Document:

Exhibit 10.1

 

VOEX, INC.

 

2003 STOCK OPTION AND RESTRICTED STOCK PLAN

 

EFFECTIVE AS OF June 19, 2003

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 1.
    	
INTRODUCTION
    	
1
    
	
 
    	
 
    	
 
    
	
SECTION 2.
    	
DEFINITIONS
    	
1
    
	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
“Affiliate”
    	
1
    
	
 
    	
(b)
    	
“Award”
    	
1
    
	
 
    	
(c)
    	
“Board”
    	
1
    
	
 
    	
(d)
    	
“Change In Control”
    	
1
    
	
 
    	
(e)
    	
“Code”
    	
2
    
	
 
    	
(f)
    	
“Committee”
    	
2
    
	
 
    	
(g)
    	
“Common Stock”
    	
2
    
	
 
    	
(h)
    	
“Company”
    	
2
    
	
 
    	
(i)
    	
“Consultant”
    	
2
    
	
 
    	
(j)
    	
“Director”
    	
2
    
	
 
    	
(k)
    	
“Disability”
    	
2
    
	
 
    	
(l)
    	
“Employee”
    	
2
    
	
 
    	
(m)
    	
“Exchange Act”
    	
2
    
	
 
    	
(n)
    	
“Exercise Price”
    	
2
    
	
 
    	
(o)
    	
“Fair Market Value”
    	
2
    
	
 
    	
(p)
    	
“Grant”
    	
3
    
	
 
    	
(q)
    	
“Incentive Stock Option” or “ISO”
    	
3
    
	
 
    	
(r)
    	
“Key Employee”
    	
3
    
	
 
    	
(s)
    	
“Non-Employee Director”
    	
3
    
	
 
    	
(t)
    	
“Nonstatutory Stock Option” or “NSO”
    	
3
    
	
 
    	
(u)
    	
“Option”
    	
3
    
	
 
    	
(v)
    	
“Optionee”
    	
3
    
	
 
    	
(w)
    	
“Parent”
    	
3
    
	
 
    	
(x)
    	
“Participant”
    	
3
    
	
 
    	
(y)
    	
“Plan”
    	
3
    
	
 
    	
(z)
    	
“Restricted Stock”
    	
3
    
	
 
    	
(aa)
    	
“Restricted Stock Agreement”
    	
3
    
	
 
    	
(bb)
    	
“Securities Act”
    	
3
    
	
 
    	
(cc)
    	
“Service”
    	
3
    
	
 
    	
(dd)
    	
“Share”
    	
3
    
	
 
    	
(ee)
    	
“Stock Option Agreement”
    	
4
    
	
 
    	
(ff)
    	
“Subsidiary”
    	
4
    
	
 
    	
(gg)
    	
“10-Percent Shareholder”
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 3.
    	
ADMINISTRATION
    	
4
    
	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Committee Composition
    	
4
    
	
 
    	
(b)
    	
Authority of the Committee
    	
4
    
	
 
    	
(c)
    	
Indemnification
    	
5
    
	
 
    	
(d)
    	
Financial Reports
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 4.
    	
ELIGIBILITY
    	
5
    
	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
General Rules
    	
5
    

 

i

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
Incentive Stock Options
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 5.
    	
SHARES SUBJECT TO PLAN
    	
5
    
	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Basic Limitation
    	
5
    
	
 
    	
(b)
    	
Additional Shares
    	
6
    
	
 
    	
(c)
    	
Dividend Equivalents
    	
6
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 6.
    	
TERMS AND CONDITIONS OF OPTIONS
    	
6
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Stock Option Agreement
    	
6
    
	
 
    	
(b)
    	
Number of Shares
    	
6
    
	
 
    	
(c)
    	
Exercise Price
    	
6
    
	
 
    	
(d)
    	
Exercisability and Term
    	
6
    
	
 
    	
(e)
    	
Modifications or Assumption of Options
    	
7
    
	
 
    	
(f)
    	
Transferability of Options
    	
7
    
	
 
    	
(g)
    	
Restrictions on Transfer
    	
7
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 7.
    	
PAYMENT FOR OPTION SHARES
    	
7
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
General Rule
    	
7
    
	
 
    	
(b)
    	
Surrender of Stock
    	
8
    
	
 
    	
(c)
    	
Promissory Note
    	
8
    
	
 
    	
(d)
    	
Other Forms of Payment
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 8.
    	
TERMS AND CONDITIONS FOR AWARDS OF RESTRICTED STOCK.
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Time, Amount and Form of Awards
    	
8
    
	
 
    	
(b)
    	
Restricted Stock Agreement
    	
8
    
	
 
    	
(c)
    	
Payment for Restricted Stocks
    	
8
    
	
 
    	
(d)
    	
Vesting Conditions
    	
8
    
	
 
    	
(e)
    	
Assignment or Transfer of Restricted Stocks
    	
8
    
	
 
    	
(f)
    	
Trusts
    	
8
    
	
 
    	
(g)
    	
Voting and Dividend Rights
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 9.
    	
PROTECTION AGAINST DILUTION
    	
9
    
	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Adjustments
    	
9
    
	
 
    	
(b)
    	
Participation Rights
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 10.
    	
EFFECT OF A CHANGE IN CONTROL
    	
9
    
	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Merger of Reorganization
    	
9
    
	
 
    	
(b)
    	
Accleration
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 11.
    	
LIMITATIONS ON RIGHTS
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Retention Rights
    	
10
    
	
 
    	
(b)
    	
Shareholders’Rights
    	
10
    
	
 
    	
(c)
    	
Regulatory Requirements
    	
10
    

 

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Page
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 12.
    	
WITHHOLDING TAXES
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
General
    	
10
    
	
 
    	
(b)
    	
Share Withholding
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 13.
    	
DURATION AND AMENDMENTS
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Term of the Plan
    	
11
    
	
 
    	
(b)
    	
Right to Amend or Terminate the Plan
    	
11
    

 

iii

 

VOEX, INC.

 

2002 STOCK OPTION AND RESTRICTED STOCK PLAN

 

EFFECTIVE AS OF June 19, 2003

 

SECTION 1.     INTRODUCTION.

 

The Company’s Board of Directors adopted the Voex, Inc. 2003 Stock Option and Restricted Stock Plan on June 19, 2003, subject to approval by the Company’s shareholders.

 

The purpose of the Plan is to promote the long-term success of the Company and the creation of shareholder value by offering Key Employees an opportunity to acquire a proprietary interest in the success of the Company, or to increase such interest, and to encourage such selected persons to continue to provide services to the Company and to attract new individuals with outstanding qualifications.

 

The Plan seeks to achieve this purpose by providing for Options (which may constitute Incentive Stock Options or Nonstatutory Stock Options) and Awards of Restricted Stock.

 

The Plan shall be governed by, and construed in accordance with, the laws of the state of Washington (except its choice-of-law provisions).  Capitalized terms shall have the meaning provided in Section 2 unless otherwise provided in this Plan or Stock Option Agreement or Restricted Stock Agreement.

 

SECTION 2.     DEFINITIONS.

