Document:

Exhibit 10.2

 

SURGIQUEST, INC.

 

AMENDED AND RESTATED

 

2006 STOCK PLAN

 

(Amended and Restated as of June 12, 2007)

 

I. GENERAL

 

1.                   Purpose.

 

The purpose of this Amended and Restated 2006 Stock Plan (the “Plan”) is to secure for SurgiQuest, Inc., a Delaware corporation (together with its parent and any subsidiary thereof, the “Corporation”) and its stockholders the benefits arising from capital stock ownership by employees, officers and directors of, and consultants or advisors to, the Corporation who are expected to contribute to the Corporation’s future growth and success. The Plan permits grants of options to purchase shares of Common Stock and awards of Restricted Shares. Those provisions of the Plan which make express reference to Section 422 of the Code shall apply only to Incentive Stock Options. Capitalized but otherwise undefined terms herein shall have the meanings ascribed to them in Section 29 hereof.

 

2.                   Plan Administration; General.

 

(a)              Administration. The Plan will be administered by the Board of Directors, whose construction and interpretation of the terms and provisions of the Plan shall be final and conclusive. The Board of Directors may in its discretion grant Restricted Shares and options to purchase shares of Common Stock and issue shares upon exercise of such options as provided in the Plan. The Board of Directors shall have authority, subject to the express provisions of the Plan, to construe the respective option and Restricted Share agreements and the Plan, to prescribe, amend and rescind rules and regulations relating to the Plan, to determine the terms and provisions of the respective option and Restricted Share agreements, and to make all other determinations in the judgment of the Board of Directors necessary or desirable for the administration of the Plan. The Board of Directors may correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any option or Restricted Share agreement in the manner and to the extent it shall deem expedient to carry the Plan into effect and it shall be the sole and final judge of such expediency. No director or person acting pursuant to authority delegated by the Board of Directors shall be liable for any action or determination under the Plan made in good faith. The Board of Directors may, to the full extent permitted by or consistent with applicable laws or regulations (including, without limitation, applicable state law and Rule 16b-3), delegate any or all of its powers under the Plan to a committee (the “Committee”) appointed by the Board of Directors, and if the Committee is so appointed, all references to the Board of Directors in the Plan shall mean and relate to such Committee with respect to the powers so delegated.

 

(b)              Options or Restricted Share Awards to Directors. Any director to whom an option or Restricted Share award is granted shall be ineligible to vote upon his option or Restricted Share

 

 

grant, but such option or Restricted Share grant may be awarded to any such director by a vote of the remainder of the directors, except as limited below.

 

(c)               Applicability of Rule 16b-3. Those provisions of the Plan which make express reference to Rule 16b-3 shall apply to the Corporation only at such time as the Corporation’s Common Stock is registered under the Exchange Act, and then only to such persons as are required to file reports under Section 16(a) of the Exchange Act (a “Reporting Person”).

 

(d)              Compliance with Section 162(m) of the Code. Section 162(m) of the Code generally limits the tax deductibility to publicly held companies of compensation in excess of $1,000,000 paid to certain “covered employees” (“Covered Employees”). It is the Corporation’s intention to preserve the deductibility of such compensation to the extent it is reasonably practicable and to the extent it is consistent with the Corporation’s compensation objectives. For purposes of this Plan, Covered Employees of the Corporation shall be those employees of the Corporation described in Section 162(m)(3) of the Code.

 

(e)               Special Provisions Applicable to Non-Statutory Options Granted to Covered Employees. In order for the full value of Non-Statutory Options granted to Covered Employees to be deductible by the Corporation for federal income tax purposes, the Corporation may intend for such Non-Statutory Options to be treated as “qualified performance based compensation” as described in Treasury Regulation § 1.162-27(e) (or any successor regulation). In such case, Non-Statutory Options granted to Covered Employees shall be subject to the following additional requirements:

 

(i)                                          such options and rights shall be granted only by the Board of Directors; and

 

(ii)                                       the exercise price of such options shall in no event be less than the Fair Market Value (as defined in Section 16) of the Common Stock as of the date of grant of such options.

 

3.  Eligibility.

 

(a)              General. Options and Restricted Shares may be granted to persons who are, at the time of grant in a Business Relationship with the Corporation; provided that Incentive Stock Options may only be granted to individuals who are employees of the Corporation (within the meaning of Section 3401(c) of the Code). A person who has been granted an option or Restricted Shares (each, a “Participant”) may, if otherwise eligible, be granted additional options or Restricted Shares if the Board of Directors shall so determine. For purposes of this Plan, the Business Relationship is considered as continuing during a period in which a Participant is on military or sick leave or other bona fide leave of absence, as long as the leave does not exceed 90 days; provided, however, that a leave that lasts longer than 90 days will not be considered an interruption of the Business Relationship if such Participant’s right to resume the Business Relationship is guaranteed by contract or statute.

 

(b)              Grant of Options to Reporting Persons. From and after the registration of the Common Stock of the Corporation under the Exchange Act, the selection of a director or an officer who is a Reporting Person (as the terms “director” and “officer” are defined for purposes of Rule 16b-3) as a Participant, the timing of the option or Restricted Share grant, the exercise

 

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price of the option and the number of Restricted Shares or shares subject to the option shall be determined either (i) by the Board of Directors, or (ii) by a committee consisting of two or more Non-Employee Directors having full authority to act in the matter.

 

4.  Stock Subject to Plan.

 

The Restricted Shares or the stock subject to options granted under the Plan shall be shares of authorized but unissued or reacquired Common Stock. Subject to adjustment as provided in Section 19 below, the maximum number of shares of Common Stock which may be issued and sold under the Plan is Six Hundred Fifteen Thousand (615,000) shares. If any Restricted Shares are reacquired by the Corporation or forfeited or if an option granted under the Plan shall expire, terminate or is canceled for any reason without having been exercised in full, the forfeited Restricted Shares or unpurchased shares subject to such option shall again be available for subsequent option or Restricted Share grants under the Plan.

 

5.  Option and Restricted Share Agreements.

 

(a)              Agreements. As a condition to the grant of Restricted Shares or an option under the Plan, each Participant shall execute a Restricted Share or an option agreement in such form not inconsistent with the Plan as may be approved by the Board of Directors. Such option or Restricted Share agreements may differ among Participants.

 

(b)              Additional Provisions. The Board of Directors may include, in option or Restricted Share agreements, provisions regarding, without limitation, restrictions on transfer, repurchase rights, rights of first refusal, commitments to pay cash bonuses, to make, arrange for or guaranty loans or to transfer other property to Participants upon exercise of options, or such other provisions as shall be determined by the Board of Directors; provided that such provisions shall not be inconsistent with any other term or condition of the Plan and such provisions shall not cause any Incentive Stock Options granted under the Plan to fail to qualify as an Incentive Stock Option.

 

II. OPTIONS

 

6.  Types of Options.

 

Options granted pursuant to the Plan shall be authorized by action of the Board of Directors of the Corporation and may be either Incentive Stock Options or Non-Statutory Options.

 

7.  Purchase of Options.

 

(a)              Exercise Price. The exercise price per share of stock deliverable upon the exercise of an option shall be determined by the Board of Directors at the time of grant of such option; provided, however, that in the case of an Incentive Stock Option, the exercise price shall not be less than 100% of the Fair Market Value of such stock at the time of grant of such option, or less than 110% of such Fair Market Value in the case of options described in Section 14(b); and provided, further, that in the case of a Non-Statutory Option the exercise price shall not be less than 50% of the Fair Market Value of such stock at the time of grant of such option.

 

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(b)              Payment of Exercise Price. Options granted under the Plan may provide for the payment of the exercise price by delivery of cash or a check to the order of the Corporation in an amount equal to the exercise price of such options, or, to the extent provided in the applicable option agreement, (i) by delivery to the Corporation of shares of Common Stock of the Corporation having a Fair Market Value on the date of exercise equal in amount to the exercise price of the options being exercised, (ii) by any other means (including, without limitation, by delivery of a promissory note of the Participant payable on such terms as are specified by the Board of Directors) which the Board of Directors determines are consistent with the purpose of the Plan and with applicable laws and regulations (including, without limitation, the provisions of Rule 16b-3 and Regulation T promulgated by the Federal Reserve Board), or (iii) by any combination of such methods of payment.

