Document:

exv10w14

Exhibit 10.14

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND SUCH LAWS.

			
	 	 	 
	Dated:                     
	 	                     Shares
	 	 	 
	 
	 	Certificate No. W-___

PRIMO WATER CORPORATION

COMMON STOCK PURCHASE WARRANT

     THIS CERTIFIES THAT for value received, subject to the terms and conditions set forth herein,
                    , or its/his/her permitted assigns (the “Holder”), is entitled to purchase up to
                     shares of Common Stock (the “Common Stock”) of Primo Water Corporation, a Delaware
corporation (the “Company”), at a purchase price of One Dollar and 25/100 ($1.25) per share (as
adjusted from time to time as herein provided, the “Purchase Price”) upon presentation of this
Warrant, payment of the Purchase Price for the shares of Common Stock purchased at the principal
office of the Company or at such other place as shall have been designated by the Company, and
subject to the vesting provisions set forth in Section 1.b. hereof. The number of shares of Common
Stock which are purchasable hereunder, as adjusted pursuant to the provisions below, is hereinafter
referred to as the “Warrant Shares.”

     This Warrant is subject to the following provisions:

     1. Exercise of Warrant.

          a. The vested portion of this Warrant may be exercised, in whole or in part, at the Holder’s
election, at any time prior to expiration of the Warrant (subject to Section 6 hereof), which
expiration shall occur upon the earlier of (i) the sixteenth (16th) day after delivery
of a notice of an Exercise Event (as defined below), (ii)                     , or (iii) five (5)
years after the date of exercise of either the put or repurchase rights with respect to the Series
B Non-voting Non-convertible Preferred Stock of the Company (the “Series B Preferred”), as set
forth in that certain Amended and Restated Certificate of Incorporation of the Company, dated April
27, 2006 (the “Charter”). The Holder may exercise the vested portion of this Warrant by delivery
to the Company of a written notice of such exercise and the tender to the Company of the Purchase
Price for the Warrant Shares purchasable pursuant to such exercise of the vested portion of this
Warrant. In case of an exercise to purchase less than all Warrant Shares purchasable hereunder,
the Company shall cancel this Warrant and shall execute and deliver a new warrant of like tenor for
the balance of the shares which may be purchased hereunder. As used herein, “Exercise Event” means
(i) the closing of a public offering of shares of Common

 

 

Stock resulting in aggregate proceeds to the Company of an amount greater than Thirty Million
Dollars ($30,000,000) (a “Qualified Public Offering”), or (ii) closing of a consolidation, merger
or other corporate reorganization, transfer of voting power or sale of all or substantially all of
the assets of the Company, which, pursuant to the Charter, may be deemed by the holders of Series B
Preferred as a liquidation, dissolution or winding up of the Company.

          b. Right to Exercise. Since the Holder’s Subscription Commitment (as defined and set
forth in that certain Subscription Agreement, dated as of the date hereof, by and between the
Company and the Holder (the “Subscription Agreement”)) may be paid in multiple tranches, and the
total amount of the Warrant Shares purchasable by exercise hereof is calculated based upon payment
of the Holder’s total Subscription Commitment, this Warrant shall vest according to this Section
1.b. At any and all times, this Warrant shall vest and become exercisable in cumulative amounts
(expressed as a percentage of the total Warrant) equal to that percentage of the total Subscription
Commitment as is paid by the Holder to the Company at any such time, with such applicable
percentage of this Warrant becoming vested and exercisable immediately upon each payment towards
the total Subscription Commitment. This Warrant shall become fully vested and exercisable upon
Holder’s payment to the Company of the entire Subscription Commitment. The foregoing vesting
provision is cumulative, such that the Warrant Shares as to which the Warrant has become
exercisable, may be purchased pursuant to the exercise of this Warrant at any subsequent date prior
to the termination or expiration of this Warrant.

     2. Compliance with Securities Laws. The Holder of this Warrant, by its/his/her
acceptance hereof, represents and acknowledges that this Warrant is acquired for the Holder’s own
account for investment purposes only and that this Warrant and the Warrant Shares issuable upon
exercise hereof, respectively, have not been registered under the Securities Act of 1933, as
amended. Accordingly, any transfer of this Warrant and such Warrant Shares shall be subject to
legal restrictions. The Holder agrees that it/he/she will not offer for sale or sell, assign or
pledge, or otherwise dispose of (except through exercise) this Warrant or any Warrant Shares issued
to the Holder pursuant to exercise hereof, except in accordance with applicable securities laws.

