Document:

exv10w3

 

Exhibit 10.3

Executive Grant

Quovadx, Inc.

2006 Equity Incentive Plan

Restricted Stock Award Agreement

     Pursuant to the Restricted Stock Award Grant Notice (the “Grant Notice”) and this
Restricted Stock Award Agreement (the “Agreement”) (collectively, the “Award”) and in consideration
of your services rendered or to be rendered, as applicable, Quovadx, Inc. (the “Company”) has
granted you a Restricted Stock Award under its 2006 Equity Incentive Plan (the “Plan”) for the
number of shares of the Company’s Common Stock subject to the Award as set forth in the Grant
Notice. Defined terms not explicitly defined in this Agreement but defined in the Plan shall have
the same definitions as in the Plan.

     The details of your Award are as follows:

     1. Vesting. Subject to the limitations contained herein and in the Plan, your
Award will vest as follows:

          (a) The shares will vest as provided in the Vesting Schedule set forth in your Grant Notice,
provided that vesting will cease upon the termination of your Continuous Service.

          (b) Shares subject to your Award that have vested in accordance with the Vesting Schedule set
forth in the Grant Notice and this Section 1 are “Vested Shares.” Shares subject to your Award
that are not Vested Shares are “Unvested Shares.”

     2. Number of Shares. The number of shares of Common Stock subject to your Award as
referenced in your Grant Notice may be adjusted from time to time for capitalization adjustments as
set forth in the Plan.

     3. Securities Law Compliance. Notwithstanding anything to the contrary contained
herein, you may not be issued any shares of Common Stock under your Award unless the shares of
Common Stock are either then registered under the Securities Act or, if such shares of Common Stock
are not then so registered, the Company has determined that such issuance would be exempt from the
registration requirements of the Securities Act. Your Award must also comply with other applicable
laws and regulations governing the Award, and you will not receive such shares if the Company
determines that such receipt would not be in material compliance with such laws and regulations.

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     4. Right of Reacquisition. The Company shall simultaneously with the termination of
your Continuous Service automatically reacquire (the “Reacquisition Right”) for no consideration
all of the Unvested Shares, unless the Company agrees to waive its Reacquisition Right as to some
or all of the Unvested Shares. Any such waiver shall be exercised by the Company by written notice
to you or your representative (with a copy to the Escrow Agent, as defined below) within ninety
(90) days after the termination of your Continuous Service, and the Escrow Agent may then release
to you the number of Unvested Shares not being reacquired by the Company. If the Company does not
waive its Reacquisition Right as to all of the Unvested Shares, then upon such termination of your
Continuous Service, the Escrow Agent shall transfer to the Company the number of Unvested Shares
the Company is reacquiring. The Reacquisition Right shall expire when all of the shares have
become Vested Shares in accordance with Section 1.

     5. Change in Control.

          (a) In the event of a Change in Control, the Company may assign the Reacquisition Right to its
successor (or the successor’s parent company), if any, in connection with the Change in Control.
In addition, to the extent the Reacquisition Right remains in effect following such Change in
Control, it shall apply to the new capital stock or other property received in exchange for the
Common Stock in consummation of the Change in Control, but only to the extent the Common Stock was
at the time covered by such right.

          (b) In addition, if a Change in Control occurs and if, within three months before and twelve
(12) months after, the effective time of such Change in Control, your Continuous Service terminates
due to (i) an involuntary termination (excluding death or Disability) without Cause, or (ii) a
voluntary termination for Good Reason, then, subject to your compliance with the provisions of
your employment agreement and you executing and not revoking a separation agreement and general
release of claims in a form satisfactory to the Company, the shares subject to your Award
shall become vested in full upon the later of (A) the date your Continuous Service terminates, or
(B) the date such Change in Control is consummated.

