Document:

Agreement and Plan of Conversion and Merger

  
 Exhibit 4.1 

 
 AGREEMENT AND PLAN OF CONVERSION AND MERGER 
  
 THIS AGREEMENT AND PLAN OF CONVERSION AND MERGER dated as of January
    , 2005 by and between SOUND SURGICAL TECHNOLOGIES LLC, a Colorado limited liability company (“Sound LLC”), and SOUND SURGICAL TECHNOLOGIES INC., a Delaware corporation (“the “Company”).

  
 WHEREAS, the management committee of Sound LLC and the board
of directors of the Company have approved, and deem it fair to, advisable and in the best interests of each of Sound LLC and the Company and their respective membership interest holders and stockholders to convert Sound LLC from a limited liability
company to a corporation form of business entity under the applicable provisions of the Colorado Corporations and Associations Act, whereby each issued and outstanding membership interest of Sound LLC will become one share of common stock of the
resulting entity (“Sound Inc.”) (which, under the Colorado Corporations and Associations Act, is the same entity as the converting entity) and all outstanding options and warrants of Sound LLC will become options and warrants,
respectively, of Sound Inc., and as soon as practicable thereafter consummate the merger of Sound Inc. with and into the Company (the “Merger”), upon the terms and subject to the conditions of this Agreement and Plan of Conversion and
Merger (this “Agreement”), whereby each issued and outstanding share of common stock of Sound Inc. (a “Sound Share”) will be exchanged in the merger (“Merger Consideration”) for one share of the common stock, $0.0001
par value per share, of the Company (the “Stock”), and all outstanding options and warrants of Sound Inc. will be exchanged for a like number of options and warrants, respectively, of the Company; and 
  
 WHEREAS, Sound LLC and the Company desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe various conditions to the Merger; 
  
 NOW, THEREFORE, in consideration of the premises and the representations, warranties and agreements herein contained, the parties agree as follows:

  
 ARTICLE I 
 CERTAIN DEFINITIONS 
  
 Unless the context otherwise requires, the terms defined in this Article I shall have the meanings herein specified for all purposes of this Agreement,
applicable to both the singular and the plural forms of such terms. Any capitalized term used in this Agreement and not ascribed a meaning in this Article I shall have the meaning ascribed to such term elsewhere in this Agreement. 
  
 “Affiliate” means, with respect to a specified Person, any other
Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Person, and shall include (a) any officer or director of a Person, (b) any Person of which the Company or Sound
LLC (or such specified Person) or any Affiliate (as defined in clause (a) above) of the Company or Sound LLC (or such specified Person) shall, directly or indirectly, beneficially own either (i) at least 10% of the outstanding equity securities
having the general power to vote, or (ii) at least 10% of the equity interests, or (c) any Person directly or indirectly controlling the Company or Sound LLC (or such specified Person) through a management agreement, voting agreement or other
contract. 
  
 “Articles of Merger” has the meaning set
forth in Section 2.2. 
  

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 “Basis” means any past or present fact, situation, circumstance, status, condition, activity,
practice, plan, occurrence, event, incident, action, failure to act or omission, or transaction that forms or reasonably form the basis for any specified consequence. 
  
 “Benefit Arrangement” means any form of current or deferred compensation, bonus, stock option, stock appreciation
right, severance pay, salary continuation, pension, profit-sharing, retirement or incentive plan, practice or arrangement, any group or individual disability, medical, dental, health, hospitalization, life or other insurance plan or related benefit,
or any other welfare or similar plan or arrangement for the benefit of any director, officer or employee, whether active or retired, or for any class or classes of such directors, officers or employees. 
  
 “Breach” has the meaning set forth in Section 8.1.2. 
  
 “Breaching Party” has the meaning set forth in Section 8.1.2.

  
 “Certificates” has the meaning set forth in Section
2.9. 
  
 “The Company” has the meaning set forth in the
first paragraph of this Agreement. 
  
 “Claim” means any
actual or threatened claim, action, suit, arbitration, hearing, inquiry, proceeding (including administrative and informal proceeding), complaint, charge, investigation or audit by or before any Governmental Entity or arbitrator and any appeal from
any of the foregoing. 
  
 “Closing” has the meaning set
forth in Section 3.1. 
  
 “Closing Date” has the meaning
set forth in Section 3.1. 
  
 “Code” means the Internal
Revenue Code of 1986, as amended. 
  
 “Common Stock”
means the common stock, par value $0.0001 per share, of the Company. 
  
 “Confidential Information” means any information concerning the businesses and affairs of any of the Parties that is not already generally available to the public. Confidential Information includes all information or material
disclosed or provided by Sound LLC to the Company (or vice versa), either orally or in writing, or obtained by the Company from a third party or any other source, concerning any aspect of the business or affairs of Sound LLC or its Affiliates
(or vice versa), including without limitation, any information or material pertaining to any products, formulae, specifications, designs, processes, plans, policies, procedures, employees, work conditions, legal and regulatory affairs,
assets, inventory, discoveries, trademarks, patents, manufacturing, packaging, distribution, sales, marketing, expenses, financial statements and data, customer and supplier lists, raw materials, costs of goods and relationships with third parties.
Confidential Information also includes any notes, analyses, compilations, studies or other material or documents prepared by a Party which contain, reflect or are based on, in whole or in part, the Confidential Information. Notwithstanding the
foregoing, Confidential Information shall not include information or material that (i) is publicly available or becomes publicly available through no action or fault of the Receiving Party, (ii) was already in the Receiving Party’s possession
or known to the Receiving Party prior to being disclosed or provided to the Receiving Party by or on behalf of the other Party, provided that the source of such information or material was not bound by a contractual, legal or fiduciary obligation of
confidentiality to the other Party or any other party with respect to such information or material that is known to the Receiving Party, or (iii) was or is obtained by the Receiving Party from a third party, provided, that, such third party was not
bound by a contractual, legal or fiduciary 

  

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obligation of confidentiality to the other Party or any other party with respect to such information or material that is known to the Receiving Party.

  
 “Conversion” has the meaning set forth in Section
2.1. 
  
 “DGCL” has the meaning set forth in Section
2.1. 
  
 “Effective Time” has the meaning set forth in
Section 2.2. 
  
 “Employee Plan” means any
“employee benefit plan,” as defined in Section 3(3) of ERISA, which is subject to any provisions of ERISA, and covers any employee, whether active or retired, of Sound LLC. 
  
 “Environmental, Health, and Safety Laws” means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Resource Conservation and Recovery Act of 1976, and the Occupational Safety and Health Act of 1970, each as amended, together with all Legal Requirements concerning pollution or protection of the environment, public health
and safety, or employee health and safety, including Legal Requirements relating to emissions, discharges, and releases or threatened releases of pollutants, contaminants, or chemical, industrial, hazardous, or toxic materials or wastes into ambient
air, surface water, ground water or lands or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants or chemical, industrial, toxic materials or other
Hazardous Substances. 
  
 “ERISA” means the Employee
Retirement Income Security Act of 1974, as amended. 
  
 “Exhibits” means the exhibits to the Registration Statement as filed with the SEC. 
  
 “Financial Statements” shall have the meaning set forth in Section 4.5. 
  
 “GAAP” means United States generally accepted accounting principles, as amended from time to time. 
  
 “Governmental Entity” means any federal, state, local or foreign
court, government or administrative agency or commission, or any other governmental authority or instrumentality whatsoever. 
  
 “Hazardous Substances” means any hazardous, toxic or infectious substance, material, gas or waste which is regulated by any Governmental Entity.

  
 “Indebtedness” means, when used with reference to
any Person, without duplication, (i) any Liability of such Person created or assumed by such Person, or any Subsidiary thereof, (A) for borrowed money, (B) evidenced by a bond, note, debenture, or similar instrument (including a purchase money
obligation, deed of trust or mortgage) given in connection with the acquisition of, or in exchange for, any property or assets (other than inventory or similar property acquired and consumed in the Ordinary Course of Business), (C) in respect of
letters of credit issued for such Person’s account and “swaps” of interest and currency, exchange rates, and other interest and currency exchange rate hedging agreements to which such Person is a party or (D) for the payment of money
as lessee under leases that should be, in accordance with GAAP, recorded as capital leases for financial reporting purposes; (ii) any Liability of others described in the preceding clause (i) guaranteed as to payment of principal or interest by such
Person or in effect guaranteed by such Person through an agreement, contingent or otherwise, to purchase, repurchase, or pay the related Indebtedness or to acquire the security therefor; (iii) all Liabilities or obligations secured by a Lien upon
property owned by such Person and upon which Liabilities or obligations such Person customarily pays interest or principal, whether or not such Person has assumed or 

  

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become liable for the payment of such liabilities or obligations; and (iv) any amendment, renewal, extension, revision or refunding of any such Liability or
obligation. 
  
 “Intellectual Property” means all
legally protectable property that does not fall within the category of tangible property or intangible property of the type including financial accounts and instruments, including specifically assets such as (i) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications, and patent disclosures, together with all reissuances, continuations, continuations-in-part revisions, extensions, and
reexaminations thereof; (ii) all trademarks, service marks, trade dress, logos, trade names, and corporate names, together with all translations, adaptations, derivations and combinations thereof and including all-goodwill associated therewith, and
all applications registrations, and renewals in connection therewith; (iii) all copyrightable works, such as advertising, marketing, training and instruction materials, together with all copyrights and all applications, registrations, and renewals
in connection therewith; (iv) all trade secrets and confidential business information (including recipes, ideas, research and development, know-how, formulas, formulations, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals); (v) all computer software (including data and related documentation); (vi) product designs
protectable under one or more of the foregoing categories; (vii) agreements relating to any of the foregoing, such as licenses from or to other parties including customers, users and competitors; (viii) all other proprietary rights; and (ix) all
copies and tangible embodiments thereof (in whatever form or medium). 
  
 “IPO” means, with respect to the Company, (i) the completed initial offering and sale of a minimum of 2,000,000 shares of the Company’s common stock to the public in an offering registered under the provisions of the
Securities Act and described in the Company’s registration statement on Form SB-2 filed with the SEC (SEC File No. 333-121472), and (ii) the Company’s common stock being quoted on the American Stock Exchange. 
  
 “Knowledge” means that a Party is actually aware of the fact or
matter in question. 
  
 “Legal Requirement” means any
statute, law, ordinance, rule, regulation, permit, order, writ, judgment, injunction, decree or award issued, enacted or promulgated by any Governmental Entity or any arbitrator with binding authority on a Party or Parties, as the case may be.

  
 “Liability” means any liability (whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including, but not limited to, any liability for Taxes. 
  
 “Licenses” has the meaning set forth in Section 4.14 below.

  
 “Lien” means any lien (including any judgment or
mechanics’ lien, regardless of whether liquidated), mortgage, assessment, security interest, easement, pledge, trust (constructive or otherwise), deed of trust, option or other charge, encumbrance or restriction. 
  
 “Lockup Legends” has the meaning set forth in Section 2.9.

  
 “Losses” means any and all losses, damages, demands,
assessments, adjustments, judgments, settlement payments, deficiencies, penalties, fines, interest (including interest from the date of such damages), and costs and expenses (including without limitation reasonable attorneys’ fees and
disbursements of every kind, nature and description). 
  

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 “Material Adverse Effect” when used in connection with an entity means any change, event,
violation, inaccuracy, circumstance or effect that individually or in the aggregate (taking into account all other such changes, events, violations, inaccuracies, circumstances or effects) that is or reasonably is likely to be materially adverse to
(i) the legal right or authorization of the entity to continue to operate its business as operated at the date of this Agreement or (ii) the business, assets (including intangible assets), capitalization, financial condition or results of operations
of such entity and its parent (if applicable) or subsidiaries taken as a whole; provided, however, that the following shall not be considered a “Material Adverse Effect”: changes, events, violations, inaccuracies, circumstances and effects
that are caused by conditions affecting the United States economy as a whole or affecting the industry in which such entity competes as a whole, which conditions do not affect such entity in a disproportionate manner. 
  
 “Material Contract” means with respect to Sound LLC (i) any union
contract or any employment or consulting contract or arrangement providing for future compensation, written or oral, with any officer, director or employee which is not terminable on thirty (30) days notice or less without penalty or obligation to
make payments related to such termination; (ii) any plan contract or arrangement, whether written or oral, providing for bonuses, pensions, deferred compensation, severance pay or benefits, retirement payments, profit sharing or the like; (iii) any
existing broker agreement, lease sale or purchase agreement, distribution agreement, volume purchase agreement, or similar agreement in which the annual amount involved in 2004 exceeded or is expected to exceed $50,000 in aggregate amount; (iv)
except for trade indebtedness incurred in the Ordinary Course of Business, any Indebtedness incurred in the acquisition of any company or other entity or Indebtedness for borrowed money by way of direct loan, sale of debt securities, recourse
obligation on lease sale, purchase money obligation, conditional sale, guarantee, leasehold obligation or otherwise; (v) any contract containing any covenant purporting to limit in any way the freedom of Sound LLC to compete in any line of business
or in any geographic area; (vi) any agreement of indemnification; (vii) any agreement, contract or commitment relating to capital expenditure and which involve future payments in excess of $50,000 in the aggregate by Sound LLC; (viii) any agreement,
contract or commitment relating to the disposition of assets, including any intangible assets or Intellectual Property rights (other than inventory), which involve payments in excess of $50,000 in the aggregate by Sound LLC; (ix) any contract with a
Governmental Entity subject to price redetermination or renegotiation; or (x) all insurance policies of Sound LLC; (xi) all equipment leases of Sound LLC in which Sound LLC is lessee and which involve payments in excess of $50,000 in the aggregate;
or (xii) any other agreement, contract or commitment which is material to Sound LLC. “Material Contract” with respect to the Company means any agreement, contract or commitment which the Company files or is required to file with its SEC
reports. 
  
 “Members” mean the members of Sound LLC at
the date hereof. 
  
 “Membership Register” has the
meaning set forth in Section 2.9. 
  
 “Merger” means the
merger of Sound LLC with and into the Company as provided for in this Agreement. 
  
 “Offering” has the meaning set forth in Section 2.2. 
  
 “Offering Closing Date” has the meaning set forth in Section 2.2. 
  
 “Ordinary Course of Business” means the ordinary course of business consistent with past custom and practice (including with respect to quantity
and frequency and, where appropriate, in accordance with formulas). 
  
 “Party” means, as the context may require, either the Company or Sound LLC. 
  

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 “Parties” means the Company and Sound LLC. 
  