     3. Shares of Common Stock in Reserve. The Company agrees at all times to reserve a
sufficient number of authorized but unissued shares of Common Stock for the purposes of the
exercise of this Warrant, and to take such action as may be necessary to ensure that all Warrant
Shares issued upon exercise of this Warrant will be duly and validly authorized and issued and
fully paid and nonassessable.

     4. No Voting or Dividend Rights: This Warrant shall not entitle the Holder to any
voting rights or other rights as a stockholder of the Company, and no dividend or interest shall be
payable or accrued in respect of this Warrant or the interest represented hereby or the Warrant
Shares which may be purchased hereunder until and unless, and except to the extent that, this
Warrant shall be exercised.

     5. Adjustment of Purchase Price and Number of Shares:

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          a. The Purchase Price hereof shall be subject to adjustment from time to time. In case
the Company shall (a) pay a dividend on its Common Stock in Common Stock, (b) subdivide its
outstanding shares of Common Stock, or (c) combine its outstanding shares of Common Stock
into a smaller number of shares, then, in such an event, the Purchase Price in effect
immediately prior thereto shall be adjusted proportionately so that the adjusted Purchase
Price will bear the same relation to the Purchase Price in effect immediately prior to any
such event as the total number of shares of Common Stock outstanding immediately prior to
any such event shall bear to the total number of shares of Common Stock outstanding
immediately after such event. An adjustment made pursuant to this Subsection 5.a. (a) shall
become effective retroactively immediately after the record date in the case of a dividend
and (b) shall become effective immediately after the effective date in the case of a
subdivision or combination. The Purchase Price, as so adjusted, shall be readjusted in the
same manner upon the happening of any successive event or events described herein.

          b. Upon each adjustment of the Purchase Price pursuant to subsection 5.a., the number
of shares of Common Stock purchasable upon exercise of this Warrant shall be adjusted to the
number of shares of Common Stock, rounded down to the nearest whole share, obtained by
multiplying (i) the number of shares of Common Stock purchasable immediately prior to such
adjustment upon the exercise of this Warrant, (ii) by the Purchase Price in effect prior to
such adjustment, and (iii) dividing the product so obtained by the new Purchase Price.

          c. In case of any capital reorganization of the Company, or of any reclassification of
the Common Stock, this Warrant shall be exercisable after such capital reorganization or
reclassification upon the terms and conditions specified in this Warrant, for the number of
shares of stock or other securities which the Common Stock issuable (at the time of such
capital reorganization or reclassification) upon exercise of this Warrant would have been
entitled to receive upon such capital reorganization or reclassification if such exercise
had taken place immediately prior to such action. The subdivision or combination of shares
of Common Stock at any time outstanding into a greater or lesser number of shares of Common
Stock shall not be deemed to be a reclassification of the Common Stock of the Company for
the purposes of this Subsection 5.c.

          d. Whenever the Purchase Price is adjusted as herein provided, the Company shall
compute the adjusted Purchase Price in accordance with Subsection 5.a. and shall prepare a
certificate signed by its chief financial officer setting forth the adjusted Purchase Price
and showing in reasonable detail the method of such adjustment and the fact requiring the
adjustment and upon which such calculation is based, and such certificate shall forthwith be
forwarded to the Holder.

          e. The form of this Warrant need not be changed because of any change in the Purchase
Price pursuant to this Section 5, and any Warrant issued after such change may state the
same Purchase Price and the same number of shares of Common Stock as

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are stated in this Warrant as initially issued. The Company, however, may at any time
in its sole discretion (which shall be conclusive) make any change in the form of this
Warrant that it may deem appropriate and that does not affect the substance thereof. Any
Warrant thereafter issued or countersigned, whether in exchange or substitution for an
outstanding Warrant or otherwise, may be in the form as so changed.