          For purposes of this Subsection 5(b), “Cause” has the meaning given in your written employment
agreement with the Company OR, in the absence of a written employment agreement, “Cause”
means a termination by the Company because of any one of the following events: (i) Your breach of
your employment agreement that results in material injury to the Company which, if capable of cure,
has not been cured by you within thirty (30) days after receipt by you of written notice from the
Company’s chief executive officer (the “CEO”) of such breach; (ii) your misconduct, fraud,
dishonesty, or malfeasance that results in material injury to the Company; (iii) your willful or
intentional failure to (a) perform your duties under your employment agreement, (b) follow the
reasonable and legal direction of the CEO, or (c) follow the policies, procedures, and rules of the
Company (provided that, for any such failure listed in this sub-section (iii), the CEO shall first
give you written notice setting forth with specificity the reasons that the CEO believes you are
failing, and thirty (30) days to cure such failure); or (iv) your conviction of, or plea of nolo
contendre to, a felony. For purposes of this Agreement, your failure to achieve certain results,
such as those set forth in a business plan of the Company, that is not the result of your
demonstrating willful and deliberate dereliction of duty shall not constitute Cause.

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          For purposes of this Subsection 5(b), “Good Reason” has the meaning given in your written
employment agreement with the Company OR, in the absence of a written employment agreement,
“Good Reason” means the occurrence of any of the following: (i) the Company, without your written
consent, (a) takes any action which results in the reduction of your then current title, duties, or
responsibilities, other than a reduction or change required by applicable law or listing
requirements, (b) reduces your then current base salary or target bonus other than a one-time
reduction of not more than 10% that also is applied to substantially all executive officers of the
Company, (c) reduces the benefits to which you are entitled on the effective date of your
employment agreement, unless a similar reduction is made for substantially all other executive
officers, or (d) relocates you to a facility or a location more than 75 miles from your then
present location, (ii) a successor to the Company fails to assume your employment agreement in
writing upon becoming a successor or assignee of the Company, or (iii) the Company breaches your
employment agreement and such breach results in material injury to you; provided, however, that if
the event that potentially constitutes Good Reason is capable of cure, Good Reason only shall exist
if the Company has not cured such event within thirty (30) days after receipt by the CEO of written
notice from you describing why you believe Good Reason exists.

     6. Escrow of Unvested Common Stock. As security for your faithful performance of the
terms of this Agreement and to insure the availability for delivery of your Common Stock in
connection with the Reacquisition Right provided in Section 4 above, you agree to the following
“Joint Escrow” and “Joint Escrow Instructions,” and you and the Company hereby authorize and direct
the Secretary of the Company (“Escrow Agent”) to make arrangements with respect to all Unvested
Shares awarded pursuant to the terms of this Agreement and of your Grant Notice, in accordance with
the following Joint Escrow Instructions:

          (a) In the event your Continuous Service terminates, the Company shall, pursuant to the
Reacquisition Right in Section 4 above, automatically reacquire for no consideration all Unvested
Shares, within the meaning of Section 1 above, as of the date of such termination, unless the
Company elects to waive such right as to some or all of the Unvested Shares. If the Company (or
its assignee) elects to waive the Reacquisition Right, the Company or its assignee will give you
and Escrow Agent a written notice specifying the number of Unvested Shares not to be reacquired.
You and the Company hereby irrevocably authorize and direct Escrow Agent to close the transaction
contemplated by such notice as soon as practicable following the date of termination of your
Continuous Service in accordance with the terms of this Agreement and the notice of waiver, if any.

          (b) Vested Shares shall be delivered to you electronically upon vesting.

          (c) At any closing involving the transfer or delivery of some or all of the property subject
to the Grant Notice and this Agreement, Escrow Agent is directed (a) to date any stock assignments
necessary for the transfer in question, (b) to fill in the number of Unvested Shares being
transferred, and (c) to deliver same, together with the certificate, if any, evidencing the
Unvested Shares to be transferred, to you or the Company, as applicable.

