Document:

Form of Restricted Stock Agreement

 

Exhibit 10.3

FORM OF RESTRICTED STOCK AGREEMENT

ASPECT MEDICAL SYSTEMS, INC.

Restricted Stock Agreement

Granted Under Amended and Restated 1998 Director Equity Incentive Plan

     AGREEMENT made this [  ] day of [          ], between Aspect Medical Systems, Inc., a Delaware
corporation (the “Company”), and [insert name of director] (the “Participant”).

     For valuable consideration, receipt of which is acknowledged, the parties hereto agree as
follows:

     1. Purchase of Shares.

     The Company shall issue and sell to the Participant, and the Participant shall purchase from
the Company, subject to the terms and conditions set forth in this Agreement and in the Company’s
Amended and Restated 1998 Director Equity Incentive Plan (the “Plan”), [insert number of shares
granted] shares (the “Shares”) of common stock, $0.01 par value, of the Company (“Common Stock”),
at a purchase price of $[insert price per share] per share. The aggregate purchase price for the
Shares shall be paid by the Participant by check payable to the order of the Company or such other
method as may be acceptable to the Company. Upon receipt by the Company of payment for the Shares,
the Company shall issue to the Participant one or more certificates in the name of the Participant
for that number of Shares purchased by the Participant. The Participant agrees that the Shares
shall be subject to the purchase options set forth in Section 2 of this Agreement and the
restrictions on transfer set forth in Section 4 of this Agreement.

     2. Purchase Option.

          (a) In the event that the Participant ceases to serve as a director of the Company for any
reason or no reason, with or without cause, prior to [three years from grant date], the Company
shall have the right and option (the “Purchase Option”) to purchase from the Participant, for a sum
of $[insert price per share] per share (the “Option Price”), some or all of the Unvested Shares (as
defined below).

     “Unvested Shares” means the total number of Shares multiplied by the Applicable Percentage at
the time the Purchase Option becomes exercisable by the Company. The “Applicable Percentage” shall
be (i) 100% during the [12-month] period ending [12 months from date vesting begins] (ii) 100% less
[33.3]% for each completed [one year] period of service as a director by the Participant with the
Company from and after [date vesting begins] and (iii) zero on or after [three years from grant
date].

 

 

     3. Exercise of Purchase Option and Closing.

          (a) The Company may exercise the Purchase Option by delivering or mailing to the Participant
(or his estate), within 90 days after the termination of service as a director of the Company, a
written notice of exercise of the Purchase Option. Such notice shall specify the number of Shares
to be purchased. If and to the extent the Purchase Option is not so exercised by the giving of
such a notice within such 90-day period, the Purchase Option shall automatically expire and
terminate effective upon the expiration of such 90-day period.

          (b) Within 10 days after delivery to the Participant of the Company’s notice of the exercise
of the Purchase Option pursuant to subsection (a) above, the Participant (or his estate) shall,
pursuant to the provisions of the Joint Escrow Instructions referred to in Section 5 below, tender
to the Company at its principal offices the certificate or certificates representing the Shares
which the Company has elected to purchase in accordance with the terms of this Agreement, duly
endorsed in blank or with duly endorsed stock powers attached thereto, all in form suitable for the
transfer of such Shares to the Company. Promptly following its receipt of such certificate or
certificates, the Company shall pay to the Participant the aggregate Option Price for such Shares
(provided that any delay in making such payment shall not invalidate the Company’s exercise of the
Purchase Option with respect to such Shares).

          (c) After the time at which any Shares are required to be delivered to the Company for
transfer to the Company pursuant to subsection (b) above, the Company shall not pay any dividend to
the Participant on account of such Shares or permit the Participant to exercise any of the
privileges or rights of a stockholder with respect to such Shares, but shall, in so far as
permitted by law, treat the Company as the owner of such Shares.

          (d) The Option Price may be payable, at the option of the Company, in cancellation of all or a
portion of any outstanding indebtedness of the Participant to the Company or in cash (by check) or
both.

          (e) The Company shall not purchase any fraction of a Share upon exercise of the Purchase
Option, and any fraction of a Share resulting from a computation made pursuant to Section 2 of this
Agreement shall be rounded to the nearest whole Share (with any one-half Share being rounded
upward).