     6. Notices to Holder of an Exercise Event. In case of an Exercise Event, the Company
shall use reasonable efforts to cause to be delivered to the Holder at least fifteen (15) days
prior to the date of consummation of such Exercise Event a notice setting forth (i) the occurrence
of the Exercise Event, (ii) the anticipated date of consummation of such Exercise Event, and (iii)
a summary of the material terms and conditions of such Exercise Event. For purposes hereof,
notices or other communications hereunder shall be in writing, and shall be deemed effectively
given upon personal delivery, upon confirmed delivery by facsimile, on the next day following
delivery by a reputable overnight courier, or on the third day following mailing by registered or
certified mail, return receipt requested, postage prepaid, addressed to the address set forth in
the Company’s records.

     7. Replacement Warrant for Lost Certificate: Upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and,
in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to the
Company, and reimbursement to the Company of all reasonable expenses incidental thereto (and upon
surrender and cancellation of this Warrant if mutilated), the Company will execute and deliver a
new warrant of like tenor, in lieu of this Warrant.

     8. Assignability and Binding Effect: This Warrant shall be binding upon and inure to
the benefit of any and all successors and assigns of the Holder and the Company; provided, however,
that no Assignment (as defined below) may be made by the Holder except for an Assignment to an
Approved Party (as defined below). Any Assignment made without first complying with the provisions
of this Section 8 shall be void and of no legal effect.

     9. Amendment and Waiver. Except as otherwise provided herein, the provisions of this
Warrant may be amended and the Company may take any action herein prohibited, or omit to perform
any act herein required to be performed by it, only if the Company has obtained the prior written
consent of the Holder.

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     10. Entire Agreement. This Warrant and the Subscription Agreement supersede any and
all other understandings and agreements, either oral or in writing, between the parties hereto with
respect to the subject matter hereof, and constitute the only agreement between the parties with
respect to such subject matter.

     11. Definitions. As used herein:

     a. “Affiliates” means with respect to any Person, any Person directly or indirectly
controlling, controlled by, or under common control with such Person. For the purposes of
this definition, “control” (including correlative meanings, such as the terms “controlling”
“controlled by” and “under common control with”), as applied to any Person, means the
possession, directly, indirectly or beneficially, of either: (i) fifty-one (51%) equity
ownership; or (ii) the power to direct or cause the direction of the management and policies
of that Person, whether through the ownership of voting securities or by contract or
otherwise.

     b. “Approved Party” means: (i) Affiliates; (ii) parents (including step-parents and
adoptive parents) and children (including step-children, adopted children and children of
the half-blood); (iii) partners or retired partners of a partnership, or members or retired
members in a limited liability company; or (iv) Persons to whom an Assignment is made with
the prior written approval of the Company. The Company’s approval shall not be unreasonably
withheld, provided that, it may refuse such approval if the proposed assignee is reasonably
believed by the Company to be a competitor of the Company.

     c. “Assignment” means any sale, assignment, gift, pledge, encumbrance or other transfer
or disposition of this Warrant;

     d. “Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political subdivision
thereof.

     12. Governing Law. THIS WARRANT SHALL BE GOVERNED BY, CONSTRUED IN ACCORDANCE WITH,
AND ENFORCED UNDER, THE LAWS OF THE STATE OF NORTH CAROLINA, WITHOUT REGARD TO THE PRINCIPLES OF
CONFLICTS OF LAW OF SUCH STATE.

[THE NEXT PAGE IS THE SIGNATURE PAGE]

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     IN WITNESS WHEREOF, the Company has executed this Warrant under seal effective as of the date
first above written.

	 	 	 	 	 
	 	COMPANY:

PRIMO WATER CORPORATION

 	 
	 	By:  	 	 
	 	 	Its:exv10w15

Exhibit 10.15

PRIMIER CORPORATION

2004 STOCK PLAN

     1. PURPOSE. The purpose of this Plan is to advance the interests of Primier Corporation, a Delaware
corporation (the “Company”), by providing an opportunity to its selected key employees (as defined
in Section 2(b)) and consultants (as defined in Section 2(a)) to purchase shares (the “Shares”) of
the Common stock, par value $0.00l per share (the “Common Stock”), of the Company. By encouraging
stock ownership, the Company seeks to attract, retain and motivate key employees and consultants.
It is intended that this purpose will be effected by the granting of (i) incentive stock options
(“Incentive Options”) as described in § 422 of the Internal Revenue Code of 1986, as amended (the
“Code”); (ii) nonqualified stock options (“Nonqualified Options,” and, together with the incentive
options, the “Options”) as provided herein; and (iii) rights to purchase shares of Common Stock
(“Restricted Stock”) of the Company pursuant to restricted stock agreements and/or subscription
agreements as provided herein (“Purchase Rights” and collectively with the options, the “Stock
Incentives”).