          (d) You irrevocably authorize the Company to deposit with Escrow Agent the certificates, if
any, evidencing the Unvested Shares to be held by Escrow Agent hereunder and

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any additions and substitutions to the Unvested Shares as specified in this Agreement. You do
hereby irrevocably constitute and appoint Escrow Agent as your attorney-in-fact and agent for the
term of this escrow to execute with respect to such securities and other property all documents of
assignment and/or transfer and all stock certificates, if any, necessary or appropriate to make all
securities negotiable and complete any transaction herein contemplated.

          (e) This escrow shall terminate upon the expiration or application in full of the
Reacquisition Right, whichever occurs first, and the completion of the tasks contemplated by these
Joint Escrow Instructions; provided, however, that this escrow shall not terminate with respect to
any Unvested Shares that vest, but for which you have not satisfied any applicable federal, state,
local and foreign tax withholding obligation of the Company or an Affiliate which arise in
connection with vesting of the Unvested Shares.

          (f) If, at the time of termination of this escrow, Escrow Agent should have in its possession
any documents, securities, or other property belonging to you, Escrow Agent shall deliver all of
same to you and shall be discharged of all further obligations hereunder.

          (g) Except as otherwise provided in these Joint Escrow Instructions, Escrow Agent’s duties
hereunder may be altered, amended, modified, or revoked only by a writing signed by all of the
parties hereto.

          (h) Escrow Agent shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or refraining from
acting on any instrument reasonably believed by Escrow Agent to be genuine and to have been signed
or presented by the proper party or parties or their assignees. Escrow Agent shall not be
personally liable for any act Escrow Agent may do or omit to do hereunder as Escrow Agent or as
attorney-in-fact for you while acting in good faith and any act done or omitted by Escrow Agent
pursuant to the advice of Escrow Agent’s own attorneys shall be conclusive evidence of such good
faith.

          (i) Escrow Agent is hereby expressly authorized to disregard any and all warnings given by any
of the parties hereto or by any other person or corporation, excepting only orders or process of
courts of law, and is hereby expressly authorized to comply with and obey orders, judgments, or
decrees of any court. In case Escrow Agent obeys or complies with any such order, judgment, or
decree of any court, Escrow Agent shall not be liable to any of the parties hereto or to any other
person, firm, or corporation by reason of such compliance, notwithstanding any such order,
judgment, or decree being subsequently reversed, modified, annulled, set aside, vacated, or found
to have been entered without jurisdiction.

          (j) Escrow Agent shall not be liable in any respect on account of the identity, authority, or
rights of the parties executing or delivering or purporting to execute or deliver this Agreement or
any documents or papers deposited or called for hereunder.

          (k) Escrow Agent shall not be liable for the outlawing of any rights under any statute of
limitations with respect to these Joint Escrow Instructions or any documents deposited with Escrow
Agent.

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          (l) Escrow Agent’s responsibilities as Escrow Agent hereunder shall terminate if Escrow Agent
shall cease to be the Secretary of the Company or if Escrow Agent shall resign by written notice to
each party. In the event of any such termination, the Company may appoint any officer or assistant
officer of the Company or other person who in the future assumes the position of Secretary of the
Company as successor Escrow Agent and you hereby confirm the appointment of such successor or
successors as your attorney-in-fact and agent to the full extent of such successor Escrow Agent’s
appointment.

          (m) If Escrow Agent reasonably requires other or further instruments in connection with these
Joint Escrow Instructions or obligations in respect hereto, the necessary parties hereto shall join
in furnishing such instruments.

          (n) It is understood and agreed that should any dispute arise with respect to the delivery
and/or ownership or right of possession of the securities, Escrow Agent is authorized and directed
to retain in its possession without liability to anyone all or any part of said securities until
such dispute shall have been settled either by mutual written agreement of the parties concerned or
by a final order, decree, or judgment of a court of competent jurisdiction after the time for
appeal has expired and no appeal has been perfected, but Escrow Agent shall be under no duty
whatsoever to institute or defend any such proceedings.