 

(a)       “Affiliate” means any entity other than a Subsidiary, if the Company and/or one or more Subsidiaries own not less than 50% of such entity.  For purposes of determining an individual’s “Service,” this definition shall include any entity other than a Subsidiary, if the Company, a Parent and/or one or more Subsidiaries own not less than 50% of such entity.

 

(b)       “Award” means any award of an Option or Restricted Stock under the Plan.

 

(c)       “Board” means the Board of Directors of the Company, as constituted from time to time.

 

(d)   “Change In Control” except as may otherwise be provided in the Stock Option Agreement, means any merger or consolidation of the Company into or with another corporation or other entity, or the sale, transfer or other disposition of all or substantially all of the assets or capital stock of the Company, or any reorganization, recapitalization or like transaction or series of related transactions having substantially equivalent effect and purpose, at the conclusion of which such merger, consolidation, sale, transfer, disposition, reorganization, recapitalization or like transaction the holders of the capital stock of the Company entitled to vote for the election of directors or similar governing body immediately prior to such transaction or series of related transactions own less than a majority of the

 

 

capital stock entitled to vote for the election of directors or similar governing body of the acquiring entity or entity surviving or resulting from such transaction or series of related transactions immediately thereafter; provided that a merger effected exclusively for the purpose of changing the domicile of the Company shall not be deemed to constitute a “Change in Control”.

 

(e)        “Code” means the Internal Revenue Code of 1986, as amended.

 

(f)        “Committee” means a committee consisting of two or more members of the Board that is appointed by the Board (as described in Section 3) to administer the Plan.

 

(g)       “Common Stock” means the Company’s common stock.

 

(h)       “Company” means Voex, Inc., a Washington corporation.

 

(i)        “Consultant” means an individual who performs bona fide services to the Company, a Parent, a Subsidiary or an Affiliate other than as an Employee or Director or Non-Employee Director.

 

(j)        “Director” means a member of the Board who is also an Employee.

 

(k)       “Disability” means that the Key Employee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.

 

(l)        “Employee” means any individual who is a common-law employee of the Company, a Parent, a Subsidiary or an Affiliate.

 

(m)      “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(n)       “Exercise Price” means the amount for which a Share may be purchased upon exercise of such Option, as specified in the applicable Stock Option Agreement.

 

(o)       “Fair Market Value” means the market price of Shares, determined by the Committee as follows:

 

(i)            If the Shares were traded over-the-counter on the date in question but were not classified as a national market issue, then the Fair Market Value shall be equal to the mean between the last reported representative bid and asked prices quoted by the Nasdaq system for such date;

 

(ii)           If the Shares were traded over-the-counter on the date in question and were classified as a national market issue, then the Fair Market Value shall be equal to the last-transaction price quoted by the Nasdaq system for such date;

 

(iii)          If the Shares were traded on a stock exchange on the date in question, then the Fair Market Value shall be equal to the closing price reported by the applicable composite transactions report for such date; and

 

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(iv)          If none of the foregoing provisions is applicable, then the Fair Market Value shall be determined by the Committee in good faith on such basis as it deems appropriate.

 

Whenever possible, the determination of Fair Market Value by the Committee shall be based on the prices reported in the Wall Street Journal.  Such determination shall be conclusive and binding on all persons.

 

(p)       “Grant” means any grant of an Option under the Plan.

 

(q)       “Incentive Stock Option” or “ISO” means an incentive stock option described in Code section 422(b).

 

(r)        “Key Employee” means an Employee, Director, Non-Employee Director or Consultant who has been selected by the Committee to receive an Award under the Plan.

 

(s)       “Non-Employee Director” means a member of the Board who is not an Employee.

 

(t)        “Nonstatutory Stock Option” or “NSO” means a stock option that is not an ISO.

 

(u)       “Option” means an ISO or NSO granted under the Plan entitling the Optionee to purchase Shares.

 

(v)       “Optionee” means an individual, estate or other entity that holds an Option.

 

(w)      “Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.  A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be considered a Parent commencing as of such date.

 

(x)        “Participant” means an individual or estate or other entity that holds an Award.

 

(y)       “Plan” means this Voex, Inc. 2003 Stock Option and Restricted Stock Plan as it may be amended from time to time.

 

(z)        “Restricted Stock” means a Share awarded under the Plan.

 

(aa)     “Restricted Stock Agreement” means the agreement described in Section 8 evidencing each Award of Restricted Stock.

 

(bb)     “Securities Act” means the Securities Act of 1933, as amended.

 

(cc)     “Service” means service as an Employee, Director, Non-Employee Director or Consultant.

 

(dd)     “Share” means one share of Common Stock.

 

3

 

(ee)     “Stock Option Agreement” means the agreement described in Section 6 evidencing each Grant of an Option.

 

(ff)       “Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.  A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date.

 

(gg)     “10-Percent Shareholder” means an individual who owns more than ten percent (10%) of the total combined voting power of all classes of outstanding stock of the Company, its Parent or any of its subsidiaries.  In determining stock ownership, the attribution rules of section 424(d) of the Code shall be applied.

 

SECTION 3.     ADMINISTRATION.

 

(a)       Committee Composition.  A Committee appointed by the Board shall administer the Plan.  The Board shall designate one of the members of the Committee as chairperson.  If no Committee has been approved, the entire Board shall constitute the Committee.  Members of the Committee shall serve for such period of time as the Board may determine and shall be subject to removal by the Board at any time.  The Board may also at any time terminate the functions of the Committee and reassume all powers and authority previously delegated to the Committee.

 

Effective with the Company’s initial public offering, the Committee shall consist either of (i) those individuals who shall satisfy the requirements of Rule 16b-3 (or its successor) under the Exchange Act with respect to Options to persons who are officers or directors of the Company under Section 16 of the Exchange Act or (ii) the Board itself.

 

The Board may also appoint one or more separate committees of the Board, each composed of one or more directors of the Company who need not qualify under Rule 16b-3, who may administer the Plan with respect to Key Employees who are not considered officers or directors of the Company under Section 16 of the Exchange Act, may grant Awards under the Plan to such Key Employees and may determine all terms of such Awards.

 

To the extent consistent with applicable law, the Board may authorize a senior executive officer of the Company to grant Awards to individuals eligible to receive Awards under the Plan, within the limits specifically prescribed by the Board.

 

(b)       Authority of the Committee.  Subject to the provisions of the Plan, the Committee shall have full authority and discretion to take any actions it deems necessary or advisable for the administration of the Plan.  Such actions shall include:

 

(i)            selecting Key Employees who are to receive Awards under the Plan;

(ii)                                  determining the type, number, vesting requirements and other features and conditions of such Awards;

(iii)          interpreting the Plan; and

 

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(iv)          making all other decisions relating to the operation of the Plan.

 

The Committee may adopt such rules or guidelines, as it deems appropriate to implement the Plan.  The Committee’s determinations under the Plan shall be final and binding on all persons.