     2. DEFINITIONS.

          (a) The term “consultants” means those persons, other than employees of the
Company, who provide services to the Company, including nonemployee
directors of the Company, and who are determined by the Compensation Committee to be eligible for Stock Incentives
under this Plan.

          (b) The term “key employees” means those executive, administrative, operational, engineering or
managerial employees who are determined by the Compensation Committee to be eligible for Stock
Incentives under this Plan.

          (c) The term “optionee” means an individual to whom an Option is granted under this Plan.

          (d) The term “grantee” menus an individual to whom a Purchase Right is granted under this Plan.

     3. EFFECTIVE DATE. This Plan became effective as of November 1, 2004, the date it was adopted by
the Board of Directors of the Company.

     4. STOCK SUBJECT TO THE PLAN. The Shares that may be purchased (through the exercise of options or
the purchase of Restricted Stock) under this Plan shall not exceed in the aggregate Four Million
Five Hundred Thousand (4,500,000) Shares. If any Stock Incentives granted under the Plan shall
terminate, expire or be canceled as to any Shares, new Stock Incentives may thereafter be granted
covering such Shares. In addition, any Shares purchased under this Plan subsequently repurchased by
the Company pursuant to the terms hereof may again be granted under the Plan. The Shares issued
upon exercise of Stock Incentives under this Plan may, in whole or in part, be either authorized but unissued Shares
or issued Shares reacquired by the Company. Notwithstanding any other provisions of this Plan, the
aggregate

 

 

number of Shares subject to outstanding Options granted under the Plan, plus the aggregate number
of Shares issued upon the exercise of all Options granted under the Plan, plus the aggregate number
of Shares issued pursuant to all Purchase Rights granted under the Plan, shall never be permitted
to exceed the number of Shares specified in the first sentence of Section 4, except in accordance
with subsection 8(a) below.

     5. ADMINISTRATION.

          (a) The
Plan shall be administered by the Board of Directors of the Company
(the “Board”), or by a
committee appointed by the Board which shall not have less than two (2) members (in either case,
the “Compensation Committee”). The Compensation Committee may delegate nondiscretionary
administrative duties to such employees of the Company as it deems proper.

          (b) Subject to the provisions of the Plan, the Compensation Committee shall have the sole
authority, in its discretion:

               (i) to determine to which of the eligible individuals, and the time or times at which, Stock
Incentives shall be granted;

               (ii) to determine the number of shares of Common Stock to be subject to Stock Incentives granted to
each eligible individual;

               (iii) to determine the price to be paid for the shares of Common Stock upon the exercise of each
Option or upon the issuance of Restricted Stock;

               (iv) to determine the term and the exercise schedule of each Option;

               (v) to determine the terms and conditions of each agreement for the grant of Stock Incentives
(which need not be identical) entered into between the Company and any eligible individual to whom
the Compensation Committee has granted Stock Incentives;

               (vi) to interpret the Plan; and

               (vii) to make all determinations deemed necessary or advisable for the administration of the Plan.

          (c) The Compensation Committee, if any, shall be appointed by and shall serve at the pleasure of
the Board of Directors of the Company. No member of the Compensation Committee shall be liable for
any action or determination made with respect to the Plan.

     6.
ELIGIBLE EMPLOYEES AND CONSULTANTS. Incentive Options may be granted to such key employees of the
Company, including members of the Board of Directors who are also employees of the Company, as are
selected by the Compensation Committee or Board of Directors. Nonqualified Options and Purchase
Rights may be granted to such key

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employees and consultants of the Company, including members of the Board of Directors, as are
selected by the Compensation Committee or the Board of Directors. The
term “employee” includes an
officer or director who is an employee of the Company or a parent or subsidiary of it, as well as a
nonofficer, nondirector employee of the Company or a parent or subsidiary of it.