 

(c)          Cashless Exercise. Notwithstanding the provisions of Section 7(b) to the contrary, if approved by the Board of Directors and if the Fair Market Value of one share of Common Stock of the Corporation is greater than the exercise price on the date of exercise, in lieu of paying the exercise price in cash, a Participant may elect upon exercise to receive that number of shares of Common Stock equal to the value (as determined below) of a share to be exercised minus the exercise price by delivering notice of such election to the Corporation, in which event the Corporation shall issue to such Participant a number of shares of Common Stock computed using the following formula:

 

X = Y(A-B)

A

 

Where                                     X = the number of shares of Common Stock to be issued to such Participant

Y = the number of shares to be exercised

A = the Fair Market Value of one share of the Corporation’s Common Stock (at the date of exercise)

B = exercise price (as adjusted to the date of such calculation).

 

8.  Exercise of Options.

 

(a)         Timing; Acceleration; Extension. Each option granted under the Plan shall be exercisable either in full or in installments at such time or times and during such period as shall be set forth in the option agreement evidencing such option, subject to the provisions of the Plan. No option granted to a Reporting Person for purposes of the Exchange Act, however, shall be exercisable during the first six (6) months after the date of grant. Subject to the requirements in the immediately preceding sentence, if an option is not at the time of grant immediately exercisable, the Board of Directors may: (i) in the option agreement, provide for the acceleration of the exercise date or dates of the subject option upon the occurrence of specified events; (ii) at any time prior to the complete termination of an option, accelerate the date or dates on which all or any particular option or options granted under the Plan may be exercised, unless such acceleration would violate Section 422D of the Code; and/or (iii) extend the date or dates on which all or any particular option or options granted under the Plan may be exercised, unless such extension would cause the Plan to fail to comply with Section 422 of the Code or with Rule 16b-3 (if applicable).

 

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(b)         Expiration of Options. Subject to earlier termination as provided in the Plan, each option and all rights thereunder shall expire on such date as determined by the Board of Directors and set forth in the applicable option agreement; provided that such date shall not be later than ten (10) years after the date on which the option is granted.

 

9.  Nontransferability of Options.

 

No option granted under this Plan may be assigned or otherwise transferred by any Participant except by will or by the laws of descent and distribution or pursuant to a qualified domestic relations order as defined in the Code or Title I of ERISA, or the rules thereunder. An option may be exercised during the lifetime of a Participant only by such Participant. If any Participant should attempt to dispose of or encumber his options, other than in accordance with the applicable terms of this Plan or the applicable option agreement, his interest in such options shall terminate.

 

10. Effect of Termination of Business Relationship, Death or Disability on Non-Statutory Options.

 

(a)              Termination of Business Relationship; Death or Disability. Subject to the provisions of the Plan, a Participant may exercise an option (but only to the extent such option was exercisable at the time of termination of such Participant’s Business Relationship with the Corporation) at any time within three (3) months following the termination of such Participant’s Business Relationship with the Corporation or within one (1) year if such termination was due to the death or disability of such Participant, but, in no event later than the expiration date of the option.

 

(b)              Termination for Cause or Upon Breach. If the termination of a Participant’s Business Relationship is for Cause, except as otherwise provided in the applicable option agreement or other Corporate Agreement, all outstanding options shall expire immediately upon such termination. The Board of Directors shall have the power to determine whether a Participant has been terminated for Cause and the date upon which such termination for Cause occurs. Any such determinations shall be final and conclusive and binding upon the Participant. In addition to the foregoing, all outstanding options shall expire immediately, if, at any time following termination of the Business Relationship, a Participant breaches any Corporate Agreement that survives termination of such Business Relationship.

 

11. Suspension of Option.

 

The Corporation may suspend for a reasonable period or periods the time during which any option granted pursuant to the Plan may be exercised if, in the opinion of the Corporation, such suspension is required to enable the Corporation to remain in compliance with regulatory requirements relating to the issuance of shares of Common Stock. If at any time the Corporation shall determine, in its discretion, that the listing, registration or qualification of the shares of Common Stock reserved for options upon any securities exchange or under any state or federal law, or the consent or approval of any government regulatory body, is necessary or desirable as a condition of, or in connection with, the granting or exercise of an option or the issue or purchase of shares under an option, the option may not be exercised in whole or in part until such listing,

 

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registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Corporation. The Corporation shall be under no obligation to effect or obtain any such listing, registration, qualification, consent or approval if the Corporation shall determine, in its discretion, that such action would not be in the best interest of the Corporation. The Corporation shall not be liable for damages due to a delay in the delivery or issuance of any stock certificates for any reason whatsoever, including, but not limited to, a delay caused by listing, registration or qualification of the shares of Common Stock subject to an option upon any securities exchange or under any federal or state law or the effecting or obtaining of any consent or approval of any governmental body with respect to the granting or exercise of an option or the issue or purchase of shares under an option.

 

12.  Cancellation and New Grant of Options, Etc.

 

The Board of Directors shall have the authority to, at any time and from time to time, with the consent of the affected Participants: (i) cancel any or all outstanding options under the Plan and the grant in substitution therefor new options under the Plan covering the same or different numbers of shares of Common Stock and having the same or different exercise price, or (ii) amend the terms of any and all outstanding options under the Plan to provide for a different exercise price.

 

13.  Rights as a Stockholder.

 

A Participant shall have no rights as a stockholder with respect to any shares covered by any option (including, without limitation, any rights to receive dividends or non-cash distributions with respect to such shares) until the date of issue of a stock certificate to him for such shares. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued.

 

14.  Incentive Stock Options.

 

Options granted under the Plan which are intended to be Incentive Stock Options shall be subject to the following additional terms and conditions:

 

(a)              Express Designation. All Incentive Stock Options granted under the Plan shall, at the time of grant, be specifically designated as such in the option agreement covering such Incentive Stock Options.

 

(b)              10% Stockholder. If any employee to whom an Incentive Stock Option is to be granted under the Plan is, at the time of the grant of such option, the owner of stock possessing more than 10% of the total combined voting power of all classes of stock of the Corporation (after taking into account the attribution of stock ownership rules of Section 424(d) of the Code), then the following special provisions shall be applicable to the Incentive Stock Option granted to such individual:

 

(i)                                     The purchase price per share of the Common Stock subject to such Incentive Stock Option shall not be less than 110% of the Fair Market Value of one share of Common Stock at the time of grant; and

 

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(ii)                                  the option exercise period shall not exceed five (5) years from the date of grant.

 

(c)               Dollar Limitation. For so long as the Code shall so provide, options granted to any employee under the Plan (and any other incentive stock option plans of the Corporation) that are intended to constitute Incentive Stock Options shall not constitute Incentive Stock Options to the extent that such options, in the aggregate, become exercisable for the first time in any one (1) calendar year for shares of Common Stock with an aggregate Fair Market Value, as of the respective date or dates of grant, of more than $100,000 (or such other limitations as the Code may provide).

 

(d)              Termination of Employment, Death or Disability. No Incentive Stock Option may be exercised unless, at the time of such exercise, the Participant causing such exercise is, and has been continuously since the date of grant of his option, employed by the Corporation, except that:

 

(i)                                     an Incentive Stock Option may be exercised (to the extent such option was exercisable at the time of termination of the Participant’s employment with the Corporation) within the period of three (3) months after the date the Participant ceases to be an employee of the Corporation (or within such lesser period as may be specified in the applicable option agreement), provided, that the option agreement may designate a longer exercise period and that the exercise after such three (3) month period shall be treated as the exercise of a Non-Statutory Option under the Plan and provided, further, that if the termination of the Participant’s employment is for Cause, except as provided in any applicable option agreement or other Corporate Agreement, all outstanding options shall expire immediately upon such termination. The Board of Directors shall have the power to determine whether a Participant has been terminated for Cause and the date upon which such termination for Cause occurs. Any such determinations shall be final and conclusive and binding upon such Participant. In addition to the foregoing, all outstanding options shall expire immediately, if, at any time following termination of employment with the Corporation, such Participant breaches any Corporate Agreement that survives termination of the Business Relationship;

 

(ii)                                  if a Participant dies while in the employ of the Corporation or if a Participant dies within three (3) months after such Participant ceases to be an employee, the Incentive Stock Option may be exercised by the person to whom it is transferred by will or the laws of descent and distribution within the period of one (1) year after the date of death (or within such lesser period as may be specified in the applicable option agreement); and

 

(iii)                               if a Participant becomes disabled (within the meaning of Section 22(e)(3) of the Code or any successor provisions thereto) while in the employ of the Corporation, the Incentive Stock Option may be exercised within the period of one (1) year after the date such Participant ceases to be an employee because of such disability (or within such lesser period as may be specified in the applicable option agreement).

 

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For all purposes of the Plan and any option granted hereunder, “employment” shall be defined in accordance with the provisions of Treasury Regulation 1.421-7(h) (or any successor regulation). Notwithstanding the foregoing provisions, no Incentive Stock Option may be exercised after its expiration date.

