Document:

ex10_1.htm

Exhibit 10.1

 

AGREEMENT AND PLAN OF SHARE EXCHANGE

THIS AGREEMENT AND PLAN OF SHARE EXCHANGE (hereinafter referred to as the “Agreement”), is entered into as of this 21st day of July, 2010, by and between, GREENHOUSE HOLDINGS, INC., a publicly-owned Nevada corporation (“GreenHouse”), GREEN HOUSE HOLDINGS, INC., a Nevada corporation and wholly-owned subsidiary of GreenHouse (“GHH”), BILLY C. JONES a resident of the state of North Carolina (“Jones”), LIFE PROTECTION, INC., a North Carolina corporation (“Life Protection”) and each of the shareholders of Life Protection (the “Life Protection Shareholders”, and together with Life Protection and Jones, the “Sellers”).  (GreenHouse, GHH, Life Protection, Life Protection Shareholders, and Jones are sometimes hereinafter collectively referred to as the “Parties” and individually as a “Party”).

W I T N E S S E T H

WHEREAS, GreenHouse is a publicly-owned Nevada corporation with 22,573,374 shares of common stock, par value $0.001 per share, (the “GreenHouse Common Stock”) issued and outstanding and is quoted on the Over the Counter Bulletin Board (the “OTCBB”) under the symbol “GRHU”.

WHEREAS, Jones is a holder of one percent of the membership interests in LPI-R.O.A.D. House LLC, a North Carolina limited liability company (“LPI”) and  Life Protection is a North Carolina corporation engaged in the business of providing contracted solutions and services for the military, government and law enforcement, and which among, other items, holds forty nine percent (49%) of the membership interests of LPI.

WHEREAS, the Parties desire that GHH acquire all of the capital stock of Life Protection (the “Life Protection Shares”), which is owned as of the date hereof by all of the Life Protection Shareholders, and all of the Jones’ membership interests in LPI solely in exchange for an aggregate of 1,118,750 newly issued shares of GreenHouse Common Stock (the “Exchange Shares”) pursuant to the terms and conditions set forth in this Agreement (the “Exchange”);

WHEREAS, immediately upon consummation of the Closing (as hereinafter defined), the Exchange Shares will be issued to Jones in accordance with his pro rata ownership of LPI membership interests as of the Closing Date and to the Life Protection Shareholders on a pro rata basis, in proportion to the ratio that the number Life Protection Shares held by such Life Protection Holder bears to the pro rata portion of Life Protection equity held by all the Life Protection Shareholders as of the date of the Closing as set forth on Schedule I;

  

  

  

WHEREAS, following the Closing, Life Protection will become a wholly-owned subsidiary of GHH, the Exchange Shares will represent approximately five percent (5%) of the total outstanding shares of GreenHouse Common Stock on a fully-diluted basis; and

WHEREAS, the Parties intend that the transaction contemplated herein (the “Transaction”) qualify as a reorganization and tax-free exchange under Section 368(a) of the Internal Revenue Code of 1986, as amended.

NOW THEREFORE, on the stated premises and for and in consideration of the foregoing recitals which are hereby incorporated by reference, the mutual covenants and agreements hereinafter set forth and the mutual benefits to the Parties to be derived herefrom and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the Parties hereto agree as follows:

ARTICLE I

PLAN OF EXCHANGE

1.1            The Exchange.  At the Closing (as hereinafter defined), all of the Life Protection Shares issued and outstanding immediately prior to the Closing Date and Jones’ membership interests in LPI shall be exchanged for One Million One Hundred Eighteen Thousand Seven Hundred and Fifty shares (1,118,750) of GreenHouse Common Stock.  From and after the Closing Date, the Life Protection Shareholders shall no longer own any Life Protection Shares and the former Life Protection Shares shall represent the pro rata portion of the Exchange Shares issuable in exchange therefor pursuant to this Agreement.  Any fractional shares that would result from such exchange will be rounded up to the next highest whole number.

1.2            No Dilution.  Except as set forth herein, GreenHouse shall neither effect, nor fix any record date with respect to, any stock split, stock dividend, reverse stock split, recapitalization, or similar change in the GreenHouse Common Stock between the date of this Agreement and the Closing.

1.3            Closing. The closing (“Closing”) of the transactions contemplated by this Agreement shall occur immediately following the execution of this Agreement providing the closing conditions set forth in Articles V and VI have been satisfied or waived (the “Closing Date”).

1.4            Closing Events.  At the Closing, each of the respective parties hereto shall execute, acknowledge, and deliver (or shall cause to be executed, acknowledged, and delivered) any and all stock certificates, officers’ certificates, opinions, financial statements, schedules, agreements, resolutions, rulings, or other instruments required by this Agreement to be so delivered at or prior to the Closing, and the documents and certificates provided in Sections 5.2, 5.4, 6.2, 6.4 and 6.5, together with such other items as may be reasonably requested by the parties hereto and their respective legal counsel in order to effectuate or evidence the transactions contemplated hereby.  If agreed to by the parties, the Closing may take place through the exchange of documents (other than the exchange of stock certificates) by fax, email and/or express courier.  At the Closing, the Exchange Shares shall be issued in the names and denominations provided by Life Protection.

  

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1.5            Standstill.  Until the earlier of the Closing or September 30, 2010 (the “No Shop Period”), neither Jones, Life Protection nor the Life Protection Shareholders will (i) solicit or encourage any offer or enter into any agreement or other understanding, whether written or oral, for the sale, transfer or other disposition of any capital stock or assets of Life Protection to or with any other entity or person, except as contemplated by the Transaction, other than sales of goods and services by Life Protection in the ordinary course of its business; (ii) entertain or pursue any unsolicited communication, offer or proposal for any such sale, transfer or other disposition; or (iii) furnish to any person or entity (other than GreenHouse, and its authorized agents and representatives) any nonpublic information concerning Life Protection or its business, financial affairs or prospects for the purpose or with the intent of permitting such person or entity to evaluate a possible acquisition of any capital stock or assets of Life Protection.  If either Life Protection or any of the Life Protection Shareholders shall receive any unsolicited communication or offer, Life Protection or the Life Protection Shareholders, as applicable, shall immediately notify GreenHouse of the receipt of such communication or offer.

1.6            Exemption From Registration. GreenHouse and Life Protection intend that the Exchange Shares to be issued pursuant to Section 1.1 hereof will be issued in a transaction exempt from registration under the Securities Act of 1933, as amended (“Securities Act”), by reason of section 4(2) of the Securities Act and/or Rule 506 of Regulation D promulgated by the SEC thereunder.

ARTICLE II

REPRESENTATIONS, COVENANTS, AND WARRANTIES REGARDING LIFE PROTECTION

The Sellers represent and warrant to GreenHouse that the statements contained in this Article II are true and correct to the knowledge of Life Protection. For purposes of this Article II, the phrase “to the knowledge of Life Protection” or any phrase of similar import shall be deemed to refer to the actual knowledge of the executive officers of Life Protection immediately before the Closing.

  

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2.1            Organization.  Life Protection is a corporation duly organized, validly existing, and in good standing under the laws of the State of North Carolina.  Life Protection has the power and is duly authorized, qualified, franchised, and licensed under all applicable laws, regulations, ordinances, and orders of public authorities to own all of its properties and assets and to carry on its business in all material respects as it is now being conducted, including qualification to do business as a foreign corporation in jurisdictions in which the character and location of the assets owned by it or the nature of the business transacted by it requires qualification except where the failure to be so qualified or in good standing, individually or in the aggregate, has not had and would not reasonably be expected to have a Life Protection Material Adverse Effect (as defined below).  The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated by this Agreement in accordance with the terms hereof will not, violate any provision of Life Protection’s organizational documents.  Life Protection has taken all action required by laws, its certificate of incorporation, certificate of business registration, or otherwise to authorize the execution and delivery of this Agreement. Life Protection has full power, authority, and legal right and has taken or will take all action required by law, its Articles of Organization, and otherwise to consummate the transactions herein contemplated. For purposes of this Agreement, “Life Protection Material Adverse Effect” means a material adverse effect on the assets, business, condition (financial or otherwise) or results of operations of Life Protection or its subsidiaries taken as a whole.

2.2            Capitalization. The authorized capital stock of Life Protection consists of one million two hundred thousand shares of capital stock of which 1,000,000 shares were designated Class A common stock, without par value (“Class A Common Stock”), 100,000 shares were designated Class B common stock, without par value (“Class B Common Stock”)and 100,000 shares were designated preferred stock, without par value (“Preferred Stock”).  As of the date of this Agreement, 1,000,000 shares of Class A Common Stock, 99,750 shares of Class B Common Stock, and 19,000 shares of Preferred Stock were issued and outstanding.  Section 2.2 of the Life Protection Disclosure Schedule sets forth a complete and accurate list of (i) all shareholders of Life Protection, indicating the number and class of Life Protection Shares held by each shareholder, and (ii) all stock option plans and other stock or equity-related plans of Life Protection. All of the issued and outstanding Life Protection Shares are duly authorized, validly issued, fully paid, nonassessable and free of all preemptive rights. Other than as listed in Section 2.2 of the Life Protection Disclosure Schedule, there are no notes or other indebtedness convertible into shares of any class of the Life Protection’s capital stock, outstanding or authorized options, warrants, rights, agreements or commitments to which Life Protection is a party or which are binding upon Life Protection providing for the issuance or redemption of any of its capital stock. There are no outstanding or authorized stock appreciation, phantom stock or similar rights with respect to Life Protection. Except as set forth in Section 2.2 of the Life Protection Disclosure Schedule, there are no agreements to which the Life Protection is a party or by which it is bound with respect to the voting (including without limitation voting trusts or proxies), registration under the Securities Act, or sale or transfer (including without limitation agreements relating to pre-emptive rights, rights of first refusal, co-sale rights or “drag-along” rights) of any securities of Life Protection. To the knowledge of Life Protection, there are no agreements among other parties, to which Life Protection is not a party and by which it is not bound, with respect to the voting (including without limitation voting trusts or proxies) or sale or transfer (including without limitation agreements relating to rights of first refusal, co-sale rights or “drag-along” rights) of any securities of Life Protection. All of the issued and outstanding Life Protection Shares were issued in compliance with applicable federal and state securities laws.

  

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2.3            Financial Statements.  Except as set forth herein or in Section 2.3 of the Life Protection Disclosure Schedule:

(a)            Life Protection has filed all local income tax returns required to be filed by it from its inception to the date hereof.  All such returns are complete and accurate in all material respects.

(b)            Life Protection has no liabilities with respect to the payment of federal, county, local, or other taxes (including any deficiencies, interest, or penalties), except for taxes accrued but not yet due and payable, for which Life Protection may be liable in its own right or as a transferee of the assets of, or as a successor to, any other corporation or entity.

(c)            No deficiency for any taxes has been proposed, asserted or assessed against Life Protection.  There has been no tax audit, nor has there been any notice to Life Protection by any taxing authority regarding any such tax audit, or, to the knowledge of Life Protection, is any such tax audit threatened with regard to any taxes or Life Protection tax returns.  Life Protection does not expect the assessment of any additional taxes of Life Protection for any period prior to the date hereof and has no knowledge of any unresolved questions concerning the liability for taxes of Life Protection.

(d)            Life Protection shall have provided to GreenHouse the audited balance sheets of Life Protection as of, and the audited statements of income, shareholders’ equity and cash flows of Life Protection for the years ended December 31, 2008 and 2009 (the “Life Protection Balance Sheet Date”), and the unaudited balance sheet of Life Protection as of, and the audited statements of income, shareholders’ equity and cash flows of Life Protection for the three months ended March 31, 2010 (collectively “Life Protection Financial Statements”).  The Life Protection Financial Statements have been prepared from the books and records of Life Protection in accordance with U.S. Generally Accepted Accounting Principals (“GAAP”) applied on a consistent basis throughout the periods covered thereby, fairly present the financial condition, results of operations and cash flows of Life Protection and LPI as of the respective dates thereof and for the periods referred to therein, comply as to form with the applicable rules and regulations of the SEC for inclusion of such Life Protection Financial Statements in the GreenHouse filings with the SEC as required by the Securities Exchange Act of 1934 (the “Exchange Act”) and are consistent with the books and records of Life Protection and the Subsidiaries, except as provided in the notes thereto.

  

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(e)            The books and records, financial and otherwise, of Life Protection are in all material respects complete and correct and have been maintained in accordance with good business and accounting practices.

2.4            Disclosure. No representation or warranty by Life Protection contained in this Agreement or in any of the Transaction Documentation, and no statement contained in any document, certificate or other instrument delivered or to be delivered by or on behalf of Life Protection pursuant to this Agreement or therein, contains or will contain any untrue statement of a material fact or omits or will omit to state any material fact necessary, in light of the circumstances under which it was or will be made, in order to make the statements herein or therein not misleading. Life Protection has disclosed to GreenHouse all material information relating to the business of Life Protection or any Subsidiary or the transactions contemplated by this Agreement.