 

(c)       Indemnification.  Each member of the Committee, or of the Board, shall be indemnified and held harmless by the Company against and from (i) any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan or any Stock Option Agreement or any Restricted Stock Agreement, and (ii) from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such claim, action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf.  The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s Articles  of Incorporation or Bylaws, by contract, as a matter of law, or otherwise, or under any power that the Company may have to indemnify them or hold them harmless.

 

(d)       Financial Reports.  To the extent required by applicable law, the Company shall furnish to Participants the Company’s summary financial information including a balance sheet regarding the Company’s financial condition and results of operations, unless such Participants have duties with the Company that assure them access to equivalent information.  Such financial statements need not be audited.

 

SECTION 4.     ELIGIBILITY.

 

(a)       General Rules.  Only Employees, Directors, Non-Employee Directors and Consultants shall be eligible for designation as Key Employees by the Committee.

 

(b)       Incentive Stock Options.  Only Key Employees who are common-law employees of the Company, a Parent or a Subsidiary shall be eligible for the grant of ISOs.  In addition, a Key Employee who is a 10-Percent Shareholder shall not be eligible for the grant of an ISO unless the requirements set forth in section 422(c)(5) of the Code are satisfied.

 

SECTION 5.     SHARES SUBJECT TO PLAN.

 

(a)       Basic Limitation.  The stock issuable under the Plan shall be authorized but unissued Shares or treasury Shares.  The aggregate number of Shares reserved for Awards under the Plan shall not exceed one million (1,200,000) Shares on a fully diluted basis, subject to adjustment pursuant to Section 9.

 

5

 

(b)       Additional Shares.  If Awards are forfeited or terminate for any other reason before being exercised, then the Shares underlying such Awards shall again become available for Awards under the Plan.

 

(c)       Dividend Equivalents.  Any dividend equivalents distributed under the Plan shall not be applied against the number of Shares available for Awards.

 

SECTION 6.     TERMS AND CONDITIONS OF OPTIONS.

 

(a)       Stock Option Agreement.  Each Grant under the Plan shall be evidenced by a Stock Option Agreement between the Optionee and the Company.  Such Option shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions that are not inconsistent with the Plan and that the Committee deems appropriate for inclusion in a Stock Option Agreement.  The provisions of the various Stock Option Agreements entered into under the Plan need not be identical.  A Stock Option Agreement may provide that new Options will be granted automatically to the Optionee when he or she exercises the prior Options.  The Stock Option Agreement shall also specify whether the Option is an ISO or an NSO.

 

(b)       Number of Shares.  Each Stock Option Agreement shall specify the number of Shares that are subject to the Option and shall provide for the adjustment of such number in accordance with Section 9.

 

(c)       Exercise Price.  An Option’s Exercise Price shall be established by the Committee and set forth in a Stock Option Agreement.  To the extent required by applicable law the Exercise Price of an ISO shall not be less than 100% of the Fair Market Value (110% for 10-Percent Shareholders) of a Share on the date of Grant.  In the case of an NSO, a Stock Option Agreement may specify an Exercise Price that varies in accordance with a predetermined formula while the NSO is outstanding.  To the extent required by applicable law, the Exercise Price for an NSO shall not be less than 85% of the Fair Market Value (110% for 10-Percent Shareholders) of a Share on the date of Grant.

 

(d)       Exercisability and Term.  Each Stock Option Agreement shall specify the date when all or any installment of the Option is to become exercisable. Except as otherwise set forth in the Stock Option Agreement, an Option shall vest as to 25% of the total number of Shares on the first anniversary of the Vesting Start Date, as defined in the Stock Option Agreement, provided that the Optionee is providing Service as of such anniversary.  Thereafter, the Option shall vest monthly at the rate of 2.0833% of the total number of Shares until the Option is 100% vested and exercisable four years from the Vesting Start Date, as defined in the Stock Option Agreement, provided the Optionee is providing Service as of such date.  In no event shall more than 100% of the Shares, as defined the Stock Option Agreement, become vested.  The Stock Option Agreement shall also specify the term of the Option; provided that the term of an ISO, and to the extent required by applicable law a NSO, shall in no event exceed ten (10) years from the date of Grant.  An ISO that is granted to a 10-Percent Shareholder shall have a maximum term of five (5) years.  To the extent required by applicable law, vested Options shall be exercisable for a minimum period of six (6) months and a maximum period of twelve (12) months following

 

6

 

termination of Services due to death or Disability; and, Options shall be exercisable for a minimum of thirty (30) days and a maximum of three (3) months following termination of Services (other than terminations for cause, as defined in the Company’s personnel policies).  Notwithstanding the previous sentence, no Option can be exercised after the expiration date provided in the applicable Stock Option Agreement.  A Stock Option Agreement may provide for accelerated exercisability in the event of the Optionee’s death, disability or retirement or other events and may provide for expiration prior to the end of its term in the event of the termination of the Optionee’s service.  A Stock Option Agreement may permit an Optionee to exercise an Option before it is vested, subject to the Company’s right of repurchase over any Shares acquired under the unvested portion of the Option (an “early exercise”), which right of repurchase shall lapse at the same rate the Option would have vested had there been no early exercise.  In no event shall the Company be required to issue fractional Shares upon the exercise of an Option.

 

(e)       Modifications or Assumption of Options.  Within the limitations of the Plan, the Committee may modify, extend or assume outstanding options or may accept the cancellation of outstanding options (whether granted by the Company or by another issuer) in return for the grant of new Options for the same or a different number of Shares and at the same or a different Exercise Price.  The foregoing notwithstanding, no modification of an Option shall, without the consent of the Optionee, alter or impair his or her rights or obligations under such Option.

 

(f)        Transferability of Options.  Except as otherwise provided in the applicable Stock Option Agreement and then only to the extent permitted by applicable law, no Option shall be transferable by the Optionee other than by will or by the laws of descent and distribution.  Except as otherwise provided in the applicable Stock Option Agreement, an Option may be exercised during the lifetime of the Optionee only or by the guardian or legal representative of the Optionee.  No Option or interest therein may be assigned, pledged or hypothecated by the Optionee during his lifetime, whether by operation of law or otherwise, or be made subject to execution, attachment or similar process.

 

(g)       Restrictions on Transfer.  Any Shares issued upon exercise of an Option shall be subject to such rights of repurchase, rights of first refusal and other transfer restrictions as the Committee may determine.  Such restrictions shall apply in addition to any restrictions that may apply to holders of Shares generally and shall also comply to the extent necessary with applicable law.

 

SECTION 7.     PAYMENT FOR OPTION SHARES.

 

(a)       General Rule.  The entire Exercise Price of Shares issued upon exercise of Options shall be payable in cash at the time when such Shares are purchased, except as follows:

 

(i)            In the case of an ISO granted under the Plan, payment shall be made only pursuant to the express provisions of the applicable Stock Option Agreement.  The Stock Option Agreement may specify that payment may be made in any form(s) described in this Section 7.

 

7

 

(ii)           In the case of an NSO granted under the Plan, the Committee may in its discretion, at any time accept payment in any form(s) described in this Section 7.