 “Permitted Liens” means (i) liens for Taxes not yet due and payable
or for Taxes that the taxpayer is contesting in good faith through appropriate proceedings; (ii) purchase money Liens and Liens securing rental payments under capital lease arrangements; (iii) statutory Liens, such as mechanics’,
materialmen’s, warehousemen’s, carriers’ or other like Liens, incurred in good faith in the Ordinary Course of Business, provided that the underlying obligations relating to such Liens are paid in the Ordinary Course of Business, or
are being contested diligently and in good faith by appropriate proceedings and as to which the applicable obligor has set aside reserves on its books reasonably satisfactory to the Company, or the payment of which obligations are otherwise secured
in a manner reasonably satisfactory to the Company; and (iv) zoning ordinances, easements, licenses, reservations, provisions, covenants, conditions, waivers or restrictions on the use of Property and other title exceptions, in each case, that are
reasonably acceptable to the Company. 
  
 “Person” means
an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, a business enterprise, or a governmental entity (or any department, agency, or
political subdivision thereof), or any other legal entity, whether acting in an individual, fiduciary or other capacity. 
  
 “Purchase Rights” has the meaning set forth in Section 2.7. 
  
 “Purchase Rights Register” has the meaning set forth in Section 2.10. 
  
 “Real Property” has the meaning set forth in Section 4.8.

  
 “Receiving Party” means the Party to which
Confidential Information is disclosed or provided, or the Party that obtains Confidential Information from a third party or any other source. 
  
 “Registration Statement” means the Registration Statement filed with the SEC by the Company that relates to the IPO, as the same may be amended
from time to time. 
  
 “Requisite Regulatory Approvals”
has the meaning as set forth in Section 3.5.8. 
  
 “SEC”
means the United States Securities and Exchange Commission. 
  
 “Securities Act” means the Securities Act of 1933, as amended. 
  
 “Short Year Period” has the meaning set forth in Section 7.9. 
  
 “Sound Inc.” has the meaning set forth in the first paragraph of this Agreement. 
  
 “Sound LLC” has the meaning set forth in the first paragraph of this Agreement. All references in this Agreement
to Sound LLC shall mean Sound Inc. upon completion of the Conversion, except where the context requires otherwise. Any document or instrument executed or delivered by Sound LLC prior to the Conversion shall be deemed after the Conversion to have
been executed or delivered by Sound Inc. and all representations, warranties, covenants and agreements of Sound LLC in this Agreement shall be deemed after the Conversion to have been made by Sound Inc. 
  
 “Sound LLC Interests” has the meaning set forth in the first
paragraph of this Agreement, and represents all of the outstanding membership interests of Sound LLC at the date hereof, including those 

  

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membership interests issued in conversion of the Series A preferred membership interests of Sound LLC immediately prior to the Effective Time as defined in
Section 2.2, but excluding options, warrants and any other right to acquire a membership interest in Sound LLC. 
  
 “Sound Share” has the meaning set forth in the first paragraph of this Agreement. 
  
 “Stock” has the meaning set forth in the first paragraph of this Agreement and means the shares of Common Stock
issued in the Merger. 
  
 “Sound Surgical Sales” means
Sound Surgical Sales, LLC, a wholly-owned subsidiary of Sound LLC. 
  
 “Subsidiary” means any corporation, limited liability company, or other business entity, with respect to which a specified Person (or a Subsidiary thereof) owns a majority of the outstanding equity securities, or has the power to
vote or direct the voting of sufficient securities to elect a majority of the directors, managers, or other governing persons, as the case may be. 
  
 “Surviving Corporation” has the meaning set forth in Section 2.1. 
  
 “Tax” means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits, environmental, customs, duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or other tax, duty, impost, excise or contribution of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not. 
  
 “Tax Return” means any return, declaration, report, claim for
refund, or information return or statement relating to any Tax, including any schedule or attachment thereto, and including any amendment thereof. 
  
 “Transfer Agent” has the meaning set forth in Section 2.9. 
  
 ARTICLE II 
  
 CONVERSION AND THE MERGER; EFFECT OF THE MERGER ON THE MEMBERSHIP 
 INTERESTS OF SOUND LLC AND THE CAPITAL STOCK OF THE COMPANY 
  
 2.1 Conversion and The Merger; Requisite Approvals. Immediately prior to and as part of the Closing of the Merger and subject to all of the terms
and conditions of this Agreement pertaining to the Closing of the Merger and in accordance with the Colorado Corporations and Associations Act, Sound LLC will file the requisite statement of conversion and articles of incorporation of Sound Inc.
substantially in the form furnished by Sound LLC to the Company, and the conversion of Sound LLC into Sound Inc. (the “Conversion”) will become effective at the time of such filing. As soon as practicable thereafter and upon the terms and
subject to the conditions of this Agreement and in accordance with the Delaware General Corporation Law (the “DGCL”), Sound Inc. will be merged with and into the Company at the Effective Time. Following the Merger, the separate existence
of Sound Inc. will cease and the Company will continue as the surviving entity (the “Surviving Corporation”) and will continue its corporate existence in accordance with the DGCL. The board of directors and the stockholders of the Company
and the management committee and the Members of Sound LLC have approved the Conversion and the Merger upon the terms and subject to the conditions set forth in this Agreement. 
  

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 2.2 Effective Time. The Closing of the Merger will take place upon the satisfaction or, to the
extent permitted in this Agreement, waiver of the conditions set forth in Article VI and on the date of the closing (the “Offering Closing Date “) of the Company’s initial public offering as described in its Registration Statement on
Form SB-2, SEC File No. 333-121472 (the “Offering”) or such other time and date prior to the Offering Closing Date as is agreed to by Sound LLC and the Company. As soon as practicable following the Closing, the Surviving Corporation will
file the articles of merger required by the DGCL with respect to the Merger (the “Articles of Merger”) and other appropriate documents executed in accordance with the relevant provisions of the DGCL. The Merger will become effective at
such time as the Articles of Merger is duly filed with the Delaware Secretary of State (the time the Merger becomes effective being the “Effective Time”). 
  
 2.3 Effects of the Merger. The Merger will have the effects set forth in the DGCL. If at any time after the Effective
Time, the Surviving Corporation considers or is advised that any further assignments or assurances in law or otherwise are necessary or desirable to vest, perfect or confirm, of record or otherwise, in the Surviving Corporation, all rights, title
and interests in all real estate and other property and all privileges, powers and franchises of Sound Inc., the Surviving Corporation and its proper officers and directors, in the name and on behalf of Sound Inc. and the Company, will execute and
deliver all such proper deeds, assignments and assurances in law and do all things necessary and proper to vest, perfect or confirm title to such property or rights in the Surviving Corporation and otherwise to carry out the purpose of this
Agreement, and the proper officers and directors of the Surviving Corporation are fully authorized in the name of the Company or otherwise to take any and all such action. 
  
 2.4 Certificate of Incorporation and By-laws. 
  
 2.4.1 The certificate of incorporation of the Company, as in effect immediately prior to the Effective Time,
will be, from and after the Effective Time, the certificate of incorporation of the Surviving Corporation until thereafter altered, amended or repealed as provided therein and in accordance with applicable law. 
  
 2.4.2 The by-laws of the Company, as in effect immediately
prior to the Effective Time, will be, from and after the Effective Time, the by-laws of the Surviving Corporation, until thereafter altered, amended or repealed as provided therein and in accordance with applicable law. 
  
 2.5 Directors and Officers. The directors and officers of the Company
immediately prior to the Effective Time will be, from and after the Effective Time, the directors and officers of the Surviving Corporation until their respective successors are duly elected or appointed and qualified or their earlier resignation or
removal, in accordance with the Surviving Corporation’s certificate of incorporation or by-laws. 
  
 2.6 Vacancies. If at the Effective Time a vacancy exists in the Board of Directors or in any of the offices of the Surviving Corporation, such
vacancy thereafter may be filled in the manner provided by the DGCL and the certificate of incorporation and by-laws of the Surviving Corporation. 
  
 2.7 Options, Warrants or other Derivative Securities. At the Effective Time, each outstanding option or warrant to purchase a Sound Share
(collectively, “Purchase Rights”), whether issued under an Employee Plan or otherwise, whether vested or unvested, will continue in effect and shall be, until thereafter altered, amended or terminated as provided therein and in accordance
with applicable law or the terms of the applicable Employee Plan, if any, converted as a result of the Merger into an option or warrant to purchase Common Stock of the Surviving Corporation. Each option and warrant issued or to be issued by the
Surviving Corporation shall continue to have, and be subject to, the same terms and 

  

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conditions set forth in the applicable plan, grant or issuance agreement, or terms immediately prior to the Effective Time. Additionally, each Employee Plan
of Sound Inc. including without limitation, the 2000 Unit Option Plan and the 2004 Equity Award Plan, shall as a result of the Merger become Employee Plans of the Surviving Corporation and the Company hereby agrees that the terms, provisions and
conditions of such Employee Plans shall continue in full force and effect following the Effective Time, as if such Employee Plans had been adopted by the directors and stockholders of the Company, subject to the right of the Company to amend,
terminate or alter such Employee Plans after the Effective Time in accordance with the terms of applicable law and such Employee Plans. 
  
 2.8 Effect on Sound LLC Interests. As of the Effective Time, by virtue of the Merger and without any action on the part of Members, each Sound
Share issued and outstanding immediately prior to the Effective Time will, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive the Merger Consideration consisting solely of the
Stock of the Surviving Corporation. To the extent applicable, Sound LLC confirms that its Members have waived any and all dissenters’ rights available to them under the DGCL and hereby confirm to the Company that none of such rights are, or
will be, exercised by such Members. All of the Sound Inc. Shares, when so converted, no longer will be outstanding and automatically, by virtue of the Merger, be canceled and retired, and each holder of a Sound Share will cease to have any rights
with respect thereto, except the right to receive the Merger Consideration. 
  
 2.9 Issuance of Certificates. 
  
 2.9.1 Sound LLC confirms that prior to the Effective Time it has not certificated the Sound LLC Interests or the Sound Shares and that it has maintained a complete and accurate register (the “Membership
Register”) of the Members who hold Sound LLC Interests (which upon the Conversion will become Sound Shares) as provided by applicable Colorado law. At Closing, Sound Inc. will provide a certified copy of the Membership Register to the Company.
Promptly following the Effective Time, the Company agrees that it shall provide stop transfer instructions and the certified copy of the Membership Register to its duly appointed transfer agent (the “Transfer Agent”) for the issuance and
payment of the Merger Consideration. Following the Closing, the holder of each Sound Share will be entitled to receive in exchange therefor the Merger Consideration, and the outstanding Sound Shares forthwith will be canceled on the register of
Sound Inc. If any part of the Merger Consideration is to be paid to a Person other than the Person in whose name the Sound Share is registered, it will be a condition of exchange that the Person requesting the exchange provides (i) an interest
power, properly signature guaranteed or otherwise in proper form for transfer, (ii) pays any transfer or other taxes required by reason of the exchange to a Person other than the registered holder of such Sound Share (or establishes to the
reasonable satisfaction of the Surviving Corporation that such tax has been paid or is not applicable), and (iii) satisfies such requirements and provides such other documentation as the Surviving Corporation reasonably may request to satisfy
applicable law with respect to such exchange. Each Sound Share will be deemed at any time after the Effective Time to represent only the right to receive the Stock issuable therefor. 
  
 2.9.2 The Merger Consideration to be paid in accordance with the terms of this Article II will be deemed to
have been exchanged and paid in full satisfaction of all rights pertaining to the Sound Shares theretofore represented, and there will be no further registration of transfers on the transfer books of the Surviving Corporation of the Sound Shares
that were outstanding immediately prior to the Effective Time. 
  
 2.9.3 If at any time following six (6) months after the Effective Time the Surviving Corporation receives a request for transfer of a Sound Share, the holder or holders of such Sound Share shall be entitled to look
only to the Surviving Corporation (subject to abandoned property, escheat or other similar laws) with respect to the Merger Consideration payable with respect to a Sound Share, without any 

  

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interest thereon. Notwithstanding the foregoing, none of Sound LLC, Sound Inc., the Surviving Corporation or the Transfer Agent shall be liable to any holder
of a Sound Share for Merger Consideration delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. 
  
 2.9.4 Upon the issuance of certificates representing the Stock (the “Certificates”), the Company covenants and agrees with Sound
LLC that it shall instruct the Transfer Agent to place on each of the Certificates, in addition to any other legends required or called for by applicable law, the legends (the “Lockup Legends”) set forth below. The Company covenants,
acknowledges and agrees that the Lockup Legends and this Section 2.9.4 shall survive the Closing for a period of six (6) months from the Offering Closing Date. Furthermore, the Company agrees that each of the Members of Sound LLC are intended third
party beneficiaries of this Section 2.9(d) and that any of such third party beneficiaries shall have an enforceable interest in the covenant and agreement contained in this Section 2.9(d), which interest likewise will survive for a period of six (6)
months from the Offering Closing Date and thereafter be terminated and of no further force or effect. The Company agrees that it shall take all necessary and appropriate action to enforce compliance with the Lockup Legends and this paragraph (d),
including without limitation (i) the issuance of stop transfer instructions to the Transfer Agent, and (ii) advising each of the Members of Sound LLC of the restrictions under this paragraph. The content of the Lockup Legends shall be as follows:

  
 [On the face of the each Certificate]
“The Common Stock represented by this Certificate is subject to restrictions on transfer pursuant to the Agreement and Plan of Conversion and Merger described on the reverse.” 
  
 [On the reverse side of each Certificate] “The Common Stock represented by this Certificate cannot be
transferred, sold, pledged, hypothecated, or hedged, nor can any beneficial interest in the Common Stock represented hereby be transferred or alienated in any respect, for a period of 180 days from the effective date of the Company’s initial
public offering of common stock, pursuant to the Agreement and Plan of Conversion and Merger between the Company and Sound Surgical Technologies LLC, a copy of which is on file with the Company at its principal offices.] 
  
 2.10 Purchase Rights. The Purchase Rights outstanding as of the
Effective Time have been memorialized in a register of options and warrants of Sound LLC (the “Purchase Rights Register”), a certified copy of which has been provided to the Company. The exercise prices, terms and other provisions of the
Purchase Rights are as described in the copies of the grant agreements or term descriptions or, as applicable, in the relevant provisions of the Employee Plans.  
  
 2.11 Characterization for Federal Income Tax Purposes. For federal income tax purposes, it is intended that the
Merger contemplated by this Agreement be treated as a forward A merger within the meaning of Section 368(a)(1)(A) of the Code. 
  
 ARTICLE III 
 CLOSING 

 
 3.1 Closing. The consummation of the Merger and the other
transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of the Company, located at 357 South McCaslin Boulevard, Suite 100, Louisville, Colorado 80027, on such date that all of the conditions to Closing
are satisfied, including without limitation the satisfaction of the condition set forth in Section 3.5.8 that the Company shall have consummated the IPO, or such other date and place as the Parties may mutually 

  

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agree (the “Closing Date”). The Closing shall be carried out and completed in accordance with the escrow provisions set forth in Section 3.7.