2.5            Undisclosed Liabilities. Neither Life Protection nor any Subsidiary has any material liability (whether known or unknown, whether absolute or contingent, whether liquidated or unliquidated and whether due or to become due), except for (a) liabilities shown on the Life Protection Balance Sheets referred to in Section 2.3, (d) liabilities which have arisen since the Life Protection Balance Sheet Date in the Ordinary Course of Business (as defined herein) and (c) contractual and other liabilities incurred in the Ordinary Course of Business which are not required by GAAP to be reflected on a balance sheet.  As used in this Agreement, “Ordinary Course of Business” means the ordinary course of Life Protection’s business, consistent with past custom and practice (including with respect to frequency and amount).

2.6            Absence of Certain Changes or Events.  Except as set forth in this Agreement or in Schedule 2.6 hereto:

  

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(a)  except in the Ordinary Course of Business, there has not been (i) any material adverse change in the business, operations, properties, assets, or condition of Life Protection or any Subsidiary; or (ii) any damage, destruction, or loss to Life Protection or any Subsidiary (whether or not covered by insurance) materially and adversely affecting the business, operations, properties, assets, or condition of Life Protection or any Subsidiary;

(b)  Life Protection or any Subsidiary has not (i) borrowed or agreed to borrow any funds or incurred, or become subject to, any material obligation or liability (absolute or contingent) not otherwise in the ordinary course of business; (ii) paid any material obligation or liability not otherwise in the ordinary course of business (absolute or contingent) other than current liabilities reflected in or shown on the most recent Life Protection consolidated balance sheet, and current liabilities incurred since that date in the ordinary course of business; (iii) sold or transferred, or agreed to sell or transfer, any of its assets, properties, or rights not otherwise in the ordinary course of business; (iv) made or permitted any amendment or termination of any contract, agreement, or license to which they are a party not otherwise in the ordinary course of business if such amendment or termination is material, considering the business of Life Protection or any Subsidiary; or (v) issued, delivered, or agreed to issue or deliver any stock, bonds or other corporate securities including debentures (whether authorized and unissued or held as treasury stock).

2.7            Litigation and Proceedings.  There are no actions, suits, proceedings, or investigations pending or, to the knowledge of Life Protection, threatened by or against Life Protection or any Subsidiary, or affecting Life Protection or any Subsidiary, or its properties, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign, or before any arbitrator of any kind.

2.8            No Conflict With Other Instruments.  The execution of this Agreement and the consummation of the transactions contemplated by this Agreement will not result in the breach of any term or provision of, or constitute an event of default under, any material indenture, mortgage, deed of trust, or other material contract, agreement, or instrument to which Life Protection or any Subsidiary is a party or to which any of its properties or operations are subject.

2.9            Contracts.  Life Protection has provided, or will provide GreenHouse, copies of all material contracts, agreements, franchises, license agreements, or other commitments to which Life Protection is a party or by which it or any of its assets, products, technology, or properties are bound.

  

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2.10          Compliance With Laws and Regulations.  Life Protection has complied with all applicable statutes and regulations of any national, county, or other governmental entity or agency thereof, except to the extent that noncompliance would not materially and adversely affect the business, operations, properties, assets, or condition of Life Protection.

2.11          Approval of Agreement.  The board of directors of Life Protection (the “Life Protection Board”) and the Life Protection Shareholders have authorized the execution and delivery of this Agreement by Life Protection and have approved the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Life Protection and constitutes a valid and binding obligation of Life Protection, enforceable against Life Protection in accordance with its terms.

2.12          Title and Related Matters.  Life Protection has good and marketable title to all of its properties, interest in properties, and assets, real and personal, which are reflected in the Life Protection balance sheet or acquired after that date (except properties, interest in properties, and assets sold or otherwise disposed of since such date in the ordinary course of business), free and clear of all liens, pledges, charges, or encumbrances except: statutory liens or claims not yet delinquent; and as described in the Life Protection Disclosure Schedule.

2.13          Governmental Authorizations.  Life Protection has all licenses, franchises, permits, and other government authorizations, that are legally required to enable it to conduct its business operations in all material respects as conducted on the date hereof. Except for compliance with federal and state securities or corporation laws, as hereinafter provided, no authorization, approval, consent, or order of, or registration, declaration, or filing with, any court or other governmental body is required in connection with the execution and delivery by Life Protection of this Agreement and the consummation by Life Protection of the transactions contemplated hereby.

2.14          Continuity of Business Enterprises.  Life Protection has no commitment or present intention to liquidate Life Protection or sell or otherwise dispose of a material portion of its business or assets following the consummation of the transactions contemplated hereby.

2.15          Ownership of Life Protection Membership Interests.  The Life Protection Shareholders are the legal and beneficial owners of 100% of the Life Protection Shares, free and clear of any claims, charges, equities, liens, security interests, and encumbrances whatsoever, and the Life Protection Shareholders have full right, power, and authority to transfer, assign, convey, and deliver their respective Life Protection Shares; and delivery of such Life Protection Shares at the Closing will convey to GreenHouse good and marketable title to such Life Protection Shares free and clear of any claims, charges, equities, liens, security interests, and encumbrances except for any such claims, charges, equities, liens, security interests, and encumbrances arising out of such Life Protection Shares being held by GreenHouse.

  

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2.16          Brokers.  Life Protection has not entered into any contract with any person, firm or other entity that would obligate Life Protection or GreenHouse to pay any commission, brokerage or finders’ fee in connection with the transactions contemplated herein.

2.17          Subsidiaries and Predecessor Corporations. LPI is Life Protection’s only subsidiary (the “Subsidiary”).  For purposes of this Agreement, a “Subsidiary” shall mean any corporation, partnership, joint venture or other entity in which a Party has, directly or indirectly, an equity interest representing 50% or more of the equity securities thereof or other equity interests therein (collectively, the “Subsidiaries”).The Subsidiary is an entity duly organized, validly existing and in corporate and tax good standing under the laws of the jurisdiction of its incorporation. The Subsidiary is duly qualified to conduct business and is in corporate and tax good standing under the laws of each jurisdiction in which the nature of its businesses or the ownership or leasing of its properties requires qualification to do business, except where the failure to be so qualified or in good standing, individually or in the aggregate, has not had and would not reasonably be expected to have a Life Protection Material Adverse Effect. Each Subsidiary has all requisite power and authority to carry on the businesses in which it is engaged and to own and use the properties owned and used by it. Life Protection has delivered or made available to GreenHouse complete and accurate copies of the charter, bylaws or other organizational documents of each Subsidiary. The Subsidiary is not in default under or in violation of any provision of its charter, bylaws or other organizational documents.  All of the Subsidiary’ issued and outstanding equity securities are duly authorized, validly issued, fully paid, nonassessable and free of preemptive rights. All equity securities of the Subsidiary that are held of record or owned beneficially by Life Protection free and clear of any restrictions on transfer (other than restrictions under the Securities Act and state securities laws), claims, Security Interests, options, warrants, rights, contracts, calls, commitments, equities and demands. There are no outstanding or authorized options, warrants, rights, agreements or commitments to which Life Protection or the Subsidiary is a party or which are binding on any of them providing for the issuance, disposition or acquisition of any equity securities of the Subsidiary. There are no outstanding stock appreciation, phantom stock or similar rights with respect to the Subsidiary. To the knowledge of Life Protection, there are no voting trusts, proxies or other agreements or understandings with respect to the voting of any equity securities of any Subsidiary. Life Protection does not control directly or indirectly or have any direct or indirect equity participation or similar interest in any corporation, partnership, limited liability Life Protection, joint venture, trust or other business association other than the Subsidiary.

  

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2.18          Intellectual Property.  Life Protection owns or has the right to use all Intellectual Property (as defined below) necessary (i) to use, manufacture, market and distribute the products manufactured, marketed, sold or licensed, and to provide the services provided, by Life Protection or the Subsidiaries to other parties (together, the “Customer Deliverables”) and (ii) to operate the internal systems of Life Protection or the Subsidiaries that are material to its business or operations, including, without limitation, computer hardware systems, software applications and embedded systems (the “Internal Systems”; the Intellectual Property owned by or licensed to Life Protection or the Subsidiaries and incorporated in or underlying the Customer Deliverables or the Internal Systems is referred to herein as the “Life Protection Intellectual Property”). Each item of Life Protection Intellectual Property will be owned or available for use by the Surviving Corporation immediately following the Closing on substantially identical terms and conditions as it was immediately prior to the Closing. Life Protection has taken all reasonable measures to protect the proprietary nature of each item of Life Protection Intellectual Property. To the knowledge of Life Protection, (a) no other person or entity has any rights to any of Life Protection Intellectual Property owned by Life Protection except pursuant to agreements or licenses entered into by Life Protection and such person in the ordinary course, and (b) no other person or entity is infringing, violating or misappropriating any of Life Protection Intellectual Property. For purposes of this Agreement, “Intellectual Property” means all (i) patents and patent applications, (ii) copyrights and registrations thereof, (iii) computer software, data and documentation, (iv) trade secrets and confidential business information, whether patentable or unpatentable and whether or not reduced to practice, know-how, manufacturing and production processes and techniques, research and development information, copyrightable works, financial, marketing and business data, pricing and cost information, business and marketing plans and customer and supplier lists and information, (v) trademarks, service marks, trade names, domain names and applications and registrations therefor and (vi) other proprietary rights relating to any of the foregoing.

2.19          Certain Business Relationships With affiliates. Except as listed in Section 2.19 of the Life Protection Disclosure Schedule and except as contemplated by employment agreements, consulting agreements and the agreements contemplated by the Transactions: (i) no affiliate of Life Protection or of any Subsidiary (a) owns any property or right, tangible or intangible, which is used in the business of Life Protection or any Subsidiary, (b) has any claim or cause of action against Life Protection or any Subsidiary, or (c) owes any money to, or is owed any money by, Life Protection or any Subsidiary.

  

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ARTICLE III

REPRESENTATIONS, COVENANTS, AND WARRANTIES OF LPI

The Sellers represent and warrant to GreenHouse and GHH that the statements contained in this Article II are true and correct to the knowledge of LPI. For purposes of this Article II, the phrase “to the knowledge of LPI” or any phrase of similar import shall be deemed to refer to the actual knowledge of the executive officers of LPI immediately before the Closing.

3.1            Organization.  LPI is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of North Carolina.  LPI has the power and is duly authorized, qualified, franchised, and licensed under all applicable laws, regulations, ordinances, and orders of public authorities to own all of its properties and assets and to carry on its business in all material respects as it is now being conducted, including qualification to do business as a foreign corporation in jurisdictions in which the character and location of the assets owned by it or the nature of the business transacted by it requires qualification except where the failure to be so qualified or in good standing, individually or in the aggregate, has not had and would not reasonably be expected to have a LPI Material Adverse Effect (as defined below).  The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated by this Agreement in accordance with the terms hereof will not, violate any provision of LPI’s organizational documents.  LPI has taken all action required by laws, its certificate of incorporation, certificate of business registration, or otherwise to authorize the execution and delivery of this Agreement. LPI has full power, authority, and legal right and has taken or will take all action required by law, its Articles of Organization, and otherwise to consummate the transactions herein contemplated. For purposes of this Agreement, “LPI Material Adverse Effect” means a material adverse effect on the assets, business, condition (financial or otherwise) or results of operations of LPI or its subsidiaries taken as a whole.

3.2            Capitalization. The authorized capitalization of LPI consists of [______] membership interests.  As of the date of this Agreement, [______] membership interests were issued and outstanding.  Section 3.2 of the LPI Disclosure Schedule sets forth a complete and accurate list of all equityholders of LPI, indicating the number and class of LPI Interests held by each equityholder. All of the issued and outstanding LPI Interests are duly authorized, validly issued, fully paid, nonassessable and free of all preemptive rights. Other than as listed in Section 3.2 of the LPI Disclosure Schedule, there are no rights, agreements or commitments to which LPI is a party or which are binding upon LPI providing for the issuance or redemption of any of its membership interests. There are no outstanding or authorized appreciation, phantom or similar rights with respect to LPI. Except as set forth in Section 3.2 of the LPI Disclosure Schedule, there are no agreements to which the LPI is a party or by which it is bound with respect to the voting (including without limitation voting trusts or proxies), registration under the Securities Act, or sale or transfer (including without limitation agreements relating to pre-emptive rights, rights of first refusal, co-sale rights or “drag-along” rights) of any securities of LPI.  To the knowledge of LPI, there are no agreements among other parties, to which LPI is not a party and by which it is not bound, with respect to the voting (including without limitation voting trusts or proxies) or sale or transfer (including without limitation agreements relating to rights of first refusal, co-sale rights or “drag-along” rights) of any securities of LPI. All of the issued and outstanding LPI Shares were issued in compliance with applicable federal and state securities laws.