 

(b)       Surrender of Stock.  To the extent that this Section 7(b) is applicable, payment for all or any part of the Exercise Price may be made with Shares which have already been owned by the Optionee for such duration as shall be specified by the Committee.  Such Shares shall be valued at their Fair Market Value on the date when the new Shares are purchased under the Plan.

 

(c)       Promissory Note.  To the extent that this Section 7(c) is applicable, payment for all or any part of the Exercise Price may be made with a full-recourse promissory note.

 

(d)       Other Forms of Payment.  To the extent that this Section 7(d) is applicable, payment may be made in any other form that is consistent with applicable laws, regulations and rules.

 

SECTION 8.     TERMS AND CONDITIONS FOR AWARDS OF RESTRICTED STOCK.

 

(a)       Time, Amount and Form of Awards.  Awards under the Plan may be granted in the form of Restricted Stock.

 

(b)       Restricted Stock Agreement.  Each Award of Restricted Stock under the Plan shall be evidenced by a Restricted Stock Agreement between the Participant and the Company.  Such Award shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions that are not inconsistent with the Plan and that the Committee deems appropriate for inclusion in a Restricted Stock Agreement.  The provisions of the various Restricted Stock Agreements entered into under the Plan need not be identical.

 

(c)       Payment for Restricted Stock.  Restricted Stock may be issued with or without cash consideration under the Plan.

 

(d)       Vesting Conditions.  Each Award of Restricted Stock shall become vested, in full or in installments, upon satisfaction of the conditions specified in the Restricted Stock Agreement.  A Restricted Stock Agreement may provide for accelerated vesting in the event of the Participant’s death, Disability or retirement or other events.

 

(e)       Assignment or Transfer of Restricted Stock.  Except as provided in Section 12, or in a Restricted Stock Agreement, or as required by applicable law, Restricted Stock granted under the Plan shall not be anticipated, assigned, attached, garnished, optioned, transferred or made subject to any creditor’s process, whether voluntarily, involuntarily or by operation of law.  Any act in violation of this Section 8(e) shall be void.  However, this Section 8(e) shall not preclude a Participant from designating a beneficiary who will receive any outstanding Restricted Stocks in the event of the Participant’s death, nor shall it preclude a transfer of Restricted Stocks by will or by the laws of descent and distribution.

 

(f)        Trusts.  Neither this Section 8 nor any other provision of the Plan shall preclude a Participant from transferring or assigning Restricted Stock to (a) the trustee of a trust that is revocable by such Participant alone, both at the time of the transfer or assignment and at all

 

8

 

times thereafter prior to such Participant’s death, or (b) the trustee of any other trust to the extent approved in advance by the Committee in writing.  A transfer or assignment of Restricted Stock from such trustee to any person other than such Participant shall be permitted only to the extent approved in advance by the Committee in writing, and Restricted Stock held by such trustee shall be subject to all of the conditions and restrictions set forth in the Plan and in the applicable Restricted Stock Agreement, as if such trustee were a party to such Agreement.

 

(g)       Voting and Dividend Rights.  The holders of Restricted Stock awarded under the Plan shall have the same voting, dividend and other rights as the Company’s other shareholders.  A Restricted Stock Agreement, however, may require that the holders of Restricted Stock invest any cash dividends received in additional Restricted Stock.  Such additional Restricted Stock shall be subject to the same conditions and restrictions as the Award with respect to which the dividends were paid.  Such additional Restricted Stock shall not reduce the number of Shares available under Section 5.

 

SECTION 9.     PROTECTION AGAINST DILUTION.

 

(a)       Adjustments.  In the event of a subdivision of the outstanding Shares, a declaration of a dividend payable in Shares, a declaration of a dividend payable in a form other than Shares in an amount that has a material effect on the price of Shares, a combination or consolidation of the outstanding Shares (by reclassification or otherwise) into a lesser number of Shares, a recapitalization, a spin-off or a similar occurrence, the Committee shall make such adjustments as it, in its sole discretion, deems appropriate in one or more of:

 

(i)            the number of Shares available for future Awards under Section 5;

 

(ii)           the number of Shares covered by each outstanding Award; or

 

(iii)          the Exercise Price under each outstanding Option.

 

(b)       Participant Rights.  Except as provided in this Section 9, a Participant shall have no rights by reason of any issue by the Company of stock of any class or securities convertible into stock of any class, any subdivision or consolidation of shares of stock of any class, the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class.

 

SECTION 10.    EFFECT OF A CHANGE IN CONTROL.

 

(a)       Merger or Reorganization. In the event that the Company is a party to a merger or other reorganization, outstanding Awards shall be subject to the agreement of merger or reorganization.  Such agreement may provide, without limitation, for the assumption of outstanding Awards or replacement Awards of substantially equivalent value by the surviving corporation or its parent, for their continuation by the Company (if the Company is a surviving corporation), for accelerated vesting or for their cancellation with or without consideration, in all cases without the consent of the Participant.

 

9

 

(b)       Acceleration.  Except as otherwise provided in the applicable Stock Option Agreement, in the event that a Change in Control occurs with respect to the Company and the applicable agreement of merger or reorganization provides for assumption or continuation of Options pursuant to Section 10(a), or the Options otherwise continue, no acceleration of vesting shall occur.  In the event that a Change in Control occurs with respect to the Company and there is no assumption or continuation of Options, all Options shall vest and become immediately exercisable immediately before the Change in Control.

 

SECTION 11.    LIMITATIONS ON RIGHTS.

 

(a)       Retention Rights.  Neither the Plan nor any Award granted under the Plan shall be deemed to give any individual a right to remain an employee, consultant or director of the Company, a Parent, a Subsidiary or an Affiliate.  The Company and its Parents and Subsidiaries and Affiliates reserve the right to terminate the Service of any person at any time, and for any reason, subject to applicable laws, the Company’s Articles of Incorporation  and Bylaws and a written employment agreement (if any).

 

(b)       Shareholders’ Rights.  A Participant shall have no dividend rights, voting rights or other rights as a shareholder with respect to any Shares covered by his or her Award prior to the issuance of a stock certificate for such Shares.  No adjustment shall be made for cash dividends or other rights for which the record date is prior to the date when such certificate is issued, except as expressly provided in Section 9.

 

(c)       Regulatory Requirements.  Any other provision of the Plan notwithstanding, the obligation of the Company to issue Shares under the Plan shall be subject to all applicable laws, rules and regulations and such approval by any regulatory body as may be required.  The Company reserves the right to restrict, in whole or in part, the delivery of Shares pursuant to any Award prior to the satisfaction of all legal requirements relating to the issuance of such Shares, to their registration, qualification or listing or to an exemption from registration, qualification or listing.

 

SECTION 12.    WITHHOLDING TAXES.

 

(a)       General.  A Participant shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise in connection with his or her Award.  The Company shall not be required to issue any Shares or make any cash payment under the Plan until such obligations are satisfied.

 

(b)       Share Withholding.  If a public market for the Company’s Shares exists, the Committee may permit a Participant to satisfy all or part of his or her withholding or income tax obligations by having the Company withhold all or a portion of any Shares that otherwise would be issued to him or her or by surrendering all or a portion of any Shares that he or she previously acquired.  Such Shares shall be valued at their Fair Market Value on the date when taxes otherwise would be withheld in cash.  Any payment of taxes by assigning Shares to the Company may be subject to restrictions, including, but not limited to, any restrictions required by rules of the Securities and Exchange Commission.