          (f) The Company may assign its Purchase Option to one or more persons or entities.

     4. Restrictions on Transfer.

          (a) The Participant shall not sell, assign, transfer, pledge, hypothecate or otherwise dispose
of, by operation of law or otherwise (collectively “transfer”) any Shares, or any interest therein,
that are subject to the Purchase Option, except that the Participant may transfer such Shares to or
for the benefit of any spouse, children, parents, uncles, aunts, siblings, grandchildren and any
other relatives approved by the Board of Directors (collectively, “Approved Relatives”) or to a
trust established solely for the benefit of the Participant and/or Approved Relatives, provided

 

 

that such Shares shall remain subject to this Agreement (including without limitation the
restrictions on transfer set forth in this Section 4 and the Purchase Option) and such permitted
transferee shall, as a condition to such transfer, deliver to the Company a written instrument
confirming that such transferee shall be bound by all of the terms and conditions of this
Agreement.

          (b) The Company shall not be required (i) to transfer on its books any of the Shares which
have been transferred in violation of any of the provisions set forth in this Agreement or (ii) to
treat as owner of such Shares or to pay dividends to any transferee to whom such Shares have been
transferred in violation of any of the provisions of this Agreement.

     5. Escrow.

     The Participant shall, upon the execution of this Agreement, execute Joint Escrow Instructions
in the form attached to this Agreement as Exhibit A. The Joint Escrow Instructions shall be
delivered to the Secretary of the Company, as escrow agent thereunder. The Participant shall
deliver to such escrow agent a stock assignment duly endorsed in blank, in the form attached to
this Agreement as Exhibit B, and hereby instructs the Company to deliver to such escrow agent, on
behalf of the Participant, the certificate(s) evidencing the Shares issued hereunder. Such
materials shall be held by such escrow agent pursuant to the terms of such Joint Escrow
Instructions.

     6. Restrictive Legends.

     All certificates representing Shares shall have affixed thereto a legend in substantially the
following form, in addition to any other legends that may be required under federal or state
securities laws:

“The shares of stock represented by this certificate are subject to
restrictions on transfer and an option to purchase set forth in a
certain Restricted Stock Agreement between the corporation and the
registered owner of these shares (or his predecessor in interest), and
such Agreement is available for inspection without charge at the
office of the Secretary of the corporation.”

     7. Provisions of the Plan. This Agreement is subject to the provisions of the Plan, a
copy of which is furnished to the Participant with this Agreement.

     8. Withholding Taxes; Section 83(b) Election.

          (a) The Participant acknowledges and agrees that the Company has the right to deduct from
payments of any kind otherwise due to the Participant any federal, state or local taxes of any kind
required by law to be withheld with respect to the purchase of the Shares by the Participant or the
lapse of the Purchase Option.

          (b) The Participant has reviewed with the Participant’s own tax advisors the federal, state,
local and foreign tax consequences of this investment and the transactions contemplated by this
Agreement. The Participant is relying solely on such advisors and not on any statements or
representations of the Company or any of its agents. The Participant understands that

 

 

the Participant (and not the Company) shall be responsible for the Participant’s own tax liability
that may arise as a result of this investment or the transactions contemplated by this Agreement.
The Participant understands that it may be beneficial in many circumstances to elect to be taxed at
the time the Shares are purchased rather than when and as the Company’s Purchase Option expires by
filing an election under Section 83(b) of the Code with the I.R.S. within 30 days from the date of
purchase.

     THE PARTICIPANT ACKNOWLEDGES THAT IT IS THE PARTICIPANT’S SOLE RESPONSIBILITY AND NOT THE
COMPANY’S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IF THE PARTICIPANT REQUESTS THE
COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON THE PARTICIPANT’S BEHALF.

     9. Miscellaneous.

          (a) No Rights to Continued Engagement. The Participant acknowledges and agrees that
the vesting of the Shares pursuant to Section 2 hereof is earned only by continuing service as a
director of the Company. The Participant further acknowledges and agrees that the transactions
contemplated hereunder and the vesting schedule set forth herein do not constitute an express or
implied promise of continued engagement as a director for the vesting period, for any period, or at
all.