  

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3.3            Financial Statements.  Except as set forth herein or in Section 3.3 of the LPI Disclosure Schedule:

(a)            LPI has filed all local income tax returns required to be filed by it from its inception to the date hereof.  All such returns are complete and accurate in all material respects.

(b)            LPI has no liabilities with respect to the payment of federal, county, local, or other taxes (including any deficiencies, interest, or penalties), except for taxes accrued but not yet due and payable, for which LPI may be liable in its own right or as a transferee of the assets of, or as a successor to, any other corporation or entity.

(c)            No deficiency for any taxes has been proposed, asserted or assessed against LPI.  There has been no tax audit, nor has there been any notice to LPI by any taxing authority regarding any such tax audit, or, to the knowledge of LPI, is any such tax audit threatened with regard to any taxes or LPI tax returns.  LPI does not expect the assessment of any additional taxes of LPI for any period prior to the date hereof and has no knowledge of any unresolved questions concerning the liability for taxes of LPI.

(d)            LPI shall have provided to GreenHouse the audited balance sheets of LPI as of, and the audited statements of income, shareholders’ equity and cash flows of LPI for the years ended December 31, 2008 and 2009 (the “LPI Balance Sheet Date”), and the unaudited balance sheet of LPI as of, and the audited statements of income, shareholders’ equity and cash flows of LPI for the three months ended March 31, 2010 (collectively “LPI Financial Statements”).  The LPI Financial Statements have been prepared from the books and records of LPI in accordance with U.S. Generally Accepted Accounting Principals (“GAAP”) applied on a consistent basis throughout the periods covered thereby, fairly present the financial condition, results of operations and cash flows of LPI as of the respective dates thereof and for the periods referred to therein, comply as to form with the applicable rules and regulations of the SEC for inclusion of such LPI Financial Statements in the GreenHouse filings with the SEC as required by the Securities Exchange Act of 1934 (the “Exchange Act”) and are consistent with the books and records of LPI and the Subsidiaries, except as provided in the notes thereto.

  

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(e)            The books and records, financial and otherwise, of LPI are in all material respects complete and correct and have been maintained in accordance with good business and accounting practices.

3.4            Disclosure. No representation or warranty by LPI contained in this Agreement or in any of the Transaction Documentation, and no statement contained in any document, certificate or other instrument delivered or to be delivered by or on behalf of LPI pursuant to this Agreement or therein, contains or will contain any untrue statement of a material fact or omits or will omit to state any material fact necessary, in light of the circumstances under which it was or will be made, in order to make the statements herein or therein not misleading. LPI has disclosed to GreenHouse all material information relating to the business of LPI or the transactions contemplated by this Agreement.

3.5            Undisclosed Liabilities. LPI has no material liability (whether known or unknown, whether absolute or contingent, whether liquidated or unliquidated and whether due or to become due), except for (a) liabilities shown on the LPI Balance Sheets referred to in Section 3.3, (d) liabilities which have arisen since the LPI Balance Sheet Date in the Ordinary Course of Business (as defined herein) and (c) contractual and other liabilities incurred in the Ordinary Course of Business which are not required by GAAP to be reflected on a balance sheet.  As used in this Agreement, “Ordinary Course of Business” means the ordinary course of LPI’s business, consistent with past custom and practice (including with respect to frequency and amount).

3.6            Absence of Certain Changes or Events.  Except as set forth in this Agreement or in Section 3.6 of the LPI Disclosure Schedule:

(a)  except in the Ordinary Course of Business, there has not been (i) any material adverse change in the business, operations, properties, assets, or condition of LPI; or (ii) any damage, destruction, or loss to LPI (whether or not covered by insurance) materially and adversely affecting the business, operations, properties, assets, or condition of LPI;

  

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(b)  LPI has not (i) borrowed or agreed to borrow any funds or incurred, or become subject to, any material obligation or liability (absolute or contingent) not otherwise in the ordinary course of business; (ii) paid any material obligation or liability not otherwise in the ordinary course of business (absolute or contingent) other than current liabilities reflected in or shown on the most recent LPI consolidated balance sheet, and current liabilities incurred since that date in the ordinary course of business; (iii) sold or transferred, or agreed to sell or transfer, any of its assets, properties, or rights not otherwise in the ordinary course of business; (iv) made or permitted any amendment or termination of any contract, agreement, or license to which they are a party not otherwise in the ordinary course of business if such amendment or termination is material, considering the business of LPI; or (v) issued, delivered, or agreed to issue or deliver any stock, bonds or other corporate securities including debentures (whether authorized and unissued or held as treasury stock).

3.7            Litigation and Proceedings.  There are no actions, suits, proceedings, or investigations pending or, to the knowledge of LPI, threatened by or against LPI, or affecting LPI, or its properties, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign, or before any arbitrator of any kind.

3.8            No Conflict With Other Instruments.  The execution of this Agreement and the consummation of the transactions contemplated by this Agreement will not result in the breach of any term or provision of, or constitute an event of default under, any material indenture, mortgage, deed of trust, or other material contract, agreement, or instrument to which LPI is a party or to which any of its properties or operations are subject.

3.9            Contracts.  LPI has provided, or will provide GreenHouse, copies of all material contracts, agreements, franchises, license agreements, or other commitments to which LPI is a party or by which it or any of its assets, products, technology, or properties are bound.

3.10          Compliance With Laws and Regulations.  LPI has complied with all applicable statutes and regulations of any national, county, or other governmental entity or agency thereof, except to the extent that noncompliance would not materially and adversely affect the business, operations, properties, assets, or condition of LPI.

3.11          Approval of Agreement.  The board of directors of LPI (the “LPI Board”) and the LPI Shareholders have authorized the execution and delivery of this Agreement by LPI and have approved the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by LPI and constitutes a valid and binding obligation of LPI, enforceable against LPI in accordance with its terms.

  

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3.12          Title and Related Matters.  LPI has good and marketable title to all of its properties, interest in properties, and assets, real and personal, which are reflected in the LPI balance sheet or acquired after that date (except properties, interest in properties, and assets sold or otherwise disposed of since such date in the ordinary course of business), free and clear of all liens, pledges, charges, or encumbrances except: statutory liens or claims not yet delinquent; and as described in the LPI Disclosure Schedule.

3.13          Governmental Authorizations.  LPI has all licenses, franchises, permits, and other government authorizations, that are legally required to enable it to conduct its business operations in all material respects as conducted on the date hereof. Except for compliance with federal and state securities or corporation laws, as hereinafter provided, no authorization, approval, consent, or order of, or registration, declaration, or filing with, any court or other governmental body is required in connection with the execution and delivery by LPI of this Agreement and the consummation by LPI of the transactions contemplated hereby.

3.14          Continuity of Business Enterprises.  LPI has no commitment or present intention to liquidate LPI or sell or otherwise dispose of a material portion of its business or assets following the consummation of the transactions contemplated hereby.

3.15          Brokers. LPI has not entered into any contract with any person, firm or other entity that would obligate LPI or GreenHouse to pay any commission, brokerage or finders’ fee in connection with the transactions contemplated herein.

3.16          Subsidiaries and Predecessor Corporations. LPI has no subsidiaries.  For purposes of this Agreement, a “Subsidiary” shall mean any corporation, partnership, joint venture or other entity in which a Party has, directly or indirectly, an equity interest representing 50% or more of the equity securities thereof or other equity interests therein (collectively, the “Subsidiaries”).

3.17          Intellectual Property.  LPI owns or has the right to use all Intellectual Property (as defined below) necessary (i) to use, manufacture, market and distribute the products manufactured, marketed, sold or licensed, and to provide the services provided, by LPI to other parties (together, the “Customer Deliverables”) and (ii) to operate the internal systems of LPI that are material to its business or operations, including, without limitation, computer hardware systems, software applications and embedded systems (the “Internal Systems”; the Intellectual Property owned by or licensed to LPI and incorporated in or underlying the Customer Deliverables or the Internal Systems is referred to herein as the “LPI Intellectual Property”). Each item of LPI Intellectual Property will be owned or available for use by the Surviving Corporation immediately following the Closing on substantially identical terms and conditions as it was immediately prior to the Closing. LPI has taken all reasonable measures to protect the proprietary nature of each item of LPI Intellectual Property. To the knowledge of LPI, (a) no other person or entity has any rights to any of LPI Intellectual Property owned by LPI except pursuant to agreements or licenses entered into by LPI and such person in the ordinary course, and (b) no other person or entity is infringing, violating or misappropriating any of LPI Intellectual Property. For purposes of this Agreement, “Intellectual Property” means all (i) patents and patent applications, (ii) copyrights and registrations thereof, (iii) computer software, data and documentation, (iv) trade secrets and confidential business information, whether patentable or unpatentable and whether or not reduced to practice, know-how, manufacturing and production processes and techniques, research and development information, copyrightable works, financial, marketing and business data, pricing and cost information, business and marketing plans and customer and supplier lists and information, (v) trademarks, service marks, trade names, domain names and applications and registrations therefor and (vi) other proprietary rights relating to any of the foregoing.

  

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3.18          Certain Business Relationships With affiliates. Except as listed in Section 2.19 of the LPI Disclosure Schedule and except as contemplated by employment agreements, consulting agreements and the agreements contemplated by the Transactions: (i) no affiliate of LPI (a) owns any property or right, tangible or intangible, which is used in the business of LPI, (b) has any claim or cause of action against LPI, or (c) owes any money to, or is owed any money by, LPI.

ARTICLE IV

REPRESENTATIONS, COVENANTS, AND WARRANTIES OF GREENHOUSE

GreenHouse represents and warrants to Life Protection that the statements contained in this Article III are true and correct:

4.1            Organization.  GreenHouse is a corporation duly organized, validly existing, and in good standing under the laws of the State of Nevada, and has the corporate power and is duly authorized, qualified, franchised, and licensed under all applicable laws, regulations, ordinances, and orders of public authorities to own all of its properties and assets and to carry on its business in all material respects as it is now being conducted, and there is no jurisdiction in which it is not qualified in which the character and location of the assets owned by it or the nature of the business transacted by it requires qualification. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby will not, violate any provision of GreenHouse’s Articles of Incorporation or bylaws. GreenHouse has taken all action required by law, its Articles of Incorporation, its bylaws, or otherwise to authorize the execution and delivery of this Agreement, and GreenHouse has full power, authority, and legal right and has taken all action required by law, its Articles of Incorporation, bylaws, or otherwise to consummate the transactions herein contemplated.

  

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4.2            Capitalization. The authorized capital stock of GreenHouse consists of 300,000,000 shares of GreenHouse Common Stock and 10,000,000 shares of preferred stock, par value $0.001 per share (“Preferred Stock”).  Immediately prior the Closing, there shall be 22,573,374 shares of GreenHouse Common Stock issued and outstanding, no shares of preferred stock issued and outstanding 379,509 warrants to purchase Green House Common Stock issued and outstanding and 784,000 options to purchase Green House Common Stock issued and outstanding.  All of the issued and outstanding shares of GreenHouse Common Stock are duly authorized, validly issued, fully paid, nonassessable and free of all preemptive rights. The Exchange Shares to be issued at the Closing pursuant to Section 1.1 hereof, when issued and delivered in accordance with the terms hereof, shall be duly and validly issued, fully paid and nonassessable and free of all preemptive rights.

4.3            Financial Statements.  The audited financial statements and unaudited interim financial statements of the GreenHouse included in the GreenHouse Reports (collectively, the “GreenHouse Financial Statements”) (i) complied as to form in all material respects with applicable accounting requirements and, as appropriate, the published rules and regulations of the SEC with respect thereto when filed, (ii) were prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby (except as may be indicated therein or in the notes thereto, and in the case of quarterly financial statements, as permitted by Form 10-Q under the Exchange Act), (iii) fairly present the consolidated financial condition, results of operations and cash flows of the GreenHouse as of the respective dates thereof and for the periods referred to therein, and (iv) are consistent with the books and records of the GreenHouse.