 

III. RESTRICTED SHARES

 

15. Restricted Shares.

 

(a)              Awards. The Board of Directors may from time to time in its discretion award Restricted Shares to individuals or entities in a Business Relationship with the Corporation and may determine the number of Restricted Shares awarded and the terms and conditions thereof including the amount of payment, if any, to be made by a Participant for such Restricted Shares.

 

(b)              Restricted Period; Lapse of Restrictions. At the time an award of Restricted Shares is made, the Board of Directors shall establish a period of time (the “Restricted Period”) applicable to such award which shall not be less than one (1) year nor more than ten (10) years. Each award of Restricted Shares may have a different Restricted Period. In lieu of establishing a Restricted Period, the Board of Directors may establish restrictions based only on the achievement of specified performance measures. At the time an award is made, the Board of Directors may, in its discretion, prescribe conditions for the incremental lapse of restrictions during the Restricted Period and for the lapse of restrictions upon the occurrence of other conditions in addition to or other than the expiration of the Restricted Period with respect to all or any portion of the Restricted Shares. Such conditions may include, without limitation, the death or disability of a Participant, retirement of a Participant, termination by the Corporation of a Participant’s Business Relationship other than for Cause, or the occurrence of a Change of Control. Such conditions may also include performance measures, which, in the case of an award of Restricted Shares to a Covered Employee, shall be based on one or more of the following criteria: earnings per share, market value per share, return on invested capital, return on operating assets and return on equity. The Board of Directors may also, in its discretion, shorten or terminate the Restricted Period or waive any conditions for the lapse of restrictions with respect to all or any portion of the Restricted Shares at any time after the date the award is made.

 

(c)               Rights of Holder; Limitations Thereon. Upon an award of Restricted Shares, a stock certificate representing the number of Restricted Shares awarded shall be registered in the name of the Participant granted such Restricted Shares and, at the discretion of the Board of Directors, will be either delivered to such Participant with an appropriate legend or held in custody by the Corporation or a bank for such Participant’s account. A Participant shall generally have the rights and privileges of a stockholder as to such Restricted Shares, including the right to vote such Restricted Shares, except that the following restrictions shall apply: (i) with respect to each Restricted Share, a Participant shall not be entitled to delivery of an unlegended certificate until the expiration or termination of the Restricted Period, and the satisfaction of any other conditions prescribed by the Board of Directors relating to such Restricted Share; (ii) with respect to each Restricted Share, such share may not be sold, transferred, assigned, pledged, or otherwise encumbered or disposed of until the expiration of the Restricted Period and the satisfaction of any other conditions prescribed by the Board of Directors, relating to such Restricted Share (except, subject to the provisions of the Participant’s stock restriction agreement, by will or the

 

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laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Code or Title I of ERISA or the rules promulgated thereunder); and (iii) all of the Restricted Shares as to which restrictions have not at the time lapsed shall be forfeited and all rights of a Participant to such Restricted Shares shall terminate without further obligation on the part of the Corporation unless such Participant has maintained a Business Relationship with the Corporation until the expiration or termination of the Restricted Period and the satisfaction of any other conditions prescribed by the Board of Directors applicable to such Restricted Shares. Upon the forfeiture of any Restricted Shares, such forfeited shares shall be transferred to the Corporation without further action by the Participant. At the discretion of the Board of Directors, cash and stock dividends with respect to the Restricted Shares may be either currently paid or withheld by the Corporation for the Participant’s account, and interest may be paid on the amount of cash dividends withheld at a rate and subject to such terms as determined by the Board of Directors. A Participant shall have the same rights and privileges, and be subject to the same restrictions, with respect to any shares received pursuant to Section 19 hereof.

 

(d)     Delivery of Unrestricted Shares. Upon the expiration or termination of the Restricted Period and the satisfaction of any other conditions prescribed by the Board of Directors, the restrictions applicable to the Restricted Shares shall lapse and a stock certificate for the number of Restricted Shares with respect to which the restrictions have lapsed shall be delivered, free of all such restrictions, except any that may be imposed by this Plan or by law including without limitation securities laws, to the Participant or the Participant’s beneficiary or estate, as the case may be. The Corporation shall not be required to deliver any fractional share of Common Stock but will pay, in lieu thereof, the Fair Market Value (determined as of the date the restrictions lapse) of such fractional share to the Participant or the Participant’s beneficiary or estate, as the case may be.

 

IV. FAIR MARKET VALUE

 

16. Fair Market Value.

 

“Fair Market Value” of a share of Common Stock of the Corporation as of a specified date for the purposes of the Plan shall mean the closing price of a share of the Common Stock on the principal securities exchange on which such shares are traded on the day immediately preceding the date as of which Fair Market Value is being determined, or on the next preceding date on which such shares are traded if no shares were traded on such immediately preceding day, or if the shares are not traded on a securities exchange, Fair Market Value shall be deemed to be the average of the high bid and low asked prices of the shares in the over-the-counter market on the day immediately preceding the date as of which Fair Market Value is being determined or on the next preceding date on which such high bid and low asked prices were recorded. If the shares are not publicly traded, Fair Market Value of a share of Common Stock (including in the case of any repurchase of shares, any distributions with respect thereto which would be repurchased with the shares) shall be determined in good faith by the Board of Directors. In no case shall Fair Market Value be determined with regard to restrictions other than restrictions which, by their terms, will never lapse.

 

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V. MISCELLANEOUS

 

17. Compliance with Corporate Agreements.

 

(a)              Except in accordance with any and all applicable Corporate Agreements, no Participant may Transfer his shares of Common Stock or any interest in such shares of Common Stock to any person or entity without the prior written consent of the Corporation. The Corporation may place an appropriate legend on the share certificates issued pursuant to this Plan to reflect the restrictions imposed by this Plan and applicable securities laws.

 

(b)              No Participant holding shares of Common Stock may make any Transfer, or enter into, consent to, or vote in favor of any transaction that would result in any Transfer unless all the provisions of this Plan and any Corporate Agreement that are applicable to such Transfer have been complied with.

 

18. General Restrictions.

 

(a)              Investment Representations. The Corporation may require a Participant, as a condition of receiving Restricted Shares or exercising an option, to give written assurances in substance and form satisfactory to the Corporation to the effect that such person is acquiring the Restricted Shares or Common Stock subject to the option for his own account for investment and not with any present intention of selling or otherwise distributing the same, and to such other effects as the Corporation deems necessary or appropriate in order to comply with federal and applicable state securities laws, or with covenants or representations made by the Corporation in connection with any public offering of its Common Stock.

 

(b)              Compliance with Securities Law. Each option and grant of Restricted Shares shall be subject to the requirement that if, at any time, counsel to the Corporation shall determine that the listing, registration or qualification of the Restricted Shares or Common Stock subject to such option upon any securities exchange or under any state or federal law, or the consent or approval of any governmental or regulatory body, or the disclosure of non-public information or the satisfaction of any other condition is necessary as a condition of, or in connection with the issuance or purchase of shares thereunder, such Restricted Shares shall not be granted and such option may not be exercised, in whole or in part, unless such listing, registration, qualification, consent or approval, or satisfaction of such condition shall have been effected or obtained on conditions acceptable to the Board of Directors. Nothing herein shall be deemed to require the Corporation to apply for or to obtain such listing, registration or qualification, or to satisfy such condition.

 

19. Adjustment Provisions for Recapitalization, Reorganizations and Related Transactions.

 

(a)              Recapitalization and Related Transactions. If, through or as a result of any recapitalization, reclassification, stock dividend, stock split, reverse stock split, liquidation, exchange of shares, spin-off, combination, consolidation or other similar transaction, (i) the outstanding shares of Common Stock are increased, decreased or exchanged for a different number or kind of shares or other securities of the Corporation, or (ii) additional shares or new or different shares or other non-cash assets are distributed with respect to such shares of Common Stock or other securities, an appropriate and proportionate adjustment shall be made in (x) the maximum number and kind of shares reserved for issuance under the Plan, (y) the number and

 

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kind of Restricted Shares granted and shares or other securities subject to any then outstanding options under the Plan, and (z) the exercise price for each share subject to any then outstanding options under the Plan, without changing the aggregate purchase price as to which such options remain exercisable. Notwithstanding the foregoing, no adjustment shall be made pursuant to this Section 19 if such adjustment (A) would cause the Plan to fail to comply with Section 422 of the Code or with Rule 16b-3 or (B) would be considered as the adoption of a new plan requiring stockholder approval.