          (b) Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision of this Agreement,
and each other provision of this Agreement shall be severable and enforceable to the extent
permitted by law.

          (c) Waiver. Any provision for the benefit of the Company contained in this Agreement
may be waived, either generally or in any particular instance, by the Board of Directors of the
Company.

          (d) Binding Effect. This Agreement shall be binding upon and inure to the benefit of
the Company and the Participant and their respective heirs, executors, administrators, legal
representatives, successors and assigns, subject to the restrictions on transfer set forth in
Section 4 of this Agreement.

          (e) Notice. All notices required or permitted hereunder shall be in writing and
deemed effectively given upon personal delivery or five days after deposit in the United States
Post Office, by registered or certified mail, postage prepaid, addressed to the other party hereto
at the address shown beneath his or its respective signature to this Agreement, or at such other
address or addresses as either party shall designate to the other in accordance with this Section
9(e).

          (f) Pronouns. Whenever the context may require, any pronouns used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns
and pronouns shall include the plural, and vice versa.

 

 

          (g) Entire Agreement. This Agreement and the Plan constitute the entire agreement
between the parties, and supersedes all prior agreements and understandings, relating to the
subject matter of this Agreement.

          (h) Amendment. This Agreement may be amended or modified only by a written instrument
executed by both the Company and the Participant.

          (i) Governing Law. This Agreement shall be construed, interpreted and enforced in
accordance with the internal laws of the State of Delaware without regard to any applicable
conflicts of laws.

          (j) Participant’s Acknowledgments. The Participant acknowledges that he or she: (i)
has read this Agreement; (ii) has been represented in the preparation, negotiation, and execution
of this Agreement by legal counsel of the Participant’s own choice or has voluntarily declined to
seek such counsel; (iii) understands the terms and consequences of this Agreement; (iv) is fully
aware of the legal and binding effect of this Agreement; and (v) understands that the law firm of
Wilmer Cutler Pickering Hale and Dorr LLP, is acting as counsel to the Company in connection with
the transactions contemplated by the Agreement, and is not acting as counsel for the Participant.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 	 	 	 
	 	 	ASPECT MEDICAL SYSTEMS, INC.
	 
	 	 	 	 
	

	 	By:
	 	 
	

	 	     Title:
	 	 
	

	 	Address:	 	     141 Needham Street
	

	 	 	 	     Newton, MA 02464
	 
	 	 	 	 
	 	 	 
	 	 	[Name of Participant]
	 	 	Address:	 	 
	

	 	 	 	 

 

 

Exhibit A

ASPECT MEDICAL SYSTEMS, INC.

Joint Escrow Instructions

__________, 2005

                                        

[Secretary]

Aspect Medical Systems, Inc.

141 Needham Street

Newton, MA 02464

Dear Sir:

     As Escrow Agent for Aspect Medical Systems, Inc., a Delaware corporation, and its successors
in interest under the Restricted Stock Agreement (the “Agreement”) of even date herewith, to which
a copy of these Joint Escrow Instructions is attached (the “Company”), and the undersigned person
(“Holder”), you are hereby authorized and directed to hold the documents delivered to you pursuant
to the terms of the Agreement in accordance with the following instructions:

     1. Appointment. Holder irrevocably authorizes the Company to deposit with you any
certificates evidencing Shares (as defined in the Agreement) to be held by you hereunder and any
additions and substitutions to said Shares. For purposes of these Joint Escrow Instructions,
“Shares” shall be deemed to include any additional or substitute property. Holder does hereby
irrevocably constitute and appoint you as his attorney-in-fact and agent for the term of this
escrow to execute with respect to such Shares all documents necessary or appropriate to make such
Shares negotiable and to complete any transaction herein contemplated. Subject to the provisions
of this Section 1 and the terms of the Agreement, Holder shall exercise all rights and privileges
of a stockholder of the Company while the Shares are held by you.

     2. Closing of Purchase.

          (a) Upon any purchase by the Company of the Shares pursuant to the Agreement, the Company
shall give to Holder and you a written notice specifying the purchase price for the Shares, as
determined pursuant to the Agreement, and the time for a closing hereunder (the “Closing”) at the
principal office of the Company. Holder and the Company hereby irrevocably authorize and direct
you to close the transaction contemplated by such notice in accordance with the terms of said
notice.