4.4            Securities Act and Exchange Act Filings.  GreenHouse has furnished or made available to Life Protection complete and accurate copies, as amended or supplemented, of its (a) effective Registration Statement on Form S-1, which contains audited financial statements for the period June 20, 2008 (inception) through September 30, 2008 as filed with the SEC (SEC File No. 333-156611), (b) Annual Report on Form 10-K for the Fiscal Year ended July 31, 2009, which contains audited financial statements for the period June 20, 2008 (inception) through December 31 ,2009, and (c) all other reports filed by GreenHouse under Section 13 or 15(d) of the Exchange Act and all proxy or information statements filed by GreenHouse under subsections (a) or (c) of Section 14 of the Exchange Act with the SEC since June 20, 2008 (such documents are collectively referred to herein as the “GreenHouse Reports”). The GreenHouse Reports constitute all of the documents required to be filed by GreenHouse under Section 13 or subsections (a) or (c) of Section 14 of the Exchange Act with the SEC from September 10, 2008 through the date of this Agreement. GreenHouse Reports complied in all material respects with the requirements of the Exchange Act and the rules and regulations thereunder when filed.  Each GreenHouse Report filed under the Exchange Act was filed on or before its due date (if any) or within the applicable extension period provided under the Exchange Act. As of their respective dates, GreenHouse Reports did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

  

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4.5            Undisclosed Liabilities. To the knowledge of GreenHouse, neither GreenHouse nor any Subsidiary has any material liability (whether known or unknown, whether absolute or contingent, whether liquidated or unliquidated and whether due or to become due), except for (a) liabilities shown on the Life Protection Balance Sheets referred to in Section 2.3, (d) liabilities which have arisen since the Life Protection Balance Sheet Date in the Ordinary Course of Business (as defined herein) and (c) contractual and other liabilities incurred in the Ordinary Course of Business which are not required by GAAP to be reflected on a balance sheet.  As used in this Agreement, “Ordinary Course of Business” means the ordinary course of Life Protection’s business, consistent with past custom and practice (including with respect to frequency and amount).

4.6            Absence of Certain Changes or Events.  Except as described herein:

(a) There has not been (i) any material adverse change, financial or otherwise, in the business, operations, properties, assets, or condition of GreenHouse (whether or not covered by insurance) materially and adversely affecting the business, operations, properties, assets, or condition of GreenHouse;

(b) GreenHouse has not (i) amended its Articles of Incorporation or by-laws; (ii) declared or made, or agreed to declare or make any payment of dividends or distributions of any assets of any kind whatsoever to shareholders or purchased or redeemed, or agreed to purchase or redeem, any of its capital stock; (iii) waived any rights of value which in the aggregate are extraordinary or material considering the business of GreenHouse; (iv) made any material change in its method of management, operation, or accounting; (v) entered into any other material transactions; (vi) made any accrual or arrangement for or payment of bonuses or special compensation of any kind or any severance or termination pay to any present or former officer or employee; (vii) increased the rate of compensation payable or to become payable by it to any of its officers or directors or any of its employees; or (viii) made any increase in any profit sharing, bonus, deferred compensation, insurance, pension, retirement, or other employee benefit plan, payment, or arrangement, made to, for, or with its officers, directors, or employees;

  

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(c) GreenHouse has not (i) granted or agreed to grant any options, warrants, or other rights for its stocks, bonds, or other corporate securities calling for the issuance thereof; (ii) borrowed or agreed to borrow any funds or incurred, or become subject to, any material obligation or liability (absolute or contingent) except liabilities incurred in the ordinary course of business; (iii) paid or agreed to pay any material obligation or liability (absolute or contingent) other than current liabilities reflected in or shown on the most recent GreenHouse balance sheet and current liabilities incurred since that date in the ordinary course of business and professional and other fees and expenses incurred in connection with the preparation of this Agreement and the consummation of the transactions contemplated hereby; (iv) sold or transferred, or agreed to sell or transfer, any of its assets, property, or rights (except assets, property, or rights not used or useful in its business which, in the aggregate have a value of less than $5,000), or canceled, or agreed to cancel, any debts or claims (except debts or claims which in the aggregate are of a value of less than $5,000); (v) made or permitted any amendment or termination of any contract, agreement, or license to which it is a party if such amendment or termination is material, considering the business of GreenHouse; or (vi) issued, delivered, or agreed to issue or deliver any stock, bonds, or other corporate securities including debentures (whether authorized and unissued or held as treasury stock), except in connection with this Agreement;

(d) GreenHouse has no assets, liabilities or accounts payable of any kind or nature, actual or contingent not disclosed in the GreenHouse Financial Statements.

(e) To the best knowledge of GreenHouse, it has not become subject to any law or regulation which materially and adversely affects, or in the future may adversely affect, the business, operations, properties, assets, or condition of GreenHouse.

  

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4.7            Litigation and Proceedings.  There are no actions, suits, or proceedings pending or, to the knowledge of GreenHouse, threatened by or against or affecting GreenHouse, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign, or before any arbitrator of any kind not disclosed in the GreenHouse Financial Statements..

4.8            Contracts.  GreenHouse is not a party to any material contract, agreement, or other commitment, except as specifically disclosed in its schedules to this Agreement.

4.9            No Conflict With Other Instruments.  The execution of this Agreement and the consummation of the transactions contemplated by this Agreement will not result in the breach of any term or provision of, or constitute a default under, any indenture, mortgage, deed of trust, or other material agreement or instrument to which GreenHouse is a party or to which it or any of its assets or operations are subject.

4.10          Approval of Agreement.  The board of directors of GreenHouse (the “GreenHouse Board”) has authorized the execution and delivery of this Agreement by GreenHouse and has approved this Agreement and the transactions contemplated hereby.

4.11          Disclosure. No representation or warranty by GreenHouse contained in this Agreement or in any of the Transaction documentation, and no statement contained in the any document, certificate or other instrument delivered or to be delivered by or on behalf of GreenHouse pursuant to this Agreement or therein, contains or will contain any untrue statement of a material fact or omits or will omit to state any material fact necessary, in light of the circumstances under which it was or will be made, in order to make the statements herein or therein not misleading. GreenHouse has disclosed to Life Protection all material information relating to the business of GreenHouse or any Subsidiary or the transactions contemplated by this Agreement.

ARTICLE V

SPECIAL COVENANTS

5.1            Current Report.  As soon as reasonably practicable after the execution of this Agreement, the Parties shall prepare a current report on Form 8-K relating to this Agreement and the transactions contemplated hereby (the “Current Report”). Each of Life Protection and GreenHouse shall use its reasonable efforts to cause the Current Report to be filed with the SEC within four business days of the execution of this Agreement and to otherwise comply with all requirements of applicable federal and state securities laws. Further, the Parties shall prepare and file with the SEC an amendment to the Current Report within four business days after the Closing Date, if such Current Report was filed before the Closing Date.

  

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5.2            Actions of Life Protection.  Prior to the Closing, Life Protection shall cause the following actions to be taken by the written consent of the holders of a majority of the outstanding shares of common stock and the Board of Directors of Life Protection:

(a) the approval of this Agreement and the Transactions contemplated hereby and thereby; and

(b) such other actions as the directors may determine are necessary or appropriate.

5.3            Actions of LPI.  Prior to the Closing, LPI shall cause the following actions to be taken by the written consent of the holders of a majority of the outstanding shares of common stock and the Board of Directors of LPI:

(a) the approval of this Agreement and the Transactions contemplated hereby and thereby; and

(b) such other actions as the directors may determine are necessary or appropriate

5.4            Access to Properties and Records.  GreenHouse and Life Protection will each afford to the officers and authorized representatives of the other reasonable access to the properties, books, and records of GreenHouse or Life Protection in order that each may have full opportunity to make such reasonable investigation as it shall desire to make of the affairs of the other, and each will furnish the other with such additional financial and operating data and other information as to the business and properties of GreenHouse or Life Protection as the other shall from time to time reasonably request.

5.5            Delivery of Books and Records.  At the Closing, GreenHouse shall deliver to Life Protection, the originals of the corporate minute books, books of account, contracts, records, and all other books or documents of GreenHouse now in the possession or control of GreenHouse or its representatives and agents.

5.6            Actions Prior to Closing by both Parties.

(a) From and after the date of this Agreement until the Closing Date and except as permitted or contemplated by this Agreement, GreenHouse, Life Protection and LPI will: (i) carry on their business in substantially the same manner as it has heretofore; (ii) maintain and keep their properties in states of good repair and condition as at present, except for depreciation due to ordinary wear and tear and damage due to casualty; (iii) maintain in full force and effect insurance comparable in amount and in scope of coverage to  now maintained; (iv) perform in all material respects all of their obligations under material contracts, leases, and instruments relating to or affecting their assets, properties, and business; (v) use their best efforts to maintain and preserve its business organization intact, to retain their key employees, and to maintain its relationship with its material suppliers and customers; and (vi) fully comply with and perform in all material respects all obligations and duties imposed on them by all federal and state laws and all rules, regulations, and orders imposed by federal or state governmental authorities.

  

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(b) Except as set forth herein, from and after the date of this Agreement until the Closing Date, neither GreenHouse, Life Protection nor LPI will: (i) make any change in their organizational documents, charter documents or bylaws; (ii) take any action described in Section 2.6 in the case of Life Protection, 3.6 in the case of LPI or in Section 4.6 in the case of GreenHouse (all except as permitted therein or as disclosed in the applicable party’s schedules); (iii) enter into or amend any contract, agreement, or other instrument of any of the types described in such party’s schedules, except that a party may enter into or amend any contract, agreement, or other instrument in the ordinary course of business involving the sale of goods or services, or (iv) make or change any material tax election, settle or compromise any material tax liability or file any amended tax return.

5.7            Indemnification.

(a) Life Protection and LPI hereby agrees to indemnify GreenHouse and each of the officers, agents and directors of GreenHouse as of the date of execution of this Agreement against any loss, liability, claim, damage, or expense (including, but not limited to, any and all expense whatsoever reasonably incurred in investigating, preparing, or defending against any litigation, commenced or threatened, or any claim whatsoever), to which it or they may become subject arising out of or based on any inaccuracy appearing in or misrepresentation made in Article II. The indemnification provided for in this paragraph shall not survive the Closing and consummation of the transactions contemplated hereby but shall survive the termination of this Agreement pursuant to Section 7.1(b) of this Agreement.

(b) GreenHouse hereby agrees to indemnify Life Protection and each of the officers, agents and directors of Life Protection as of the date of execution of this Agreement against any loss, liability, claim, damage, or expense (including, but not limited to, any and all expense whatsoever reasonably incurred in investigating, preparing, or defending against any litigation, commenced or threatened, or any claim whatsoever), to which it or they may become subject arising out of or based on any inaccuracy appearing in or misrepresentation made under Article III. The indemnification provided for in this paragraph shall survive the Closing and consummation of the transactions contemplated hereby in accordance with the provisions of Section 1.6.

  

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5.8            Plan of Reorganization.  This Agreement is intended to constitute a “plan of reorganization” within the meaning of Treasury Regulation Section 1.368-2(g).  From and after the date of this Agreement and until the Closing Date, each Party hereto shall use its reasonable best efforts to cause the Share Exchange to qualify, and will not knowingly take any action, cause any action to be taken, fail to take any action or cause any action to fail to be taken which action or failure to act could prevent the Share Exchange from qualifying as a reorganization under the provisions of Section 368(a) of the Code.

ARTICLE VI

CONDITIONS PRECEDENT TO OBLIGATIONS OF GREENHOUSE

The obligations of GreenHouse under this Agreement are subject to the satisfaction, at or before the Closing, of the following conditions:

6.1            Operating Agreement.  GHH shall have agreed to the terms and conditions of an Operating Agreement with the remaining members of LPI regarding the governing of the affairs of LPI which shall be effective upon consummation of the Closing.

6.2            Right of First Refusal.  LPI and the members of LPI shall have waived any and all rights of first refusal to acquire Jones’ membership interests in LPI.

6.3            Employment Agreements. Jones shall each have entered into an employment with Life Protection.

6.4            Novation of Contracts.  Such government contracts as Green House shall designate shall have been novated by the respective counter-parties.

6.5            Accuracy of Representations; Performance.  The representations and warranties made by Life Protection in this Agreement were true when made and shall be true at the Closing Date with the same force and effect as if such representations and warranties were made at and as of the Closing Date (except for changes therein permitted by this Agreement), and Life Protection and LPI shall have performed or complied with all covenants and conditions required by this Agreement to be performed or complied with by Life Protection prior to or at the Closing. GreenHouse may request to be furnished with a certificate, signed by a duly authorized officer of Life Protection and dated the Closing Date, to the foregoing effect.

  

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6.6            Officer’s Certificates.  GreenHouse shall have been furnished with a certificate dated the Closing Date and signed by duly authorized officers of Life Protection and LPI to the effect that no litigation, proceeding, investigation, or inquiry is pending or, to the best knowledge of Life Protection threatened, which might result in an action to enjoin or prevent the consummation of the transactions contemplated by this Agreement, or, to the extent not disclosed in the Life Protection Disclosure Schedule or the LPI Schedule, by or against Life Protection or LPI which might result in any material adverse change in any of the assets, properties, business, or operations of Life Protection.

6.7            No Material Adverse Change.  Prior to the Closing Date, there shall not have occurred any material adverse change in the financial condition, business, or operations of Life Protection or LPI, nor shall any event have occurred which, with the lapse of time or the giving of notice, may cause or create any material adverse change in the financial condition, business, or operations.