 

(b)         Reorganization, Merger and Related Transactions. If the Corporation shall be the surviving corporation in any reorganization, merger or consolidation of the Corporation with one or more other corporations, any then outstanding options or Restricted Shares shall pertain to and apply to the securities to which a holder of the number of shares of Common Stock subject to such Restricted Shares or options would have been entitled immediately following such reorganization, merger, or consolidation, with a corresponding proportionate adjustment of the purchase price as to which such options may be exercised so that the aggregate purchase price as to which such options may be exercised shall be the same as the aggregate purchase price as to which such options may be exercised for the shares remaining subject to the options immediately prior to such reorganization, merger, or consolidation.

 

(c)          Board Authority to Make Adjustments. Any adjustments made under this Section 19 will be made by the Board of Directors, whose determination as to what adjustments, if any, will be made and the extent thereof will be final, binding and conclusive. No fractional shares will be issued under the Plan on account of any such adjustments.

 

20. Change of Control; Acceleration.

 

(a)              The Corporation shall give each Participant at least five (5) days notice prior to the consummation of a Change of Control.

 

(b)              From and after a Change of Control:

 

(i)                                     if an Participant continues in a Business Relationship with a successor corporation or a parent or a subsidiary of such successor corporation (such entity, the “Successor Corporation”), such Business Relationship shall be deemed to be continued Business Relationship with the Corporation and all outstanding options and Restricted Share awards shall be assumed by the Successor Corporation or substituted by new options or restricted shares on terms no less favorable to the Participant than those provided hereunder and under any applicable Corporate Agreement;

 

(ii)                                  if at any time in the period ninety (90) days prior to the consummation of the Change of Control or before the first anniversary of the consummation of the Change of Control (A) a Participant’s Business Relationship is terminated by the Corporation or Successor Corporation without Cause or (B) a Participant terminates his Business Relationship with the Corporation or Successor Corporation for Good Reason, then upon the later of (I) the consummation of such Change of Control or (II) the date of the termination of such Participant’s Business Relationship, all outstanding options or Restricted Shares, as the case may be, held by such Participant or Participant on such

 

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date shall immediately become fully vested and, in the case of options, fully exercisable;

 

(iii)                               in the event that the Successor Corporation refuses to assume all outstanding options of the Corporation or to substitute options as provided in Section 20(b)(i) above, then: (A) all options held by any Participant having a Business Relationship with the Corporation for at least twelve consecutive months immediately prior to the Change of Control shall immediately become fully vested and fully exercisable immediately prior to the Change of Control, provided that such Participant has a Business Relationship with the Corporation at such time; and (B) fifty percent (50%) of all unvested options held by any Participant having a Business Relationship with the Corporation for at least six consecutive months but less than twelve consecutive months immediately prior to the Change of Control shall immediately become fully vested and fully exercisable immediately prior to the Change of Control, provided that such Participant has a Business Relationship with the Corporation at such time; and

 

(iv)                              in the event that the Successor Corporation refuses to assume all Restricted Share awards of the Corporation or to substitute restricted share awards as provided in Section 20(b)(i) above, then: (A) all Restricted Shares held by any Participant having a continuous Business Relationship with the Corporation for at least the twelve consecutive months immediately prior to the Change of Control shall become unrestricted shares immediately prior to the Change of Control, provided that such Participant has a Business Relationship with the Corporation at such time; and (B) fifty percent (50%) of all Restricted Shares held by any Participant having a continuous Business Relationship with the Corporation for at least six consecutive months but less than twelve consecutive months immediately prior to the Change of Control shall become unrestricted shares immediately prior to the Change of Control, provided that such Participant has a Business Relationship with the Corporation at such time.

 

(c)               To the extent any vested and exercisable option is not exercised immediately prior to consummation of a Change of Control the unexercised portion of such option shall terminate in its entirety automatically upon such consummation and the Board of Directors shall notify the Participant of such fact at least two (2) days prior to the date on which such option terminates.

 

(d)              Any option (or portion thereof) that is neither vested and exercisable upon the consummation of the Change of Control nor assumed by the Successor Corporation shall terminate automatically upon the consummation of the Change of Control and the Board of Directors shall notify the Participant of such fact at least five (5) days prior to the date on which the option terminates. Any unvested portion of a Restricted Share award that is not assumed by the Successor Corporation shall terminate automatically upon the consummation of the Change of Control and the Board of Directors shall notify the Participant of such fact at least five (5) days prior to the date on which the Restricted Share award terminates.

 

(e)          For purposes of this Section 20, an option or a Restricted Share award shall be considered assumed, without limitation, if, at the time of issuance of the stock or other consideration upon a Change of Control, each Participant would be entitled to receive upon

 

12

 

exercise of the option or Restricted Share award the same number and kind of shares of stock or the same amount of property, cash or securities as such holder would have been entitled to receive upon the occurrence of the transaction if the holder had been, immediately prior to such transaction, the holder of the number of shares of Common Stock covered by the option or the Restricted Share award at such time (after giving effect to any adjustments in the number of shares covered by the option or Restricted Share award as provided for in this Section 20); provided, however, that if the consideration received in the transaction is not solely common stock of the Successor Corporation, the Board of Directors may, with the consent of the Successor Corporation, provide for the consideration to be received upon exercise of the option or Restricted Share award to be solely common stock of the Successor Corporation equal to the Fair Market Value of the per share consideration received by holders of Common Stock in the transaction.

 

21.            No Requirement to Continue Business Relationship.

 

Nothing contained in the Plan or in any Restricted Share or option agreement shall confer upon any Participant any right with respect to the continuation of his Business Relationship with the Corporation or interfere in any way with the right of the Corporation at any time to terminate or alter the scope of such Business Relationship.

 

22.            Other Employee Benefits.

 

Except as to plans which by their terms include such amounts as compensation, the amount of any compensation deemed to be received by an employee as a result of (a) the grant of Restricted Shares or lapse of restrictions thereon or (b) the exercise of an option or the sale of shares received upon such exercise will not constitute compensation with respect to which any other employee benefits of such employee are determined, including, without limitation, benefits under any bonus, pension, profit-sharing, life insurance or salary continuation plan, except as otherwise specifically determined by the Board of Directors.

 

23.       Amendment of the Plan.

 

(a)              The Board of Directors may at any time, and from time to time, modify or amend the Plan in any respect, except that if at any time the approval of the stockholders of the Corporation is required under Section 422 of the Code or any successor provision with respect to Incentive Stock Options, or under Rule 16b-3, the Board of Directors may not effect such modification or amendment without such approval.

 

(b)              The termination or any modification or amendment of the Plan shall not, without the consent of an affected Participant, affect his rights under an option or grant of Restricted Shares previously granted to him. With the consent of such affected Participant, the Board of Directors may amend outstanding option or Restricted Share agreements with such Participant in a manner not inconsistent with the Plan. The Board of Directors shall have the right to amend or modify (i) the terms and provisions of the Plan and of any outstanding Incentive Stock Options granted under the Plan to the extent necessary to qualify any or all such options for such favorable federal income tax treatment (including deferral of taxation upon exercise) as may be afforded Incentive Stock Options under Section 422 of the Code and (ii) the terms and provisions of the Plan and of

 

13

 

any outstanding option or grant of Restricted Shares to the extent necessary to ensure the qualification of the Plan under Rule 16b-3.

 

24. Withholding.

 

(a)              General. The Corporation, shall have the right to deduct from payments of any kind otherwise due to a Participant any federal, state or local taxes of any kind required by law to be withheld with respect to any shares issued upon exercise of options or lapse of restrictions on Restricted Shares under the Plan. Subject to the prior approval of the Corporation, which may be withheld by the Corporation in its discretion, such Participant may elect to satisfy such obligations, in whole or in part, (i) by causing the Corporation to withhold shares of Common Stock otherwise issuable pursuant to the exercise of an option or lapse of restrictions on Restricted Shares, or (ii) by delivering to the Corporation shares of Common Stock already owned by the Participant or Participant. The shares so delivered or withheld shall have a Fair Market Value equal to such withholding obligation as of the date that the amount of tax to be withheld is to be determined. A Participant who has made an election pursuant to this Section 24(a) may satisfy his withholding obligation only with shares of Common Stock which are not subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements.

 

(b)              Incentive Stock Options. The acceptance of shares of Common Stock upon exercise of an Incentive Stock Option shall constitute an agreement by the Participant: (i) to notify the Corporation if any or all of such shares are disposed of by such Participant within two (2) years from the date the option was granted or within one (1) year from the date the shares were transferred to such Participant pursuant to the exercise of the option, and (ii) if required by law, to remit to the Corporation, at the time of and in the case of any such disposition, an amount sufficient to satisfy the Corporation’s federal, state and local withholding tax obligations with respect to such disposition, whether or not, as to both (i) and (ii), such Participant is employed by the Corporation at the time of such disposition.