          (b) At the Closing, you are directed (i) to date the stock assignment form or forms necessary
for the transfer of the Shares, (ii) to fill in on such form or forms the number of Shares being
transferred, and (iii) to deliver same, together with the certificate or certificates evidencing
the Shares to be transferred, to the Company against the simultaneous delivery to you of the
purchase price for the Shares being purchased pursuant to the Agreement.

 

 

     3. Withdrawal. The Holder shall have the right to withdraw from this escrow any
Shares as to which the Purchase Option (as defined in the Agreement) has terminated or expired.

     4. Duties of Escrow Agent.

          (a) Your duties hereunder may be altered, amended, modified or revoked only by a writing
signed by all of the parties hereto.

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

          (c) You are hereby expressly authorized to disregard any and all warnings given by any of the
parties hereto or by any other person or entity, excepting only orders or process of courts of law,
and are hereby expressly authorized to comply with and obey orders, judgments or decrees of any
court. If you are uncertain of any actions to be taken or instructions to be followed, you may
refuse to act in the absence of an order, judgment or decrees of a court. In case you obey or
comply with any such order, judgment or decree of any court, you shall not be liable to any of the
parties hereto or to any other person or entity, by reason of such compliance, notwithstanding any
such order, judgment or decree being subsequently reversed, modified, annulled, set aside, vacated
or found to have been entered without jurisdiction.

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

          (e) You shall be entitled to employ such legal counsel and other experts as you may deem
necessary properly to advise you in connection with your obligations hereunder and may rely upon
the advice of such counsel.

          (f) Your rights and responsibilities as Escrow Agent hereunder shall terminate if (i) you
cease to be [Secretary] of the Company or (ii) you resign by written notice to each party. In the
event of a termination under clause (i), your successor as [Secretary] shall become Escrow Agent
hereunder; in the event of a termination under clause (ii), the Company shall appoint a successor
Escrow Agent hereunder.

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

 

 

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

          (i) These Joint Escrow Instructions set forth your sole duties with respect to any and all
matters pertinent hereto and no implied duties or obligations shall be read into these Joint Escrow
Instructions against you.

          (j) The Company shall indemnify you and hold you harmless against any and all damages, losses,
liabilities, costs, and expenses, including attorneys’ fees and disbursements, (including without
limitation the fees of counsel retained pursuant to Section 4(e) above, for anything done or
omitted to be done by you as Escrow Agent in connection with this Agreement or the performance of
your duties hereunder, except such as shall result from your gross negligence or willful
misconduct.

     5. Notice. Any notice required or permitted hereunder shall be given in writing and
shall be deemed effectively given upon personal delivery or upon deposit in the United States Post
Office, by registered or certified mail with postage and fees prepaid, addressed to each of the
other parties thereunto entitled at the following addresses, or at such other addresses as a party
may designate by ten days’ advance written notice to each of the other parties hereto.

	 	 	 	 	 
	

	 	COMPANY:
	 	Notices to the Company shall be sent to the address set
forth in the salutation hereto, Attn: President
	 
	 	 	 	 
	

	 	HOLDER:
	 	Notices to Holder shall be sent to the address set forth
below Holder’s signature below.
	 
	 	 	 	 
	

	 	ESCROW AGENT:
	 	Notices to the Escrow Agent shall be sent to the address set
forth in the salutation hereto.

     6. Miscellaneous.

          (a) By signing these Joint Escrow Instructions, you become a party hereto only for the purpose
of said Joint Escrow Instructions, and you do not become a party to the Agreement.

          (b) This instrument shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns.

 

 

	 	 	 	 	 	 
	 	 	Very truly yours,
	 
	 	 	 	 
	 	 	ASPECT MEDICAL SYSTEMS, INC.
	 
