shares increases after the Approval
Date, then the maximum aggregate number of Shares which may be subject to Options and Stock
Purchase Rights granted under the Plan or issued upon exercise of Options and Stock Purchase
Rights granted under the Plan shall be increased by 15% of such increase. The Shares may be
authorized but unissued, or reacquired Common Stock. Notwithstanding the foregoing, a maximum of
950,000 Shares may be granted in the form of Incentive Stock Options under the Plan.

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

     4. Administration of the Plan.

          (a) Administrator. The Plan shall be administered by the Board or a Committee
appointed by the Board, which Committee shall be constituted to comply with Applicable Laws,
including, but not limited to Rule 16b-3 of the Exchange Act and Section 162(m) of the Code (at
such time as the Company is subject to the Exchange Act).

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

               (i) to determine the Fair Market Value (in accordance with Section 2(n));

               (ii) to select the Service Providers to whom Options and Stock Purchase Rights may from time
to time be granted hereunder;

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

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

               (v) to determine the terms and conditions, of any Option or Stock Purchase Right granted
hereunder. Such terms and conditions shall include, but are not limited to, the exercise price
(which must be determined in accordance with Section 8), the time or times when Options or Stock
Purchase Rights may be exercised (which may be based on performance criteria), any vesting
acceleration or waiver of forfeiture restrictions, and any repurchase rights, restriction, or
limitation regarding any Option or Stock Purchase Right or the Common Stock relating thereto,
based in each case on such factors as the Administrator, in its sole discretion, shall determine.

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

               (vii) to reduce the exercise price of any Option to the then current Fair Market Value if the
Fair Market Value of the Common Stock covered by such Option has declined since the date the
Option was granted, provided that no such reduction shall be made without the express written
consent of the Optionee if such change would cause the Option to become subject to Section 409A of
the Code;

               (viii) to initiate an Option Exchange Program;

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

               (x) to allow Optionees to satisfy withholding tax obligations by electing to have the Company
withhold from the Shares to be issued upon exercise of an Option or Stock Purchase Right that
number of Shares having a Fair Market Value equal to the amount required to be withheld. The Fair
Market Value of the Shares to be withheld shall be determined on the date that the amount of tax
to be withheld is to be determined. For the purposes of establishing the amount of Shares that
may be used to satisfy an Optionee’s tax withholding obligations, the Administrator shall limit
the Shares used for

			
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withholding to the minimum statutory withholding rates for federal and state tax purposes,
including payroll taxes on such supplemental income tax. All elections by Optionees to have
Shares withheld for this purpose shall be made in such form and under such conditions as the
Administrator may deem necessary or advisable; and

               (xi) to construe and interpret the terms of the Plan and awards granted pursuant to the Plan;
provided, however, the Administrator shall take all necessary action to insure that any awards
granted pursuant to the Plan to the chief executive officer and the four highest compensated
Officers of the Company are administered in accordance with Section 162(m)(4)(B) or (C) of the
Code and applicable regulations (at such time as the Company is subject to the Exchange Act).

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

     5. Eligibility.

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

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

          (c) Neither the Plan nor any Option or Stock Purchase Right shall confer upon any Optionee
any right with respect to continuing the Optionee’s relationship as a Service Provider with the
Company, nor shall it interfere in any way with his or her right or the Company’s right (subject
to the provisions of any employment or other agreement between the Company and such Optionee) to
terminate such relationship at any time, with or without cause.

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

     7. Term of Option. The term of each Option shall be stated in the Option Agreement;
provided, however, that the term shall be no more than 10 years from the date of grant thereof.
In the case of an Incentive Stock Option granted to an Optionee who, at the time the Option is
granted, owns stock representing more than 10% of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the term of the Option shall be five years from the date of
grant or such shorter term as may be provided in the Option Agreement.

     8. Option Exercise Price and Consideration.

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

               (i) In the case of an Incentive Stock Option:

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

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

               (ii) In the case of a Nonstatutory Stock Option, the per Share exercise price shall be no
less than 100% of the Fair Market Value per Share on the date of grant.

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

               (iii) cash,

               (iv) check,

               (v) promissory note,

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

			
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               (vii) consideration received by the Company under a cashless exercise program implemented by
the Company in connection with the Plan, or

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

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

     9. Exercise of Option.

          (a) Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder
shall be exercisable according to the terms hereof at such times and under such conditions as
determined by the Administrator and set forth in the Option Agreement. Options shall become
exercisable at a rate of no less than 20% per year over five years from the date the options are
granted. Unless the Administrator provides otherwise, vesting of Options granted hereunder shall
be tolled during any unpaid leave of absence. An Option may not be exercised for a fraction of a
Share.