  
 3.2 Mutual Deliveries at Closing. Provided that all of
the conditions to the Closing set forth in Sections 3.5 and 3.6 have been satisfied or waived by the Party benefiting therefrom, the appropriate Parties or Persons shall execute and deliver or cause to be delivered the certificates and documents
hereinafter described. 
  
 3.3 Sound LLC’s Deliveries at
Closing. Provided that all of the conditions to the Closing set forth in Sections 3.5 and 3.6 have been satisfied or waived by the Party benefiting therefrom, Sound LLC shall execute and deliver or cause to be delivered to the Company at the
Closing the following: 
  
 3.3.1 An
Officer’s Certificate of Sound LLC dated the Closing Date in form reasonably satisfactory to the Company; 
  
 3.3.2 Sound LLC’s original minute books, such minute books to contain (i) original articles of organization and all amendments
thereto, or copies thereof if the originals are unavailable; (ii) the operating agreement as then in effect; (iii) interest transfer records and the certified Membership Register; and (iv) all minutes of meetings or consents in lieu of such meetings
of the management committee and Members; 
  
 3.3.3 A good standing certificate of Sound LLC, dated within forty five (45) business days of the Closing Date, for each jurisdiction in which Sound LLC is required to be qualified and authorized to do business; 
  
 3.3.4 Minutes of meetings of the management committee and
Members of Sound LLC authorizing and approving this Agreement and the transactions contemplated herein; 
  
 3.3.5 The resignations of all of the officers and managers of Sound LLC from those positions, but not as employees, effective as of the
Closing Date; and 
  
 3.3.6 Such other documents
and instruments as may be specified in this Agreement or otherwise reasonably requested in writing by the Company in order to consummate the transactions contemplated in this Agreement. 
  
 3.4 The Company’s Deliveries at Closing. Provided that all of the conditions to the Closing set forth in
Sections 3.5 and 3.6 have been satisfied or waived by the Party benefiting therefrom, the Company shall execute and deliver or cause to be delivered at the Closing the following: 
  
 3.4.1 The Certificates representing the Stock or verification from the Transfer Agent that certificates have
been issued to the former Members of Sound LLC in proportion to their ownership of Sound LLC as of the Closing Date; 
  
 3.4.2 A good standing certificate of the Company, dated within forty five (45) business days of the Closing Date, for each jurisdiction in
which the Company is required to be qualified and authorized to do business; 
  
 3.4.3 Minutes of the board of directors and stockholders of the Company authorizing and approving this Agreement and the transactions contemplated in this Agreement; and 
  

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 3.4.4 Such other documents and instruments as may be specified in this Agreement or
otherwise reasonably requested in writing by Sound LLC in order to consummate the transactions contemplated in this Agreement. 
  
 3.5 Conditions to The Company’s Obligations. The Company’s obligations under this Agreement to consummate the transactions contemplated
in this Agreement are subject to the satisfaction, at or prior to the Closing, of all of the following conditions: 
  
 3.5.1 Representations and Warranties True; Performance of Obligations. The representations and warranties made by Sound LLC in this
Agreement shall be true, correct and complete in all material respects on and as of the Closing Date with the same force and effect as if they had been made on and as of said date; and Sound LLC in all material respects performed all of the
obligations and complied with each and all of the covenants required to be performed or complied with by it on or prior to the Closing Date. 
  
 3.5.2 Material Adverse Effect. No act, event or condition shall have occurred which the Company determines in its reasonable
discretion has had or could have a Material Adverse Effect on Sound LLC. 
  
 3.5.3 Authorizations and Approvals. All authorizations, approvals or consents, if any, from third parties, including from any Governmental Entity or other Person, required to be obtained by Sound LLC shall have
been obtained. 
  
 3.5.4 Investigation of
Sound LLC. The Company acknowledges having satisfactorily concluded (through its representatives, accountants, counsel and other experts) a due diligence investigation of the business, condition (financial, legal and other), properties, assets,
prospects, operations and affairs of Sound LLC, and Sound LLC shall provide updated due diligence information reasonably requested by the Company through a date not less than one business day prior to Closing. 
  
 3.5.5 Deliveries. The Company shall have received
from the appropriate Party or Person, the documents and instruments satisfying the delivery obligations set forth in Sections 3.2 through 3.3. 
  
 3.5.6 No Claims. There shall not be pending or threatened any Claims before any Governmental Entity (i) challenging or otherwise
seeking to restrain or prohibit the consummation of the transactions contemplated in this Agreement, or (ii) seeking to prohibit the direct or indirect ownership or operation by the Company of all or a material portion of the business or assets of
Sound LLC, or to compel the Company or Sound LLC to dispose of or hold separate all or a material portion of the business or assets of Sound LLC or the Company. 
  
 3.5.7 Corporate Action. All corporate and other proceedings and actions taken in connection with the
transactions contemplated in this Agreement and all certificates, opinions, agreements, instruments, releases and documents referenced herein or incident to the transactions contemplated in this Agreement shall be in form and substance satisfactory
to the Company and its counsel. 
  
 3.5.8
Requisite Regulatory Approvals. All notices or filings required to be made, all authorizations, permits, certificates, registrations, consents, approvals or orders required to be obtained, and all waiting periods required to expire prior to
the consummation of the transactions contemplated by this Agreement under applicable federal law of the United States or applicable laws of any state having jurisdiction over the transactions contemplated by this Agreement or the businesses
conducted by the 

  

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Parties or any Affiliate or Subsidiary of any Party (collectively, the “Requisite Regulatory Approvals”) shall have been obtained or expired, as
the case may be, without the imposition of any condition which is materially burdensome upon the Company or any Party or Person to be affected by such condition. 
  
 3.5.9 IPO Completed. The IPO of the Company shall have been closed. 
  
 3.6 Conditions to Sound LLC’s Obligations. Sound LLC’s
obligations in this Agreement to consummate the transactions in this Agreement are subject to the satisfaction, at or prior to the Closing, of the following conditions: 
  
 3.6.1 Representations and Warranties True; Performance of Obligations. The representations and
warranties made by the Company in this Agreement shall be true, correct and complete in all material respects on and as of the Closing Date with the same force and effect as if they had been made on and as of said date; and the Company in all
material respects performed all of the obligations and complied with each and all of the covenants required to be performed or complied by it on or prior to the Closing Date. 
  
 3.6.2 Authorizations and Approvals. All authorizations, approvals or consents, if any, from third
parties, including from any Governmental Entity or other Person, required to be obtained by the Company shall have been obtained. 
  
 3.6.3 Deliveries. Sound LLC shall have received from the Company the documents and instruments satisfying the delivery obligations
set forth in Sections 3.2 and 3.4. 
  
 3.6.4
No Claims. There shall not be pending or threatened any Claims before any Governmental Entity (i) challenging or otherwise seeking to restrain or prohibit the consummation of the transactions contemplated in this Agreement, or (ii) seeking to
prohibit the direct or indirect ownership or operation by the Company of all or a material portion of the business or assets of Sound LLC, or to compel the Company or Sound LLC to dispose of or hold separate all or a material portion of the business
or assets of Sound LLC or the Company. 
  
 3.6.5
Requisite Regulatory Approvals. The Requisite Regulatory Approvals shall have been obtained or expired, as the case may be, without the imposition of any condition which is materially burdensome upon Sound LLC or any Party or Person to be
affected by such condition. 
  
 3.6.6 IPO
Completed. The IPO of the Company shall have been closed. 
  
 3.7 Escrow. On or prior to the date that the Registration Statement becomes effective, the Parties shall execute all of the documents to be delivered at Closing as set forth in Sections 3.2 through 3.6 and deliver such originally
executed documents to an escrow agent appointed in the manner set forth below. The documents will be held by the escrow agent in escrow, subject to instructions to deliver the documents (i) upon closing of the IPO, to the recipients entitled to
receive such documents at the Closing as provided under Sections 3.2 through 3.6 above, or (ii) if this Agreement is terminated prior to closing the IPO pursuant to Section 8.1 hereof, to the Parties who executed and delivered such documents to the
escrow agent. 
  
 The escrow agent shall be selected and appointed
by the Company. The above instructions and the other terms and conditions of the escrow arrangement shall be set forth in a written escrow agreement mutually acceptable to the Company and the escrow agent. The fees of the escrow agent and other
costs and expenses of such escrow shall be paid in accordance with Section 7.5 hereof. 
  

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 ARTICLE IV 
 REPRESENTATIONS AND WARRANTIES OF SOUND LLC 
  
 Sound LLC represents and warrants to the Company that, except for changes contemplated by this Agreement and except as set forth in the Registration Statement or the Exhibits thereto, each of the following statements
is true, correct and complete as of the date of this Agreement and the Closing Date. Except where the context requires otherwise, each representation extends to Sound LLC and Sound Surgical Sales. 
  
 4.1 Organization and Standing, Articles of Organization and Operating
Agreements. Sound LLC and Sound Surgical Sales are limited liability companies duly organized, validly existing and in good standing under the laws of the State of Colorado, and have full power and authority to own their assets and properties
and to carry on their business as presently conducted. Sound LLC and Sound Surgical Sales each are duly qualified and authorized to do business, and are in good standing as a foreign limited liability company in each jurisdiction where the nature of
their activities or of their properties (both owned and leased) make such qualification necessary, except where the failure to so qualify would not have a Material Adverse Effect. Sound LLC has furnished the Company with copies of the articles of
organization and operating agreements, as amended to the date hereof, of both Sound LLC and Sound Surgical Sales. Said copies are true, correct and complete and contain all amendments through the Closing Date. 
  
 4.2 Authorization. All actions on the part on the part of Sound LLC,
its officers, managers and Members necessary for the authorization, execution and delivery of this Agreement and the documents contemplated in this Agreement, and the performance of all of Sound LLC’s obligations hereunder and thereunder, have
been taken prior to the Closing. This Agreement and the documents contemplated in this Agreement, when executed and delivered, shall constitute valid and legally binding obligations of Sound LLC enforceable in accordance with their respective terms.

  
 4.3 Subsidiaries. Other than Sound Surgical Sales,
Sound LLC has no Subsidiaries and does not presently own, of record or beneficially, or control, directly or indirectly, any capital stock, securities convertible into capital stock or any other equity interest in any corporation, association or
business entity, nor is Sound LLC, directly or indirectly, a participant in any joint venture, partnership or other entity the equity owners of which are other than Sound LLC, Sound Surgical Sales or the Company. 
  
 4.4 Capitalization. The membership interests of Sound LLC at the
Effective Time will consist of voting units described as common membership units. The Series A preferred membership units formerly outstanding have prior to the Effective Time been converted by agreement of the holders thereof into common membership
units. Accordingly, at the Effective Time and at the Closing, Sound LLC will have only common membership units outstanding. The record holders of all of the issued and outstanding membership interests of Sound LLC are set forth in the Membership
Register provided by Sound LLC to the Company. All of the Sound LLC Interests have been duly authorized, validly issued, fully paid and non-assessable. All Purchase Rights relating to membership interests of Sound LLC are memorialized and are as set
forth in the Purchase Rights Register provided by Sound LLC to the Company. 
  
 Other than the foregoing, there are no outstanding membership interests of Sound LLC, preferred membership interests or any other equity interests of Sound LLC, and there are no options, warrants, calls, conversion
rights, preemptive rights, commitments or agreements of any character to which Sound LLC may be bound that do or may obligate Sound LLC to issue, deliver or sell, or cause to be issued, delivered or sold, additional Sound LLC Interests or other
equity securities or that do or may obligate Sound LLC to grant, extend or enter into any such option, warrant, call, conversion right, commitment or agreement. There are no outstanding arrangements, agreements, commitments or understandings of any

  

 14 

 
kind affecting or relating to the voting, issuance, purchase, redemption, repurchase or transfer of any Sound LLC Interests or any other securities of Sound
LLC of which Sound LLC is aware. Sound LLC is not, and prior to the Closing will have not, become a party to or subject to any contract or obligation wherein any Person has a right or option to purchase or acquire any rights in any capital stock or
securities of Sound LLC. 
  
 4.5 Financial Statements.
True, complete and correct copies of Sound LLC’s financial statements containing (1) audited balance sheets as of December 31, 2003 and 2004, and statements of operations, cash flows and members’ equity for the years ended December 31,
2003 and 2004 (collectively, the “Financial Statements”), have been delivered to the Company. The Financial Statements have been prepared in accordance with GAAP consistently applied and fairly present the financial position of Sound LLC
as of the dates thereof and the results of its operations and cash flows for the periods then ended. There are no Sound LLC Liabilities, direct or indirect, fixed or contingent, which are not reflected in the balance sheet as of December 31, 2004,
except for Liabilities incurred in the Ordinary Course of Business subsequent to December 31, 2004, which would not be material, either individually or in the aggregate. There is no Basis for any assertion against Sound LLC of any Liability or
obligation of any nature whatsoever that is not fully reflected in the Financial Statements which, either individually or in the aggregate, would be material. Since the date of the Financial Statements, there have been no material changes in Sound
LLC’s accounting policies. 
  
 4.6 Material Contracts.
The Exhibits contain a complete and accurate list of all Material Contracts to which Sound LLC or Sound Surgical Sales is a party or bound. True, correct and complete copies of all Material Contracts listed in the Exhibit list in the Registration
Statement have been furnished by Sound LLC to the Company. Each Material Contract so listed is a valid and binding obligation of Sound LLC or Sound Surgical Sales and is enforceable against Sound LLC and the other Person or Persons thereto in
accordance with its terms, subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and subject to the availability of equitable remedies. Subject to obtaining any necessary waivers at or prior to Closing,
Sound LLC has performed all material obligations required to be performed by it to date and is not in material default under or in breach of any material term or provision of any Material Contract to which Sound LLC is a party, is subject or is
otherwise bound, and no event has occurred that, with the giving of notice or the passage of time or both, would constitute such a default or breach under any Material Contract. No party with whom Sound LLC has a Material Contract is in default of
its obligations thereunder. No consent or approval of any party to any of the Material Contracts is necessary in order to permit Sound LLC to consummate the transactions contemplated in this Agreement. 
  
 4.7 Assets Other Than Real Property. Sound LLC has title to all
properties and assets (other than real property which is subject to Section 4.8) owned or leased by Sound LLC, free and clear of all Liens except for: (i) Permitted Liens; (ii) Liens, if any, that are not substantial in character, amount or extent
and do not detract materially from the value, or interfere with present use or the sale or other disposition, of the property subject thereto or affected thereby, and (iii) Liens disclosed in the Exhibits or the Registration Statement. The assets
and properties of Sound LLC constitute all the assets, properties, rights, privileges and interests necessary for the operation of Sound LLC’s business; provided, however, that no representation or warranty is made as to the physical condition
or current state of repair of such properties or assets. 
  