 

10

 

SECTION 13.    DURATION AND AMENDMENTS.

 

(a)       Term of the Plan.  The Plan, as set forth herein, shall become effective on the date of its adoption by the Board, subject to the approval of the Company’s shareholders.  No Options shall be exercisable until such shareholder approval is obtained.  In the event that the shareholders fail to approve the Plan within twelve (12) months after its adoption by the Board, any Option granted under the Plan shall revert to a Nonstatutory Stock Option. To the extent required by applicable law, the Plan shall terminate on the date that is ten (10) years after its adoption by the Board and may be terminated on any earlier date pursuant to Section 13(b).

 

(b)       Right to Amend or Terminate the Plan.  The Board may amend or terminate the Plan at any time and for any reason.  The termination of the Plan, or any amendment thereof, shall not affect any Award previously granted under the Plan.  No Awards shall be granted under the Plan after the Plan’s termination.  An amendment of the Plan shall be subject to the approval of the Company’s shareholders only to the extent required by applicable laws, regulations or rules.

 

**********************************************************************

Adopted by the Board of Directors on June 19, 2003 and approved by the shareholders on July 1, 2003.

 

11

 

GRANT NO.                         

 

GRANT NO.                                       

 

VOEX, INC.

2003 STOCK OPTION AND RESTRICTED STOCK PLAN

 

NONSTATUTORY STOCK OPTION AGREEMENT

 

Voex, Inc., a Delaware corporation (the “Company”), hereby grants an Option to purchase shares of its common stock (the “Shares”) to the Optionee named below.  The terms and conditions of the Option are set forth in this cover sheet, in the attachment and in the Company’s 2003 Stock Option and Restricted Stock Plan (the “Plan”).

 

Date of Option Grant:

 

Name of Optionee:

 

Optionee’s Social Security Number:

 

Number of Shares Covered by Option:

 

Exercise Price per Share:

 

Vesting Start Date: (see “Vesting Schedule” below)

 

Vesting Schedule:

 

Subject to all the terms of the attached Agreement and continuation of your Service through the applicable vesting date, your right to purchase Shares under this Option shall become vested and exercisable according the following schedule:

 

No additional Shares will vest after your Service has terminated for any reason.

 

[signature page follows]

 

 

By signing this cover sheet, you agree to all of the terms and conditions described in the attached Agreement and in the Plan, a copy of which is also enclosed.

 

 

	
Optionee:
    	
 
    	
 
    
	
 
    	
(Signature)
    	
 
    
	
 
    	
 
    	
 
    
	
Company:
    	
 
    	
 
    
	
 
    	
(Signature)
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    	
 
    

 

 

Attachment

 

2

 

VOEX, INC.

2003 STOCK OPTION AND RESTRICTED STOCK PLAN

 

NONSTATUTORY STOCK OPTION AGREEMENT

 

	
The   Plan and Other Agreements
    	
 
    	
The   text of the Plan is incorporated in this Agreement by reference.  Certain capitalized terms used in this   Agreement are defined in the Plan. 

 

This   Agreement and the Plan constitute the entire understanding between you and   the Company regarding this Option.  Any   prior agreements, commitments or negotiations concerning this Option are   superseded.
    
	
 
    	
 
    	
 
    
	
Nonstatutory   Stock Option
    	
 
    	
This   Option is not intended to be an Incentive Stock Option under section   422 of the Internal Revenue Code and will be interpreted accordingly.
    
	
 
    	
 
    	
 
    
	
Vesting
    	
 
    	
This   Option is only exercisable before it expires and then only with respect to   the vested portion of the Option.  This   Option will vest according to the Vesting Schedule on the attached cover   sheet.
    
	
 
    	
 
    	
 
    
	
Term
    	
 
    	
Your   Option will expire in any event at the close of business at Company   headquarters on the day before the 7th anniversary of the Date of Option   Grant, as shown on the cover sheet.    Your Option will expire earlier if your Service terminates, as   described below.
    
	
 
    	
 
    	
 
    
	
Regular   Termination
    	
 
    	
If   your Service terminates for any reason, other than death, Disability or   Cause, as defined below, then your Option will expire at the close of   business at Company headquarters on the 90th day after your termination date.
    
	
 
    	
 
    	
 
    
	
Termination   for Cause
    	
 
    	
If   your Service is terminated for Cause, as determined by the Board in its sole   discretion, then you shall immediately forfeit all rights to your Option and   the Option shall immediately expire.    For purposes of this Agreement, “Cause” shall mean the termination of   your Service due to your commission of any act of fraud, embezzlement or   dishonesty; any unauthorized use or disclosure of confidential information or   trade secrets of the Company (or any Parent, Subsidiary or Affiliate); or any   other intentional misconduct adversely affecting the business or affairs of   the Company (or any Parent, Subsidiary or Affiliate) in a material   manner.  This definition shall not   restrict in any way the Company’s or any Parent’s, Subsidiary’s or Affiliate’s   right to discharge you for any other reason, nor shall this definition be   deemed to be inclusive of all the acts or omissions which 
    

 

3

 

	
 
    	
 
    	
constitute   “cause” for purposes other than this Agreement.
    
	
 
    	
 
    	
 
    
	
Death
    	
 
    	
If   your Service terminates because of your death, then your Option will expire   at the close of business at Company headquarters on the date twelve (12)   months after the date of death.  During   that twelve (12) month period, your estate or heirs may exercise the vested   portion of your Option.
    
	
 
    	
 
    	
 
    
	
Disability
    	
 
    	
If   your Service terminates because of your Disability, then your Option will   expire at the close of business at Company headquarters on the date twelve   (12) months after your termination date.
    
	
 
    	
 
    	
 
    
	
Leaves   of Absence
    	
 
    	
For   purposes of this Option, your Service does not terminate when you go on a bona fide leave of absence that was approved by the   Company in writing, if the terms of the leave provide for continued Service   crediting, or when continued Service crediting is required by applicable   law.  Your Service terminates in any   event when the approved leave ends unless you immediately return to active   work. 

 

The   Company determines which leaves count for this purpose, and when your Service   terminates for all purposes under the Plan.
    
	
 
    	
 
    	
 
    
	
Notice   of Exercise
    	
 
    	
When   you wish to exercise this Option, you must notify the Company by filing the   proper “Notice of Exercise” form at the address given on the form.  Your notice must specify how many Shares   you wish to purchase.  Your notice must   also specify how your Shares should be registered (in your name only or in   your and your spouse’s names as community property or as joint tenants with   right of survivorship).  The notice   will be effective when it is received by the Company. 

 

If   someone else wants to exercise this Option after your death, that person must   prove to the Company’s satisfaction that he or she is entitled to do so.
    