 

(c)               Reporting Persons. Notwithstanding the foregoing, in the case of a Reporting Person whose options have been granted in accordance with the provisions of Section 3(b) herein, no election to use shares for the payment of withholding taxes shall be effective unless made in compliance with any applicable requirements of Rule 16b-3.

 

25. Effective Date and Duration of the Plan.

 

(a)     Effective Date. The Plan shall become effective when adopted by the Board of Directors, but no Incentive Stock Option granted under the Plan shall become exercisable unless and until the Plan shall have been approved by the Corporation’s stockholders. If such stockholder approval is not obtained within twelve (12) months after the date of the Board’s adoption of the Plan, no options previously granted under the Plan shall be deemed to be Incentive Stock Options and no Incentive Stock Options shall be granted thereafter. Amendments to the Plan not requiring stockholder approval shall become effective when adopted by the Board of Directors; amendments requiring stockholder approval (as provided in Section 23) shall become effective when adopted by the Board of Directors, but no Incentive Stock Option granted after the date of such amendment shall become exercisable (to the extent that such amendment to the Plan was required to enable the Corporation to grant such Incentive Stock

 

14

 

Option to a particular Participant) unless and until such amendment shall have been approved by the Corporation’s stockholders. If such stockholder approval is not obtained within twelve (12) months of the Board’s adoption of such amendment, any Incentive Stock Options granted on or after the date of such amendment shall terminate to the extent that such amendment to the Plan was required to enable the Corporation to grant such option to a particular Participant. Subject to this limitation, options may be granted under the Plan at any time after the effective date and before the date fixed for termination of the Plan.

 

(b)     Termination. Unless sooner terminated in accordance with this Plan, the Plan shall terminate upon the earlier of (i) the close of business on the day next preceding the tenth anniversary of the date of its adoption by the Board of Directors, or (ii) the date on which all shares available for issuance under the Plan shall have been issued pursuant to the exercise or cancellation of Restricted Shares or options granted under the Plan. If the date of termination is determined under (i) above, then Restricted Shares or options outstanding on such date shall continue to have force and effect in accordance with the provisions of the option and Restricted Shares agreements.

 

26.            Common Stock Underlying Options Subject to Stockholders Agreement.

 

If so determined by the Board of Directors, as a condition to the grant of an option or an award of Restricted Shares under the Plan, each Participant shall execute and deliver a Stockholders Agreement or similar agreement or a joinder agreement to an existing Stockholders Agreement or similar agreement between and among the Corporation and its stockholders, in the form(s) prescribed by the Corporation, pursuant to which such Participant will agree to be bound by all of the terms and conditions of such agreement upon the exercise of the option or upon receipt of the Restricted Shares.

 

27.            Governing Law.

 

The provisions of this Plan shall be governed by and construed in accordance with the laws of the State of Delaware without regard to its conflicts of laws principles.

 

28.            Pronouns.

 

As used in this Plan, all pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the identity of the person or persons may require.

 

29.            Definitions.

 

As used in this Plan, the following terms shall have the respective meanings set forth below or in the Section of the Plan set forth below:

 

(a)              “Board of Directors” shall mean the Board of Directors of the SurgiQuest, Inc., a Delaware corporation.

 

(b)              “Business Relationship” shall mean serving the Corporation or a Successor Corporation in the capacity of an employee, officer, director, advisor or consultant.

 

(c)               “Cause” shall mean (i) any negligence, gross negligence or willful misconduct that materially and adversely affects the best interests of the Corporation or Successor Corporation, as

 

15

 

the case may be, (ii) the Participant’s conviction of any felony or crime involving dishonesty, (iii) the failure by the Participant to diligently perform his duties to the reasonable satisfaction of the Corporation or Successor Corporation, as the case may be; (iv) material breach by the Participant of any Corporate Agreement; or (v) any intentional act by the Participant of competition with or against the interest of the Corporation or the Successor Corporation, as the case may be.

 

(d)              “Change of Control” shall mean a sale of all or substantially all of the Corporation’s assets or capital stock, or any merger or consolidation pursuant to which the Corporation’s stockholders shall receive cash or securities of another corporation and less than 50% of the outstanding capital stock of the surviving corporation pursuant to such merger or consolidation shall be owned by the stockholders of the Corporation.

 

(e)               “Code” shall mean the Internal Revenue Code of 1986, as amended or replaced from time to time.

 

(f)                “Committee” shall have the meaning set forth in Section 2(a) of the Plan

 

(g)               “Common Stock” shall mean shares of the common stock of the SurgiQuest, Inc., a Delaware corporation, $0.001 par value per share.

 

(h)              “Corporation” shall have the meaning set forth in Section 1 of the Plan.

 

(i)                  “Corporate Agreement” shall mean any agreement between the Corporation and a Participant, including without limitation an employment, consulting, confidentiality, proprietary rights, noncompetition or non-disclosure agreement, a stock option agreement, or a restricted stock agreement.

 

(j)                 “Covered Employee” shall have the meaning set forth in Section 2(d) of the Plan.

 

(k)              “ERISA” shall mean the Employee Retirement Income Security Act.

 

(l)                  “Exchange Act” shall mean the Securities Exchange Act of 1934.

 

(m)          “Fair Market Value” shall have the meaning set forth in Section 16 of the Plan.

 

(n)              “Good Reason” shall mean (i) a material breach by the Corporation or Successor Corporation of any of the material terms of any employment agreement then in effect between the Corporation or Successor Corporation, as the case may be, and the Participant or Participant and the expiration of any applicable notice or cure periods relating thereto, (ii) a requirement by the Corporation or Successor Corporation that the Participant, without his consent, relocate from his residence or to commute more than sixty (60) miles from the offices of the Corporation at which he was principally employed, or (iii) a material diminution in the Participant’s title, duties or responsibilities or conditions of his Business Relationship from those in effect ninety (90) days prior to the consummation of the Change of Control, or a reduction in the Participant’s annual base salary in effect ninety (90) days prior to the consummation of the Change of Control (other than a reduction applicable generally to substantially all individuals with Business Relationships with the Corporation or Successor Corporation, as the case may be).

 

(o)              “Incentive Stock Options” shall mean options meeting the requirements of Section 422 of the Code.

 

(p)              “Non-Employee Director” shall mean a member of the Board of Directors who qualifies as a “Non-Employee Director” within the meaning of Rule 16b-3.

 

16

 

(q)              “Non-Statutory Options” shall mean options which are not intended to meet the requirements of Section 422 of the Code.

 

(r)                 “Participant” shall have the meaning set forth in Section 3 of the Plan.

 

(s)                “Plan” shall have the meaning set forth in Section 1 of the Plan.

 

(t)                 “Restricted Period” shall have the meaning set forth in Section 15(b) of the Plan.

 

(u)              “Restricted Shares” shall mean awards of shares of Common Stock that are restricted as provided in Section 15 of the Plan.

 

(v)              “Reporting Person” shall have the meaning set forth in Section 2(c) of the Plan.

 

(w)            “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act, or any successor rule.

 

(x)              “Successor Corporation” shall have the meaning set forth in Section 20(b)(i).

 

(y)              “Transfer” means any sale, pledge, assignment, encumbrance, gift or other disposition or transfer by any person or entity of outstanding shares of Common Stock of the Corporation or any legal or beneficial interest therein, including any tender or transfer in connection with any merger, recapitalization, reclassification, or tender or exchange offer (for all or part of the outstanding shares of capital stock of the Corporation), whether or not the person or entity making such transfer votes for or against any transaction involving any such Transfer.

 

17

 

Amendment

 

to the

 

SURGIQUEST, INC.

 

AMENDED AND RESTATED

 

2006 STOCK PLAN

 

November 14, 2008

 

The Board of Directors and the Stockholders of SurgiQuest, Inc., a Delaware Corporation, having the requisite votes necessary to authorize or take such actions, adopted resolutions by written consent authorizing and approving this amendment to its Amended and Restated 2006 Stock Plan (the “Plan”) as set forth below:

 

The Plan is hereby amended by deleting Section 4 in its entirety and replacing such section with the following:

 

“4. Stock Subject to Plan.

 

The Restricted Shares or the stock subject to options granted under the Plan shall be shares of authorized but unissued or reacquired Common Stock. Subject to adjustment as provided in Section 19 below, the maximum number of shares of Common Stock which may be issued and sold under the Plan is Six Hundred Seventy-Five Thousand (675,000) shares. If any Restricted Shares are reacquired by the Corporation or forfeited or if an option granted under the Plan shall expire, terminate or is canceled for any reason without having been exercised in full, the forfeited Restricted Shares or unpurchased shares subject to such option shall again be available for subsequent option or Restricted Share grants under the Plan.”