 4.8
Real Property. Sound LLC owns no real property fee interests. The Exhibits and the Registration Statement contain a complete and accurate list or make reference to all of Sound LLC’s other real property interests (“Real
Property”) pursuant to leases, subleases, licenses or other agreements. Sound LLC has good and marketable title in and to the Real Property, free and clear of all Liens and Claims, except for (i) Liens and Claims and other matters recorded in
the real property records, and (ii) 

  

 15 

 
other matters as described in the Registration Statement or the Exhibits. To the extent it has had operations thereon, the activities of Sound LLC with
respect to the Real Property are in all material respects permitted and authorized by applicable zoning laws, ordinances and regulations and all laws and regulations of any Governmental Entity. The buildings and other improvements on the Real
Property in the aggregate are sufficient to conduct such current business activities as are conducted at such facilities; provided, however, that no representation or warranty is made as to the physical condition or current state of repair of such
Real Property, including the improvements thereon. 
  
 4.9 No
Conflicts. Neither the execution and delivery nor the performance of this Agreement by Sound LLC will result in any of the following: (i) a default or an event that, with notice or lapse of time or both, could be a default, breach or violation
of (A) the articles of organization, as amended, or operating agreement of Sound LLC, (B) any Material Contract; (ii) the termination of any Material Contract or the acceleration of the maturity of any Indebtedness or other material obligation of
Sound LLC; (iii) the creation or imposition of any Lien (except for Permitted Liens) on any of the assets or properties of Sound LLC; (iv) the creation or imposition of any Lien on any Sound LLC Interests; or (v) a violation or breach of any known
writ, injunction or decree of any Governmental Entity or the final award in any arbitration proceeding to which Sound LLC is a party or by which any of its properties are bound. 
  
 4.10 Litigation. There are no Claims before any court or administrative agency pending or currently threatened
against or with respect to Sound LLC, which question the validity of this Agreement or any action taken or to be taken in connection herewith, or which, individually or in the aggregate, might result in a Material Adverse Effect, or in any material
impairment of the right or ability to carry on its business as now conducted or as proposed to be conducted, or in any material Liability or Loss on the part of Sound LLC. Sound LLC is not a party or subject to, and none of its assets are bound by,
the provisions of any order, writ, injunction, judgment, or decree of any Governmental Entity or arbitrator known to Sound LLC. 
  
 4.11 Taxes. Sound LLC has no Liability for any Taxes, except for Taxes which have accrued and are not yet payable. Sound LLC has filed or caused to
be filed all Tax Returns required under applicable law to be filed on or before the Closing Date, Sound LLC has paid or made provision for all Taxes and other charges which have or may become due for the periods covered by such Tax Returns, and all
such Tax Returns are true, correct and complete in all material respects. None of the Tax Returns of Sound LLC currently are under investigation or audit, nor is an investigation or audit pending to the Knowledge of the officers of Sound LLC. There
are no outstanding agreements or waivers extending the statutory period of limitations applicable to any Sound LLC Tax Return for any period. The accounting treatment of all items of income, gain, loss, deduction and credit as reported on all Tax
Returns and estimates filed by or on behalf of Sound LLC are true, correct and complete in all material respects, and all deferred Taxes and all Taxes due for the period ending on the Closing Date have been accrued on the Balance Sheet as of
December 31, 2004. No Claim ever has been made by any Governmental Entity in a jurisdiction where Sound LLC does not file Tax Returns that it is or may be subject to taxation by that jurisdiction. All Taxes owed by Sound LLC or which Sound LLC is
obligated to withhold from amounts owed or owing to any employee, independent contractor, Member, creditor or third party and which are or have become due have been paid. There is no unresolved Claim concerning Sound LLC’s Tax Liability, and to
the Knowledge of the officers of Sound LLC, no Basis for any such Claim exists. 
  
 4.12 Employees. The Registration Statement includes a description of the current employees of Sound LLC, and Sound LLC has made documentation available to the Company concerning each employee’s tenure,
title or job classification, and the current annual rate of compensation payable to each such employee. There is no unfair labor practice complaint, strike, slowdown, stoppage or other controversy pending or threatened, or attempt to unionize
relating to any of its employees. Sound LLC is not a party to any collective bargaining agreement with respect to any of its employees or to a written 

  

 16 

 
employment contract with any of its employees except as disclosed in the Registration Statement or the Exhibits thereto. Except as otherwise described in the
Registration Statement or the Exhibits, there are no understandings with respect to the employment of any officer or any such employee which are not terminable by Sound LLC without Liability on not more than thirty (30) days’ notice. No
officer, director, or employee is entitled to receive any payment of any amount under any existing agreement, Benefit Arrangement, Employment Plan or other benefit, or to the accrual or vesting of any other benefit or payment as a result of the
consummation of any transactions contemplated by this Agreement. Sound LLC has complied with all applicable Legal Requirements which govern workers’ compensation, equal employment opportunity and equal pay. Sound LLC’s employment of each
of its employees is in compliance with all immigration and naturalization laws of the United States. 
  
 4.13 Consents. No consents, approvals, orders, or authorizations of, or registrations, qualifications, designations, declarations or filings with,
any Governmental Entity or under any Material Contract, is or will be required on the part of Sound LLC in connection with the valid execution and delivery of this Agreement and the Merger, or the consummation of any other transaction contemplated
in this Agreement, other than such authorizations and filings specifically contemplated in this Agreement. 
  
 4.14 Operating Rights. Sound LLC has all operating authority, licenses, franchises, permits, certificates, consents, rights and privileges
(collectively, “Licenses”) as are necessary or appropriate to the operation of its business as now conducted. Such Licenses are in full force and effect, no violations have been or are expected to have been recorded in respect of any such
Licenses, and no proceeding is pending or threatened that could result in the revocation or limitation of any of such Licenses. Sound LLC has conducted its business so as to comply in all material respects with all such Licenses. 
  
 4.15 Compliance with Applicable Laws. The properties, assets, business
and operations of Sound LLC have been and are being maintained and conducted in compliance with all Legal Requirements to which Sound LLC is subject. No investigation or review by any Governmental Entity with respect to Sound LLC is pending nor has
any Governmental Entity indicated in writing to Sound LLC any intention to conduct the same. 
  
 4.16 Insurance. Sound LLC has furnished to the Company copies of all insurance policies carried by Sound LLC and all insurance loss runs or workmen’s compensation claims received for the past two (2)
policy years, if any, including true, complete and correct copies of the summaries or declaration pages from the insurance companies of all applicable policies, all of which are in full force and effect to the Knowledge of Sound LLC. All premiums
payable under all such policies have been paid and Sound LLC is otherwise in full compliance with the terms of such policies (or other policies providing substantially similar coverage). There is no threatened termination or rescission of, or
material premium increase with respect to, any such policies. 
  
 4.17 Absence of Changes. Since December 31, 2004, (i) there has not been any change in or amendment of the articles of organization, operating agreement or other governing instruments of Sound LLC; (ii) any sale or issuance of, or
grant of options, warrants or rights to acquire, any Sound LLC Interests or other securities of Sound LLC or any declaration, setting aside, or payment of dividends or redemptions in respect of any Sound LLC Interests or other securities, or any
direct or indirect redemption, purchase or other acquisition of Sound LLC Interests or any other securities of Sound LLC, or any agreement, understandings or commitments to do the same; (iii) to the Knowledge of Sound LLC, any transfer or other
disposition or pledge of, or the grant of options, warrants or rights to acquire, any of the outstanding Sound LLC Interests; (iv) any amendment, termination or revocation of any Material Contract; (v) any sale, transfer, mortgage, pledge, or
incurring of any Lien (other than Permitted Liens and sales in the ordinary course of business) of, on or affecting any of the assets of Sound LLC valued at or above $10,000 individually or in the aggregate; (vi) any increase in the compensation
paid or payable, 

  

 17 

 
other than bonuses paid in the Ordinary Course of Business, or in the fringe benefits provided to any employee of Sound LLC, or the adoption of any Benefit
Arrangements or Employee Plans not in existence in the year ended December 31, 2004; (vii) any damage, destruction or loss, whether or not covered by insurance, of any of the assets of Sound LLC; (viii) any purchase or lease, or commitment for the
purchase or lease, of equipment or other capital assets not disclosed in Sound LLC’s Financial Statements which is in excess of the normal, ordinary and usual requirements of the business of Sound LLC; (ix) any change that by itself or together
with other changes, has had a Material Adverse Effect on Sound LLC; (x) any agreement or arrangement made by Sound LLC or any Member of Sound LLC to take any action which, if taken prior to the date of this Agreement, would have made any
representation or warranty set forth in this Agreement untrue or incorrect in any material respect as of the date when made; (xi) the commencement or written notice or written threat of commencement of any Claim against Sound LLC or any of its
Affiliates; or (xii) any dividends or other distributions of cash, property or other assets to the Members of Sound LLC. 
  
 4.18 Employee Plans. The Registration Statement and Exhibits include a complete description of all Employee Plans and Benefit Arrangements
maintained, administered or contributed to, or otherwise participated in, by Sound LLC. True and complete copies of each such Employee Plan or Benefit Arrangement, including amendments thereto, have been provided to the Company, together with true
and complete copies of (i) annual reports for the most recent three (3) years, (ii) all plan documents and the most recent summary plan description of each such Employee Plan, together with any modifications thereto, and (iii) the most recent
favorable determination letter (if applicable) from the Internal Revenue Service for each such Employee Plan. None of the Employee Plans is a “multiemployer plan” as defined in Section 3(37) of ERISA or a “multiple employer plan”
as covered in Section 412(c) of the Code, and Sound LLC has not been obligated to make a contribution to any multiemployer or multiple employer plan. All contributions (including all employer contributions and employee salary reduction
contributions) which are due have been paid to each such Employee Plan or Benefit Arrangement and all contributions for any period ending on or before the Closing Date which are not yet due have been paid to each such Employee Plan or Benefit
Arrangement or accrued in accordance with past custom and practice of Sound LLC. Each Employee Plan which is intended to be qualified under Section 401 (a) of the Code is so qualified and each trust maintained pursuant thereto is exempt from income
tax under Section 501(a) of the Code. None of Sound LLC, any Employee Plan, any trusts created thereunder, and any trustee, administrator nor any other fiduciary thereof has engaged in a “prohibited transaction,” as defined in Section 406
of ERISA and Section 4975 of the Code, or any breach of fiduciary duty as defined in Part 4 of Subtitle B of Title I of ERISA. 
  
 4.19 Intellectual Property Rights. 
  
 4.19.1 Sound LLC owns, or has the right to use, sell or license all Intellectual Property necessary or required for the conduct of its
business as presently conducted and such rights to use, sell or license are reasonably sufficient for such conduct of Sound LLC’s business. Sound LLC has taken reasonable actions designed to safeguard and maintain the secrecy and
confidentiality of, and its proprietary right in, all of its Intellectual Property. The Registration Statement contains a description of the material Intellectual Property of Sound LLC and Sound LLC has provided copies of all instruments evidencing
its Intellectual Property to the Company. All of such Intellectual Property is currently the property of Sound LLC. 
  
 4.19.2 Neither the license, sublicense or intended use of any Intellectual Property licensed or used by Sound LLC or currently under
development by Sound LLC violates any license or agreement between Sound LLC and any third party or infringes any Intellectual Property of any other party; and there is not pending or threatened any Claim contesting the validity, ownership or right
to use, license or 

  

 18 

 
dispose of any Intellectual Property or that the proposed use, license or disposition thereof conflicts or will conflict with the rights of any other party.

  
 4.20 Environment, Health and Safety. 
  
 4.20.1 Sound LLC has complied with all Environmental, Health
and Safety Laws, except where failure to comply would not have a Material Adverse Effect, and no Claim or notice has been filed or commenced against it alleging any failure to so comply. Without limiting the generality of the preceding sentence,
Sound LLC has obtained and been in compliance with all of the terms and conditions of all Licenses and other authorizations which are required under, and has complied with all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables which are contained in, all Environmental, Health, and Safety Laws, except where failure to comply would not have a Material Adverse Effect. 
  
 4.20.2 Sound LLC has not handled or disposed of any
substance, arranged for the disposal of any substance, exposed any employee or other individual to any substance or condition, or owned or operated any property or facility in any manner that could form a Basis for any present or future Claim
against Sound LLC giving rise to any Liability, except where having done so would not have a Material Adverse Effect. Sound LLC has no known Liability for damage to any site, location, or body of water (surface or subsurface), for any illness of or
personal injury to any employee or other individual, or for any reason under any Environmental, Health, and Safety Law which could have a Material Adverse Effect. 
  
 4.20.3 All properties used in Sound LLC’s business, including the Real Property, are free of Hazardous
Substances, except where the existence thereof would not have a Material Adverse Effect. 
  
 4.21 Certain Transactions. Except as disclosed in the Registration Statement, there are no existing or pending transactions, nor are there any agreements or understandings, between Sound LLC on the one han, and
any member, officer or manager of Sound LLC or any its Affiliates on the other hand, including without limitation any transactions, arrangements or understandings relating to the purchase or sale of goods or services or the sale, lease or use of any
of the assets of or by Sound LLC, with or without adequate compensation, or to any indebtedness owed to or by Sound LLC in any amount whatsoever, except employee expense advances, expense reimbursement, and compensation payable in the Ordinary
Course of Business. 
  
 4.22 Bank Accounts; Powers of
Attorney. Sound LLC has provided the Company with an accurate list, as of the date of this Agreement, of the following: (i) the name of each financial institution in which Sound LLC has any account or safe deposit box; (ii) the names in which
the accounts or boxes are held; (iii) the type of account; and (iv) the name of each person authorized to draw thereon or have access thereto. Sound LLC has not issued any general or special powers of attorney. 
  
 4.23 Absence of Claims Against Sound LLC. Except as set forth in this
Agreement, in the Registration Statement, or in the Financial Statements, there are no Claims outstanding against Sound LLC. 
  
 4.24 Employee Loans. There are no outstanding loans and/or other advances made by Sound LLC to any of its officers, managers, Members, employees,
agents or consultants, other than expense advances to employees made in the Ordinary Course of Business. 
  
 4.25 Brokers’ Fees. Sound LLC is not a party to or obligated under any agreement with any broker, agent, or finder relating to the
transactions contemplated hereby, and neither the execution of this 

  

 19 

 
Agreement nor the consummation of the transactions provided for herein will result in any liability to any broker, agent or finder. 
  