     7. DURATION OF THE PLAN. This Plan shall terminate ten (10) years from the effective date of this
Plan, unless terminated earlier pursuant to Section 18 hereof, and no Stock Incentives may be
granted after such termination.

     8. RESTRICTIONS ON INCENTIVE OPTIONS. Incentive Options (but not Nonqualified Options) granted
under this Plan shall be subject to the following restrictions:

          (a) Limitation on Number of Shares. The aggregate fair market value, determined as of the
date the Incentive Option is granted, of the Shares with respect to which Incentive Options are
exercisable for the first time by an employee during any calendar year shall not exceed One Hundred
Thousand Dollars ($100,000). If an employee is eligible to participate in any other incentive stock
option plans of the Company which are also intended to comply with the provisions of § 422 of the
Code, the applicable annual limitation shall apply to the aggregate number of Shares for which
Incentive Options may be granted under all such plans. An Incentive Option may be granted which
exceeds the One Hundred Thousand Dollar ($100,000) limitation, as long as under then applicable law
the portion of such Option which is exercisable for shares in excess of the One Hundred Thousand
Dollar ($100,000) limitation shall be treated as a Nonqualified Option. No Incentive Options may be
exercised until and unless the Plan is approved by the stockholders within one year of the date
hereof, such approval to be expressed in any legal way under Delaware law.

          (b) 10% Stockholder, If any employee to whom an Incentive Option is granted pursuant to the
provisions of the Plan is on the date of grant the owner of stock (as
determined under Treas. Reg.
§1.422-2(h)) possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company (or of any parent or subsidiary of the Company), then the following
special provisions shall be applicable to the Incentive Option granted to such individual:

     (i) The Option price per Share subject to such Incentive Option shall not be less than one hundred
ten percent (110%) of the fair market value of one Share on the date of grant; and

     (ii) The Incentive Option shall not have a term in excess of five (5) years from the date of grant.

In determining stock ownership, an optionee shall be considered as owning the voting capital stock
owned, directly or indirectly, by or for his brothers and sisters, spouse, ancestors, and lineal
descendants. Voting capital stock owned, directly or indirectly, by or for a corporation, partnership, estate or trust shall be considered as being owned proportionately
by or for its stockholders, partners, or beneficiaries, as applicable. Common Stock with respect to
which any such optionee holds an option shall not be counted. Additionally, outstanding capital
stock shall

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include all capital stock actually issued and outstanding immediately after the grant of the option
to the optionee. Outstanding capital stock shall not include capital stock authorized for issue
under outstanding options held by the optionee or by any other person.

     9. TERMS AND CONDITIONS OF OPTIONS. Incentive and Nonqualified Options granted under this Plan
shall be evidenced by stock option agreements in such form and not inconsistent with the Plan as
the Compensation Committee or the Board of Directors shall approve from time to time, which
agreements shall evidence the following terms and conditions:

          (a) Price.

               (i) Incentive
Options. Subject to the condition of subsection (b)(i) of Section 8, if
applicable, with respect to each Incentive Option, the purchase price per Share payable upon the
exercise of each Incentive Option granted hereunder shall be determined by the Compensation
Committee or the Board of Directors and shall be not less than one hundred percent (100%) of the
fair market value of one Share on the day the Option is granted.

               (ii) Nonqualified Options. With respect to each Nonqualified Option, the purchase price per
Share payable upon the exercise of each Nonqualified Option granted hereunder shall be determined
by the Compensation Committee or the Board of Directors at the time the Nonqualified Option is
granted.

          (b) Number of Shares. Each stock option agreement shall specify the number of Shares to
which it pertains.

          (c) Exercise. Subject to the conditions of subsections (a) and (b)(ii) of Section 8, if
applicable, each Option shall be exercisable for the full amount or for any part thereof and at
such intervals or in such installments as the Compensation Committee or the Board of Directors may
determine at the time it grants such Option; provided, however, that no Option shall be exercisable
with respect to any Shares later than ten (10) years after the date of the grant of such Option.