          (o) By signing this Agreement below, Escrow Agent becomes a party hereto only for the purpose
of said Joint Escrow Instructions in this Section 6; Escrow Agent does not become a party to any
other rights and obligations of this Agreement apart from those in this Section 6.

          (p) Escrow Agent shall be entitled to employ such legal counsel and other experts as Escrow
Agent may deem necessary properly to advise Escrow Agent in connection with Escrow Agent’s
obligations hereunder. Escrow Agent may rely upon the advice of such counsel, and may pay such
counsel reasonable compensation therefor. The Company shall be responsible for all fees generated
by such legal counsel in connection with Escrow Agent’s obligations hereunder.

          (q) These Joint Escrow Instructions set forth in this Section 6 shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and permitted assigns.
It is understood and agreed that references to “Escrow Agent” or “Escrow Agent’s” herein refer to
the original Escrow Agent and to any and all successor Escrow Agents. It is understood and agreed
that the Company may at any time or from time to time assign its rights under the Agreement and
these Joint Escrow Instructions in whole or in part.

     7. Execution of Documents. You hereby acknowledge and agree that the manner selected
by the Company by which you indicate your consent to your Grant Notice is also deemed to be your
execution of your Grant Notice and of this Agreement. You further agree that such manner of
indicating consent may be relied upon as your signature for establishing your execution of any
documents to be executed in the future in connection with your Award.

     8. Irrevocable Power of Attorney.  You constitute and appoint the Secretary of the
Company as attorney-in-fact and agent to transfer said Common Stock on the books of the

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Company with full power of substitution in the premises, and to execute with respect to such
securities and other property all documents of assignment and/or transfer and all stock
certificates necessary or appropriate to make all securities negotiable and complete any
transaction herein contemplated. This is a special power of attorney coupled with an interest
(specifically, the Company’s underlying security interest in retaining the shares of Common Stock
in the event you do not perform the associated services for the Company), and is irrevocable and
shall survive your death or legal incapacity. This power of attorney is limited to the matters
specified in this Agreement.

     9. Rights as Stockholder. Subject to the provisions of this Agreement, you shall
have the right to exercise all rights and privileges of a stockholder of the Company with respect
to the shares deposited in the Joint Escrow. You shall be deemed to be the holder of the
shares for purposes of receiving any dividends that may be paid with respect to such shares and for
purposes of exercising any voting rights relating to such shares, even if some or all of the shares
are Unvested Shares.

     10. Limitations on Transfer of the Common Stock. In addition to any other limitation
on transfer created by applicable securities laws, you shall not transfer, sell, assign,
hypothecate, donate, encumber, or otherwise dispose of any interest in the Common Stock while such
shares of Common Stock are Unvested Shares or continue to be held in the Joint Escrow. After any
Common Stock has been released from the Joint Escrow, you shall not transfer, sell, assign,
hypothecate, donate, encumber, or otherwise dispose of any interest in the Common Stock except in
compliance with the provisions herein and applicable securities laws.

     11. Restrictive Legends. The certificates representing the Common Stock shall have
endorsed thereon appropriate legends as determined by the Company.

     12. Non-transferability of the Award. Your Award is not transferable except by will
or by the laws of descent and distribution.

     13. Award not a Service Contract. Your Award is not an employment or service
contract, and nothing in your Award shall be deemed to create in any way whatsoever any obligation
on your part to continue in the employ of the Company or an Affiliate, or of the Company or an
Affiliate to continue your employment. In addition, nothing in your Award shall obligate the
Company or an Affiliate, their respective stockholders, Boards of Directors, Officers or Employees
to continue any relationship that you might have as a Director or Consultant for the Company or an
Affiliate.

     14. Withholding Obligations.

          (a) At the time your Award is granted, or at any time thereafter as requested by the Company,
you hereby authorize withholding from payroll and any other amounts payable to you, and otherwise
agree to make adequate provision in cash for, as determined by the Company, any sums required to
satisfy the federal, state, local and foreign tax withholding obligations of the Company or an
Affiliate, if any, which arise in connection with your Award. In the Company’s sole discretion,
the Company may elect, and you hereby authorize the Company, to withhold Vested Shares in such
amounts as the Company determines are necessary to satisfy your obligation pursuant to the
preceding sentence.