 4.26 Full Disclosure. Neither this Agreement and the representations
and warranties by Sound LLC contained herein, nor any other written statement or certificate delivered or to be furnished to the Company by Sound LLC in connection herewith, when read together, contain any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements contained herein or therein not materially misleading, in light of the circumstances under which they were made. To the Knowledge of Sound LLC, there is no fact which has not
been disclosed to the Company that would have a Material Adverse Effect or would affect the ability of Sound LLC to perform its obligations under this Agreement. 
  
 ARTICLE V 
 REPRESENTATIONS AND WARRANTIES OF THE COMPANY 
  
 The Company represents and warrants to Sound LLC that each of the following statements is true, correct and complete in all material respects as of the date of this Agreement and the Closing Date: 
  
 5.1 Organization and Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of Delaware and has full power and authority to own its assets and properties and to carry on its business as presently conducted. The Company is duly qualified and
authorized to do business, and is in good standing as a foreign corporation, in each jurisdiction where the nature of its activities or of its properties (both owned and leased) make such qualification necessary, except where the failure to so
qualify would not have a Material Adverse Effect. 
  
 5.2
Authorization. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement and the documents contemplated hereby, and the performance of
all of the Company’s obligations hereunder and thereunder, have been taken prior to the Closing. This Agreement and the documents contemplated hereby, when executed and delivered, shall constitute valid and legally binding obligations of the
Company enforceable in accordance with their respective terms 
  
 5.3 No Conflicts. Neither the execution and delivery nor the performance of this Agreement by the Company will result in any of the following: (i) a default or an event that, with notice or lapse of time or both, could be a default,
breach or violation of (A) the certificate of incorporation or by-laws of the Company, (B) any Material Contract to which the Company is party; (ii) the termination of any Material Contract or the acceleration of the maturity of any Indebtedness or
other material obligation of the Company; (iii) the creation or imposition of any Lien (except for Permitted Liens) on any of the assets or properties of the Company; (iv) the creation or imposition of any Lien on any shares of stock of the Company;
or (v) a violation or breach of any known writ, injunction or decree of any Governmental Entity or the final award in any arbitration proceeding to which the Company is a party or by which any of its properties are bound. 
  
 5.4 Consents. No consents, approvals, orders, or authorizations of, or
registrations, qualifications, designations, declarations or filings with, any Governmental Entity or under any Material Contract of the Company is or will be required on the part of the Company in connection with the valid execution and delivery of
this Agreement and the purchase of the Sound LLC Interests, or the consummation of any other transaction contemplated in this Agreement, other than such authorizations and filings specifically contemplated in this Agreement. 
  

 20 

 5.5 Brokers’ Fees. The Company is not a party to or obligated under any agreement with any
broker, agent, or finder relating to the transactions contemplated hereby, and neither the execution of this Agreement nor the consummation of the transactions provided for herein will result in any liability to any broker, agent or finder.

  
 5.6 Full Disclosure. Neither this Agreement or the
representations and warranties of the Company contained herein, nor any other written statement or certificate delivered or to be furnished to Sound LLC in connection herewith by the Company, when read together, contain any untrue statement of a
material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not materially misleading, in light of the circumstances under which they were made. To the Knowledge of the Company, there is no
fact which has not been disclosed to Sound LLC that would have a Material Adverse Effect or would affect the ability of the Company to perform its obligations under this Agreement. 
  
 ARTICLE VI 
 CONDUCT OF BUSINESS PENDING CLOSING 
  
 During the
period commencing on the date hereof and through the Closing Date, Sound LLC shall comply with the following: 
  
 6.1 Qualification. Sound LLC will maintain all qualifications to transact business and remain in good standing in its jurisdiction of organization
and in the foreign jurisdictions in which Sound LLC owns or leases any property or conducts any business. 
  
 6.2 Ordinary Course. Sound LLC shall conduct its business in, and only in, the Ordinary Course of Business and, to the extent consistent with such
business, shall not make or institute any unusual or novel methods of management, accounting, or operation that vary materially from those methods used by Sound LLC as of December 31, 2004. Sound LLC will use commercially reasonable efforts to
preserve its business organization intact, to keep available to Sound LLC its present officers and employees, and to preserve its present relationships with suppliers, customers, and others having business relationships with Sound LLC. Sound LLC
shall maintain its properties and assets in such condition and repair as such properties and assets are in as of the date hereof. 
  
 6.3 Corporate Changes. Sound LLC will not (i) amend its articles of organization or operating agreement (or equivalent documents); (ii) acquire by
merging or consolidating with, or agreeing to merge or consolidate with, or purchase substantially all of the stock or assets of, or otherwise acquire, any business or any corporation, partnership, association or other business organization or
division thereof except as contemplated in this Agreement; (iii) enter into any partnership or joint venture; (iv) declare, set aside, make or pay any dividend or other distribution in respect of the Sound LLC Interests or purchase or redeem,
directly or indirectly, any securities, including the Sound LLC Interests; (v) issue or sell any membership interests or any options, warrants, conversion or other rights to purchase any such membership interests or any securities convertible into
or exchangeable for such membership interests; or (vi) liquidate or dissolve or obligate itself to do so. 
  
 6.4 Indebtedness. Except in the Ordinary Course of Business, Sound LLC shall not incur any Indebtedness, sell any debt securities or lend money to
or guarantee the Indebtedness of any Person. Sound LLC shall not restructure or refinance its existing Indebtedness. 
  

 21 

 6.5 Accounting. Sound LLC shall not make any change in the accounting principles, methods or
practices followed by it or depreciation or amortization policies or rates heretofore adopted by it, except as may be required to conform to changes in GAAP. Sound LLC shall maintain its books, records, and accounts in accordance with GAAP applied
on a basis consistent with that of prior periods. 
  
 6.6
Compliance with Legal Requirements. Sound LLC shall comply promptly and in all material respects with all Legal Requirements imposed upon it and its operations and with respect to the transactions contemplated by this Agreement, and shall
cooperate promptly with, and furnish information to, the Company in connection with any such requirements imposed upon the Company, or upon any of its Affiliates in connection with such requirements or the transactions contemplated in this
Agreement. 
  
 6.7 Disposition of Assets. Except in the
Ordinary Course of Business, Sound LLC shall not sell, transfer, license, lease or otherwise dispose of, or suffer or cause the encumbrance by any Lien other than Permitted Liens upon any of its properties or assets, tangible or intangible, or upon
any interest therein. 
  
 6.8 Compensation. Except in the
Ordinary Course of Business, Sound LLC shall not (i) adopt or amend in any material respect any collective bargaining, bonus, profit-sharing, compensation, option, pension, retirement, deferred compensation, Employee Plan, Benefit Arrangement, or
any other agreement, trust, fund or arrangement for the benefit of employees other than to comply with any Legal Requirement; or (ii) pay, or make any accrual or arrangement for payment of, any increase in compensation, bonuses or special
compensation of any kind, or any severance or termination pay to, or enter into any employment or loan or loan guarantee agreement with, any Member or any current or former officer, manager, employee or consultant of Sound LLC. 
  
 6.9 Modification or Breach of Agreements; New Agreements. Except in
the Ordinary Course of Business, Sound LLC shall not terminate or modify, or commit or cause or, suffer to be committed any act that will result in breach or violation of any term of or (with or without notice or passage of time, or both) constitute
a default under or otherwise give any Person a basis for nonperformance under, any Material Contract, written or oral. Sound LLC shall refrain from becoming a party to any contract or commitment other than in the Ordinary Course of Business. Sound
LLC shall meet all of its contractual obligations in accordance with their respective terms. 
  
 6.10 Capital Expenditures. Except in the Ordinary Course of Business and except for capital expenditures or commitments necessary to maintain its properties and assets in good condition and repair (the amount
of which shall not exceed $20,000 individually), Sound LLC shall not purchase or enter into any contract to purchase any capital assets without informing the Company of the same in writing. 
  
 6.11 Consents. Sound LLC shall use commercially reasonable efforts to
obtain any consent, authorization or approval of, or exemption by, any Governmental Entity or Person required to be obtained or made by any Party hereto in connection with the transactions contemplated in this Agreement or the taking of any action
in connection with the consummation thereof. 
  
 6.12
Maintenance of Insurance. Sound LLC shall maintain its policies of insurance in full force and effect on substantially the same terms and conditions as in effect on December 31, 2004, and shall not do, permit or willingly allow to be done any
act by which any of said policies of insurance may be suspended, materially impaired or canceled. 
  
 6.13 Discharge. Except in the Ordinary Course of Business, Sound LLC shall not cancel, compromise, release or discharge any Claim of Sound LLC upon
or against any Person or waive any right of Sound LLC of material value, and shall not discharge any Lien upon any asset of Sound LLC or 

  

 22 

 
compromise any debt or other obligation of Sound LLC to any Person other than Liens, debts or obligations with respect to current Liabilities of Sound LLC.

  
 6.14 Claims. Sound LLC shall not institute, settle or
agree to settle any Claim before any Governmental Entity. 
  
 6.15
Taxes and Tax Assessments. Sound LLC shall pay, when due, and prior to the imposition or assessment of any interest, penalties or Liens by reason of the nonpayment of, all Taxes assessed against Sound LLC, its assets, properties or
operations. Sound LLC shall furnish promptly to the Company a copy of all notices of proposed assessment or similar notices or reports that are received from any taxing authority and which relate to Sound LLC’s operations for periods ending on
or prior to the Closing Date. 
  
 ARTICLE VII 
 ADDITIONAL COVENANTS 
  
 7.1 Covenants of Sound LLC. During the period from the date hereof through the Closing Date, Sound LLC agrees to: 
  
 7.1.1 Comply promptly with all applicable Legal Requirements
imposed upon it with respect to the transactions contemplated by this Agreement, and shall cooperate promptly with, and furnish information to, the Company in connection with any such requirements imposed upon the Company or upon any of the
Company’s Affiliates in connection with such requirements or the transactions contemplated in this Agreement; 
  
 7.1.2 Use its reasonable best efforts to obtain (and to cooperate with the Company in obtaining) any consent, authorization or approval
of, or exemption by, any Person required to be obtained or made by Sound LLC in connection with the transactions contemplated in this Agreement; 
  
 7.1.3 Use its reasonable best efforts to bring about the satisfaction of the conditions precedent to Closing set forth in Section 3.6;

  
 7.1.4 Promptly advise the Company orally and,
within three (3) business days thereafter, in writing of any change in Sound LLC’s business or condition that has had or would reasonably be expected to have a Material Adverse Effect on Sound LLC; and 
  
 7.1.5 Deliver to the Company prior to the Closing a written
statement disclosing any untrue statement in this Agreement (or supplement thereto) or document furnished pursuant to this Agreement, or any omission to state any material fact required to make the statements herein or therein contained complete and
not misleading, immediately upon the discovery of such untrue statement or omission, accompanied by a written supplement to this Agreement stating each provision of this Agreement that may be affected thereby; provided, however, that the disclosure
of such untrue statement or omission shall not prevent the Company from terminating this Agreement pursuant to Section 8.1.2 at any time at or prior to the Closing in respect of any original untrue or misleading statement. 
  
 7.2 Covenants of The Company. During the period from the date hereof
to the Closing Date, the Company shall: 
  
 7.2.1
Comply promptly with all applicable Legal Requirements imposed upon it with respect to the transactions contemplated by this Agreement, and shall cooperate promptly with, and furnish information to, Sound LLC in connection with any such requirements
imposed upon Sound LLC or upon 

  

 23 

 
any of Sound LLC’s Affiliates in connection with such requirements or the transactions contemplated in this Agreement; 
  
 7.2.2 Use its reasonable best efforts to obtain any consent,
authorization or approval of, or exemption by, any Person required to be obtained or made by the Company in connection with the transactions contemplated in this Agreement; 
  
 7.2.3 Use its reasonable best efforts to bring about the satisfaction of the conditions precedent to Closing
set forth in Section 3.6; and 
  
 7.2.4 Promptly
advise Sound LLC orally and, within three (3) business days thereafter, in writing of any change in the Company’s business or condition that has had or would reasonably be expected to have a Material Adverse Effect on the Company. 

 
 7.3 Tax Advice. The Members of Sound LLC shall assume and be fully
responsible for any and all Liability, including without limitation any and all Tax Liability, incurred by them, which is caused by, arises from, or relates to the merger of Sound LLC into the Company. Sound LLC acknowledges that it has received its
own tax advice with respect to this Agreement and the transactions contemplated thereby, and is not in any way relying on any statements or advice of the Company or any of its officers, directors, employees, agents or representatives with respect to
such matters. 
  
 7.4 Access and Information. 
  
 7.4.1 During the period commencing on the date hereof and
continuing through the Closing Date, Sound LLC shall afford to the Company and to its accountants, counsel, and other representatives, reasonable access during regular business hours and without undue interruption to its business to all of its
properties, books, contracts, commitments, records and personnel and, during such period, and to furnish promptly to the Company all information concerning its business, properties and personnel as the Company reasonably may request. 
  
 7.4.2 Except to the extent permitted by the provisions of
Section 7.7, the Company shall hold in confidence, and shall use reasonable efforts to ensure that its employees and representatives hold in confidence, all such information supplied to it by Sound LLC concerning Sound LLC and shall not disclose
such information to any third party except as may be required by any Legal Requirement and except for information that (i) is or becomes generally available to the public other than as result of disclosure by the Company or its representatives; (ii)
becomes available to the Company or its representatives from a third party other than Sound LLC and the Company or its representatives have no reason to believe that such third party is not entitled to disclose such information; (iii) is known to
the Company or its representatives on a non-confidential basis prior to its disclosure by Sound LLC; or (iv) is made available by Sound LLC to any other Person on a non-restricted basis. Notwithstanding the foregoing, Sound LLC consents to the
Company furnishing all information required to be furnished in the Registration Statement and the Exhibits and to making all disclosure contained in the Registration Statement. The Company’s obligations under the foregoing sentence shall expire
upon completion of the Closing. 
  
 7.4.3 The
Company shall hold in confidence, and shall use reasonable efforts to ensure, that its employees and representatives hold in confidence, all information supplied to it by Sound LLC. 
  
 7.5 Expenses. All costs and expenses of the parties hereto (including, without limitation, all legal fees and
expenses and costs) incurred in connection with this Agreement, the transactions contemplated hereby, the IPO and all related transactions shall be paid by Sound LLC or the Surviving Corporation. 
  

 24 

 7.6 Certain Notifications. At all times from the date hereof to the Closing Date, each Party shall
promptly notify the others in writing of the occurrence of any event that will or reasonably would be expected to result in the failure to satisfy any of the conditions specified in Sections 3.5 and 3.6. 
  