6.8            Other Items.

GreenHouse shall have received such further documents, certificates, or instruments relating to the transactions contemplated hereby as GreenHouse may reasonably request.

(a) Complete and satisfactory due diligence review of Life Protection and LPI by GreenHouse.

(b) Approval of the Transaction by the Life Protection Board of Directors, the Life Protection Shareholders and the LPI equityholders.

(c) Any necessary third-party consents shall be obtained prior to Closing, including but not limited to consents necessary from Life Protection’s lenders, creditors, vendors and lessors.

ARTICLE VII

CONDITIONS PRECEDENT TO OBLIGATIONS OF LIFE PROTECTION , LPI AND JONES

The obligations of Life Protection, LPI and Jones under this Agreement are subject to the satisfaction, at or before the Closing, of the following conditions:

7.1            Accuracy of Representations; Performance.  The representations and warranties made by GreenHouse in this Agreement were true when made and shall be true as of the Closing Date (except for changes therein permitted by this Agreement) with the same force and effect as if such representations and warranties were made at and as of the Closing Date, and GreenHouse shall have performed and complied with all covenants and conditions required by this Agreement to be performed or complied with by GreenHouse prior to or at the Closing.  Life Protection shall have been furnished with a certificate, signed by a duly authorized executive officer of GreenHouse and dated the Closing Date, to the foregoing effect.

  

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7.2            Officer’s Certificate.  Life Protection shall have been furnished with a certificate dated the Closing Date and signed by a duly authorized executive officer of GreenHouse to the effect that no litigation, proceeding, investigation, or inquiry is pending or, to the best knowledge of GreenHouse threatened, which might result in an action to enjoin or prevent the consummation of the transactions contemplated by this Agreement.

7.3            No Material Adverse Change.  Prior to the Closing Date, there shall not have occurred any material adverse change in the financial condition, business, or operations of GreenHouse nor shall any event have occurred which, with the lapse of time or the giving of notice, may cause or create any material adverse change in the financial condition, business, or operations of GreenHouse.

7.4            Good Standing.  Life Protection shall have received a certificate of good standing from the Secretary of State of the State of Nevada or other appropriate office, dated as of a date within ten days prior to the Closing Date certifying that GreenHouse is in good standing as a corporation in the State of Nevada and has filed all tax returns required to have been filed by it to date and has paid all taxes reported as due thereon.

7.5            Other Items.

(a) Life Protection shall have received a stockholder list of GreenHouse containing the name, address, and number of shares held by each GreenHouse stockholder as of the date of Closing certified by an executive officer of GreenHouse as being true, complete, and accurate by GreenHouse transfer agent.

(b) Life Protection shall have received such further documents, certificates, or instruments relating to the transactions contemplated hereby as Life Protection may reasonably request.

(c) Complete and satisfactory due diligence review of GreenHouse by Life Protection.

(d) Approval of the Transaction by the GreenHouse Board.

  

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(e) There shall have been no material adverse changes in GreenHouse, financial or otherwise.

(f) Any necessary third-party consents shall be obtained prior to Closing, including but not limited to consents necessary from GreenHouse’s lenders, creditors; vendors, and lessors.

ARTICLE VIII

TERMINATION

8.1            Termination.

 This Agreement may be terminated by either the Life Protection Board or the GreenHouse Board at any time prior to the Closing Date if: (i) there shall be any actual or threatened action or proceeding before any court or any governmental body which shall seek to restrain, prohibit, or invalidate the transactions contemplated by this Agreement and which, in the judgment of such board of directors, made in good faith and based on the advice of its legal counsel, makes it inadvisable to proceed with the exchange contemplated by this Agreement; (ii) any of the transactions contemplated hereby are disapproved by any regulatory authority whose approval is required to consummate such transactions or in the judgment of such board of directors, made in good faith and based on the advice of counsel, there is substantial likelihood that any such approval will not be obtained or will be obtained only on a condition or conditions which would be unduly burdensome, making it inadvisable to proceed with the exchange; (iii) there shall have been any change after the date of the latest balance sheets of Life Protection and GreenHouse, respectively, in the assets, properties, business, or financial condition of Life Protection and GreenHouse, which could have a materially adverse affect on the value of the business of Life Protection and GreenHouse respectively. In the event of termination pursuant to this paragraph (a) of Section 7.1, no obligation, right, or liability shall arise hereunder, and each party shall bear all of the expenses incurred by it in connection with the negotiation, drafting, and execution of this Agreement and the transactions herein contemplated; (iv) the Closing Date shall not have occurred by December 31, 2010; or (v) if GreenHouse shall not have provided responses satisfactory in Life Protection’s reasonable judgment to Life Protection’s request for due diligence materials.

 This Agreement may be terminated at any time prior to the Closing by action of the GreenHouse Board if Life Protection or LPI shall fail to comply in any material respect with any of its covenants or agreements contained in this Agreement or if any of the representations or warranties of Life Protection or LPI contained herein shall be inaccurate in any material respect, and, in either case if such failure is reasonably subject to cure, it remains uncured for seven days after notice of such failure is provided to Life Protection or LPI. If this Agreement is terminated pursuant to this paragraph (b) of Section 7.1, this Agreement shall be of no further force or effect, and no obligation, right, or liability shall arise hereunder, except that Life Protection shall bear its own costs as well as the costs incurred by GreenHouse in connection with the negotiation, preparation, and execution of this Agreement and qualifying the offer and sale of securities contemplated hereby for exemption from the registration requirements of state and federal securities laws.

  

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 This Agreement may be terminated at any time prior to the Closing by action of the Life Protection Board if GreenHouse shall fail to comply in any material respect with any of its covenants or agreements contained in this Agreement or if any of the representations or warranties of GreenHouse contained herein shall be inaccurate in any material respect, and, in either case if such failure is reasonably subject to cure, it remains uncured for seven days after notice of such failure is provided to GreenHouse.  If this Agreement is terminated pursuant to this paragraph (c) of Section 7.1, this Agreement shall be of no further force or effect, and no obligation, right, or liability shall arise hereunder, except that GreenHouse shall bear its own costs as well as the costs of Life Protection incurred in connection with the negotiation, preparation, and execution of this Agreement.

ARTICLE IX

MISCELLANEOUS

9.1            Governing Law.  This Agreement shall be governed by, enforced, and construed under and in accordance with the laws of the United States of America and, with respect to matters of state law, with the laws of Nevada.  Any dispute arising under or in any way related to this Agreement will be submitted to binding arbitration before a single arbitrator by the American Arbitration Association in accordance with the Association’s commercial rules then in effect. The arbitration will be conducted in New York, New York. The decision of the arbitrator will set forth in reasonable detail the basis for the decision and will be binding on the parties. The arbitration award may be confirmed by any court of competent jurisdiction.

9.2            Notices.  Any notices or other communications required or permitted hereunder shall be sufficiently given if personally delivered to it or sent by registered mail or certified mail, postage prepaid, or by prepaid telegram and any such notice or communication shall be deemed to have been given as of the date so delivered, mailed, or telegraphed.

9.3            Attorney’s Fees. In the event that any party institutes any action or suit to enforce this Agreement or to secure relief from any default hereunder or breach hereof, the breaching party or parties shall reimburse the non-breaching party or parties for all costs, including reasonable attorneys’ fees, incurred in connection therewith and in enforcing or collecting any judgment rendered therein.

  

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9.4            Confidentiality.  GreenHouse, on the one hand, and Life Protection and the Life Protection Shareholders, on the other hand, will keep confidential all information and materials regarding the other Party designated by such Party as confidential.  The provisions of this Section 8.4 shall not apply to any information which is or shall become part of the public domain through no fault of the Party subject to the obligation from a third party with a right to disclose such information free of obligation of confidentiality. GreenHouse and Life Protection agree that no public disclosure will be made by either Party of the existence of the Transaction or the letter of intent or any of its terms without first advising the other Party and obtaining its prior written consent to the proposed disclosure, unless such disclosure is required by law, regulation or stock exchange rule.

9.5            Expenses.  Except as otherwise set forth herein, each party shall bear its own costs and expenses associated with the transactions contemplated by this Agreement.  Without limiting the generality of the foregoing, all costs and expenses incurred by Life Protection and GreenHouse after the Closing shall be borne by the surviving entity.  After the Closing, the costs and expenses of the Life Protection Shareholders shall be borne by GreenHouse.

9.6            Schedules; Knowledge.  Each party is presumed to have full knowledge of all information set forth in the other party’s schedules delivered pursuant to this Agreement.

9.7            Third Party Beneficiaries.  This contract is solely between GreenHouse, Life Protection and the Life Protection Shareholders, and, except as specifically provided, no director, officer, stockholder, employee, agent, independent contractor, or any other person or entity shall be deemed to be a third party beneficiary of this Agreement.

9.8            Entire Agreement.  This Agreement represents the entire agreement between the parties relating to the transaction. There are no other courses of dealing, understandings, agreements, representations, or warranties, written or oral, except as set forth herein.

9.9            Survival.  The representations and warranties of the respective parties shall survive the Closing Date and the consummation of the transactions herein contemplated.

9.10          Counterparts.  This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which taken together shall be but a single instrument.

  

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9.11          Amendment or Waiver.  Every right and remedy provided herein shall be cumulative with every other right and remedy, whether conferred herein, at law, or in equity, and may be enforced concurrently herewith, and no waiver by any party of the performance of any obligation by the other shall be construed as a waiver of the same or any other default then, theretofore, or thereafter occurring or existing. At any time prior to the Closing Date, this Agreement may be amended by a writing signed by all parties hereto, with respect to any of the terms contained herein, and any term or condition of this Agreement may be waived or the time for performance hereof may be extended by a writing signed by the party or parties for whose benefit the provision is intended.

9.12          Press Releases and Announcements.  No Party shall issue any press release or public announcement relating to the subject matter of this Agreement without the prior written approval of the other Parties; provided, however, that any Party may make any public disclosure it believes in good faith is required by applicable law, regulation or stock market rule (in which case the disclosing Party shall use reasonable efforts to advise the other Parties and provide them with a copy of the proposed disclosure prior to making the disclosure).

(The rest of this page left intentionally blank.)

  

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IN WITNESS WHEREOF, the corporate parties hereto have caused this Agreement to be executed by their respective officers, hereunto duly authorized, as of the date first above-written.

	
GREENHOUSE HOLDINGS, INC.

	  	
LIFE PROTECTION, INC.

	  
	  	  	  	  	  	  
	  	  	  	  	  	  
	
By:

	
    /s/

	  	
By:

	
    /s/

	  
	  	
Name:

	  	  	
Name:

	  
	  	
Title:

	  	  	
Title:

	  
	  	  	  	  	  	  
	  	  	  	  	  	  
	
GREENHOUSE HOLDINGS, INC.

	  	  	  	  
	  	  	  	  	  	  
	  	  	  	  	  	  
	
By:

	
    /s/

	  	
    /s/

	  
	  	
Name:

	  	
BILLY C. JONES

	  
	  	
Title:

	  	  	  	  

  

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SCHEDULE 2.6

The Life Protection Shareholders holding such interests as of the date hereof shall be entitled to receive, as a special divided, net revenues actually collected from work performed by Life Protection at the “Ft. Story Project”, pro rata, in accordance with their ownership of LPI Shares as of the date hereof.

 

 

31ex10_01.htm

Exhibit 10.01

 

TEARLAB CORPORATION

 

(formerly OCCULOGIX, INC. and formerly VASCULAR SCIENCES CORPORATION)

2002 STOCK OPTION PLAN, AS AMENDED IN 2010

1.      Establishment, Purpose and Term of Plan.

1.1      Establishment.  The TearLab Corporation 2002 Stock Option Plan (the “Plan”) was established effective as of the effective date of the Delaware reincorporation of OccuLogix Corporation (the predecessor corporation to the Company) (the “Effective Date”).

1.2      Purpose.  The purpose of the Plan is to advance the interests of the Participating Company Group and its stockholders by providing an incentive to attract, retain and reward persons performing services for the Participating Company Group and by motivating such persons to contribute to the growth and profitability of the Participating Company Group.

1.3      Term of Plan.  The Plan shall continue in effect until the earlier of its termination by the Board or the date on which all of the shares of Stock available for issuance under the Plan have been issued and all restrictions on such shares under the terms of the Plan and the agreements evidencing Options granted under the Plan have lapsed.  However, all Options shall be granted, if at all, within ten (10) years from the earlier of the date the Plan is adopted by the Board or the date the Plan is duly approved by the stockholders of the Company.

2.      Definitions and Construction.

2.1      Definitions.  Whenever used herein, the following terms shall have their respective meanings set forth below:

(a)      “Board” means the Board of Directors of the Company.  If one or more Committees have been appointed by the Board to administer the Plan, “Board” also means such Committee(s).

(b)      “Code” means the Internal Revenue Code of 1986, as amended, and any applicable regulations promulgated thereunder.