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          (b) Unless the tax withholding obligations of the Company or any Affiliate are timely
satisfied as reasonably determined by the Company, then the Company shall have no obligation to
issue a certificate for, or otherwise deliver, such shares or release such shares from any escrow
provided for herein and any shares held in escrow shall be automatically reacquired by the Company
for no consideration.

     15. Tax Consequences. You have reviewed with your own tax advisors the federal,
state, local and foreign tax consequences of this investment and the transactions contemplated by
this Agreement. You are relying solely on such advisors and not on any statements or
representations of the Company or any of its agents. You understand that you (and not the Company)
shall be responsible for your own tax liability that may arise as a result of this investment or
the transactions contemplated by this Agreement. You understand that Section 83 of the Code taxes
as ordinary income to you the fair market value of the shares of Common Stock as of the date any
restrictions on the shares lapse (that is, as of the date on which part or all of the shares vest).
In this context, “restriction” includes the right of the Company to reacquire the shares pursuant
to its Reacquisition Right.

     16. Notices. Any notice or request required or permitted hereunder shall be given in
writing to each of the other parties hereto and shall be deemed effectively given on the earlier of
(a) the date of personal delivery, including delivery by express courier, or (b) the date that is
five days after deposit in the United States Post Office (whether or not actually received by the
addressee), by registered or certified mail with postage and fees prepaid, addressed at the
following addresses, or at such other address(es) as a party may designate by ten days’ advance
written notice to each of the other parties hereto:

	 	 	 
	     Company:

	 	Quovadx, Inc.
	 

	 	7600 E. Orchard Road
	 

	 	Suite 300-S
	 

	 	Greenwood Village, CO 80111
	 

	 	Attn: Secretary of the Company
	 
	     You:

	 	Your address as on file with the Company’s
	 

	 	Human Resources Department at the time notice is given
	 
	     Escrow Agent:

	 	Linda K. Wackwitz , Secretary of the Company
	 

	 	Quovadx, Inc.
	 

	 	7600 E. Orchard Road
	 

	 	Suite 300-S
	 

	 	Greenwood Village, CO 80111

     17. Miscellaneous.

          (a) The rights and obligations of the Company under your Award shall be transferable to any
one or more persons or entities, and all covenants and agreements hereunder shall inure to the
benefit of, and be enforceable by, the Company’s successors and assigns. Your rights and
obligations under your Award may only be assigned with the prior written consent of the Company.

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          (b) You agree upon request to execute any further documents or instruments necessary or
desirable in the sole determination of the Company to carry out the purposes or intent of your
Award.

          (c) You acknowledge and agree that you have reviewed your Award in its entirety, have had an
opportunity to obtain the advice of counsel prior to executing and accepting your Award and fully
understand all provisions of your Award.

     18. Governing Plan Document. Your Award is subject to all the provisions of the
Plan, the provisions of which are hereby made a part of your Award, and is further subject to all
interpretations, amendments, rules and regulations which may from time to time be promulgated and
adopted pursuant to the Plan. In the event of any conflict between the provisions of your Award
and those of the Plan, the provisions of the Plan shall control.

* * * * *

     This Restricted Stock Award Agreement shall be deemed to be signed by the Company and the
Participants upon the signing by the Participant of the Restricted Stock Grant Notice to which it
is attached.

     The Escrow Agent hereby acknowledges and accepts its rights and responsibilities pursuant to
Section 6 above.

	 	 	 
	 

Linda K. Wackwitz

	 	 
	Secretary of the Company
	 	 
	Escrow Agent
	 

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Exhibit 10.4

Director Grant

Quovadx, Inc.