 7.7 Publicity. At all times prior to the Closing Date, none of the
Parties or their directors, managers, officers, employees or agents, as the case may be, shall issue any press release or other information to the press concerning the IPO or the transactions contemplated hereby; provided, however, that no Party
shall be prohibited from supplying any information to any of its representatives, agents, attorneys, advisors, and others to the extent necessary to complete the transactions contemplated hereby so long as such representatives, agents, attorneys,
advisors, and others are made aware of the terms of this Section 7.7. Nothing contained in this Agreement shall prevent any Party to this Agreement at any time from furnishing any required information to any Governmental Entity or others in
connection with the IPO or pursuant to a Legal Requirement or from complying with its legal or contractual obligations; provided that the Party furnishing such information shall have used its reasonable best efforts to comply with this provision
first, and in any event does so only with the advice of counsel. 
  
 7.8 Further Assurances. 
  
 7.8.1
Subject to the terms and conditions of this Agreement, each of the Parties agrees to use all reasonable efforts to take, or cause to be taken, all action, and to do, or cause to be done, all things necessary, proper or advisable under applicable
Legal Requirements to consummate and make effective the transactions contemplated in this Agreement. 
  
 7.8.2 If at any time after the Closing any further action is necessary or desirable to carry out the purposes of this Agreement, the
proper officers or directors of the Company and the proper officers and managers of Sound LLC, as the case may be, shall take or cause to be taken all such necessary or convenient action and execute, and deliver and file, or cause to be executed,
delivered and filed, all necessary or appropriate documentation. 
  
 7.9 Income Tax Returns For Sound LLC. Upon Closing, the tax status of Sound LLC will terminate and the tax year beginning on January 1, 2005 will end as of the Closing (the “Short Year Period”). The Company and Sound LLC
agree to cooperate in preparing and filing on behalf of Sound LLC, on or prior to the due dates thereof, the Federal and State income tax returns for Sound LLC for the Short Year Period. The Surviving Corporation shall bear the costs and expenses
incurred in preparing such returns. 
  
 ARTICLE VIII

 TERMINATION, AMENDMENT AND WAIVER 
  
 8.1 Termination. This Agreement may be terminated at any time prior to the Effective Time: 
  
 8.1.1 By written consent of the Company and Sound LLC;

  
 8.1.2 By Sound LLC, on the one hand, or by
the Company, on the other hand, if there has been a breach, failure to fulfill or default (collectively, a “Breach”) on the part of the other Party (the “Breaching Party”) of any of the representations and warranties contained in
this Agreement or in the due and timely performance and satisfaction of any of the covenants, agreements or conditions contained in this Agreement; 
  

 25 

 8.1.3 By Sound LLC, on the one hand, or by the Company, on the other hand, if there shall
be a final non-appealable order of a Governmental Entity or arbitrator in effect preventing consummation of the transactions hereunder; or there shall be any action taken, or any statute, rule, regulation or order enacted, promulgated or issued or
deemed applicable to the transactions hereunder by any Governmental Entity or arbitrator which would make the consummation of the transactions illegal; or 
  
 8.1.4 By Sound LLC, on the one hand, or by the Company, on the other hand, if the Registration Statement shall not have been declared
effective on or before June 30, 2005. 
  
 8.2 Effect of
Termination. In the case of any termination of this Agreement pursuant to Section 8.1,,this Agreement shall forthwith become void, and there shall be no Liability or obligation on the part of any Party or its officers, directors, managers,
members or stockholders, as the case may be, except that all costs and expenses incurred in connection herewith shall be assumed and paid by Sound LLC. 
  
 8.3 Amendment. This Agreement may be amended at any time by a written instrument executed by the Parties. Any amendment effected pursuant to this
Section 8.3 shall be binding upon all Parties. 
  
 8.4
Waiver. Any term or provision of this Agreement may be waived in writing at any time by the Party or Parties entitled to the benefits thereof. Any waiver effected pursuant to this Section 8.4 shall be binding upon all Parties. No failure to
exercise and no delay in exercising any right, power or privilege shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege preclude the exercise of any other right, power or privilege. No waiver of
any breach of any covenant or agreement hereunder shall be deemed a waiver of a preceding or subsequent breach of the same or any other covenant or agreement. The rights and remedies of each Party under this Agreement are in addition to all other
rights and remedies, whether at law, in equity or otherwise, that such Party may have against the other Parties. 
  
 ARTICLE IX 
 GENERAL PROVISIONS 
  
 9.1 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Colorado. 
  
 9.2 Successors and
Assigns. Except as otherwise expressly provided in this Agreement, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors and assigns of the Parties. 
  
 9.3 Entire Agreement. This Agreement and the other documents delivered
pursuant to this Agreement constitute the full and entire understanding and agreement among the Parties with regard to the subject matter of this Agreement and no Party shall be liable or bound to any other Party in any manner by any
representations, warranties, covenants, or agreements except as specifically set forth herein or therein. Nothing in this Agreement, express or implied, is intended to confer upon any Person, other than the Parties and their respective successors
and assigns, any rights, remedies, obligations, or Liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. 
  
 9.4 Severability. In the event any provision of this Agreement shall be invalid, illegal, or unenforceable, it shall, to the extent practicable, be
modified so as to make it valid, legal and enforceable and to retain as nearly as practicable the intent of the Parties, and the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

  

 26 

 9.5 Notice. All notices and other communications required or permitted under this Agreement shall
be in writing and shall be deemed effectively given (i) if delivered personally (including by overnight express or messenger), upon delivery; (ii) if delivered by registered or certified mail, return receipt requested, upon the earlier of actual
delivery or three (3) days after being mailed; or (iii) if given by facsimile, upon confirmation of transmission by facsimile, in each case to the Parties at the following addresses: 
  

	 	(a)	If to the Company, addressed to: 

  
 Sound Surgical Technologies Inc. 
 357 South McCaslin Boulevard, Suite 100 
 Louisville, Colorado 80027 
 Attn: Donald B. Wingerter, Jr., Chief Executive Officer 
  
 (b) If to Sound LLC, addressed to: 
  

Sound Surgical Technologies LLC 
 357 South McCaslin Boulevard, Suite 100 
 Louisville, Colorado 80027 
 Attn: Douglas D. Foote, Chief Financial Officer 
  

9.6 Construction. The Parties to this Agreement have participated jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any
of the provisions of this Agreement. 
  
 9.7 Arbitration.
Any controversy or claim as to the provisions of this Agreement between or among any of the Parties shall be submitted for binding arbitration. The arbitration shall be conducted by a single arbitrator of the American Arbitration Association
(“AAA”) in accordance with the applicable Commercial Arbitration Rules of the AAA then in effect. Any arbitration under this Section 9.7 shall take place in Denver, Colorado. 
  
 9.8 Heading and References. The headings of the Articles and Sections of this Agreement are for convenience of
reference only and are not to be considered in construing this Agreement. References to Articles and Sections are references to Articles and Sections of this Agreement unless the context requires otherwise. 
  
 9.9 Counterparts. This Agreement may be executed by facsimile and in
any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument. 
  
 [Remainder of page intentionally left blank] 
  

 27 

 IN WITNESS WHEREOF, the foregoing Agreement and is hereby executed as of the date first above written. 
  

			
	 SOUND SURGICAL TECHNOLOGIES INC.,
a Delaware corporation

		
	 By:
	 	 
	 	 	 Donald B. Wingerter, Jr.

	 	 	 Chief Executive Officer

	
	 SOUND SURGICAL TECHNOLOGIES LLC,
a Colorado limited liability company

		
	 By:
	 	 
	 	 	 Donald B. Wingerter, Jr.

	 	 	 Chief Executive Officer

  

 282005 Equity Incentive Plan

  
 Exhibit 10.3

  
 SOUND SURGICAL TECHNOLOGIES INC. 
 2005 EQUITY INCENTIVE PLAN 
  
 This is the 2005 Equity Incentive Plan of Sound Surgical Technologies Inc., a Delaware corporation, dated January
            , 2005 and to become effective the date upon which the Company’s registration statement on Form SB-2 relating to the Company’s initial public offering of its
common stock is declared effective by the United States Securities and Exchange Commission. 
  
 1. Purposes of the Plan. The purposes of this Plan are: 
  
 (a) to attract and retain the best available personnel for positions of substantial responsibility, 
  
 (b) to provide additional incentive to selected key Employees, Consultants and Directors, and 
  
 (c) to promote the success of the Company’s business. 
  
 2. Definitions. For the purposes of this Plan, the following terms will have the
following meanings: 
  
 (a)
“Administrator” means the Board or any of its Committees that administer the Plan, in accordance with Section 4. 
  
 (b) “Applicable Laws” means the legal requirements relating to the administration of and issuance of securities under stock
incentive plans, including, without limitation, the requirements of state corporations law, federal and state securities law, federal and state tax law, and the requirements of any stock exchange or quotation system upon which the Shares then may be
listed or quoted. For all purposes of this Plan, references to statutes and regulations shall be deemed to include any successor statutes and regulations, to the extent reasonably appropriate as determined by the Administrator. 
  
 (c) “Board” means the Board of Directors of the
Company. 
  
 (d) “Cause” shall have the
meaning set forth in a Grantee’s employment or consulting agreement with the Company (if any), or if not defined therein, shall mean (i) willful and continued failure by the Grantee to substantially perform the Grantee’s duties on behalf
of the Company, or any Parent or Subsidiary of the Company, as the case may be (other than any such failure resulting from the Grantee’s incapacity due to physical or mental illness) for a period of at least thirty consecutive days after a
written demand for substantial performance has been delivered to the Grantee, which demand specifically identifies the manner in which the Grantee has not substantially performed the Grantee’s duties, (ii) willful misconduct or gross negligence
by the Grantee which is demonstrably and materially injurious to the Company or any Parent or Subsidiary of the Company, or (iii) the Grantee is convicted of, or has entered a plea of nolo contendere to, (x) a felony or (y) any crime (whether
or not a felony) involving dishonesty, fraud, embezzlement or breach of trust. For purposes of clauses (i) and (ii) of this definition, an act, or failure to act, on the Grantee’s part shall not be deemed “willful” if done, or omitted
to be done, by the Grantee in good faith and with reasonable belief that the Grantee’s act, or failure to act, was in the best interest of the Company. 
  
 (e) “Code” means the Internal Revenue Code of 1986, as amended. For all purposes of this Plan, references to Code sections shall
be deemed to include any successor Code sections, to the extent reasonably appropriate as determined by the Administrator. 
  
 (f) “Committee” means a Committee appointed by the Board in accordance with Section 4. 
  
 (g) “Common Stock” means the common stock, $0.0001
par value per share, of the Company. 
  
 (h)
“Company” means Sound Surgical Technologies Inc., a Delaware corporation. 
  

 (i) “Consultant” means any natural person, including an advisor, engaged by the
Company or a Parent or Subsidiary to render bona fide services and who is compensated for such services, provided that the term “Consultant” does not include (i) Employees, (ii) Directors who are paid only a director’s fee by the
Company or who are not compensated by the Company for their services as Directors or (iii) any person who provides services in connection with the offer or sale of securities in a capital-raising transaction, or who directly or indirectly promotes
or maintains a market for the securities of the Company. 
  
 (j)
“Continuous Status as an Employee, Director or Consultant” means that the employment, director or consulting relationship is not interrupted or terminated by the Company, any Parent or Subsidiary, or by the Employee, Director
or Consultant. Continuous Status as an Employee, Director or Consultant will not be considered interrupted in the case of: (i) any leave of absence approved by the Board or required by Applicable Law, including sick leave, military leave, or any
other personal leave, provided, that for purposes of Incentive Stock Options, any such leave may not exceed 90 days, unless reemployment upon the expiration of such leave is guaranteed by contract (including certain Company policies) or
statute; (ii) transfers between locations of the Company or between the Company, its Parent, its Subsidiaries or its successor, or (iii) in the case of a Nonqualified Stock Option or Stock Award, the ceasing of a person to be an Employee while such
person remains a Director or Consultant, the ceasing of a person to be a Director while such person remains an Employee or Consultant, or the ceasing of a person to be a Consultant while such person remains an Employee or Director. 
  
 (k) “Director” means a member of the Board.

  
 (l) “Disability” means total and
permanent disability as defined in Section 22(e)(3) of the Code. 
  
 (m) “Employee” means any person, including an Officer or Director employed as a common law employee by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a
director’s fee by the Company will be sufficient, in and of itself, to constitute “employment” by the Company. 
  
 (n) “Exchange Act” means the Securities Exchange Act of 1934, as amended. 
  
 (o) “Fair Market Value” means, as of any date, the
value of Common Stock determined as follows: 
  

	 	(i)	If the Common Stock is listed on any established stock exchange or a national market system, including without limitation, the National Market System of Nasdaq, the Fair Market
Value of a Share of Common Stock will be (A) the closing sales price for such stock (or the closing bid, if no sales are reported) as quoted on that system or exchange (or the system or exchange with the greatest volume of trading in Common Stock)
on the last market trading day prior to the day of determination, or (B) any sales price for such stock (or the closing bid, if no sales are reported) as quoted on that system or exchange (or the system or exchange with the greatest volume of
trading in Common Stock) on the day of determination, as the Administrator may select, as reported in the Wall Street Journal or any other source the Administrator considers reliable. 

  

	 	(ii)	 If the Common Stock is quoted on the Nasdaq System (but not on the Nasdaq National Market System) or is regularly quoted by recognized securities dealers but
selling prices are not reported, the Fair Market Value of a Share of Common 

  

 2 

	 	 
Stock will be the mean between the high bid and low asked prices for the Common Stock on (A) the last market trading day prior to the day of determination,
or (B) the day of determination, as the Administrator may select, as reported in the Wall Street Journal or any other source the Administrator considers reliable. 

  

	 	(iii)	If the Common Stock is not traded as set forth above, the Fair Market Value will be determined in good faith by the Administrator with reference to the earnings history, book value
and prospects of the Company in light of market conditions generally, and any other factors the Administrator considers appropriate, such determination by the Administrator to be final, conclusive and binding. 

  
 (p) “Family Member” means any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the
Grantee’s household (other than a tenant or employee), a trust in which these persons (or the Grantee) control the management of assets, and any other entity in which these persons (or the Grantee) own more than fifty percent of the voting
interests. 
  
 (q) “Grant Notice” shall
mean a written notice evidencing certain terms and conditions of an individual Option grant. The Grant Notice is part of the Option Agreement. 
  
 (r) “Grantee” shall mean (i) any Optionee or (ii) any Employee, Consultant or Director to whom a Stock Award has been granted
pursuant to this Plan. 
  
 (s) “Incentive Stock
Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder. 
  
 (t) “Nasdaq” means the National Association of Securities Dealers, Ltd. Automated Quotation System.

  
 (u) “Nonqualified Stock Option” means
an Option not intended to qualify as an Incentive Stock Option. 
  