 

Certification

 

The foregoing Amendment was approved and adopted by the Board of Directors on November 13, 2008 and by the Stockholders on November 14, 2008.

 

 

	
 
    	
/s/ Kourosh Azarbarzin
    
	
 
    	
Name:
    	
Kourosh Azarbarzin
    
	
 
    	
Title:
    	
President
    

 

 

Amendment

 

to the

 

SURGIQUEST, INC.

 

AMENDED AND RESTATED

 

2006 STOCK PLAN

 

May 29, 2008

 

The Board of Directors and the Stockholders of SurgiQuest, Inc., a Delaware Corporation, having the requisite votes necessary to authorize or take such actions, adopted resolutions by written consent authorizing and approving the amendment to its Amended and Restated 2006 Stock Plan (the “Plan”)  as set forth below:

 

The Plan is hereby amended by deleting Section 4 in its entirety and replacing such section with the following:

 

“4. Stock Subject to Plan.

 

The Restricted Shares or the stock subject to options granted under the Plan shall be shares of authorized but unissued or reacquired Common Stock. Subject to adjustment as provided in Section 19 below, the maximum number of shares of Common Stock which may be issued and sold under the Plan is Six Hundred Forty-Five Thousand (645,000) shares.   If any Restricted Shares are reacquired by the Corporation or forfeited or if an option granted under the Plan shall expire, terminate or is canceled for any reason without having been exercised in full, the forfeited Restricted Shares or unpurchased shares subject to such option shall again be available for subsequent option or Restricted Share grants under the Plan.”

 

Certification

 

The foregoing Amendment was approved and adopted by the Board of Directors on May 28, 2008 and by the Stockholders on May 28, 2008.

 

 

	
 
    	
/s/ Kourosh Azarbarzin
    
	
 
    	
Name:
    	
Kourosh Azarbarzin
    
	
 
    	
Title:
    	
President
    

 

 

AMENDMENT

 

TO THE

 

SURGIQUEST, INC.

 

AMENDED AND RESTATED

 

2006 STOCK PLAN

 

MARCH 22, 2011

 

The Board of Directors and the Stockholders of SurgiQuest, Inc., a Delaware Corporation, having the requisite votes necessary to authorize or take such actions, adopted resolutions by written consent authorizing and approving the amendment to its Amended and Restated 2006 Stock Plan (the “Plan”)  as set forth below:

 

The Plan is hereby amended by deleting Section 4 in its entirety and replacing such section with the following:

 

“4. Stock Subject to Plan.

 

The Restricted Shares or the stock subject to options granted under the Plan shall be shares of authorized but unissued or reacquired Common Stock. Subject to adjustment as provided in Section 19 below, the maximum number of shares of Common Stock which may be issued and sold under the Plan is [One Million Three Hundred Fifty-Six Thousand Two Hundred Forty-Six (1,356,246) shares. If any Restricted Shares are reacquired by the Corporation or forfeited or if an option granted under the Plan shall expire, terminate or is canceled for any reason without having been exercised in full, the forfeited Restricted Shares or unpurchased shares subject to such option shall again be available for subsequent option or Restricted Share grants under the Plan,”

 

Certification

 

The foregoing Amendment was approved and adopted by the Board of Directors on March 22, 2011 and by the Stockholders on March 22, 2011.

 

 

	
 
    	
/s/ Kourosh Azarbarzin
    
	
 
    	
Name:
    	
Kourosh Azarbarzin
    
	
 
    	
Title:
    	
President
    

 

 

AMENDMENT

 

TO THE

 

SURGIQUEST, INC.

 

AMENDED AND RESTATED

 

2006 STOCK PLAN

 

MARCH 10, 2015

 

The Board of Directors and the Stockholders of SurgiQuest, Inc., a Delaware Corporation, having the requisite votes necessary to authorize or take such actions, adopted resolutions by written consent authorizing and approving the amendment to its Amended and Restated 2006 Stock Plan (the “Plan”) as set forth below:

 

The Plan is hereby amended by deleting Section 4 in its entirety and replacing such section with the following:

 

“4. Stock Subject to Plan.

 

The Restricted Shares or the stock subject to options granted under the Plan shall be shares of authorized but unissued or reacquired Common Stock. Subject to adjustment as provided in Section 19 below, the maximum number of shares of Common Stock which may be issued and sold under the Plan is Two Million Eight Hundred Sixteen Thousand Two Hundred Forty-Six (2,816,246) shares. If any Restricted Shares are reacquired by the Corporation or forfeited or if an option granted under the Plan shall expire, terminate or is canceled for any reason without having been exercised in full, the forfeited Restricted Shares or unpurchased shares subject to such option shall again be available for subsequent option or Restricted Share grants under the Plan.”

 

Certification

 

The foregoing Amendment was approved and adopted by the Board of Directors on March 10, 2015 and by the Stockholders on March 10, 2015

 

 

	
 
    	
/s/ Kourosh Azarbarzin
    
	
 
    	
Name:
    	
Kourosh Azarbarzin
    
	
 
    	
Title:
    	
PresidentExhibit 10.4

 

EMPLOYMENT AGREEMENT

 

WHEREAS, as an employee of SurgiQuest, Inc., a Delaware corporation (the “Company”), I have and will continue to have access to trade secrets, proprietary intellectual property and other confidential information and trade secrets of the Company; and

 

WHEREAS, the Company is in negotiations to obtain substantial equity financing from one or more private investors (the “Investors”); and

 

WHEREAS, as a stockholder and employee of the Company I will substantially benefit from such financing; and

 

WHEREAS, the Company has made it a condition to my continued employment, and the Investors have made it a condition to providing such financing, that I enter into an agreement relating to my performance of services for the Company, the assignment and protection of the Company’s confidential information and my ongoing and future non-competition with the Company;

 

NOW, THEREFORE, in consideration of the foregoing and the compensation to be paid to me, I agree with the Company as follows:

 

1.     Employment Status. The Company hereby employs me, and I hereby accept employment, as the Chief Executive Officer of the Company on the terms and conditions set forth herein. I understand that I am employed for an indefinite term and that either the Company or I may terminate the employment relationship at any time pursuant to the terms hereof.

 

2.     Duties of Employee. I shall report to the Board of Directors of the Company. I shall have oversight of the day-to-day operations of the Company. I shall perform such other duties and have such other responsibilities as may be assigned to me from time to time by the Board of Directors of the Company. As long as I am employed by the Company, I shall devote my full time and efforts to the Company and shall not, without the Company’s prior express written consent, engage directly or indirectly in any employment, consulting or business activity other than for the Company.

 

3.     Compensation and Benefits.

 

(a) My base salary shall be at the annual rate of $225,000 per year. Such compensation shall be payable in accordance with the Company’s standard payroll policy.

 

(b) I shall be entitled to participate in such employee benefit plans and to receive such other fringe benefits as are customarily afforded Company employees in similar positions with the same tenure. I understand that these employee benefit plans and fringe benefits may be amended, enlarged, diminished or terminated by the Company from time to time.

 

(c) I shall be entitled to three (3) weeks paid vacation per calendar year, such vacation to extend for such periods and to be taken at such intervals as may be approved by the Board of Directors of the Company.

 

 

(d) I shall be eligible to receive a bonus in the form of a stock option or grant of restricted stock under the Company’s 2006 Stock Plan (or under other stock option or restricted stock plans yet to be established by the company) for each calendar year based on my achievement of performance goals reasonably established and communicated to me in writing by the Board of Directors of the Company or the Compensation Committee of the Board of Directors or recorded in the minutes of meetings of the Board of Directors of the Company or the Compensation Committee of the Board of Directors. The amount of such potential bonus and the determination of whether I have achieved such performance goals shall be made in the sole but reasonable discretion of the Board of Directors or the Compensation Committee. The performance goals for my 2006 bonus shall be established by the Board of Directors or the Compensation Committee within ninety days after the date of this Agreement, and the performance goals for subsequent calendar years shall be established on or before January 31 of such calendar year. Any such options shall vest ratably over a four-year period from the date of grant, with twenty-five percent (25%) of such shares vesting on the one-year anniversary of the date of grant, with the balance vesting over the remaining thirty-six months, so long as I remain employed by the Company.