(c)      “Committee” means the Compensation Committee or other committee of the Board duly appointed to administer the Plan and having such powers as shall be specified by the Board.  Unless the powers of the Committee have been specifically limited, the Committee shall have all of the powers of the Board granted herein, including, without limitation, the power to amend or terminate the Plan at any time, subject to the terms of the Plan and any applicable limitations imposed by law.

(d)      “Company” means OccuLogix, Inc., a Delaware corporation, or any successor corporation thereto.

(e)      “Consultant” means a person engaged to provide consulting or advisory services (other than as an Employee or a Director) to a Participating Company, provided that the identity of such person, the nature of such services or the entity to which such services are provided would not preclude the Company from offering or selling securities to such person pursuant to the Plan in reliance on either the exemption from registration provided by Rule 701 under the Securities Act or, if the Company is required to file reports pursuant to Section 13 or 15(d) of the Exchange Act, registration on a Form S-8 Registration Statement under the Securities Act.

(f)      “Director” means a member of the Board or of the board of directors of any other Participating Company.

  

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(g)      “Disability” means the inability of the Optionee, in the opinion of a qualified physician acceptable to the Company, to perform the major duties of the Optionee’s position with the Participating Company Group because of the sickness or injury of the Optionee.

(h)      “Employee” means any person treated as an employee (including an Officer or a Director who is also treated as an employee) in the records of a Participating Company and, with respect to any Incentive Stock Option granted to such person, who is an employee for purposes of Section 422 of the Code; provided, however, that neither service as a Director nor payment of a director’s fee shall be sufficient to constitute employment for purposes of the Plan.  The Company shall determine in good faith and in the exercise of its discretion whether an individual has become or has ceased to be an Employee and the effective date of such individual’s employment or termination of employment, as the case may be.  For purposes of an individual’s rights, if any, under the Plan as of the time of the Company’s determination, all such determinations by the Company shall be final, binding and conclusive, notwithstanding that the Company or any court of law or governmental agency subsequently makes a contrary determination.

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

(j)      “Fair Market Value” means, as of any date, the value of a share of Stock or other property as determined by the Board, in its discretion, or by the Company, in its discretion, if such determination is expressly allocated to the Company herein, subject to the following:

(i)            If, on such date, the Stock is listed on a national or regional securities exchange or market system, the Fair Market Value of a share of Stock shall be the closing price of a share of Stock (or the mean of the closing bid and asked prices of a share of Stock if the Stock is so quoted instead) as quoted on the Nasdaq National Market, The Nasdaq SmallCap Market or such other national or regional securities exchange or market system constituting the primary market for the Stock, as reported in The Wall Street Journal or such other source as the Company deems reliable.  If the relevant date does not fall on a day on which the Stock has traded on such securities exchange or market system, the date on which the Fair Market Value shall be established shall be the last day on which the Stock was so traded prior to the relevant date, or such other appropriate day as shall be determined by the Board, in its discretion.

(ii)           If, on such date, the Stock is not listed on a national or regional securities exchange or market system, the Fair Market Value of a share of Stock shall be as determined by the Board in good faith without regard to any restriction other than a restriction which, by its terms, will never lapse.

(k)      “Incentive Stock Option” means an Option intended to be (as set forth in the Option Agreement) and which qualifies as an incentive stock option within the meaning of Section 422(b) of the Code.

(l)      “Insider” means an Officer, a Director of the Company or other person whose transactions in Stock are subject to Section 16 of the Exchange Act.

(m)     “Involuntary Termination” means the termination of the Service of any individual which occurs by reason of:

(i)            Such individual’s involuntary dismissal or discharge by the Company for reasons other than Misconduct, or

(ii)           Such individual’s voluntary resignation followaing (A) a change in his or her position with the Company which materially reduces his or her duties and responsibilities or the level of management to which he or she reports, (B) a reduction in his or her level of compensation (including base salary, fringe benefits and target bonus under any corporate-performance based bonus or incentive programs) by more than fifteen percent (15%) or (C) a relocation of such individual’s place of employment by more than fifty (50) miles, provided and only if such change, reduction or relocation is effected without the individual’s consent.

(n)      “Misconduct” means the commission of any act of fraud, embezzlement or dishonesty by the Optionee, any unauthorized use or disclosure by such person of confidential information or trade secrets of the Company (or any Participating Company), or any other intentional misconduct by such person adversely affecting the business or affairs of the Company (or any Participating Company) in a material manner.  The foregoing definition shall not in any way preclude or restrict the right of the Company (or any Participating Company) to discharge or dismiss any Optionee or other person in the Service of the Company (or any Participating Company) for any other acts or omissions, but such other acts or omissions shall not be deemed, for purposes of the Plan, to constitute grounds for termination for Misconduct.

  

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(o)      “Nonstatutory Stock Option” means an Option not intended to be (as set forth in the Option Agreement) or which does not qualify as an Incentive Stock Option.

(p)      “Officer” means any person designated by the Board as an officer of the Company.

(q)      “Option” means a right to purchase Stock pursuant to the terms and conditions of the Plan.  An Option may be either an Incentive Stock Option or a Nonstatutory Stock Option.

(r)      “Option Agreement” means a written agreement between the Company and an Optionee setting forth the terms, conditions and restrictions of the Option and Stock Appreciation Right granted to the Optionee and any shares acquired upon the exercise thereof.  An Option Agreement may consist of a form of “Notice of Grant of Stock Option” and a form of “Stock Option Agreement” incorporated therein by reference, or such other form or forms as the Board may approve from time to time.

(s)      “Optionee” means a person who has been granted one or more Options and Stock Appreciation Rights.

(t)      “Parent Corporation” means any present or future “parent corporation” of the Company, as defined in Section 424(e) of the Code.

(u)      “Participating Company” means the Company or any Parent Corporation or Subsidiary Corporation.

(v)      “Participating Company Group” means, at any point in time, all corporations collectively which are then Participating Companies.

(w)           “Prior Plan Options” means, any option granted pursuant to the OccuLogix Corporation 1997 Stock Option Plan which is outstanding on or after the date on which the Board adopts the Plan or which is granted thereafter and prior to the Effective Date.

(x)      “Rule 16b-3” means Rule 16b-3 under the Exchange Act, as amended from time to time, or any successor rule or regulation.

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

(z)      “Service” means an Optionee’s employment or service with the Participating Company Group, whether in the capacity of an Employee, a Director or a Consultant.  An Optionee’s Service shall not be deemed to have terminated merely because of a change in the capacity in which the Optionee renders Service to the Participating Company Group or a change in the Participating Company for which the Optionee renders such Service, provided that there is no interruption or termination of the Optionee’s Service.  Furthermore, an Optionee’s Service with the Participating Company Group shall not be deemed to have terminated if the Optionee takes any military leave, sick leave, or other bona fide leave of absence approved by the Company; provided, however, that if any such leave exceeds ninety (90) days, on the ninety-first (91st) day of such leave the Optionee’s Service shall be deemed to have terminated unless the Optionee’s right to return to Service with the Participating Company Group is guaranteed by statute or contract.  Notwithstanding the foregoing, unless otherwise designated by the Company or required by law, a leave of absence shall not be treated as Service for purposes of determining vesting under the Optionee’s Option Agreement.  The Optionee’s Service shall be deemed to have terminated either upon an actual termination of Service or upon the corporation for which the Optionee performs Service ceasing to be a Participating Company.  Subject to the foregoing, the Company, in its discretion, shall determine whether the Optionee’s Service has terminated and the effective date of such termination.

  

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(aa)           “Stock” means the common stock of the Company, as adjusted from time to time in accordance with Section 4.2.

(bb)           “Stock Appreciation Right” means a right to surrender to the Company all or a portion of an Option in exchange for an amount equal to the excess, if any, of:

(i) the Fair Market Value as of the date such Option or portion thereof is surrendered of the Stock issuable on exercise of such Option or portion thereof over (ii) the exercise price of such Option or portion thereof relating to such stock.

(cc)           “Subsidiary Corporation” means any present or future “subsidiary corporation” of the Company, as defined in Section 424(f) of the Code.

(dd)           “Ten Percent Owner Optionee” means an Optionee who, at the time an Option is granted to the Optionee, owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of a Participating Company within the meaning of Section 422(b)(6) of the Code.

2.2      Construction.  Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of the Plan.  Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular.  Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.  Where a Stock Appreciation Right has been granted in conjunction with an Option, the term “Option” shall include the related Stock Appreciation Right where the context permits.

3.      Administration.

3.1      Administration by the Board.  The Plan shall be administered by the Board.  All questions of interpretation of the Plan or of any Option shall be determined by the Board, and such determinations shall be final and binding upon all persons having an interest in the Plan or such Option.

3.2      Authority of Officers.  Any Officer shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, determination or election which is the responsibility of or which is allocated to the Company herein, provided the Officer has apparent authority with respect to such matter, right, obligation, determination or election.

3.3      Powers of the Board.  In addition to any other powers set forth in the Plan and subject to the provisions of the Plan, the Board shall have the full and final power and authority, in its discretion:

(a)      to determine the persons to whom, and the time or times at which, Options and Stock Appreciation Rights shall be granted and the number of shares of Stock to be subject to each Option and Stock Appreciation Right;

(b)      to designate Options as Incentive Stock Options or Nonstatutory Stock Options;

(c)      to determine the Fair Market Value of shares of Stock or other property;

(d)      to determine the terms, conditions and restrictions applicable to each Option and Stock Appreciation Right (which need not be identical) and any shares acquired upon the exercise thereof, including, without limitation, (i) the exercise price of the Option, (ii) the method of payment for shares purchased upon the exercise of the Option, (iii) the method for satisfaction of any tax withholding obligation arising in connection with the Option and Stock Appreciation Right or such shares, including by the withholding or delivery of shares of stock, (iv) the timing, terms and conditions of the exercisability of the Option and Stock Appreciation Right or the vesting of any shares acquired upon the exercise thereof, (v) the time of the expiration of the Option and Stock Appreciation Right, (vi) the effect of the Optionee’s termination of Service with the Participating Company Group on any of the foregoing, and (vii) all other terms, conditions and restrictions applicable to the Option or such shares not inconsistent with the terms of the Plan;

(e)      to approve one or more forms of Option Agreement;

  

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(f)      to amend, modify, extend, cancel, renew, reduce the exercise price of or in any other manner re-price any outstanding Option and Stock Appreciation Right or to waive any restrictions or conditions applicable to any outstanding Option and Stock Appreciation Right or any shares acquired upon the exercise thereof;

(g)      to accelerate, continue, extend or defer the exercisability of any Option and Stock Appreciation Right or the vesting of any shares acquired upon the exercise thereof, including with respect to the period following an Optionee’s termination of Service with the Participating Company Group;

(h)      to prescribe, amend or rescind rules, guidelines and policies relating to the Plan, or to adopt supplements to, or alternative versions of, the Plan, including, without limitation, as the Board deems necessary or desirable to comply with the laws of, or to accommodate the tax policy or custom of, foreign jurisdictions whose citizens may be granted Options and Stock Appreciation Rights; and

(i)      to correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Option Agreement and to make all other determinations and take such other actions with respect to the Plan or any Option and Stock Appreciation Right as the Board may deem advisable to the extent not inconsistent with the provisions of the Plan or applicable law.

3.4      Administration with Respect to Insiders.  With respect to participation by Insiders in the Plan, at any time that any class of equity security of the Company is registered pursuant to Section 12 of the Exchange Act, the Plan shall be administered in compliance with the requirements, if any, of Rule 16b-3.

3.5      Indemnification.  In addition to such other rights of indemnification as they may have as members of the Board or officers or employees of the Participating Company Group, members of the Board and any officers or employees of the Participating Company Group to whom authority to act for the Board or the Company is delegated shall be indemnified by the Company against all reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any right granted hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct in duties; provided, however, that within sixty (60) days after the institution of such action, suit or proceeding, such person shall offer to the Company, in writing, the opportunity at its own expense to handle and defend the same.

4.      Shares Subject to Plan.

4.1      Maximum Number of Shares Issuable.  Subject to adjustment as provided in Section 4.2, the maximum aggregate number of shares of Stock that may be issued under the Plan shall be 3,200,000.  This share reserve shall consist of authorized but unissued or reacquired shares of Stock or any combination thereof.  However, the share reserve, determined at any time, shall be reduced by the number of shares subject to Prior Plan Options.  If an outstanding Option, including any Prior Plan Option, for any reason expires or is terminated or canceled or if shares of Stock are acquired upon the exercise of an Option, including any Prior Plan Option, subject to a Company repurchase option and are repurchased by the Company at the Optionee’s exercise price, the shares of Stock allocable to the unexercised portion of such Option or Prior Plan Option or such repurchased shares of Stock shall again be available for issuance under the Plan.  However, except as adjusted pursuant to Section 4.2, in no event shall more than 3,200,000 shares of Stock be available for issuance pursuant to the exercise of Incentive Stock Options (the “ISO Share Issuance Limit”).  Notwithstanding the foregoing, at any such time as the offer and sale of securities pursuant to the Plan is subject to compliance with Section 260.140.45 of Title 10 of the California Code of Regulations (“Section 260.140.45”), the total number of shares of Stock issuable upon the exercise of all outstanding Options (together with options outstanding under any other stock option plan of the Company) and the total number of shares provided for under any stock bonus or similar plan of the Company shall not exceed thirty percent (30%) (or such other higher percentage limitation as may be approved by the stockholders of the Company pursuant to Section 260.140.45) of the then outstanding shares of the Company as calculated in accordance with the conditions and exclusions of Section 260.140.45.