 (v) “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. 
  
 (w) “Option” means a stock option granted under this
Plan. 
  
 (x) “Option Agreement” means a
written agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. Each Option Agreement is subject to the terms and conditions of this Plan. 
  
 (y) “Option Exchange Program” means a program in
which outstanding Options are surrendered in exchange for Options with a lower exercise price. 
  
 (z) “Optioned Stock” means the Common Stock subject to an Option. 
  
 (aa) “Optionee” means an Employee, Consultant or Director who holds an outstanding Option. 
  

 3 

 (bb) “Parent” means a “parent corporation” with respect to the Company,
whether now or later existing, as defined in Section 424(e) of the Code. 
  
 (cc) “Plan” means the Company’s 2005 Equity Incentive Plan as set forth herein. 
  
 (dd) “Section” means, except as otherwise specified, a section of this Plan. 
  
 (ee) “Share” means a share of the Common Stock, as
adjusted in accordance with Section 15. 
  
 (ff)
“Stock Award” shall mean a grant or sale by the Company of a specified number of Shares upon terms and conditions determined by the Administrator. 
  
 (gg) “Subsidiary” means (i) a “subsidiary corporation” with respect to the Company,
whether now or later existing, as defined in Section 424(f) of the Code, or (ii) a limited liability company, whether now or later existing, which would be a “subsidiary corporation” with respect to the Company under Section 424(f) of the
Code if it were a corporation. 
  
 3. Stock Subject to the Plan. The Shares
may be authorized but unissued Shares of Common Stock, except as otherwise provided in this Section 3 below. Subject to the provisions of Section 15 of the Plan, the maximum aggregate number of Shares which may be issued under the Plan will be
                     Shares of Common Stock, plus an annual increase on the first day of each fiscal year during the term of the Plan, with
the first such increase occurring on January 1, 2006, in each case in an amount equal to the lesser of (i) 15% of the increase, if any, in the outstanding Shares from the first day through the last day of the immediately preceding year, or (ii) an
amount determined by the Board. The limitations of this Section 3 shall be subject to adjustment pursuant to Section 15. The number of Shares that are subject to Options or other rights outstanding at any time under the Plan shall not exceed the
number of Shares which then remain available for issuance under the Plan. The Company, during the term of the Plan, shall at all times reserve and keep available sufficient Shares to satisfy the requirements of the Plan. 
  
 If an Option expires or becomes unexercisable without having been exercised
in full, or is surrendered pursuant to an Option Exchange Program, or if a Stock Award shall be cancelled or surrendered or expire for any reason without having been received in full, the Shares that were not purchased or received or that were
cancelled will become available for future grant or sale under the Plan (unless the Plan has terminated). If the Company repurchases Shares which were issued pursuant to the exercise of an Option or grant of a Stock Award, however, those repurchased
Shares will not be available for future grant under the Plan. 
  
 4.
Administration of the Plan. 
  
 (a) Procedure.

  

	 	(i)	Composition of the Administrator. Unless the Board expressly resolves to the contrary, the Plan will be administered only by a Committee, which will then consist solely of
persons appointed by the Board, each of whom will be “independent directors” within the meaning of Rule 10A-3 promulgated under the Exchange Act and “outside directors” within the meaning of Section 162(m) of the Code; provided,
however, the failure of the Committee to be composed solely of individuals who are both “independent directors” and “outside directors” shall not render ineffective or void any awards or grants made by, or other actions taken by,
such Committee. 

  

 4 

	 	(ii)	Multiple Administrative Bodies. The Plan may be administered by different bodies with respect to Directors, Officers who are not Directors, and Employees and Consultants who
are neither Directors nor Officers. 

  
 (b)
Powers of the Administrator. Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to that Committee, the Administrator will have the authority, in its discretion:

  

	 	(i)	to determine the Fair Market Value of the Common Stock, in accordance with Section 2(o); 

  

	 	(ii)	to select the Consultants, Employees or Directors to whom Options or Stock Awards may be granted; 

  

	 	(iii)	to determine whether and to what extent Options or Stock Awards are granted, and whether Options are intended as Incentive Stock Options or Nonqualified Stock Options;

  

	 	(iv)	to determine the number of Shares to be covered by each Option or Stock Award granted; 

  

	 	(v)	to approve forms of Grant Notices, Option Agreements and agreements governing Stock Awards; 

  

	 	(vi)	to determine the terms and conditions, not inconsistent with the terms of this Plan, of any grant of Options or Stock Awards, including, but not limited to, (A) the Options’
exercise price, (B) the time or times when Options may be exercised or Stock Awards will be vested, which may be based on performance criteria or other reasonable conditions such as Continuous Status as an Employee, Director or Consultant, (C) any
vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option, Optioned Stock or Stock Award, based in each case on factors that the Administrator determines in its sole discretion, including but
not limited to a requirement subjecting the Optioned Stock or Shares to (1) certain restrictions on transfer (including without limitation a prohibition on transfer for a specified period of time and/or a right of first refusal in favor of
the Company), and (2) a right of repurchase in favor of the Company upon termination of the Grantee’s Continuous Status as an Employee, Director or Consultant; 

  

	 	(vii)	to reduce the exercise price of any Option to the Fair Market Value at the time of the reduction, if the Fair Market Value of the Common Stock covered by that Option has declined
since the date it was granted; 

  

	 	(viii)	to accelerate the vesting or exercisability of an Option or Stock Award; 

  

 5 

	 	(ix)	to determine the terms and restrictions applicable to Options or Stock Awards; 

  

	 	(x)	to modify or amend each Option or Stock Award, subject to Section 17(c); 

  

	 	(xi)	to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Option previously granted by the Administrator;

  

	 	(xii)	to institute an Option Exchange Program; 

  

	 	(xiii)	to construe and interpret the terms of this Plan; 

  

	 	(xiv)	to prescribe, amend, and rescind rules and regulations relating to the administration of this Plan; and 

  

	 	(xv)	to make all other determinations it considers necessary or advisable for administering this Plan. 

  
 (c) Effect of Administrator’s Decision. The Administrator’s decisions, determinations and interpretations
will be final and binding on all holders of Options or Stock Awards. The Administrator shall not be required to exercise its authority or discretion on a uniform or nondiscriminatory basis. 
  
 5. Eligibility. Options granted under this Plan may be Incentive Stock Options or
Nonqualified Stock Options, as determined by the Administrator at the time of grant. Nonqualified Stock Options and Stock Awards may be granted to Employees, Consultants and Directors. Incentive Stock Options may be granted only to Employees;
provided, however, that Incentive Stock Options shall not be granted to Employees of a Subsidiary that is a limited liability company unless such limited liability company is wholly-owned by the Company or by a Subsidiary that is a corporation. If
otherwise eligible, an Employee, Consultant or Director who has been granted an Option or a Stock Award may be granted additional Options or Stock Awards. 
  
 6. Limitations on Grants of Incentive Stock Options. Each Option will be designated in the Grant Notice as either an Incentive Stock Option or a Nonqualified Stock
Option. However, notwithstanding such designations, if the Shares subject to an Optionee’s Incentive Stock Options (granted under all plans of the Company or any Parent or Subsidiary), which become exercisable for the first time during any
calendar year, have a Fair Market Value in excess of $100,000, the Options accounting for this excess will be treated as Nonqualified Stock Options. Furthermore, if an Option is designated as an Incentive Stock Option but the recipient is not
eligible to receive an Incentive Stock Option or the option terms or exercise otherwise disqualify such Option for treatment as an Incentive Stock Option, such Option shall be treated for all purposes as a Nonqualified Stock Option. For purposes of
this Section 6, Incentive Stock Options will be taken into account in the order in which they were granted, and the Fair Market Value of the Shares will be determined as of the time of grant. 
  
 7. Limit on Annual Grants to Individuals. No Optionee may receive grants, during any
fiscal year of the Company or portion thereof, of Options which, in the aggregate, cover more than 200,000 Shares, subject to adjustment as provided in Section 15. If an Option expires or terminates for any reason without having been exercised in
full, the unpurchased shares subject to that expired or terminated Option will continue to count against the maximum numbers of shares for which Options may be granted to an Optionee during any fiscal year of the Company or portion thereof.

  

 6 

 8. Term of the Plan. Subject to Section 21, the amendments and restatements to this Plan will become effective
upon the earlier to occur of its adoption by the Board or its approval by the shareholders of the Company as described in Section 21. It will continue in effect through that date which is ten years from the date of its initial adoption, unless
terminated earlier under Section 17. Unless otherwise provided in this Plan, its termination will not affect the validity of any Option or Stock Award outstanding at the date of termination, which shall continue to be governed by the terms of this
Plan as though it remained in effect. 
  
 9. Term of Option. The term of
each Option will be stated in the Option Agreement; provided, however, that in no event may the term be more than ten years from the date of grant. In addition, in the case of an Incentive Stock Option granted to an Optionee who, at
the time the Incentive Stock Option is granted, owns stock representing more than ten percent of the voting power of all classes of capital stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option will be five years
from the date of grant or any shorter term specified in the Option Agreement. 
  
 10. Option Exercise Price and Consideration. 
  
 (a) Exercise Price of Incentive Stock Options. The exercise price for Shares to be issued pursuant to exercise of an Incentive Stock Option will be determined by the Administrator provided that the per Share exercise price will be no
less than 100% of the Fair Market Value per Share on the date of grant; provided, further that in the case of an Incentive Stock Option granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than
ten percent of the voting power of all classes of capital stock of the Company or any Parent or Subsidiary, the per Share exercise price will be no less than 110% of the Fair Market Value per Share on the date of grant. 
  
 (b) Exercise Price of Nonqualified Stock Options. In the case of a
Nonqualified Stock Option, the exercise price for Shares to be issued pursuant to the exercise of any such Option will be determined by the Administrator. 
  
 (c) Waiting Period and Exercise Dates. At the time an Option is granted, the Administrator will fix the period within which the Option may be
exercised and will determine any conditions which must be satisfied before the Option may be exercised. Exercise of an Option may be conditioned upon performance criteria or other reasonable conditions such as Continuous Status as an Employee,
Director or Consultant. 
  
 (d) Form of Consideration. The
Administrator will determine the acceptable form of consideration for exercising an Option, including the method of payment. Such consideration may consist partially or entirely of: 
  

	 	(i)	cash; 

  

	 	(ii)	to the extent permitted by Applicable Law, a promissory note made by the Optionee in favor of the Company; 

  

	 	(iii)	other Shares which have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which an Option will be exercised;

  

	 	(iv)	delivery of a properly executed exercise notice together with any other documentation as the Administrator and the Optionee’s broker, if applicable, require to effect an
exercise of the Option and delivery to the Company of the sale or loan proceeds required to pay the exercise price; or 

  

	 	(v)	any other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws. 

  

 7 

 11. Exercise of Option. 
  

(a) Procedure for Exercise; Rights as a Shareholder. Any Option granted hereunder will be exercisable according to the terms of the Plan and at
times and under conditions determined by the Administrator and set forth in the Option Agreement; provided, however, that an Option may not be exercised for a fraction of a Share. 
  
 An Option will be deemed exercised when the Company receives: (i) written
notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, (ii) full payment for the Shares with respect to which the Option is exercised, and (iii) all representations, indemnifications and
documents reasonably requested by the Administrator. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and this Plan. Shares issued upon exercise of an Option
will be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse. Until the stock certificate evidencing such Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder will exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. Subject to the
provisions of Sections 14, 18, and 19, the Company will issue (or cause to be issued) such stock certificate promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 15 of the Plan. Notwithstanding the foregoing, the Administrator in its discretion may require the Company to retain possession of any certificate evidencing Shares of Common Stock
acquired upon exercise of an Option, if those Shares remain subject to repurchase under the provisions of the Option Agreement or any other agreement between the Company and the Optionee, or if those Shares are collateral for a loan or obligation
due to the Company. 
  
 Exercising an Option in any manner will
decrease the number of Shares thereafter available, both for purposes of this Plan and for sale under the Option, by the number of Shares as to which the Option is exercised. 
  
 (b) Termination of Employment or Consulting Relationship or Directorship. If an Optionee holds exercisable Options on
the date his or her Continuous Status as an Employee, Director or Consultant terminates (other than because of termination due to Cause, death or Disability), the Optionee may exercise the Options that were vested and exercisable as of the date of
termination for a period of 90 days following such termination (or such other period as is set forth in the Option Agreement or determined by the Administrator). If the Optionee is not entitled to exercise his or her entire Option at the date of
such termination, the Shares covered by the unexercisable portion of the Option will revert to the Plan, unless otherwise set forth in the Option Agreement or determined by the Administrator. The Administrator may determine in its sole discretion
that such unexercisable portion of the Option will become exercisable at such times and on such terms as the Administrator may determine in its sole discretion. If the Optionee does not exercise an Option within the time specified above after
termination, that Option will expire, and the Shares covered by it will revert to the Plan, unless otherwise set forth in the Option Agreement or determined by the Administrator. 
  
 (c) Disability of Optionee. If an Optionee holds exercisable Options on the date his or her Continuous Status as an
Employee, Director or Consultant terminates because of Disability, the Optionee may exercise the Options that were vested and exercisable as of the date of termination for a period of 12 months following such termination (or such other period as is
set forth in the Option Agreement or determined by the Administrator). If the Optionee is not entitled to exercise his or her entire Option at the date of such termination, the Shares covered by the unexercisable portion of the Option will revert to
the Plan, unless otherwise set forth in the Option Agreement or determined by the Administrator. The Administrator may determine in its sole discretion that such unexercisable portion of the Option will become exercisable at such times and on such
terms as the Administrator may determine in its sole discretion. If the Optionee 

  

 8 

 
does not exercise an Option within the time specified above after termination, that Option will expire, and the Shares covered by it will revert to the Plan,
unless otherwise set forth in the Option Agreement or determined by the Administrator. 
  
 (d) Death of Optionee. If an Optionee holds exercisable Options on the date his or her death, the Optionee’s estate or a person who acquired the right to exercise the Option by bequest or inheritance may
exercise the Options that were vested and exercisable as of the date of death for a period of 12 months following the date of death (or such other period as is set forth in the Option Agreement or determined by the Administrator). If the Optionee is
not entitled to exercise his or her entire Option at the date of death, the Shares covered by the unexercisable portion of the Option will revert to the Plan, unless otherwise set forth in the Option Agreement or determined by the Administrator. The
Administrator may determine in its sole discretion that such unexercisable portion of the Option will become exercisable at such times and on such terms as the Administrator may determine in its sole discretion. If the Optionee’s estate or a
person who acquired the right to exercise the Option by bequest or inheritance does not exercise an Option within the time specified above after termination, that Option will expire, and the Shares covered by it will revert to the Plan, unless
otherwise set forth in the Option Agreement or determined by the Administrator. 
  