 

4.     Termination. My employment hereunder shall terminate upon the occurrence of any of the following events:

 

(a)   my death or legal incapacity; or

 

(b)   written notice from the Company to me at any time of the termination of my employment hereunder by the Company as a result of my incapacity (other than as described in Section 4(a)) or inability to further perform services as contemplated herein for a period aggregating 90 days or more within any six-month period because the Board of Directors has determined (and such determination has been confirmed by an independent medical examination) that my physical or mental health shall have become impaired so as to make it impossible or impractical for me to perform the duties and responsibilities contemplated hereunder; or

 

(c)   written notice from the Company to me at any time of the termination of my employment hereunder by the Company for Cause (as hereafter defined). There shall be “Cause” for termination of my employment if the Company reasonably determines that any of the following have occurred:

 

(i)                           I have been convicted of, or pleaded guilty or nolo contendere to: (A) any felony; or (B) any lesser crime or offense having as its predicate element fraud or dishonesty;

 

(ii)                        I have misappropriated, stolen or converted any property of the Company;

 

(iii)                     I have knowingly and willfully perpetrated any act or omission which subjects the Company to criminal liability, or knowingly and willfully caused the Company to commit

 

2

 

a material violation of local, state or federal laws, rules or regulations;

 

(iv)                    I have breached in any material respect any provision of this Agreement, which breach (other than a breach of Section 7) has not been cured within thirty (30) days after written notice from the Company to me of the Company’s intent to terminate this Agreement specifying such breach with reasonable particularity;

 

(v)                       I have breached any provision of any other agreement between me and the Company, such breach has continued beyond applicable cure periods within such other agreement, and such breach has a material adverse effect on the Company or any of its direct or indirect subsidiaries; or

 

(vi)                    I have failed or refused to perform my duties hereunder and such failure or refusal has continued for a period of 10 days following written notice from the Company; provided that such duties are within the scope of duties typical of those of a Chief Executive Officer and not unlawful or negligent to act upon and would not be reasonably likely to cause me to breach any fiduciary duty to the Company; and provided further that the Company’s failure to achieve its business plan or financial projections shall not by itself be considered a failure or refusal to perform my duties hereunder; or

 

(d)   written notice from the Company to me at any time of the termination of my employment hereunder by the Company other than under Section 4(a), 4(b) or 4(c);

 

(e)   written notice from me to the Company within 180 days after the Company fails to pay any compensation due hereunder as and when due;

 

(f)    written notice from me to the Company within 90 days after the material diminution of my responsibilities; or

 

(g)   written notice from me to the Company of the termination of my employment hereunder by me other than as described in Section 4(e) or 4(f).

 

5.     Payments After Termination. Following termination of my employment, all payments and benefits provided to me under this Agreement shall cease as of the date of such termination, except that in the event my employment is terminated by the Company pursuant to Section 4(d) or by me pursuant to Section 4(e), then for the “Severance Pay Period” (as hereafter defined): (i) the Company shall pay me severance pay at the same rate as my base salary at the effective date of such termination, such payments to be made at the same time as my base salary otherwise would have been payable, and (ii) if and to the extent that following such termination

 

3

 

of employment I am eligible to continue to be covered under the Company’s group health insurance plan in effect at the time of such termination of employment, if any, the Company shall pay the premium for such insurance coverage on my behalf. The term “Severance Pay Period” shall mean the period commencing on the effective date of the termination of my employment under Section 4(d) or 4(e) and ending on earlier of (a) the twenty-six-week anniversary of the termination of my employment under Section 4(d) or 4(e), (b) the twelve-week anniversary of my voluntary termination of my employment under Section 4(f) above or (c) the date on which I commence employment in another position that offers similar compensation and benefits. As a condition to the Company’s obligation to make such payments to me or on my behalf, during the Severance Pay Period I will be available to consult with the Company on such matters as the Company may reasonably request without the payment of additional compensation to me by the Company; provided, however, that I will not provide more than forty (40) hours of such consulting services in any calendar month.

 

6.     Performance; Prior Obligations.

 

(a)   I agree to perform my assigned duties diligently, conscientiously, and with reasonable skill, and shall comply with all rules, procedures and standards put into effect from time to time by the Company with regard to my conduct and my access to and use of the Company’s property, equipment and facilities.

 

(b)   I hereby represent, warrant and agree (i) that I have the full right to enter into this Agreement and perform the services required of me hereunder, without any restriction whatsoever; (ii) that in the course of performing services hereunder, I will not violate the terms or conditions of any agreement between me and any third party or infringe or wrongfully appropriate any patents, copyrights, trade secrets or other intellectual property rights of any person or entity anywhere in the world; (iii) that I have not and will not disclose or use during my employment by the Company any confidential information that I acquired as a result of any previous employment or consulting arrangement or under a previous obligation of confidentiality; and (iv) that I have disclosed to the Company in writing any and all continuing obligations to previous employers or others that require me not to disclose any information to the Company.

 

7.       Confidential Information. While employed by the Company and thereafter, I shall not, directly or indirectly, use any Confidential Information (as hereinafter defined) other than pursuant to my employment by and for the benefit of the Company, or disclose or distribute any Confidential Information to anyone outside of the Company, whether by private communication, public address, publication or otherwise, or disclose or distribute any Confidential Information to anyone within the Company who has not been authorized to receive the same, except as directed in writing by an authorized representative of the Company. The term “Confidential Information” as used throughout this Agreement shall mean all trade secrets, proprietary information, know-how, data, designs, specifications, processes, prototypes, designs, customer lists and other technical or business information (and any tangible evidence, record or representation thereof), whether prepared, conceived or developed by an employee of the Company (including myself) or received by the Company from an outside source, which is in the possession of the Company (whether or not the property of the Company), which in any way relates to the present or future business of the Company, which is maintained in confidence by

 

4

 

the Company, or which might permit the Company or its customers to obtain a competitive advantage over competitors who do not have access to such trade secrets, proprietary information, or other data or information. Without limiting the generality of the foregoing, Confidential Information shall include:

 

(a)   any idea, improvement, invention, innovation, development, technical data, design, formula, device, pattern, concept, art, method, process, machine, manufacturing method, composition of matter, computer program, software, firmware, source code, object code, algorithm, subroutine, object module, schematic, model, diagram, flow chart, chip masking specification, user manual, training or service manual, product specification, plan for a new or revised product, compilation of information, or work in process, and any and all revisions and improvements relating to any of the foregoing (in each case whether or not reduced to tangible form); and

 

(b)   the name of any employee, consultant, customer or prospective customer, or any other customer or prospective customer information, any sales plan, marketing material, plan or survey, business plan or opportunity, product or development plan or specification, business proposal, financial record, or business record or other record or information relating to the present or proposed business of the Company or any customer.

 

Notwithstanding the foregoing, the term Confidential Information shall not apply to information which the Company has voluntarily disclosed to the public without restriction, or which has otherwise lawfully entered the public domain without my participation or fault.

 

I understand that the Company from time to time has in its possession information and materials which is claimed by customers and others to be proprietary and which the Company has agreed to keep confidential. I agree that all such information and materials shall be Confidential Information for purposes of this Agreement.

 

8.     Ownership and Assignment of Intellectual Property.

 

(a)   I agree that all originals and all copies of all business plans, manuscripts, drawings, prints, manuals, diagrams, letters, notes, notebooks, reports, models, records, files, memoranda, plans, sketches and all other documents and materials containing, representing, evidencing, recording, or constituting any Confidential Information (as defined in Section 7 above), however and whenever produced (whether by myself or others) during the course of my employment, shall be the sole property of the Company.

 

(b)   I agree that all Confidential Information and all other discoveries, inventions, ideas, specifications, designs, concepts, research and other information, databases, works of authorship, processes, products, methods and improvements, or parts thereof conceived, developed, or otherwise made by me, alone or jointly with others and in any way relating to or suggested by the Company’s present or proposed products, programs or services or to tasks assigned to me during the course of my employment, whether or not patentable or subject to copyright protection and whether or not reduced to tangible form or reduced to practice during the period of my employment with the Company and related to methods or devices for laproscopic entry and access, whether or not made during my regular working hours, and

 

5

 

whether or not made on the Company’s premises, and whether or not disclosed by me to the Company (hereinafter referred to as “Intellectual Property”), together with all products or services which embody or emulate any Intellectual Property, shall be the sole property of the Company.