	
 
    	
 
    	
 
    
	
Form   of Payment
    	
 
    	
When   you submit your notice of exercise, you must include payment of the Exercise   Price for the Shares you are purchasing.    Payment may be made in the form of cash, your personal check, a   cashier’s check or a money order.  To   the extent a public market for the Shares exists as determined by the   Company, by delivery (on a form prescribed by the Company) of an irrevocable   direction to a securities broker to sell Shares and to deliver all or part of   the sale proceeds to the Company in payment of the aggregate exercise price.
    
	
 
    	
 
    	
 
    
	
Withholding   Taxes
    	
 
    	
You   will not be allowed to exercise this Option unless you make 
    

 

4

 

	
 
    	
 
    	
acceptable   arrangements to pay any withholding or other taxes that may be due as a   result of the Option exercise or sale of Shares acquired under this Option.
    
	
 
    	
 
    	
 
    
	
Restrictions   on Exercise and Resale
    	
 
    	
By   signing this Agreement, you agree not to exercise this Option or sell any   Shares acquired under this Option at a time when applicable laws, regulations   or Company or underwriter trading policies prohibit exercise, sale or   issuance of Shares.  The Company will   not permit you to exercise this Option if the issuance of Shares at that time   would violate any law or regulation.    The Company shall have the right to designate one or more periods of   time, each of which shall not exceed one hundred eighty (180) days in   length, during which this Option shall not be exercisable if the Company   determines (in its sole discretion) that such limitation on exercise could in   any way facilitate a lessening of any restriction on transfer pursuant to the   Securities Act or any state securities laws with respect to any issuance of   securities by the Company, facilitate the registration or qualification of   any securities by the Company under the Securities Act or any state   securities laws, or facilitate the perfection of any exemption from the   registration or qualification requirements of the Securities Act or any   applicable state securities laws for the issuance or transfer of any   securities, or subject the Company to reporting requirements under the   Securities Exchange Act (including Section 12(g)).  Such limitation on exercise shall not alter   the vesting schedule set forth in this Agreement other than to limit the   periods during which this Option shall be exercisable.

 

If   the sale of Shares under the Plan is not registered under the Securities Act,   but an exemption is available which requires an investment or other   representation, you shall represent and agree at the time of exercise that   the Shares being acquired upon exercise of this Option are being acquired for   investment, and not with a view to the sale or distribution thereof, and   shall make such other representations as are deemed necessary or appropriate   by the Company and its counsel.
    
	
 
    	
 
    	
 
    
	
The   Company’s Right of First Refusal
    	
 
    	
In   the event that you propose to sell, pledge or otherwise transfer to a third   party any Shares acquired under this Agreement, or any interest in such   Shares, the Company shall have the “Right of First Refusal” with respect to   all (and not less than all) of such Shares.    If you desire to transfer Shares acquired under this Agreement, you   must give a written “Transfer Notice” to the Company describing fully the   proposed transfer, including the number of Shares proposed to be transferred,   the proposed transfer price and the name and address of the proposed   transferee.
    

 

5

 

	
 
    	
 
    	
The   Transfer Notice shall be signed both by you and by the proposed new   transferee and must constitute a binding commitment of both parties to the   transfer of the Shares.  The Company   shall have the right to purchase all, and not less than all, of the Shares on   the terms of the proposal described in the Transfer Notice (subject, however,   to any change in such terms permitted in the next paragraph) by delivery of a   notice of exercise of the Right of First Refusal within thirty (30) days   after the date when the Transfer Notice was received by the Company.  The Company’s rights under this subsection   shall be freely assignable, in whole or in part.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
If   the Company fails to exercise its Right of First Refusal within thirty (30)   days after the date when it received the Transfer Notice, you may, not later   than ninety (90) days following receipt of the Transfer Notice by the   Company, conclude a transfer of the Shares subject to the Transfer Notice on   the terms and conditions described in the Transfer Notice.  Any proposed transfer on terms and   conditions different from those described in the Transfer Notice, as well as   any subsequent proposed transfer by you, shall again be subject to the Right   of First Refusal and shall require compliance with the procedure described in   the paragraph above.  If the Company   exercises its Right of First Refusal, the parties shall consummate the sale   of the Shares on the terms set forth in the Transfer Notice within sixty   (60) days after the date when the Company received the Transfer Notice   (or within such longer period as may have been specified in the Transfer   Notice); provided, however, that in the event the Transfer Notice provided   that payment for the Shares was to be made in a form other than lawful money   paid at the time of transfer, the Company shall have the option of paying for   the Shares with lawful money equal to the present value of the consideration   described in the Transfer Notice.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The   Company’s Right of First Refusal shall inure to the benefit of its successors   and assigns and shall be binding upon any transferee of the Shares.  Share certificates shall bear a restrictive   legend, set forth in this Agreement, indicating that such shares shall be   subject to the Company’s Right of First Refusal. 

 

The   Company’s Right of First Refusal shall terminate in the event that Shares are   listed on an established stock exchange or is quoted regularly on the Nasdaq   National Market.
    
	
 
    	
 
    	
 
    
	
Transfer   of Option
    	
 
    	
Prior   to your death, only you may exercise this Option.  You cannot transfer or assign this   Option.  For instance, you may not sell   this Option or use it as security for a loan.    If you attempt to do any of these things, this Option will immediately   become
    

 

6

 

	
 
    	
 
    	
invalid.  You may, however, dispose of this Option in   your will.  Regardless of any marital   property settlement agreement, the Company is not obligated to honor a notice   of exercise from your spouse, nor is the Company obligated to recognize your   spouse’s interest in your Option in any other way.
    
	
 
    	
 
    	
 
    
	
Retention   Rights
    	
 
    	
Your   Option or this Agreement does not give you the right to be retained by the   Company (or any Parent or any Subsidiaries or Affiliates) in any   capacity.  The Company (or any Parent   and any Subsidiaries or Affiliates) reserves the right to terminate your   Service at any time and for any reason.
    
	
 
    	
 
    	
 
    
	
Shareholder   Rights
    	
 
    	
You,   or your estate or heirs, have no rights as a stockholder of the Company until   you properly exercise and deliver consideration for your Option’s Shares that   is accepted by the Company, in accordance with the provisions set forth in   this Agreement and the Plan.  No   adjustments shall be made for dividends or other rights if the applicable   record date occurs before you are a record Shareholder of the Company; except   as described in the Plan.
    
	
 
    	
 
    	
 
    
	
Adjustments
    	
 
    	
In   the event of a stock split, a stock dividend or a similar change in the   Company stock, the number of Shares covered by this Option and the exercise   price per Share may be adjusted (and rounded down to the nearest whole   number) pursuant to the Plan.  Your   Option shall be subject to the terms of the agreement of merger, liquidation   or reorganization in the event the Company is subject to such corporate   activity.
    