          An Option shall be deemed exercised when the Company receives: (i) written or electronic
notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise
the Option, (ii) full payment for the Shares with respect to which the Option is exercised, and
(iii) in the case of a Nonstatutory Option, arrangements satisfactory to the Company to satisfy any
federal, state, local or foreign withholding tax obligations that may arise in connection with the
exercise of the Nonstatutory Option. Full payment may consist of any consideration and method of
payment authorized by the Administrator and permitted by the Option Agreement and the Plan. Shares
issued upon exercise of an Option shall be issued in the name of the Optionee. Until the Shares
are issued (as evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or receive dividends or any other
rights as a stockholder shall exist with respect to the Shares, notwithstanding the exercise of the
Option. The Company shall issue (or cause to be issued) such Shares promptly after the Option is
exercised. No adjustment will be made for a dividend or other right for which the record date is
prior to the date the Shares are issued, except as provided in Section 13 of the Plan.

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

          (b) Termination of Relationship as a Service Provider. Subject to Sections 9(c) and
9(d), in the case of a Nonstatutory Stock Option, if an Optionee ceases to be a Service Provider,
such Optionee may exercise his or her Option within such period of time as is specified in the
Option Agreement (but not less than 30 days) to the extent that the Option is vested on the date
of termination (but in no event later than the expiration of the term of the Option as set forth
in the Option Agreement). Subject to Sections 9(c) and 9(d), in the case of an Incentive Stock
Option, the Option shall remain exercisable for three months following the Optionee’s termination,
or such shorter time period set forth in the Option Agreement (but in no event later than the
expiration of the term of the Option as set forth in the Option Agreement). If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does
not exercise his or her Option within the time specified by the Administrator, the Option shall
terminate and the Shares covered by such Option shall revert to the Plan.

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

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

			
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          (e) Buyout Provision. The Administrator may at any time offer to buy for a payment,
in cash or Shares, an Option previously granted, based on such terms and conditions as the
Administrator shall establish and communicate to the Optionee at the time that such offer is made,
provided however that the manner in which the Option is purchased does not involve a modification,
extension, substitution, or any other form of transaction which would cause the Option to become
subject to Section 409A of the Code, or to make an Option subject to Section 409A of the Code fail
to comply with Section 409A of the Code, without the express written consent of the Optionee.
Prior to any such offers, the Administrator shall consult the Company’s accountants or tax
advisors.

     10. Transferability and Non-Transferability of Options and Stock Purchase Rights.
Incentive Stock Options may not be sold, pledged, assigned, hypothecated, transferred, or disposed
of in any manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee. Subject to compliance with
all Applicable Laws, the Administrator may in its discretion grant transferable Nonstatutory Stock
Options and Stock Purchase Rights in accordance with the terms set forth in the applicable Option
Agreement or Restricted Stock purchase agreement.

     11. Stock Purchase Rights.

          (a) Rights to Purchase. Stock Purchase Rights may be issued either alone, in
addition to, or in tandem with other awards granted under the Plan and/or cash awards made outside
of the Plan. After the Administrator determines that it will offer Stock Purchase Rights under
the Plan, it shall advise the offeree in writing or electronically of the terms, conditions and
restrictions related to the offer, including the number of Shares that such person shall be
entitled to purchase, the price to be paid, and the time within which such person must accept such
offer. The offer shall be accepted by execution of a Restricted Stock purchase agreement in the
form determined by the Administrator. The purchase price of the Restricted Stock purchased by a
person shall be not less than one hundred percent (100%) of the Fair Market Value per Share on the
date of grant.

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

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

     12. Repurchase Rights. If the provisions of an Option Agreement or a Restricted
Stock purchase agreement grant to the Company the right to repurchase Shares upon termination of
an Optionee’s service with the Company or any Parent or Subsidiary of the Company, the applicable
agreement shall (or may, with respect to Options or Stock Purchase Rights granted or issued to
Officers, Directors or Consultants) provide that:

          (a) the right to repurchase must be exercised, if at all, within ninety (90) days of the
termination of the Optionee’s service with the Company or any Parent or Subsidiary of the Company
(or in the case of Shares issued upon exercise of Options after the date of termination of the
Optionee’s service with the Company or any Parent or Subsidiary of the Company, within ninety (90)
days after the date of the Option exercise);

          (b) the consideration payable for the Shares upon exercise of such repurchase right shall be
made in cash or by cancellation of purchase money indebtedness within the ninety (90) day periods
specified in Section 12(a);

          (c) the amount of such consideration shall be equal to the original purchase price paid by
the Optionee for each such Share or the Fair Market Value of the Shares to be repurchased on the
date of termination of Optionee’s service with the Company or any Parent or Subsidiary of the
Company as set forth in the Option Agreement or Stock Purchase Right agreement; provided, that if
such Shares may be repurchased at the original purchase price, such repurchase right shall lapse
at the rate of at least twenty percent (20%) of the Shares subject to the Option or Stock Purchase
Right per year over five (5) years from the date the Option or Stock Purchase Right is granted
(without respect to the date the Option or Stock Purchase Right was exercised or became
exercisable); and

          (d) the right to repurchase Shares, other than a right to repurchase under which Shares may
be repurchased at the original purchase price, shall terminate on the Registration Date.