	 	 	 	 
	

	 	By:
	 	 
	

	 	Title:
	 	 
	 
	 	 	 	 
	

	 	HOLDER:	 	 
	 
	 	 	 	 
	 	 	 
	

	 	(Signature)	 	 
	 
	 	 	 	 
	 	 	 
	 	 	Print Name
	 
	 	 	 	 
	

	 	Address:
	 	 
	

	 	 	 	 
	 
	 	 	 	 
	 	 	Date Signed:	 	 

ESCROW AGENT:

 

 

Exhibit B

(STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE)

     FOR VALUE RECEIVED, I hereby sell, assign and transfer unto                                          (                    )
shares of Common Stock, $0.01 par value per share, of Aspect Medical Systems, Inc. (the
“Corporation”) standing in my name on the books of the Corporation represented by Certificate(s)
Number                      herewith, and do hereby irrevocably constitute and appoint                                         
attorney to transfer the said stock on the books of the Corporation with full power of substitution
in the premises.

	 	 	 	 	 	 
	

	 	Dated:
	 	 
	 
	 	 	 	 
	IN PRESENCE OFAmendment to the 2001 Stock Incentive Plan

 

 Exhibit 10.4

ASPECT MEDICAL SYSTEMS, INC.

AMENDMENT TO

2001 STOCK INCENTIVE PLAN

     
The 2001 Stock Incentive Plan (the “2001
Stock Plan”) of Aspect Medical Systems, Inc. is hereby
amended as follows:

     
1. Section 7(c) of the 2001 Stock Plan
is deleted in its entirety and a new Section 7(c) is
inserted as follows:

     
“(c) Acquisition and Change in
Control Events

		
	 	     
    (1) Definitions
    

		
	 	     
    (a) An “Acquisition Event” shall
    mean:
    

		
	 	     
    (i) any merger or consolidation of the
    Company with or into another entity as a result of which all of
    the Common Stock of the Company is converted into or exchanged
    for the right to receive cash, securities or other property or
    is cancelled; or
    
	 
	 	     
    (ii) any exchange of all of the Common Stock
    of the Company for cash, securities or other property pursuant
    to a share exchange transaction.
    

		
	 	     
    (b) A “Change in Control Event”
    shall mean:
    

		
	 	     
    (i) the acquisition by an individual, entity
    or group (within the meaning of Section 13(d)(3) or
    14(d)(2) of the Securities Exchange Act of 1934, as amended (the
    “Exchange Act”)) (a “Person”) of beneficial
    ownership of any capital stock of the Company if, after such
    acquisition, such Person beneficially owns (within the meaning
    of Rule 13d-3 promulgated under the Exchange Act) 30% or
    more of either (x) the then-outstanding shares of common
    stock of the Company (the “Outstanding Company Common
    Stock”) or (y) the combined voting power of the
    then-outstanding securities of the Company entitled to vote
    generally in the election of directors (the “Outstanding
    Company Voting Securities”); provided, however, that
    for purposes of this subsection (i), the following
    acquisitions shall not constitute a Change in Control Event:
    (A) any acquisition directly from the Company (excluding an
    acquisition pursuant to the exercise, conversion or exchange of
    any security exercisable for, convertible into or exchangeable
    for common stock or voting securities of the Company, unless the
    Person exercising, converting or exchanging such security
    acquired such security directly from the Company or an
    underwriter or agent of the Company), (B) any acquisition
    by any employee benefit plan (or related trust) sponsored or
    maintained by the Company or any corporation controlled by the
    Company, or (C) any acquisition by any corporation pursuant
    to a Business Combination (as defined below) which complies with
    clauses (x) and (y) of subsection (iii) of
    this definition; or
    
	 
	 	     
    (ii) such time as the Continuing Directors
    (as defined below) do not constitute a majority of the Board
    (or, if applicable, the Board of Directors of a successor
    corporation to the Company), where the term “Continuing
    Director” means at any date a member of the Board
    (x) who was a member of the Board on March 25, 2005 or
    (y) who was nominated or elected subsequent to such date by
    at least a majority of the directors who were Continuing
    Directors at the time of such nomination or election or whose
    election to the Board was recommended or endorsed by at least a
    majority of the directors who were Continuing Directors at the
    time of such nomination or election; provided, however,
    that there shall be excluded from this clause (y) any
    individual whose initial assumption of office occurred as a
    result of an actual or threatened election contest with respect
    to the election or removal of directors or other actual or
    

 

 