 

7

 

	
 
    	
 
    	
 
    
	
Legends
    	
 
    	
All   certificates representing the Shares issued upon exercise of this Option   shall, where applicable, have endorsed thereon the following legend:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
“THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN   REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY   APPLICABLE STATE SECURITIES LAWS, AND NO INTEREST MAY BE SOLD, DISTRIBUTED,   ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS (A) THERE IS AN   EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE   SECURITIES LAWS COVERING ANY SUCH TRANSACTION INVOLVING SAID SECURITIES, (B)   THIS CORPORATION RECEIVES AN OPINION OF LEGAL COUNSEL FOR THE HOLDER OF THESE   SECURITIES SATISFACTORY TO THIS CORPORATION STATING THAT SUCH TRANSACTION IS   EXEMPT FROM REGISTRATION, OR (C) THIS CORPORATION OTHERWISE SATISFIES ITSELF   THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION.” 

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO   CERTAIN RESTRICTIONS ON PUBLIC RESALE AND TRANSFER AND A RIGHT OF FIRST   REFUSAL AND A REPURCHASE OPTION HELD BY THE ISSUER AND/OR ITS ASSIGNEE(S) AND   MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, ENCUMBERED, OR IN ANY WAY DISPOSED OF   EXCEPT AS SET FORTH IN A STOCK OPTION AGREEMENT BETWEEN THE ISSUER AND THE   ORIGINAL PURCHASER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE   PRINCIPAL OFFICE OF THE ISSUER.  SUCH   TRANSFER RESTRICTIONS AND RIGHTS OF FIRST REFUSAL AND REPURCHASE ARE BINDING   ON TRANSFEREES OF THESE SHARES.”
    
	
 
    	
 
    	
 
    
	
Applicable   Law
    	
 
    	
This   Agreement will be interpreted and enforced under the internal laws of the   State of Washington without giving effect to principles of conflicts of law.
    

 

By signing the cover sheet of this Agreement, you agree to all of the terms and conditions described above and in the Plan.

 

8Exhibit 10.2

 

INTELEPEER, INC.

(FORMERLY VOEX, INC.)

 

AMENDED AND RESTATED

2003 STOCK OPTION AND RESTRICTED STOCK PLAN

 

1.             ESTABLISHMENT, PURPOSE AND TERM OF PLAN.

 

1.1           Establishment.  The IntelePeer, Inc. 2003 Stock Option and Restricted Stock Plan was initially established effective June 19, 2003 (the “Initial Plan”).  The Initial Plan is hereby amended and restated in its entirety as the IntelePeer, Inc. Amended and Restated 2003 Stock Option and Restricted Stock Plan (the “Plan”) effective as of May 10, 2007 (the “Effective Date”), as amended through October 31, 2008.

 

1.2           Purpose.  The purpose of the Plan is to advance the interests of the Participating Company Group and its stockholders by providing an incentive to attract, retain and reward persons performing services for the Participating Company Group and by motivating such persons to contribute to the growth and profitability of the Participating Company Group.  The Company intends that Awards granted pursuant to the Plan be exempt from or comply with Section 409A of the Code (including any amendments or replacements of such section), and the Plan shall be so construed.

 

1.3           Term of Plan.  The Plan shall continue in effect until its termination by the Board; provided, however, that, all Awards shall be granted, if at all, within ten (10) years from the earlier of the date the Plan is adopted by the Board or the date the Plan is duly approved by the stockholders of the Company.

 

2.             DEFINITIONS AND CONSTRUCTION.

 

2.1           Definitions.  Whenever used herein, the following terms shall have their respective meanings set forth below:

 

(a)           “Applicable California Law” means Section 25102(o) of the California Corporations Code and related Sections of the California Code of Regulations.

 

(b)           “Award” means an Option or Stock Purchase Right granted under the Plan.

 

(c)           “Award Agreement” means a written or electronic agreement between the Company and a Participant setting forth the terms, conditions and restrictions of the Award granted to the Participant.

 

(d)           “Board” means the Board of Directors of the Company.  If one or more Committees have been appointed by the Board to administer the Plan, “Board” also means such Committee(s).

 

 

(e)           “Cause” means, unless such term or an equivalent term is otherwise defined with respect to an Award by the Participant’s Award Agreement or written contract of employment or service, any of the following: (i) the Participant’s theft, dishonesty, willful misconduct, breach of fiduciary duty for personal profit, or falsification of any Participating Company documents or records; (ii) the Participant’s material failure to abide by a Participating Company’s code of conduct or other policies (including, without limitation, policies relating to confidentiality and reasonable workplace conduct); (iii) the Participant’s unauthorized use, misappropriation, destruction or diversion of any tangible or intangible asset or corporate opportunity of a Participating Company (including, without limitation, the Participant’s improper use or disclosure of a Participating Company’s confidential or proprietary information); (iv) any intentional act by the Participant which has a material detrimental effect on a Participating Company’s reputation or business; (v) the Participant’s repeated failure or inability to perform any reasonable assigned duties after written notice from a Participating Company of, and a reasonable opportunity to cure, such failure or inability; (vi) any material breach by the Participant of any employment or service agreement between the Participant and a Participating Company, which breach is not cured pursuant to the terms of such agreement; or (vii) the Participant’s conviction (including any plea of guilty or nolo contendere) of any criminal act involving fraud, dishonesty, misappropriation or moral turpitude, or which impairs the Participant’s ability to perform his or her duties with a Participating Company.

 

(f)            “Change in Control” means, unless such term or an equivalent term is otherwise defined with respect to an Award by the Participant’s Award Agreement or written contract of employment or service, the occurrence of any of the following:

 

(i)            an Ownership Change Event or a series of related Ownership Change Events (collectively, a “Transaction”) in which the stockholders of the Company immediately before the Transaction do not retain immediately after the Transaction, in substantially the same proportions as their ownership of shares of the Company’s voting stock immediately before the Transaction, direct or indirect beneficial ownership of more than fifty percent (50%) of the total combined voting power of the outstanding voting securities of the Company or, in the case of an Ownership Change Event described in Section 2.1(v)(iii), the entity to which the assets of the Company were transferred (the “Transferee”), as the case may be; or

 

(ii)           the liquidation or dissolution of the Company.

 

For purposes of the preceding sentence, indirect beneficial ownership shall include, without limitation, an interest resulting from ownership of the voting securities of one or more corporations or other business entities which own the Company or the Transferee, as the case may be, either directly or through one or more subsidiary corporations or other business entities.  The Board shall have the right to determine whether multiple sales or exchanges of the voting securities of the Company or multiple Ownership Change Events are related, and its determination shall be final, binding and conclusive.

 

(g)           “Code” means the Internal Revenue Code of 1986, as amended, and any applicable regulations and administrative guidelines promulgated thereunder.

 

2

 

(h)           “Committee” means the compensation committee or other committee of the Board duly appointed to administer the Plan and having such powers as shall be specified by the Board.  Unless the powers of the Committee have been specifically limited, the Committee shall have all of the powers of the Board granted herein, including, without limitation, the power to amend or terminate the Plan at any time, subject to the terms of the Plan and any applicable limitations imposed by law.

 

(i)            “Company” means IntelePeer, Inc., a Delaware corporation, or any successor corporation thereto.