2006 Equity Incentive Plan

Stock Option Agreement

     Pursuant to your Stock Option Grant Notice (“Grant Notice”) and this Stock Option
Agreement, Quovadx, Inc. (the “Company”) has granted you an option under its 2006 Equity Incentive
Plan (the “Plan”) to purchase the number of shares of the Company’s Common Stock indicated in your
Grant Notice at the exercise price indicated in your Grant Notice. Defined terms not explicitly
defined in this Stock Option Agreement but defined in the Plan shall have the same definitions as
in the Plan.

     The details of your option are as follows:

     1. Vesting. Subject to the limitations contained herein and in the Plan, your option
will vest as follows:

          (a) Your option will vest as provided in the Vesting Schedule set forth in your Grant Notice,
provided that vesting will cease upon the termination of your Continuous Service.

          (b) Change in Control. Notwithstanding any other provisions of the Plan to the contrary, in
the event of a Change in Control before your Continuous Service terminates, your option shall
become fully vested and exercisable upon the effective date of the Change in Control.

     2. Number of Shares and Exercise Price. The number of shares of Common Stock subject
to your option and your exercise price per share referenced in your Grant Notice may be adjusted
from time to time for Capitalization Adjustments.

     3. Method of Payment. Payment of the exercise price is due in full upon exercise of
all or any part of your option. You may elect to make payment of the exercise price in cash or by
check or in any other manner permitted by your Grant Notice, which may include one or more of the
following:

          (a) Bank draft or money order payable to the Company.

          (b) In the Company’s sole discretion at the time your option is exercised and provided that at
the time of exercise the Common Stock is publicly traded and quoted regularly in The Wall Street
Journal, pursuant to a program developed under Regulation T as promulgated by the Federal Reserve
Board that, prior to the issuance of Common Stock, results in either the receipt of cash (or check)
by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to
the Company from the sales proceeds.

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          (c) In the Company’s sole discretion at the time your option is exercised and provided that at
the time of exercise the Common Stock is publicly traded and quoted regularly in The Wall Street
Journal, by delivery to the Company (either by actual delivery or attestation) of already-owned
shares of Common Stock either that you have held for the period required to avoid a charge to the
Company’s reported earnings (generally six (6) months) or that you did not acquire, directly or
indirectly from the Company, that are owned free and clear of any liens, claims, encumbrances or
security interests, and that are valued at Fair Market Value on the date of exercise. “Delivery”
for these purposes, in the sole discretion of the Company at the time you exercise your option,
shall include delivery to the Company of your attestation of ownership of such shares of Common
Stock in a form approved by the Company. Notwithstanding the foregoing, you may not exercise your
option by tender to the Company of Common Stock to the extent such tender would violate the
provisions of any law, regulation or agreement restricting the redemption of the Company’s stock.

          (d) By a “net exercise” arrangement pursuant to which the Company will reduce the number of
shares of Common Stock issued upon exercise of your option by the largest whole number of shares
with a Fair Market Value that does not exceed the aggregate exercise price; provided, however, that
the Company shall accept a cash or other payment from you to the extent of any remaining balance of
the aggregate exercise price not satisfied by such reduction in the number of whole shares to be
issued; provided further, however, that shares of Common Stock will no longer be outstanding under
your option and will not be exercisable thereafter to the extent that (1) shares are used to pay
the exercise price pursuant to the “net exercise,” (2) shares are delivered to you as a result of
such exercise, and (3) shares are withheld to satisfy tax withholding obligations, if any.

     4. Whole Shares. You may exercise your option only for whole shares of Common Stock.

     5. Securities Law Compliance. Notwithstanding anything to the contrary contained
herein, you may not exercise your option unless the shares of Common Stock issuable upon such
exercise are then registered under the Securities Act or, if such shares of Common Stock are not
then so registered, the Company has determined that such exercise and issuance would be exempt from
the registration requirements of the Securities Act. The exercise of your option also must comply
with other applicable laws and regulations governing your option, and you may not exercise your
option if the Company determines that such exercise would not be in material compliance with such
laws and regulations.