		
	 	
    threatened solicitation of proxies or consents,
    by or on behalf of a person other than the Board; or
    
	 
	 	     
    (iii) the consummation of a merger,
    consolidation, reorganization, recapitalization or share
    exchange involving the Company or a sale or other disposition of
    all or substantially all of the assets of the Company (a
    “Business Combination”), unless, immediately following
    such Business Combination, each of the following two conditions
    is satisfied: (x) all or substantially all of the
    individuals and entities who were the beneficial owners of the
    Outstanding Company Common Stock and Outstanding Company Voting
    Securities immediately prior to such Business Combination
    beneficially own, directly or indirectly, more than 50% of the
    then-outstanding shares of common stock and the combined voting
    power of the then-outstanding securities entitled to vote
    generally in the election of directors, respectively, of the
    resulting or acquiring corporation in such Business Combination
    (which shall include, without limitation, a corporation which as
    a result of such transaction owns the Company or substantially
    all of the Company’s assets either directly or through one
    or more subsidiaries) (such resulting or acquiring corporation
    is referred to herein as the “Acquiring Corporation”)
    in substantially the same proportions as their ownership of the
    Outstanding Company Common Stock and Outstanding Company Voting
    Securities, respectively, immediately prior to such Business
    Combination and (y) no Person (excluding any employee
    benefit plan (or related trust) maintained or sponsored by the
    Company or by the Acquiring Corporation) beneficially owns,
    directly or indirectly, 30% or more of the then-outstanding
    shares of common stock of the Acquiring Corporation, or of the
    combined voting power of the then-outstanding securities of such
    corporation entitled to vote generally in the election of
    directors (except to the extent that such ownership existed
    prior to the Business Combination).
    

		
	 	     
    (c) “Good Reason” shall mean any
    reduction of 10% of more in the annual cash compensation payable
    to the Participant from and after such Change in Control (which
    in the case of sales personnel shall mean the average cash
    compensation paid to such Participant for the two calendar years
    immediately prior to such Change in Control), or the relocation
    of the place of business at which the Participant is principally
    located to a location that is greater than 50 miles from
    its location immediately prior to the Acquisition Event or
    Change in Control Event.
    
	 
	 	     
    (d) “Cause” shall mean any
    (i) willful failure by the Participant, which failure is
    not cured within 30 days of written notice to the
    Participant from the Company, to perform his or her material
    responsibilities to the Company or (ii) willful misconduct
    by the Participant which affects the business reputation of the
    Company. The Participant shall be considered to have been
    discharged for “Cause” if the Company determines,
    within 30 days after the Participant’s resignation,
    that discharge for Cause was warranted.
    
	 
	 	     
    (e) “CEO” shall mean the Chief
    Executive Officer of the Company.
    
	 
	 	     
    (f) “Senior Management Employees”
    shall mean the executive officers of the Company who report
    directly to the CEO or the Board of Directors of the Company.
    
	 
	 	     
    (g) “Non-Management Employees”
    shall mean all of the employees of the Company other than the
    CEO and the Senior Management Employees.
    

		
	 	     
    (2) Effect on Options
    

		
	 	     
    (a) Acquisition Event. Upon the occurrence
    of an Acquisition Event (regardless of whether such event also
    constitutes a Change in Control Event), or the execution by the
    Company of any agreement with respect to an Acquisition Event
    (regardless of whether such event will result in a Change in
    Control Event), the Board shall provide that all outstanding
    Options shall be assumed, or equivalent options shall be
    substituted, by the acquiring or succeeding corporation (or an
    affiliate thereof); provided that if such Acquisition
    Event also constitutes a Change in Control Event, except
    

 

 

		
	 	
    to the extent specifically provided to the
    contrary in the instrument evidencing any Option or any other
    agreement between a Participant and the Company
    
	 
	 	     
    then (1)
    

		
	 	     
    (i) in the case of the CEO, all of such
    assumed or substituted options shall become exercisable in full
    upon the date which is 12 full months after the date of the
    Acquisition Event;
    
	 
	 	     
    (ii) in the case of the Senior Management
    Employees, all of such assumed or substituted options shall
    become exercisable in full upon the date which is 15 full months
    after the date of the Acquisition Event; and
    