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

          (a) Changes in Capitalization. Subject to any required action by the stockholders of
the Company, the number of shares of Common Stock covered by each outstanding Option or Stock
Purchase Right, and the number of shares of Common Stock which have been authorized for issuance
under the Plan but as to which no Options or Stock Purchase Rights have yet been granted or which
have been returned to the Plan upon cancellation or expiration of an Option or Stock Purchase
Right, as well as the price per share of Common Stock covered by each such outstanding Option or
Stock Purchase Right, shall be proportionately adjusted for any increase or decrease in the number
of issued shares of Common Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other increase or decrease

			
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in the number of issued shares of Common Stock effected without receipt of consideration by
the Company. The conversion of any convertible securities of the Company shall not be deemed to
have been “effected without receipt of consideration.” Such adjustment shall be made by the
Board, whose determination in that respect shall be final, binding and conclusive. Except as
expressly provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no adjustment by
reason thereof shall be made with respect to, the number or price of shares of Common Stock
subject to an Option or Stock Purchase Right.

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

          (c) Merger; Consolidation; or Asset Sale. If the Company is a party to a merger,
consolidation or the sale of all or substantially all of the assets of the Company, outstanding
Options and Stock Purchase Rights shall be subject to the agreement of merger, consolidation or
asset sale. Such agreement may provide for any of the following:

               (i) The assumption of outstanding Options or Stock Purchase Rights by the surviving
corporation or its Parent;

               (ii) The continuation of outstanding Options or Stock Purchase Rights by the Company, if the
Company is the surviving corporation;

               (iii) The payment of a cash settlement equal to, in the case of Options, (a) the difference
between the amount to be paid for one Share under the Option Agreement and the Exercise Price
multiplied by (b) the number of Shares subject to the Option, vested or unvested, or both, as
determined by the Company; and, in the case of Stock Purchase Rights, (a) the amount to be paid
for one Share under the Stock Purchase Right agreement multiplied by (b) the number of vested or
unvested Shares, as determined by the Company; or

               (iv) The acceleration of the vesting of outstanding Options and Stock Purchase Rights, with
notification by the Administrator to the Optionees, indicating that such Options or Stock Purchase
Rights shall be exercisable for 15 days from the date of such notice and termination of the
Options and Stock Purchase Rights after such period; provided if such transaction does not occur,
the acceleration of the Optionees’ vesting shall be voided and the Optionees’ vesting status shall
return to what is was prior to the notice.

          (d) Limitation on Adjustments. Notwithstanding the foregoing provisions of this
Section 13, the Participant’s consent to any changes made under this Section 13 shall be required
if the change will either: (i) cause an Option or Stock Purchase Right that is not subject to
Section 409A of the Code to become subject to, and fail to be in compliance with, Section 409A of
the Code, or (ii) cause an Option or Stock Purchase Right that is subject to Section 409A of the
Code to fail to be in compliance with Section 409A of the Code.

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

     15. Amendment and Termination of the Plan.

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

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

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

     16. Conditions Upon Issuance of Shares.

			
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          (a) Legal Compliance. Shares shall not be issued upon the exercise of an Option
unless the exercise of such Option and the issuance and delivery of such Shares shall comply with
Applicable Laws and shall be further subject to the approval of counsel for the Company with
respect to such compliance. No modification or adjustment shall be made to any Option which would
make the Option subject to Section 409A, without the express consent of the Optionee, and no
modification or adjustment shall be made to any Option which is subject to Section 409A which
would cause the Option to fail to comply with Section 409A.

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

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

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

	19.	 	Stockholder Approval. The Plan shall be subject to approval by the stockholders
of the Company within 12 months after the date the Plan is adopted. Such stockholder approval
shall be obtained in the degree and manner required under Applicable Law. If the Plan is not
approved by the Company’s stockholders within 12 months after its adoption by the Board, the Plan
and any Awards granted under the Plan shall automatically terminate and shall be of no force and
effect to the same extent and with the same effect as though the Plan had never been adopted.

	20.	 	Information to Optionees and Purchasers. The Company shall provide to each
Optionee and to each individual who acquires Shares pursuant to the Plan, not less frequently than
annually during the period such Optionee or purchaser has one or more Options or Stock Purchase
Rights outstanding, and, in the case of an individual who acquires Shares pursuant to the Plan,
during the period such individual owns such Shares, copies of annual financial statements, where
required by Applicable Laws. The Company shall not be required to provide such statements to key
employees whose duties in connection with the Company assure their access to equivalent
information.

			
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