  

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4.2      Adjustments for Changes in Capital Structure.  In the event of any stock dividend, stock split, reverse stock split, recapitalization, combination, reclassification or similar change in the capital structure of the Company, appropriate adjustments shall be made in the number and class of shares subject to the Plan and to any outstanding Options, in the ISO Share Issuance Limit set forth in Section 4.1, and in the exercise price per share of any outstanding Options.  If a majority of the shares which are of the same class as the shares that are subject to outstanding Options are exchanged for, converted into, or otherwise become (whether or not pursuant to an Ownership Change Event, as defined in Section 9.1) shares of another corporation (the “New Shares”), the Board may unilaterally amend the outstanding Options to provide that such Options are exercisable for New Shares.  In the event of any such amendment, the number of shares subject to, and the exercise price per share of, the outstanding Options shall be adjusted in a fair and equitable manner as determined by the Board, in its discretion.  Notwithstanding the foregoing, any fractional share resulting from an adjustment pursuant to this Section 4.2 shall be rounded down to the nearest whole number, and in no event may the exercise price of any Option be decreased to an amount less than the par value, if any, of the stock subject to the Option.  The adjustments determined by the Board pursuant to this Section 4.2 shall be final, binding and conclusive.

5.      Eligibility and Option Limitations.

5.1      Persons Eligible for Options.  Options may be granted only to Employees, Consultants, and Directors.  For purposes of the foregoing sentence, “Employees,” “Consultants” and “Directors” shall include prospective Employees, prospective Consultants and prospective Directors to whom Options are granted in connection with written offers of an employment or other service relationship with the Participating Company Group.  Eligible persons may be granted more than one (1) Option.  However, eligibility in accordance with this Section shall not entitle any person to be granted an Option, or, having been granted an Option, to be granted an additional Option.

5.2      Option Grant Restrictions.  Any person who is not an Employee on the effective date of the grant of an Option to such person may be granted only a Nonstatutory Stock Option.  An Incentive Stock Option granted to a prospective Employee upon the condition that such person become an Employee shall be deemed granted effective on the date such person commences Service with a Participating Company, with an exercise price determined as of such date in accordance with Section 6.1.

5.3      Fair Market Value Limitation.  To the extent that options designated as Incentive Stock Options (granted under all stock option plans of the Participating Company Group, including the Plan) become exercisable by an Optionee for the first time during any calendar year for stock having a Fair Market Value greater than One Hundred Thousand Dollars ($100,000), the portions of such options which exceed such amount shall be treated as Nonstatutory Stock Options.  For purposes of this Section 5.3, options designated as Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of stock shall be determined as of the time the option with respect to such stock is granted.  If the Code is amended to provide for a different limitation from that set forth in this Section 5.3, such different limitation shall be deemed incorporated herein effective as of the date and with respect to such Options as required or permitted by such amendment to the Code.  If an Option is treated as an Incentive Stock Option in part and as a Nonstatutory Stock Option in part by reason of the limitation set forth in this Section 5.3, the Optionee may designate which portion of such Option the Optionee is exercising.  In the absence of such designation, the Optionee shall be deemed to have exercised the Incentive Stock Option portion of the Option first.  Separate certificates representing each such portion shall be issued upon the exercise of the Option.

  

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6.      Terms and Conditions of Options.

Options shall be evidenced by Option Agreements specifying the number of shares of Stock covered thereby, in such form as the Board shall from time to time establish.  No Option or purported Option shall be a valid and binding obligation of the Company unless evidenced by a fully executed Option Agreement.  Option Agreements may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:

6.1      Exercise Price.  The exercise price for each Option shall be established in the discretion of the Board; provided, however, that (a) the exercise price per share for an Incentive Stock Option shall be not less than the Fair Market Value of a share of Stock on the effective date of grant of the Option, (b) the exercise price per share for a Nonstatutory Stock Option shall be not less than eighty-five percent (85%) of the Fair Market Value of a share of Stock on the effective date of grant of the Option, and (c) no Option granted to a Ten Percent Owner Optionee shall have an exercise price per share less than one hundred ten percent (110%) of the Fair Market Value of a share of Stock on the effective date of grant of the Option.  Notwithstanding the foregoing, an Option (whether an Incentive Stock Option or a Nonstatutory Stock Option) may be granted with an exercise price lower than the minimum exercise price set forth above if such Option is granted pursuant to an assumption or substitution for another option in a manner qualifying under the provisions of Section 424(a) of the Code.

6.2      Exercisability and Term of Options.  Options shall be exercisable at such time or times, or upon such event or events, and subject to such terms, conditions, performance criteria and restrictions as shall be determined by the Board and set forth in the Option Agreement evidencing such Option; provided, however, that (a) no Option shall be exercisable after the expiration of ten (10) years after the effective date of grant of such Option, (b) no Incentive Stock Option granted to a Ten Percent Owner Optionee shall be exercisable after the expiration of five (5) years after the effective date of grant of such Option, (c) no Option granted to a prospective Employee, prospective Consultant or prospective Director may become exercisable prior to the date on which such person commences Service with a Participating Company, and (d) with the exception of an Option granted to an Officer, a Director or a Consultant, no Option shall become exercisable at a rate less than twenty percent (20%) per year over a period of five (5) years from the effective date of grant of such Option, subject to the Optionee’s continued Service.  Subject to the foregoing, unless otherwise specified by the Board in the grant of an Option, any Option granted hereunder shall terminate ten (10) years after the effective date of grant of the Option, unless earlier terminated in accordance with its provisions.

6.3      Payment of Exercise Price.

(a)      Forms of Consideration Authorized.  Except as otherwise provided below, payment of the exercise price for the number of shares of Stock being purchased pursuant to any Option shall be made (i) in cash, by check or cash equivalent, (ii) by tender to the Company, or attestation to the ownership, of shares of Stock owned by the Optionee having a Fair Market Value not less than the exercise price, (iii) by delivery of a properly executed notice together with irrevocable instructions to a broker providing for the assignment to the Company 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 (including, without limitation, through an exercise complying with the provisions of Regulation T as promulgated from time to time by the Board of Governors of the Federal Reserve System) (a “Cashless Exercise”), (iv) by such other consideration as may be approved by the Board from time to time to the extent permitted by applicable law, or (v) by any combination thereof.  The Board may at any time or from time to time, by approval of or by amendment to the standard forms of Option Agreement described in Section 8, or by other means, grant Options which do not permit all of the foregoing forms of consideration to be used in payment of the exercise price or which otherwise restrict one or more forms of consideration.

(b)      Limitations on Forms of Consideration.

(i)           Tender of Stock.  Notwithstanding the foregoing, an Option may not be exercised by tender to the Company, or attestation to the ownership, of shares of Stock to the extent such tender or attestation would constitute a violation of the provisions of any law, regulation or agreement restricting the redemption of the Company’s stock.  Unless otherwise provided by the Board, an Option may not be exercised by tender to the Company, or attestation to the ownership, of shares of Stock unless such shares either have been owned by the Optionee for more than six (6) months (and not used for another Option exercise by attestation during such period) or were not acquired, directly or indirectly, from the Company.

  

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(ii)           Cashless Exercise.  The Company reserves, at any and all times, the right, in the Company’s sole and absolute discretion, to establish, decline to approve or terminate any program or procedures for the exercise of Options by means of a Cashless Exercise.

(iii)           Payment by Promissory Note.  No promissory note shall be permitted if the exercise of an Option using a promissory note would be a violation of any law.  Any permitted promissory note shall be on such terms as the Board shall determine.  The Board shall have the authority to permit or require the Optionee to secure any promissory note used to exercise an Option with the shares of Stock acquired upon the exercise of the Option or with other collateral acceptable to the Company.  Unless otherwise provided by the Board, if the Company at any time is subject to the regulations promulgated by the Board of Governors of the Federal Reserve System or any other governmental entity affecting the extension of credit in connection with the Company’s securities, any promissory note shall comply with such applicable regulations, and the Optionee shall pay the unpaid principal and accrued interest, if any, to the extent necessary to comply with such applicable regulations.

6.4      Tax Withholding.  The Company shall have the right, but not the obligation, to deduct from the shares of Stock issuable upon the exercise of an Option, or to accept from the Optionee the tender of, a number of whole shares of Stock having a Fair Market Value, as determined by the Company, equal to all or any part of the federal, state, local and foreign taxes, if any, required by law to be withheld by the Participating Company Group with respect to such Option or the shares acquired upon the exercise thereof.  Alternatively or in addition, in its discretion, the Company shall have the right to require the Optionee, through payroll withholding, cash payment or otherwise, including by means of a Cashless Exercise, to make adequate provision for any such tax withholding obligations of the Participating Company Group arising in connection with the Option or the shares acquired upon the exercise thereof.  The Fair Market Value of any shares of Stock withheld or tendered to satisfy any such tax withholding obligations shall not exceed the amount determined by the applicable minimum statutory withholding rates.  The Company shall have no obligation to deliver shares of Stock or to release shares of Stock from an escrow established pursuant to the Option Agreement until the Participating Company Group’s tax withholding obligations have been satisfied by the Optionee.

6.5      Repurchase Rights.  Shares issued under the Plan may be subject to a right of first refusal, one or more repurchase options, or other conditions and restrictions as determined by the Board in its discretion at the time the Option is granted.  The Company shall have the right to assign at any time any repurchase right it may have, whether or not such right is then exercisable, to one or more persons as may be selected by the Company.  Upon request by the Company, each Optionee shall execute any agreement evidencing such transfer restrictions prior to the receipt of shares of Stock hereunder and shall promptly present to the Company any and all certificates representing shares of Stock acquired hereunder for the placement on such certificates of appropriate legends evidencing any such transfer restrictions.

6.6      Effect of Termination of Service.

(a)      Option Exercisability.  Subject to earlier termination of the Option as otherwise provided herein and unless otherwise provided by the Board in the grant of an Option and set forth in the Option Agreement, an Option shall be exercisable after an Optionee’s termination of Service only during the applicable time period determined in accordance with this Section 6.6 and thereafter shall terminate:

(i)           Disability.  If the Optionee’s Service terminates because of the Disability of the Optionee, the Option, to the extent unexercised and exercisable on the date on which the Optionee’s Service terminated, may be exercised by the Optionee (or the Optionee’s guardian or legal representative) at any time prior to the expiration of twelve (12) months (or such longer period of time as determined by the Board, in its discretion) after the date on which the Optionee’s Service terminated, but in any event no later than the date of expiration of the Option’s term as set forth in the Option Agreement evidencing such Option (the “Option Expiration Date”).

(ii)           Death.  If the Optionee’s Service terminates because of the death of the Optionee, the Option, to the extent unexercised and exercisable on the date on which the Optionee’s Service terminated, may be exercised by the Optionee’s legal representative or other person who acquired the right to exercise the Option by reason of the Optionee’s death at any time prior to the expiration of twelve (12) months (or such longer period of time as determined by the Board, in its discretion) after the date on which the Optionee’s Service terminated, but in any event no later than the Option Expiration Date.  The Optionee’s Service shall be deemed to have terminated on account of death if the Optionee dies within three (3) months (or such longer period of time as determined by the Board, in its discretion) after the Optionee’s termination of Service.

  

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(iii)           Other Termination of Service.  If the Optionee’s Service terminates for any reason, except Disability or death, the Option, to the extent unexercised and exercisable by the Optionee on the date on which the Optionee’s Service terminated, may be exercised by the Optionee at any time prior to the expiration of three (3) months (or such longer period of time as determined by the Board, in its discretion) after the date on which the Optionee’s Service terminated, but in any event no later than the Option Expiration Date.

(b)      Extension if Exercise Prevented by Law.  Notwithstanding the foregoing, if the exercise of an Option within the applicable time periods set forth in Section 6.6(a) is prevented by the provisions of Section 10 below, the Option shall remain exercisable until three (3) months (or such longer period of time as determined by the Board, in its discretion) after the date the Optionee is notified by the Company that the Option is exercisable, but in any event no later than the Option Expiration Date.