	 
	 	     
    (iii) in the case of Non-Management
    Employees, the vesting of all of such assumed or substituted
    options shall be accelerated by one year such that (x) all
    of such assumed or substituted options which would have been
    exercisable upon the date which is 12 full months after the date
    of the Acquisition Event shall be immediately exercisable in
    full upon such Acquisition Event and (y) the remaining
    shares shall, after such Acquisition Event, continue to become
    vested in accordance with the vesting schedule set forth in such
    option but after giving effect to the acceleration of all
    vesting by one year;
    

		
	 	     
    and (2)
    

		
	 	     
    such assumed or substituted options shall become
    immediately exercisable in full if, on or prior to (i) the
    first anniversary of the date of the consummation of the
    Acquisition Event, in the case of the CEO and Non-Management
    Employees and (ii) the end of 15 full months after the
    Acquisition Event, in the case of Senior Management Employees,
    the Participant’s employment with the Company or the
    acquiring or succeeding corporation is terminated for Good
    Reason by the Participant or is terminated without Cause by the
    Company or the acquiring or succeeding corporation.
    

		
	 	     
    For purposes hereof, an Option shall be
    considered to be assumed if, following consummation of the
    Acquisition Event, the Option confers the right to purchase, for
    each share of Common Stock subject to the Option immediately
    prior to the consummation of the Acquisition Event, the
    consideration (whether cash, securities or other property)
    received as a result of the Acquisition Event by holders of
    Common Stock for each share of Common Stock held immediately
    prior to the consummation of the Acquisition Event (and if
    holders were offered a choice of consideration, the type of
    consideration chosen by the holders of a majority of the
    outstanding shares of Common Stock); provided, however, that if
    the consideration received as a result of the Acquisition Event
    is not solely common stock of the acquiring or succeeding
    corporation (or an affiliate thereof), the Company may, with the
    consent of the acquiring or succeeding corporation, provide for
    the consideration to be received upon the exercise of Options to
    consist solely of common stock of the acquiring or succeeding
    corporation (or an affiliate thereof) equivalent in value (as
    determined by the Board) to the per share consideration received
    by holders of outstanding shares of Common Stock as a result of
    the Acquisition Event.
    
	 
	 	     
    Notwithstanding the foregoing, if the acquiring
    or succeeding corporation (or an affiliate thereof) does not
    agree to assume, or substitute for, such Options, then the Board
    shall, upon written notice to the Participants, provide that all
    then unexercised Options will become exercisable in full as of a
    specified time prior to the Acquisition Event and will terminate
    immediately prior to the consummation of such Acquisition Event,
    except to the extent exercised by the Participants before the
    consummation of such Acquisition Event; provided, however, that
    in the event of an Acquisition Event under the terms of which
    holders of Common Stock will receive upon consummation thereof a
    cash payment for each share of Common Stock surrendered pursuant
    to such Acquisition Event (the “Acquisition Price”),
    then the Board may instead provide that all outstanding Options
    shall terminate upon consummation of such Acquisition Event and
    that each Participant shall receive, in exchange therefor, a
    cash payment equal to the amount (if any) by which (A) the
    Acquisition Price
    

 

 

		
	 	
    multiplied by the number of shares of Common
    Stock subject to such outstanding Options (whether or not then
    exercisable), exceeds (B) the aggregate exercise price of
    such Options.
    
	 
	 	     
    (b) Change in Control Event that is not
    an Acquisition Event. Upon the occurrence of a Change in
    Control Event that does not also constitute an Acquisition
    Event, except to the extent specifically provided to the
    contrary in the instrument evidencing any Option or any other
    agreement between a Participant and the Company,
    
	 
	 	     
    then (1)
    

		
	 	     
    (i) in the case of the CEO, all of such
    options shall become exercisable in full upon the date which is
    12 full months after the date of the Change in Control Event;
    
	 
	 	     
    (ii) in the case of the Senior Management
    Employees, all of such options shall become exercisable in full
    upon the date which is 15 full months after the date of the
    Change in Control Event; and
    
	 
	 	     