          (d) Notice of Exercise and Payment. An Option shall be exercisable only by delivery of a
written notice to the Compensation Committee or the Board of Directors, any member of the
Compensation Committee or the Board of Directors, the Company’s Treasurer, or any other officer of
the Company designated by the Compensation Committee or the Board of Directors to accept such
notices on its behalf, specifying the number of Shares for which it is exercised. If such Shares
are not at the time effectively registered under the Securities Act of 1933, as amended, the
optionee shall include with such notice a letter, in form and substance satisfactory to the
Company, confirming that such Shares are being purchased for the optionee’s own account for
investment and not with a view to the resale or distribution thereof. Payment shall be made in full
at the time of delivery to the optionee of a certificate or certificates covering the number of
Shares for which the Option was exercised. Payment shall be made
(i) by cash or check, (ii) if permitted by the
Compensation Committee or the Board of Directors, by delivery and assignment to the Company of
shares of the Company’s stock having a fair market value (as determined by the Compensation
Committee) equal to the exercise price, or (iii) by a

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combination of the foregoing. The value of a share of the Company’s stock for such purpose shall be
its fair market value as of the date the Option is exercised, as determined in accordance with
procedures to be established by the Compensation Committee.

          (e)
Withholding_Taxes; Delivery of Shares. The Company’s obligation to deliver Shares upon
exercise of a Nonqualified Option, in whole or in part, shall be subject to the optionee’s
satisfaction of all applicable federal, state, and local income and employment tax withholding
obligations. If Common Stock acquired by exercise of an Incentive Stock Option granted pursuant to
this Plan is disposed of within two (2) years from the date of grant of the Option or within one
(1) year after the transfer of the Common Stock to the optionee, the holder of the Common Stock
immediately prior to the disposition shall promptly notify the Company in writing of the date and
terms of the disposition and shall provide such other information regarding the disposition as the
Company may reasonably require.

          (f) Nontransferability. No Option shall be transferable by the optionee otherwise than by
will or the laws of descent or distribution, and each Option shall be exercisable during the
optionee’s lifetime only by the optionee (except as otherwise provided for in subsection (g)
below).

          (g) Termination of Options. Each Option shall terminate and may no longer be exercised if
the optionee ceases to be an employee of, or consultant to, the Company, as follows:

     (i) if the optionee’s employment or performance of services shall have terminated by reason of the
action of the Company under circumstances not constituting Cause, or the optionee’s resignation,
retirement, or other voluntary action of the optionee, the optionee may, at any time within a
period of thirty (30) days after such termination of employment or performance of services,
exercise the Option to the extent that the Option was exercisable by the optionee on the date of
termination of the optionee’s employment or performance of services, after which time each Option
shall terminate and may not thereafter be exercised;

     (ii) if the optionee’s employment or performance of services shall have been terminated because of
disability within the meaning of § 22(e)(3) of the Internal Revenue Code, the optionee may, at any
time within a period of one (1) year after the termination of employment or performance of
services, exercise the Option to the extent that the Option was exercisable by the optionee on the
date of termination of the optionee’s employment or performance of services, after which time each
Option shall terminate and may not thereafter be exercised;

     (iii) if the optionee dies at a time when the Option was exercisable by the optionee, then the
optionee’s estate, personal representative or beneficiary to whom it has been transferred may, at
any time within a period of one (1) year following the optionee’s death if the

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optionee’s employment or performance of services shall have been terminated by the optionee’s
death, or for the period following the termination of the optionee’s employment or performance of
services during which the Option would have remained exercisable
under clauses (i) or (ii) above if
the optionee’s employment or performance of services shall have been terminated prior to the
optionee’s death, exercise the Option to the extent the optionee might have exercised it at the
time of the optionee’s death, after which time each Option shall terminate and may not thereafter
be exercised; and

     (iv) if the optionee’s employment or performance of services shall have terminated by Company for
Cause, each Option shall terminate immediately upon such termination and may not thereafter be
exercised. “Cause” for termination of the optionee’s performance of services shall exist in the
event of acts or omissions by the optionee which constitute misconduct, gross negligence,
unlawfulness, dishonesty, or inattention to the business of the Company, which have a material
adverse effect upon the Company, or the conviction of the optionee of a crime involving moral
turpitude.