 (e) Termination for Cause. If an Optionee’s Continuous Status as an Employee, Director or Consultant is terminated for Cause, then all Options (including any vested Options) held by Optionee shall
immediately be terminated and cancelled. 
  
 (f) Disqualifying
Dispositions of Incentive Stock Options. If Common Stock acquired upon exercise of any Incentive Stock Option is disposed of in a disposition that, under Section 422 of the Code, disqualifies the holder from the application of Section 421(a) of
the Code, the holder of the Common Stock immediately before the disposition will comply with any requirements imposed by the Company in order to enable the Company to secure the related income tax deduction to which it is entitled in such event.

  
 12. Non-Transferability of Options. 
  
 (a) No Transfer. An Option may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee. Notwithstanding the foregoing, to the extent that
the Administrator so authorizes at the time a Nonqualified Stock Option is granted or amended, (i) such Option may be assigned pursuant to a qualified domestic relations order as defined by the Code, and exercised by the spouse or former spouse of
the Optionee who obtained such Option pursuant to such qualified domestic relations order, or (ii) such Option may be assigned, in whole or in part, during the Optionee’s lifetime to one or more Family Members of the Optionee. Rights under the
assigned portion may be exercised by the Family Member(s) who acquire a proprietary interest in such Option pursuant to the assignment. The terms applicable to the assigned portion shall be the same as those in effect for the Option immediately
before such assignment and shall be set forth in such documents issued to the assignee as the Administrator deems appropriate. 
  
 (b) Designation of Beneficiary. An Optionee may file a written designation of a beneficiary who is to receive any Options that remain unexercised
in the event of the Optionee’s death. If a participant is married and the designated beneficiary is not the spouse, spousal consent will be required for the designation to be effective. The Optionee may change such designation of beneficiary at
any time by written notice to the Administrator, subject to the above spousal consent requirement. 
  
 (c) Effect of No Designation. If an Optionee dies and there is no beneficiary validly designated and living at the time of the Optionee’s
death, the Company will deliver such Optionee’s Options to the executor or administrator of his or her estate, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may
deliver such Options to the spouse or to any one or more dependents or relatives of the Optionee, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate. 
  

 9 

 (d) Death of Spouse or Dissolution of Marriage. If an Optionee designates his or her spouse as
beneficiary, that designation will be deemed automatically revoked if the Optionee’s marriage is later dissolved. Similarly, any designation of a beneficiary will be deemed automatically revoked upon the death of the beneficiary if the
beneficiary predeceases the Optionee. Without limiting the generality of the preceding sentence, the interest in Options of a spouse of an Optionee who has predeceased the Optionee or (except as provided in Section 12(a) regarding qualified domestic
relations orders) whose marriage has been dissolved will automatically pass to the Optionee, and will not be transferable by such former spouse in any manner, including but not limited to such former spouse’s will, nor will any such interest
pass under the laws of intestate succession. 
  
 13. Stock Awards.

  
 (a) Grant. Subject to the express provisions and
limitations of the Plan, the Administrator, in its sole and absolute discretion, may grant Stock Awards to Employees, Consultants or Directors for a number of shares of Common Stock on such terms and conditions and to such Employees, Consultants or
Directors as it deems advisable and specifies in the respective grants. Subject to the limitations and restrictions set forth in the Plan, an Employee, Consultant or Director who has been granted an Option or Stock Award may, if otherwise eligible,
be granted additional Options or Stock Awards if the Administrator shall so determine. 
  
 (b) Restrictions. The Administrator, in its sole and absolute discretion, may impose restrictions in connection with any Stock Award, including without limitation, (i) imposing a restricted period during which
all or a portion of the Common Stock subject to the Stock Award may not be sold, assigned, transferred, pledged or otherwise encumbered (the “Restricted Period”), (ii) providing for a vesting schedule with respect to such Common Stock such
that if a Grantee ceases to be an Employee, Consultant or Director during the Restricted Period, some or all of the shares of Common Stock subject to the Stock Award shall be immediately forfeited and returned to the Company. The Administrator may,
at any time, reduce or terminate the Restricted Period. Each certificate issued in respect of shares of Common Stock pursuant to a Stock Award which is subject to restrictions shall be registered in the name of the Grantee, shall be deposited by the
Grantee with the Company together with a stock power endorsed in blank and shall bear an appropriate legend summarizing the restrictions imposed with respect to such shares of Common Stock. 
  
 (c) Rights As Shareholder. Subject to the terms of any agreement
governing a Stock Award, the Grantee of a Stock Award shall have all the rights of a shareholder with respect to the Common Stock issued pursuant to a Stock Award, including the right to vote such Shares; provided, however, that dividends or
distributions paid with respect to any such Shares which have not vested shall be deposited with the Company and shall be subject to forfeiture until the underlying Shares have vested unless otherwise provided by the Administrator in its sole
discretion. A Grantee shall not be entitled to interest with respect to the dividends or distributions so deposited. 
  
 14. Withholding Taxes. The Company will have the right to take whatever steps the Administrator deems necessary or appropriate to comply with all applicable
federal, state, local, and employment tax withholding requirements, and the Company’s obligations to deliver Shares upon the exercise of an Option or in connection with a Stock Award will be conditioned upon compliance with all such withholding
tax requirements. Without limiting the generality of the foregoing, upon the exercise of an Option, the Company will have the right to withhold taxes from any other compensation or other amounts which it may owe to the Optionee, or to require the
Optionee to pay to the Company the amount of any taxes which the Company may be required to withhold with respect to the Shares issued on such exercise. Without limiting the generality of the foregoing, the Administrator in its discretion may
authorize the Grantee to satisfy all or part of any withholding tax liability by (a) having the Company withhold from the Shares which would otherwise be issued in connection with a Stock Award or on the exercise of an Option that number of Shares
having a Fair Market Value, as of the date the withholding tax liability arises, equal to or less than the amount of the withholding tax liability, or (b) by delivering to the Company previously-owned and unencumbered Shares of the Common Stock
having a Fair Market Value, as of the date the withholding tax liability arises, equal to or less than the amount of the withholding tax liability. 
  

 10 

 15. Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset Sale. 
  
 (a) Changes in Capitalization. Subject to any required action by the
shareholders of the Company, if the outstanding shares of Common Stock are increased, decreased, changed into or exchanged for a different number or kind of shares or securities of the Company or a successor entity, or for other property (including
without limitation, cash), through reorganization, recapitalization, reclassification, stock combination, stock dividend, stock split, reverse stock split, spin off or other similar transaction, an appropriate and proportionate adjustment will be
made in the maximum number and kind of shares as to which Options and Stock Awards may be granted under this Plan. A corresponding adjustment changing the number or kind of shares allocated to Stock Awards or unexercised Options which have been
granted prior to any such change will likewise be made. Any such adjustment in the outstanding Options will be made without change in the aggregate purchase price applicable to the unexercised portion of the Options but with a corresponding
adjustment in the price for each share or other unit of any security covered by the Option. Such adjustment will be made by the Administrator, whose determination in that respect will be final, binding, and conclusive. 
  
 Where an adjustment under this Section 15(a) is made to an Incentive Stock
Option, the adjustment will be made in a manner which will not be considered a “modification” under the provisions of subsection 424(h)(3) of the Code. 
  
 (b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, to the extent
that an Option had not been previously exercised or a Stock Award had not previously vested, it will terminate immediately prior to the consummation of such proposed dissolution or liquidation. In such instance, the Administrator may, in the
exercise of its sole discretion, declare that any Stock Award shall become vested or any Option will terminate as of a date fixed by the Administrator and give each Optionee the right to exercise his or her Option as to all or any part of the
Optioned Stock, including Shares as to which the Option would not otherwise be exercisable. 
  
 (c) Corporate Transaction. Upon the occurrence of a merger, reorganization or sale of substantially all of the assets of the Company, the Administrator, may, in its sole discretion, do one or more of the
following: (i) shorten the period during which Options are exercisable (provided they remain exercisable for at least 30 days after the date notice of such shortening is given to the Optionees); (ii) accelerate any vesting schedule to which an
Option or Stock Award is subject; (iii) arrange to have the surviving or successor entity or any parent entity thereof assume the Stock Awards and the Options or grant replacement options with appropriate adjustments in the option prices and
adjustments in the number and kind of securities issuable upon exercise or adjustments so that the Options or their replacements represent the right to purchase the shares of stock, securities or other property (including cash) as may be issuable or
payable as a result of such transaction with respect to or in exchange for the number of Shares of Common Stock purchasable and receivable upon exercise of the Options had such exercise occurred in full prior to such transaction; or (iv) cancel
Options or Stock Awards upon payment to the Optionees or Grantees in cash, with respect to each Option or Stock Award to the extent then exercisable or vested (including, if applicable, any Options or Stock Awards as to which the vesting schedule
has been accelerated as contemplated in clause (ii) above), of an amount that is the equivalent of the excess of the Fair Market Value of the Common Stock (at the effective time of the merger, reorganization, sale or other event) over (in the case
of Options) the exercise price of the Option. The Administrator may also provide for one or more of the foregoing alternatives in any particular Option Agreement or agreement governing a Stock Award. In the event that a nonnegotiated merger or
acquisition of the Company occurs and the Company then maintains a change in control plan (“Change in Control Plan”) that contains provisions which are triggered on such a nonnegotiated change of control, the provisions of the Change in
Control Plan shall govern as to Options and Stock Awards the exercisability, vesting, assumption, or cancellation for cash payment of Options or Stock Awards granted under this Plan; provided, however, that in the event of a conflict between the
terms and provisions of a Change in Control Plan and this Plan, the plan which provides the greater benefit to the Optionees or Grantees shall control; and further provided, that if it is unclear if one plan is more beneficial to the Optionees or
Grantees than the other, then in such instance the Administrator shall make a good faith judgment as to whether the Change in Control Plan or this Plan is 

  

 11 

 
more beneficial to the Optionees or Grantees and such determination shall be binding on all Optionees or Grantees. 
  
 16. Date of Grant. The date of grant of an Option or Stock Award will be, for all
purposes, the date as of which the Administrator makes the determination granting such Option or Stock Award, or any other, later date determined by the Administrator and specified in the Option Agreement. Notice of the determination will be
provided to each Grantee within a reasonable time after the date of grant. 
  
 17.
Amendment and Termination of the Plan. 
  
 (a) Amendment
and Termination. The Board may at any time amend, alter or suspend or terminate the Plan. 
  
 (b) Stockholder Approval. The Company will obtain stockholder approval of any Plan amendment that increases the number of Shares for which Options or Stock Awards may be granted, or to the extent necessary and
desirable to comply with Section 422 of the Code (or any successor statute) or other Applicable Laws, or the requirements of any exchange or quotation system on which the Common Stock is listed or quoted. Such shareholder approval, if required, will
be obtained in such a manner and to such a degree as is required by the Applicable Law or requirement. 
  
 (c) Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan, including the amendments and restatement
effected hereby, will impair the rights of a Grantee, unless mutually agreed otherwise between the Grantee and the Administrator. Any such agreement must be in writing and signed by the Grantee and the Company. 
  
 18. Conditions Upon Issuance of Shares. 
  
 (a) Legal Compliance. Shares will not be issued in connection with a
Stock Award or pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such Shares will comply with all Applicable Laws, and will be further subject to the approval of counsel for the Company with
respect to such compliance. Any securities delivered under the Plan will be subject to such restrictions, and the person acquiring such securities will, if requested by the Company, provide such assurances and representations to the Company as the
Company may deem necessary or desirable to assure compliance with all Applicable Laws. To the extent permitted by Applicable Laws, the Plan and Options and Stock Awards granted hereunder will be deemed amended to the extent necessary to conform to
such laws, rules and regulations. 
  
 (b) Investment
Representation. As a condition to the exercise of an Option or grant of a Stock Award, the Company may require the person exercising such Option or receiving such Stock Award to represent and warrant at the time of any such exercise or receipt
that the Shares are being acquired only for investment and without any present intention to sell, transfer, or distribute such Shares. 
  
 19. Liability of Company. 
  
 (a) Inability to Obtain Authority. If the Company cannot, by the exercise of commercially reasonable efforts, obtain authority from any regulatory
body having jurisdiction for the sale of any Shares under this Plan, and such authority is deemed by the Company’s counsel to be necessary to the lawful issuance of those Shares, the Company will be relieved of any liability for failing to
issue or sell those Shares. 
  
 (b) Grants Exceeding Allotted
Shares. If the Optioned Stock covered by an Option or Shares subject to a Stock Award exceed, as of the date of grant, the number of Shares which may be issued under the Plan without additional shareholder approval, that Option or Stock Award
will be contingent with respect to 

  

 12 

 
such excess Shares, unless and until shareholder approval of an amendment sufficiently increasing the number of Shares subject to this Plan is timely
obtained in accordance with Section 17(b). 
  
 (c) Rights of
Participants and Beneficiaries. The Company will pay all amounts payable under this Plan only to the Grantee, or beneficiaries entitled thereto pursuant to this Plan. The Company will not be liable for the debts, contracts, or engagements of any
Grantee or his or her beneficiaries, and rights to cash payments under this Plan may not be taken in execution by attachment or garnishment, or by any other legal or equitable proceeding while in the hands of the Company. 
  
 20. Reservation of Shares. The Company will at all times reserve and keep available
for issuance a number of Shares sufficient to satisfy this Plan’s requirements during its term. 
  
 21. Stockholder Approval. The amendments and restatement of this Plan will be subject to approval by the stockholders of the Company within 12 months before or after the date of its adoption. Such stockholder
approval will be obtained in the manner and to the degree required under Applicable Laws. 
  
 22. Legending Stock Certificates. In order to enforce any restrictions imposed upon Common Stock issued in connection with a Stock Award or upon exercise of an Option granted under this Plan or to which such
Common Stock may be subject, the Administrator may cause a legend or legends to be placed on any certificates representing such Common Stock, which legend or legends will make appropriate reference to such restrictions, including, but not limited
to, a restriction against sale of such Common Stock for any period of time as may be required by Applicable Laws. Additionally, and not by way of limitation, the Administrator may impose such restrictions on any Common Stock issued pursuant to the
Plan as it may deem advisable. 
  
 23. No Employment Rights. Neither this
Plan nor any Option or Stock Award will confer upon a Grantee any right with respect to continuing the Grantee’s employment or consulting relationship with the Company, or continuing service as a Director, nor will they interfere in any way
with the Grantee’s right or the Company’s right to terminate such employment or consulting relationship or directorship at any time, with or without cause. 
  
 24. Governing Law. The Plan will be governed by, and construed in accordance with the laws of the State of Delaware without giving
effect to conflicts of law principles. 
  

 13

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