    (iii) in the case of Non-management
    Employees, the vesting of all of such options shall be
    accelerated by one year such that (x) all of such assumed
    or substituted options which would have been exercisable upon
    the date which is 12 full months after the date of the Change in
    Control Event shall be immediately exercisable in full upon such
    Change in Control Event and (y) the remaining shares shall,
    after such Change in Control Event, continue to become vested in
    accordance with the vesting schedule set forth in such option
    but after giving effect to the acceleration of all vesting by
    one year;
    

		
	 	     
    and (2)
    

		
	 	     
    such options shall be immediately exercisable in
    full if, on or prior to (i) the first anniversary of the
    date of the consummation of the Change in Control Event, in the
    case of the CEO and Non-Management Employees and (ii) the
    end of 15 full months after the Change in Control Event, in the
    case of Senior Management Employees, the Participant’s
    employment with the Company or the acquiring or succeeding
    corporation is terminated for Good Reason by the Participant or
    is terminated without Cause by the Company or the acquiring or
    succeeding corporation.
    

		
	 	     
    (3) Effect on Restricted Stock Awards
    

		
	 	     
    (a) Acquisition Event that is not a
    Change in Control Event. Upon the occurrence of an
    Acquisition Event that is not a Change in Control Event, the
    repurchase and other rights of the Company under each
    outstanding Restricted Stock Award shall inure to the benefit of
    the Company’s successor and shall apply to the cash,
    securities or other property which the Common Stock was
    converted into or exchanged for pursuant to such Acquisition
    Event in the same manner and to the same extent as they applied
    to the Common Stock subject to such Restricted Stock Award.
    
	 
	 	     
    (b) Change in Control Event. Upon the
    occurrence of a Change in Control Event (regardless of whether
    such event also constitutes an Acquisition Event), except to the
    extent specifically provided to the contrary in the instrument
    evidencing any Restricted Stock Award or any other agreement
    between a Participant and the Company,
    

		
	 	     
    (1) in the case of the CEO, the vesting
    schedule of all Restricted Stock Awards shall be accelerated so
    that all of the shares subject to the Restricted Stock Award
    shall become free and clear of all conditions and restrictions
    upon the date which is 12 full months after the date of the
    Change in Control Event;
    
	 
	 	     
    (2) in the case of Senior Management
    Employees, the vesting schedule of all Restricted Stock Awards
    shall be accelerated so that all of the shares subject to the
    Restricted Stock Award shall be free and clear of all conditions
    and restrictions upon the date which is 15 full months after the
    date of the Change in Control Event;
    

 

 

		
	 	     
    (3) in the case of Non-Management Employees,
    the vesting schedule of all Restricted Stock Awards shall be
    accelerated by one year such that (i) all the shares
    subject to the Restricted Stock Award which would have been free
    and clear of all conditions and restrictions upon the date which
    is 12 full months after the date of Change in Control Event
    shall be immediately free and clear of all conditions and
    restrictions on the date of such Change in Control Event and
    (ii) all of the remaining shares subject to the Restricted
    Stock Award shall, after such Change in Control Event, continue
    to become free and clear of all conditions and restrictions in
    accordance with the vesting schedule set forth in such
    Restricted Stock Award but after giving effect to the
    acceleration of all vesting by one year.
    
	 
	 	     
    (4) In addition, each such Restricted Stock
    Award shall immediately become free from all conditions and
    restrictions if, (A) on or prior to the first anniversary
    of the date of the consummation of the Change in Control Event,
    in the case of the CEO and Non-Management Employees and
    (B) the end of 15 full months after the Change in Control
    Event, in the case of Senior Management Employees, the officer
    or employee’s employment with the Company or the acquiring
    or succeeding corporation is terminated for Good Reason by the
    officer or employee or is terminated without Cause by the
    Company or the acquiring or succeeding corporation.
    

     
2. The following new Subsection,
Subsection 9(f), is hereby inserted into the 2001 Stock
Plan immediately following Subsection 9(e):

			
	 	“(f) 	
    Compliance with Code
    Section 409A. No Award shall
    provide for deferral of compensation that does not comply with
    Section 409A of the Code, unless the Board, at the time of
    grant, specifically provides that the Award is not intended to
    comply with Section 409A of the Code.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00085-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00085-of-00352.parquet"}]]