Notwithstanding the foregoing, no Option may be exercised to any extent by anyone after the date of
expiration of the Option.

          (h) Rights as Stockholder. The optionee shall have no rights as a stockholder with respect
to any Shares covered by the optionee’s Option until the date of issuance of a stock certificate to
the optionee for such Shares.

          (i) Repurchase of Shares by the Company. Any Shares purchased by an optionee upon exercise
of an Option may in the discretion of the Compensation Committee or the Board of Directors be
subject to repurchase by the Company if and to the extent specifically set forth in the agreement
pursuant to which the Shares were purchased.

          10.
TERMS AND CONDITIONS OF PURCHASE RIGHTS. Purchase Rights granted under this Plan shall be
evidenced by restricted stock agreements and/or subscription agreements in such form and not
inconsistent with the Plan as the Compensation Committee or Board of Directors shall approve from
time to time, which agreements shall include the following terms and conditions:

          (a) Price. The purchase price of each Share purchased by key employees or consultants
pursuant to a Purchase Right hereunder shall be the price determined by the Compensation Committee
or the Board of Directors at the time such Purchase Right is granted.

          (b) Number of Shares. Each restricted stock agreement and/or subscription agreement shall
specify the number of Shares to which it pertains.

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          (c) Investment Intent and Payment. If the Shares purchased are not at the time effectively
registered under the Securities Act of 1933, as amended, the restricted stock agreement and/or
subscription agreement shall provide that the grantee is purchasing such Shares for the grantee’s
own account for investment and not with a view to the resale or distribution thereof. Payment shall
be made in full at the time of delivery to the Company by the grantee of an executed restricted
stock agreement and/or subscription agreement covering the number of Shares for which the Purchase
Right was granted. An officer or an agent of the Company shall be entitled to retain in escrow for
the benefit of the grantee stock certificates representing Shares which are subject to a repurchase
option of the Company, as described in subsection (f) below. Payment for Shares shall be made (i)
by cash or check, (ii) if permitted by the Compensation Committee or the Board of Directors, by
delivery and assignment to the Company of shares of the Company’s stock having a fair market value
(as determined by the Compensation Committee) equal to the purchase
price. or (iii) by a
combination of (i) and (ii). The value of the shares of the Company’s stock for such purpose shall
be its fair market value as of the date of the restricted stock agreement, as determined in
accordance with procedures to be established by the Compensation
Committee.

          (d) Withholding Taxes. The Company’s obligation to deliver the Shares to the grantee shall
be subject to the grantee’s satisfaction of all applicable federal, state, and local income and
employment tax withholding obligations.

          (e) Nontransferability. Any Shares purchased by a grantee pursuant to a Purchase Right
hereunder may, in the discretion of the Compensation Committee or Board of Directors, be subject to
transfer restrictions if and to the extent specifically set forth in the restricted stock agreement
governing such purchase.

          (f) Repurchase of Shares by the Company. Any Shares purchased by a grantee pursuant to a
Purchase Right hereunder may, in the discretion of the Compensation Committee or the Board of
Directors, be subject to repurchase by the Company if and to the extent set forth in the restricted
stock agreement governing such purchase.

          (g) Rights as Stockholder. Except for the limitations on transferability and the Company’s
repurchase rights set forth above, the grantee of a Purchase Right shall, upon purchase of Shares,
possess all rights as a holder of Common Stock of the Company.

     11. STOCK
DIVIDENDS; STOCK SPLITS; STOCK COMBINATIONS; RECAPITALIZATIONS, Appropriate adjustment
shall be made in the maximum number of Shares of Common Stock subject to the Plan and in the
number, kind and price of Shares covered by any Stock Incentive granted hereunder to give effect to
any stock dividends or other distributions, stock splits, stock combinations, recapitalizations and
other similar changes in the capital structure of the Company after the effective date of the Plan.