     6. Term. You may not exercise your option before the commencement or after the
expiration of its term. The term of your option commences on the Date of Grant and expires upon
the earliest of the following:

          (a) three (3) months after the termination of your Continuous Service for any reason other
than your Disability or death, provided, however, that (i) if during any part of such three (3)
month period your option is not exercisable solely because of the condition set forth in Section 5,
your option shall not expire until the earlier of the Expiration Date or until it shall have been
exercisable for an aggregate period of three (3) months after the termination of your Continuous
Service and (ii) if (x) you are a Non-Exempt Employee, (y) you terminate your

2.

 

Continuous Service within six (6) months after the Date of Grant specified in your Grant
Notice, and (z) you have vested in a portion of your option at the time of your termination of
Continuous Service, your option shall not expire until the earlier of (A) the later of the date
that is seven (7) months after the Date of Grant specified in your Grant Notice or the date that is
three (3) months after the termination of your Continuous Service or (B) the Expiration Date;

          (b) twelve (12) months after the termination of your Continuous Service due to your
Disability;

          (c) eighteen (18) months after your death if you die either during your Continuous Service or
within three (3) months after your Continuous Service terminates;

          (d) the Expiration Date indicated in your Grant Notice; or

          (e) the day before the seventh (7th) anniversary of the Date of Grant.

     7. Exercise.

          (a) You may exercise the vested portion of your option during its term by delivering a Notice
of Exercise (in a form designated by the Company) together with the exercise price to the Secretary
of the Company, or to such other person as the Company may designate, during regular business
hours, together with such additional documents as the Company may then require.

          (b) By exercising your option you agree that, as a condition to any exercise of your option,
the Company may require you to enter into an arrangement providing for the payment by you to the
Company of any tax withholding obligation of the Company arising by reason of (1) the exercise of
your option, (2) the lapse of any substantial risk of forfeiture to which the shares of Common
Stock are subject at the time of exercise, or (3) the disposition of shares of Common Stock
acquired upon such exercise.

          (c) If your option is an Incentive Stock Option, by exercising your option you agree that you
will notify the Company in writing within fifteen (15) days after the date of any disposition of
any of the shares of the Common Stock issued upon exercise of your option that occurs within two
(2) years after the date of your option grant or within one (1) year after such shares of Common
Stock are transferred upon exercise of your option.  

     8. Transferability.

          (a) Restrictions on Transfer. Your option shall not be transferable except by will or by the
laws of descent and distribution and shall be exercisable during your lifetime only by you;
provided, however, that the Board may, in its sole discretion, permit you to transfer your option
in a manner consistent with applicable tax and securities laws upon your request.

          (b) Domestic Relations Orders. Notwithstanding the foregoing, your option may be transferred
pursuant to a domestic relations order; provided, however, that if your option is an Incentive
Stock Option, your option shall be deemed to be a Nonstatutory Stock Option as a result of such
transfer.

3.

 

          (c) Beneficiary Designation. Notwithstanding the foregoing, you may, by delivering written
notice to the Company, in a form provided by or otherwise satisfactory to the Company, designate a
third party who, in the event of your death, shall thereafter be entitled to exercise your option.

     9. Option not a Service Contract. Neither the Plan nor this Agreement confer upon
you the right to continue providing services to the Company or an Affiliate, nor do they interfere
in any way with your right or the Company’s right to terminate your service at any time, with or
without cause.

     10. Notices. Any notices provided for in your option or the Plan shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of notices delivered by
mail by the Company to you, five (5) days after deposit in the United States mail, postage prepaid,
addressed to you at the last address you provided to the Company.

     11. Governing Plan Document. Your option is subject to all the provisions of the
Plan, the provisions of which are hereby made a part of your option, and is further subject to all
interpretations, amendments, rules and regulations, which may from time to time be promulgated and
adopted pursuant to the Plan. In the event of any conflict between the provisions of your option
and those of the Plan, the provisions of the Plan shall control.

4.

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