(c)      Extension if Optionee Subject to Section 16(b).  Notwithstanding the foregoing, if a sale within the applicable time periods set forth in Section 6.6(a) of shares acquired upon the exercise of the Option would subject the Optionee to suit under Section 16(b) of the Exchange Act, the Option shall remain exercisable until the earliest to occur of (i) the tenth (10th) day following the date on which a sale of such shares by the Optionee would no longer be subject to such suit, (ii) the one hundred and ninetieth (190th) day after the Optionee’s termination of Service, or (iii) the Option Expiration Date.

(d)      Extension during Blackout Period.  Notwithstanding the foregoing, if there is in effect during the applicable time periods set forth in Section 6.6(a) a Company-imposed trading blackout to which the Optionee is subject (including an Optionee that is an Insider) and provided that neither Section 6.6(b) nor Section 6.6(c) is applicable to the circumstances at hand, the Option shall remain exercisable until the end of the tenth business day following the end of the trading blackout.

6.7      Transferability of Options.  During the lifetime of the Optionee, an Option shall be exercisable only by the Optionee or the Optionee’s guardian or legal representative.  No Option shall be assignable or transferable by the Optionee, except by will or by the laws of descent and distribution.  Notwithstanding the foregoing, to the extent permitted by the Board, in its discretion, and set forth in the Option Agreement evidencing such Option, a Nonstatutory Stock Option shall be assignable or transferable subject to the applicable limitations, if any, described in Section 260.140.41 of Title 10 of the California Code of Regulations, Rule 701 under the Securities Act, and the General Instructions to Form S-8 Registration Statement under the Securities Act.

7.      Terms and conditions of stock appreciate rights.

7.1      The Committee may, from time to time, grant Stock Appreciation Rights to any Employee, Consultant or Director in connection with the grant of any Option.  Any such grant of Stock Appreciation Rights shall be included in the Option Agreement.

7.2      Stock Appreciation Rights shall be exerciseable only at the same time, by the same person and to the same extent, that the Option related thereto is exerciseable.  Upon exercise of any Stock Appreciation Right, the corresponding portion of the related Option shall be surrendered to the Company.

7.3      The Company has the absolute right, at any time and from time to time, to require an Optionee to exercise an Option in lieu of the related Stock Appreciation Right.

  

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8.      Standard Forms of Option Agreement.

8.1      Option Agreement.  Unless otherwise provided by the Board at the time the Option is granted, an Option shall comply with and be subject to the terms and conditions set forth in the form of Option Agreement approved by the Board concurrently with its adoption of the Plan and as amended from time to time.

8.2      Authority to Vary Terms.  The Board shall have the authority from time to time to vary the terms of any standard form of Option Agreement described in this Section 8 either in connection with the grant or amendment of an individual Option or in connection with the authorization of a new standard form or forms; provided, however, that the terms and conditions of any such new, revised or amended standard form or forms of Option Agreement are not inconsistent with the terms of the Plan.

9.      Change in Control.

9.1      Definitions.

(a)      An “Ownership Change Event” shall be deemed to have occurred if any of the following occurs with respect to the Company:  (i) the direct or indirect sale or exchange in a single or series of related transactions by the stockholders of the Company of more than fifty percent (50%) of the voting stock of the Company; (ii) a merger or consolidation in which the Company is a party; (iii) the sale, exchange, or transfer of all or substantially all of the assets of the Company; or (iv) a liquidation or dissolution of the Company.

(b)      A “Change in Control” shall mean an Ownership Change Event or a series of related Ownership Change Events (collectively, a “Transaction”) wherein the stockholders of the Company immediately before the Transaction do not retain immediately after the Transaction, in substantially the same proportions as their ownership of shares of the Company’s voting stock immediately before the Transaction, direct or indirect beneficial ownership of more than fifty percent (50%) of the total combined voting power of the outstanding voting securities of the Company or, in the case of a Transaction described in Section 9.1(a)(iii), the corporation or other business entity to which the assets of the Company were transferred (the “Transferee”), as the case may be.  For purposes of the preceding sentence, indirect beneficial ownership shall include, without limitation, an interest resulting from ownership of the voting securities of one or more corporations or other business entities which own the Company or the Transferee, as the case may be, either directly or through one or more subsidiary corporations or other business entities.  The Board shall have the right to determine whether multiple sales or exchanges of the voting securities of the Company or multiple Ownership Change Events are related, and its determination shall be final, binding and conclusive.

9.2      Effect of Change in Control on Options.  In the event of a Change in Control, the surviving, continuing, successor, or purchasing corporation or other business entity or parent thereof, as the case may be (the “Acquiring Corporation”), may, without the consent of the Optionee, either assume the Company’s rights and obligations under outstanding Options or substitute for outstanding Options substantially equivalent options for the Acquiring Corporation’s stock.  In the event that the Acquiring Corporation does not assume or substitute for the outstanding Options, the Optionee will fully vest in and have the right to exercise all of his or her outstanding Options, including shares of Stock as to which such Options would not otherwise be vested or exercisable.  Any Options which are neither assumed or substituted for by the Acquiring Corporation in connection with the Change in Control nor exercised as of the date of the Change in Control shall terminate and cease to be outstanding effective as of the date of the Change in Control.  Notwithstanding the foregoing, shares acquired upon exercise of an Option prior to the Change in Control and any consideration received pursuant to the Change in Control with respect to such shares shall continue to be subject to all applicable provisions of the Option Agreement evidencing such Option except as otherwise provided in such Option Agreement.  Furthermore, notwithstanding the foregoing, if the corporation the stock of which is subject to the outstanding Options immediately prior to an Ownership Change Event described in Section 9.1(a)(i) constituting a Change in Control is the surviving or continuing corporation and immediately after such Ownership Change Event less than fifty percent (50%) of the total combined voting power of its voting stock is held by another corporation or by other corporations that are members of an affiliated group within the meaning of Section 1504(a) of the Code without regard to the provisions of Section 1504(b) of the Code, the outstanding Options shall not terminate unless the Board otherwise provides in its discretion.  Additionally, and notwithstanding anything in this Section 9.2 to the contrary, if an Optionee’s Service is terminated by reason of an Involuntary Termination within eighteen (18) months following the effective date of a Change in Control in which the Acquiring Corporation assumes or substitutes for outstanding Options, the shares of Stock subject to such Optionee’s outstanding Options will automatically accelerate and vest in full as of the Optionee’s termination of Service, including shares of Stock as to which such Options would not otherwise be vested or exercisable.  Any Option so accelerated shall remain exercisable until the Option’s expiration or, if earlier, the termination of the Option, as provided in the Optionee’s Option Agreement.

  

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10.      Provision of Information.

At least annually, copies of the Company’s balance sheet and income statement for the just completed fiscal year shall be made available to each Optionee and purchaser of shares of Stock upon the exercise of an Option.  The Company shall not be required to provide such information to key employees whose duties in connection with the Company assure them access to equivalent information.  Furthermore, the Company shall deliver to each Optionee such disclosures as are required in accordance with Rule 701 under the Securities Act.

11.      Compliance with Securities Law.

The grant of Options and the issuance of shares of Stock upon exercise of Options shall be subject to compliance with all applicable requirements of federal, state and foreign law with respect to such securities.  Options may not be exercised if the issuance of shares of Stock upon exercise would constitute a violation of any applicable federal, state or foreign securities laws or other law or regulations or the requirements of any stock exchange or market system upon which the Stock may then be listed.  In addition, no Option may be exercised unless (a) a registration statement under the Securities Act shall at the time of exercise of the Option be in effect with respect to the shares issuable upon exercise of the Option or (b) in the opinion of legal counsel to the Company, the shares issuable upon exercise of the Option may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act.  The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any shares hereunder shall relieve the Company of any liability in respect of the failure to issue or sell such shares as to which such requisite authority shall not have been obtained.  As a condition to the exercise of any Option, the Company may require the Optionee to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company.

12.      Termination or Amendment of Plan.

Without the approval of the Company’s stockholders, the Board may terminate or amend the Plan at any time.  However, subject to changes in applicable law, regulations or rules that would permit otherwise, without the approval of the Company’s stockholders, there shall be (a) no increase in the maximum aggregate number of shares of Stock that may be issued under the Plan (except by operation of the provisions of Section 4.2), (b) no change in the class of persons eligible to receive Incentive Stock Options, (c) no extension of the term of an Option granted to an Insider, other than as provided for in Section 6.6(d), (d) no reduction in the exercise price of an Option granted to an Insider, other than in connection with adjustments for changes in the Company’s capital structure as permitted pursuant to Section 4.2 and (e) no other amendment of the Plan that would require approval of the Company’s stockholders under any applicable law, regulation or rule.  No termination or amendment of the Plan shall adversely affect any then outstanding Option unless expressly agreed to by the affected Participant or required by applicable law, legislation or rule.  In any event, no termination or amendment of the Plan may adversely affect any then outstanding Option without the consent of the Optionee, unless such termination or amendment is required to enable an Option designated as an Incentive Stock Option to qualify as an Incentive Stock Option or is necessary to comply with any applicable law, regulation or rule.

13.      Stockholder Approval.

The Plan or any increase in the maximum aggregate number of shares of Stock issuable thereunder as provided in Section 4.1 (the “Authorized Shares”) shall be approved by the stockholders of the Company within twelve (12) months of the date of adoption thereof by the Board.  Options granted prior to stockholder approval of the Plan or in excess of the Authorized Shares previously approved by the stockholders shall become exercisable no earlier than the date of stockholder approval of the Plan or such increase in the Authorized Shares, as the case may be.

  

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PLAN HISTORY

	
June 2002

	
Board of Directors of OccuLogix Corporation, a Florida corporation (“OccuLogix”) adopts Plan, with an initial reserve of Two Million Six Hundred Seventy-Eight Thousand Nine Hundred and Ninety-Seven (2,678,997) shares.  This share reserve includes the number of shares of stock underlying outstanding options and the number of shares available for grant as options under the OccuLogix Corporation 1997 Stock Option Plan.  However, this share reserve, at any time, shall be reduced by the number of shares subject to Prior Plan Options.

	
June 2002

	
Stockholders of OccuLogix approve Plan, with an initial reserve of Two Million Six Hundred Seventy-Eight Thousand Nine Hundred and Ninety-Seven (2,678,997) shares.  This share reserve includes the number of shares of stock underlying outstanding options and the number of shares available for grant as options under the OccuLogix Corporation 1997 Stock Option Plan.  However, this share reserve, at any time, shall be reduced by the number of shares subject to Prior Plan Options.

	
June 2002

	
Effective date of Delaware reincorporation of OccuLogix.

	
December 2004

	
Board of Directors of OccuLogix, Inc. amends Plan to increase the share reserve to 4,456,000.

	
April 2007

	
Board of Directors of OccuLogix, Inc. resolves to submit to the stockholders of OccuLogix, Inc., for their authorization at the 2007 Annual Meeting, a proposal to increase the share reserve under the Plan by 2,000,000, from 4,456,000 to 6,456,000.

	
June 2007

	
Stockholders of OccuLogix, Inc. approve the proposal to increase the share reserve under the Plan by 2,000,000, from 4,456,000 to 6,456,000.

	
May 2008

	
Board of Directors of OccuLogix, Inc. resolves to submit to the stockholders of OccuLogix, Inc., for their authorization at the 2008 Annual and Special Meeting, a proposal to increase the share reserve under the Plan by 53,544,000, from 6,456,000 to 60,000,000.

	
September 2008

	
Stockholders of OccuLogix, Inc. approve the proposal to increase the share reserve under the Plan by 53,544,000, from 6,456,000 to 60,000,000.

	
October 2008

	
OccuLogix, Inc. effects a 1:25 reverse stock split, as a result of which every 25 issued and outstanding shares of common stock were combined into one share (and any fractional share was converted into a whole share) and the share reserve under the Plan was decreased to 2,400,000.

	
December 2009

	
Board of Directors of OccuLogix, Inc. resolves to submit to the stockholders of OccuLogix, Inc., for their authorization at the 2010 Annual Meeting, a proposal to increase the share reserve under the Plan by 800,000, from 2,400,000 to 3,200,000.

	
May 2010

	
Board of Directors of OccuLogix, Inc. approves the amendment of the Plan to provide for (i) full vesting acceleration of all outstanding stock options in the event of a change in control in which the acquiring corporation does not assume or substitute for outstanding stock options under the Plan; and (ii) full vesting acceleration of all outstanding stock options held by an optionee in the event the optionee’s service with OccuLogix (or its successor) is involuntarily terminated within 18 months following a change in control in which the acquiring corporation assumes or substitutes for outstanding stock options under the Plan.

 

	
June 2010

	
Stockholders of TearLab Corporation (formerly OccuLogix, Inc.) approve the proposal to increase the share reserve under the Plan by 800,000, from 2,400,000 to 3,200,000.

 

 

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