     12. MERGER;
SALE OF ASSETS; DISSOLUTION. In the event of a change of the Common Stock resulting
from a merger or similar reorganization as to which the Company is the surviving corporation, the number and kind of shares which thereafter may be subject
to Stock Incentives granted under this Plan and the number, kind and price of Shares then subject
to Stock

7

 

Incentives shall be appropriately adjusted in such manner as the Compensation Committee or the
Board of Directors may deem equitable to prevent substantial dilution or enlargement of the rights
available or granted hereunder. Except as otherwise determined by the Board of Directors of the
Company, a merger or a similar reorganization that the Company does not survive, or a sale of all
or substantially all of the assets of the Company, shall cause every Incentive Option and
Nonqualified Option outstanding hereunder to terminate, to the extent
not then exercised, unless
any surviving entity agrees to assume the obligations hereunder.

     13. NO RIGHTS. Except as hereinabove expressly provided in Sections 11 and 12, no optionee shall
have any rights by reason of any subdivision or consolidation of shares of the capital stock of any
class or the payment of any stock dividend or any other increase or decrease in the number of
shares of any class or by reason of any dissolution, liquidation, merger or consolidation or
spin-off of assets or stock of another corporation, and any issue by the Company of shares of stock
of any class or of securities convertible into shares of stock of any class shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number or price of shares
subject to any Option granted hereunder. The grant of an Option pursuant to this Plan shall not
affect in any way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or consolidate or to
dissolve, liquidate, sell, or transfer all or any part of its business or assets.

     14. COMPLIANCE
WITH APPLICABLE LAWS. Notwithstanding any other provision of the Plan, the Company
shall have no liability to issue any Shares under the Plan unless such issuance would comply with
all applicable laws and the applicable requirements of any securities exchange or similar entity.
Prior to the issuance of any Shares under the Plan, the Company may require a written statement
that the recipient is acquiring the Shares for investment and not for the purpose or with the
intention of distributing the Shares.

     15. DEATH
OF A PARTICIPANT. In the event of the death of an optionee, any Options which the
optionee was entitled to exercise on the date immediately preceding his or her death shall be
exercisable by the person or persons to whom those rights pass by will or by the laws of descent
and distribution. Any such exercise shall be by written notice thereof filed with the Secretary of
the Company at the Company’s corporate headquarters prior to the Qption’s expiration or termination
date (taking into account a termination pursuant to Section 9(g)(iii) hereof), and any person
exercising such an Option shall be treated as an optionee for purposes of the provisions of this
Plan.

     16. EMPLOYMENT AND STOCKHOLDER STATUS. The Plan does not constitute a contract of employment, and
selection as a recipient of Stock Incentives will not give any employee the right to be retained in
the employ of the Company. The grant of an Option under the Plan shall not confer upon the holder
thereof any right as a stockholder of the Company. As of the date on which an optionee exercises an
Option, the optionee shall have all rights of a stockholder of record with respect to the number of
Shares of Common Stock as to which the Option is exercised, irrespective of whether certificates to
evidence the Shares of stock have been issued on such date. If the redistribution of Shares is
restricted pursuant to Section 14, certificates representing such Shares may bear a legend referred
to such restrictions.

8

 

     17. TERMINATION OR AMENDMENT OF PLAN. The Board of Directors may at any time terminate this Plan or
make such changes in or additions to the Plan as it deems advisable without further action on the
part of the stockholders of the Company, provided that no such termination or amendment shall
adversely affect or impair any then outstanding Stock Incentive without the consent of the person
holding such Stock Incentive.

     18. TERMINATION.
The Plan shall terminate automatically at 11:59 p.m. on October 31, 2014, and may
be terminated at any earlier date by the Board. No Option shall be granted hereunder after
termination of the Plan, but such termination shall not affect the validity of any Option then
outstanding.

     19. TIME
OF GRANTING OPTIONS. The date of grant of an Option hereunder shall, for all purposes, be
the date on which the Compensation Committee makes the determination granting such Option.

     20. RESERVATION
OF SHARES. The Company, during the terms of this Plan, will at all times reserve
and keep available such number of shares of its Common Stock as shall be sufficient to satisfy the
requirements of the Plan.

     21. EFFECTIVE DATE. This Plan was adopted as of November 1, 2004 by the Board of Directors in
accordance with the requirements of the Internal Revenue Code and the Delaware General Corporation
Law, and shall be effective on said date, provided the Plan is approved by the Company’s
stockholders within twelve (12) months of said date. Options may
be granted, but may not be
exercised, prior to the date of such stockholder approval.

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