 

(c)   I agree to, and hereby do, assign to the Company all my right, title and interest throughout the world in and to all Intellectual Property and to anything tangible which evidences, incorporates, constitutes, represents or records any Intellectual Property. I agree that all Intellectual Property shall constitute works made for hire under the copyright laws of the United States and hereby assign and, to the extent any such assignment cannot be made at present, I hereby agree to assign to the Company all copyrights, patents and other proprietary rights I may have in any Intellectual Property, together with the right to file for and/or own wholly without restriction United States and foreign patents, trademarks, and copyrights. I hereby waive all moral rights or proprietary rights in or to any Intellectual Property and, to the extent that such rights may not be waived, agree not to assert such rights against the Company or its licensees, successors or assigns. I hereby designate the Company as my agent, and grant to the Company a power of attorney with full power of substitution, which power of attorney shall be deemed coupled with an interest, for the purpose of effecting any the assignment of Intellectual Property rights to the Company.

 

(d)   I hereby certify Exhibit A sets forth any and all Confidential Information and Intellectual Property that I claim as my own or otherwise intend to exclude from this Agreement because it was developed by me prior to the date of this Agreement. I understand that after execution of this Agreement I shall have no right to exclude Confidential Information or Intellectual Property from this Agreement.

 

9.     Employee’s Obligation to Keep Records. I shall make and maintain adequate and current written records of all Intellectual Property, including notebooks and invention disclosures, which records shall be available to and remain the property of the Company at all times. I shall disclose all Intellectual Property promptly, fully and in writing to the Company immediately upon production or development of the same and at any time upon request.

 

10.  Employee’s Obligation to Cooperate. I will, at any time during my employment, or after it terminates, upon request of the Company and at the Company’s expense, execute all documents and perform all lawful acts which the Company considers necessary or advisableto secure its rights hereunder and to carry out the intent of this Agreement. Without limiting the generality of the foregoing, I will assist the Company in any reasonable and lawful manner to obtain for its own benefit patents or copyrights in any and all countries with respect to all Intellectual Property assigned pursuant to Section 8, and I will execute, when requested, patent and other applications and assignments thereof to the Company, or persons designated by it, and any other lawful documents deemed necessary by the Company to carry out the purposes of this Agreement, and I will further assist the Company in every reasonable way to enforce any patents and copyrights obtained, including, without limitation, testifying in any suit or proceeding involving any of said patents or copyrights or executing any documents deemed necessary by the Company, all without further consideration than provided for herein. It is understood that reasonable out-of-pocket expenses of my assistance incurred at the request of the Company under this Section will be reimbursed by the Company.

 

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11.  Non-Competition. During my employment with the Company I shall devote my full working time, skill, energy and efforts to the Company. During my employment with the Company, and for a period of (a) two years after the termination of my employment with the Company for Cause, or (b) one year after termination of my employment with the Company for any other reason, I shall not, on my own behalf, or as owner, manager, stockholder, consultant, director, officer, or employee of any business entity (except as a holder of not more than one (1%) percent of the stock of a publicly held company) participate, directly or indirectly, in any capacity, in any business activity that is in competition with the Company.

 

12.  Non-Solicitation. During my employment with the Company, and for a period of two years after the termination of my employment with the Company for any reason, I shall not (i) solicit, induce, attempt to hire, or hire any employee of the Company (or any person who may have been employed by the Company during the term of my employment with the Company), or assist in such hiring by any other person or business entity or encourage any such employee to terminate his or her employment with the Company, or (ii) solicit or conduct business with any customer of the Company in connection with any service or business that is competitive with any service or business in which the Company was engaged at the time of the termination of my employment.

 

13.  Return of Property. Upon termination of my employment with the Company, or at any other time upon request of the Company, I shall return promptly any and all customer or prospective customer lists, other customer or prospective customer information or related materials, computer programs, software, electronic data, specifications, drawings, blueprints, data storage devices, reproductions, sketches, notes, notebooks, memoranda, reports, records, proposals, business plans, or copies of them, other documents or materials, tools, equipment, or other property belonging to the Company or its customers which I may then possess or have under my control. I further agree that upon termination of my employment I shall not take with me any documents or data in any form or of any description containing or pertaining to Confidential Information or Intellectual Property.

 

If requested to do so by the Company, I agree to sign a Termination Certificate in which I confirm that I have complied with the requirements of the preceding paragraph and that I am aware that certain restrictions imposed upon me by this Agreement continue after termination of my employment. I understand, however, that my obligations under this Agreement will continue even if I do not sign a Termination Certificate.

 

14.  Other Obligations. I acknowledge that the Company from time to time may have agreements with other persons, including the government of the United States or other countries and agencies thereof, which impose obligations or restrictions on the Company regarding inventions made during the course of work thereunder or regarding the confidential nature of such work. I agree to be bound by all such obligations and restrictions and to take all action necessary to discharge the obligations of the Company thereunder.

 

15.  Miscellaneous

 

(a)   This Agreement contains the entire and only agreement between me and the Company with respect to the subject matter hereof, superseding any previous oral or

 

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written communications, representations, understandings, or agreements with the Company or any officer or representative hereof. In the event of any inconsistency between this Agreement and any other contract between me and the Company, the provisions of this Agreement shall prevail.

 

(b)   In the event the Company has reason to believe this Agreement has or may be breached, I acknowledge and consent that this Agreement may be disclosed to my then current or prospective employer without risk or liability to the Company.

 

(c)   My obligations under this Agreement shall survive the termination of my employment with the Company regardless of the manner of or reasons for such termination, and regardless of whether such termination constitutes a breach of any other agreement I may have with the Company. My obligations under this Agreement shall be binding upon my heirs, assigns, executors, administrators and representatives, and the provisions of this Agreement shall inure to the benefit of and be binding on the successors and assigns of the Company.

 

(d)   This Agreement is not assignable by me. In the event of a sale, transfer or other disposition of the Company’s assets or business, whether by merger, consolidation or otherwise, the Company may assign this Agreement and its rights hereunder. The Company may also assign this Agreement and its rights hereunder to any of its affiliates.

 

(e)   If any provision of this Agreement shall be determined to be unenforceable by any court of competent jurisdiction by reason of its extending for too great a period of time or over too large a geographic area or over too great a range of activities, it shall be interpreted to extend only over the maximum period of time, geographic area or range of activities as to which it may be enforceable. If, after application of the immediately preceding sentence, any provision of this Agreement shall be determined to be invalid, illegal or otherwise unenforceable by any court of competent jurisdiction, the validity, legality and enforceability of the other provisions of this Agreement shall not be affected thereby. Except as otherwise provided in this paragraph, any invalid, illegal or unenforceable provision of this Agreement shall be severable, and after any such severance, all other provisions hereof shall remain in full force and effect.

 

(f)    I acknowledge and agree that violation of this Agreement by me would cause irreparable harm to the Company not adequately compensable by money damages alone, and I therefore agree that, in addition to all other remedies available to the Company at law, in equity or otherwise, the Company shall be entitled to injunctive relief to prevent an actual or threatened violation of this Agreement and to enforce the provisions hereof, without showing or proving any actual damage to the Company or posting any bond in connection therewith.

 

(g)   No failure by the Company to insist upon strict compliance with any of the terms, covenants, or conditions hereof, and no delay or omission by the Company in exercising any right under this Agreement, will operate as a waiver of such terms, covenants, conditions or rights. A waiver or consent given by the Company on any one occasion is effective only in that instance and will not be construed as a bar to or waiver of any right on any other occasion.

 

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(h)   This Agreement may not be changed, modified, released, discharged, abandoned, or otherwise amended, in whole or in part, except by an instrument in writing signed by me and the Company.

 

(i)    This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware.

 

BY PLACING MY SIGNATURE HEREUNDER, I ACKNOWLEDGE THAT I HAVE READ ALL THE PROVISIONS OF THIS EMPLOYMENT AGREEMENT AND THAT I AGREE TO ALL OF ITS TERMS.

 

 

	
Date:
    	
April 18,   2006
    	
 
    	
/s/ Kourosh   Azarbarzin
    
	
 
    	
 
    	
Kourosh   Azarbarzin
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Address:
    	
85 Lancelot Drive
    
	
 
    	
 
    	
 
    	
Fairfield, ct 06824
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Accepted and   Agreed:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
SURGIQUEST, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Date:
    	
April 18,   2006
    	
 
    	
By:
    	
/s/ Merton G   Gollaher
    
	
 
    	
 
    	
Name:
    	
MERTON G   GOLLAHER
    
	
 
    	
 
    	
Title:
    	
SECRETARY
    

 

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EXHIBIT A

 

Excluded Confidential Information and Intellectual Property

 

All confidential information and intellectual property assigned to United States Surgical during the course of and in connection with my employment with Unites States Surgical.

 

All confidential information and intellectual property assigned to Barosense, Inc. in connection with a consulting arrangement, which relates to a novel technology called “Creating Plications to enable Endolumenal Bariatric Surgery.”

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