 

(j)            “Consultant” means a person engaged to provide consulting or advisory services (other than as an Employee or a Director) to a Participating Company, provided that the identity of such person, the nature of such services or the entity to which such services are provided would not preclude the Company from offering or selling securities to such person pursuant to the Plan in reliance on either the exemption from registration provided by Rule 701 under the Securities Act or, if the Company is required to file reports pursuant to Section 13 or 15(d) of the Exchange Act, registration on a Form S-8 Registration Statement under the Securities Act.

 

(k)           “Director” means a member of the Board or of the board of directors of any other Participating Company.

 

(l)            “Disability” means the inability of the Participant, in the opinion of a qualified physician acceptable to the Company, to perform the major duties of the Participant’s position with the Participating Company Group because of the sickness or injury of the Participant.

 

(m)          “Employee” means any person treated as an employee (including an Officer or a Director who is also treated as an employee) in the records of a Participating Company and, with respect to any Incentive Stock Option granted to such person, who is an employee for purposes of Section 422 of the Code; provided, however, that neither service as a Director nor payment of a director’s fee shall be sufficient to constitute employment for purposes of the Plan.  The Company shall determine in good faith and in the exercise of its discretion whether an individual has become or has ceased to be an Employee and the effective date of such individual’s employment or termination of employment, as the case may be.  For purposes of an individual’s rights, if any, under the terms of the Plan as of the time of the Company’s determination of whether or not the individual is an Employee, all such determinations by the Company shall be final, binding and conclusive as to such rights, if any, notwithstanding that the Company or any court of law or governmental agency subsequently makes a contrary determination as to such individual’s status as an Employee.

 

(n)           “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(o)           “Fair Market Value” means, as of any date, the value of a share of Stock or other property as determined by the Board, in its discretion, or by the Company, in its

 

3

 

discretion, if such determination is expressly allocated to the Company herein, subject to the following:

 

(i)            If, on such date, the Stock is listed on a national or regional securities exchange or market system, the Fair Market Value of a share of Stock shall be the closing price of a share of Stock (or the mean of the closing bid and asked prices of a share of Stock if the Stock is so quoted instead) as quoted on the national or regional securities exchange or market system constituting the primary market for the Stock, as reported in The Wall Street Journal or such other source as the Company deems reliable.  If the relevant date does not fall on a day on which the Stock has traded on such securities exchange or market system, the date on which the Fair Market Value shall be established shall be the last day on which the Stock was so traded prior to the relevant date, or such other appropriate day as shall be determined by the Board, in its discretion.

 

(ii)           If, on such date, the Stock is not listed on a national or regional securities exchange or market system, the Fair Market Value of a share of Stock shall be as determined by the Board in good faith without regard to any restriction other than a restriction which, by its terms, will never lapse, and subject to the applicable requirements, if any, of Section 409A of the Code and Section 260.140.50 of Title 10 of the California Code of Regulations.

 

(p)           “Incentive Stock Option” means an Option intended to be (as set forth in the Award Agreement) and which qualifies as an incentive stock option within the meaning of Section 422(b) of the Code.

 

(q)           “Insider” means an Officer, a Director of the Company or other person whose transactions in Stock are subject to Section 16 of the Exchange Act.

 

(r)            “Net-Exercise” means a procedure by which the Participant will be issued a number of whole shares of Stock upon the exercise of an Option determined in accordance with the following formula:

 

N = X(A-B)/A, where

 

“N” = the number of shares of Stock to be issued to the Participant upon exercise of the Option;

 

“X” = the total number of shares with respect to which the Participant has elected to exercise the Option;

 

“A” = the Fair Market Value of one (1) share of Stock determined on the exercise date; and

 

“B” = the exercise price per share (as defined in the Participant’s Award Agreement)

 

4

 

(s)           “Nonstatutory Stock Option” means an Option not intended to be (as set forth in the Award Agreement) or which does not qualify as an Incentive Stock Option.

 

(t)            “Officer” means any person designated by the Board as an officer of the Company.

 

(u)           “Option” means a right granted under Section 6 to purchase Stock pursuant to the terms and conditions of the Plan.  An Option may be either an Incentive Stock Option or a Nonstatutory Stock Option.

 

(v)           “Ownership Change Event” means the occurrence of any of the following with respect to the Company:  (i) the direct or indirect sale or exchange in a single or series of related transactions by the stockholders of the Company of more than fifty percent (50%) of the voting stock of the Company; (ii) a merger or consolidation in which the Company is a party; or (iii) the sale, exchange, or transfer of all or substantially all of the assets of the Company.

 

(w)          “Parent Corporation” means any present or future “parent corporation” of the Company, as defined in Section 424(e) of the Code.

 

(x)            “Participant”  means any eligible person who has been granted one or more Awards.

 

(y)           “Participating Company” means the Company or any Parent Corporation or Subsidiary Corporation.

 

(z)            “Participating Company Group” means, at any point in time, all entities collectively which are then Participating Companies.

 

(aa)         “Rule 16b-3” means Rule 16b-3 under the Exchange Act, as amended from time to time, or any successor rule or regulation.

 

(bb)         “Securities Act” means the Securities Act of 1933, as amended.

 

(cc)         “Service” means a Participant’s employment or service with the Participating Company Group, whether in the capacity of an Employee, a Director or a Consultant.  A Participant’s Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant renders Service to the Participating Company Group or a change in the Participating Company for which the Participant renders such Service, provided that there is no interruption or termination of the Participant’s Service.  Furthermore, a Participant’s Service shall not be deemed to have terminated if the Participant takes any military leave, sick leave, or other bona fide leave of absence approved by the Company.  However, if any such leave taken by a Participant exceeds ninety (90) days, then on the ninety-first (91st) day following the commencement of such leave the Participant’s Service shall be deemed to have terminated, unless the Participant’s right to return to Service is guaranteed by statute or contract.  Notwithstanding the foregoing, unless otherwise designated by the Company or required by law, an unpaid leave of absence shall not be treated as Service for purposes of determining vesting under the Participant’s Award Agreement.  Except as otherwise provided by the Board, in its

 

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discretion, the Participant’s Service shall be deemed to have terminated either upon an actual termination of Service or upon the corporation for which the Participant performs Service ceasing to be a Participating Company.  Subject to the foregoing, the Company, in its discretion, shall determine whether the Participant’s Service has terminated and the effective date of and reason for such termination.

 

(dd)         “Stock” means the common stock of the Company, as adjusted from time to time in accordance with Section 4.2.

 

(ee)         “Stock Purchase Right” means a right granted under Section 7 to purchase Stock pursuant to the terms and conditions of the Plan.

 

(ff)           “Subsidiary Corporation” means any present or future “subsidiary corporation” of the Company, as defined in Section 424(f) of the Code.

 

(gg)         “Ten Percent Stockholder” means a person who, at the time an Award is granted to such person, owns stock possessing more than ten percent (10%) of the total combined voting power (as defined in Section 194.5 of the California Corporations Code) of all classes of stock of a Participating Company within the meaning of Section 422(b)(6) of the Code.

 

2.2           Construction.  Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of the Plan.  Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular.  Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.

 

3.             ADMINISTRATION.

 

3.1           Administration by the Board.  The Plan shall be administered by the Board.  All questions of interpretation of the Plan or of any Award shall be determined by the Board, and such determinations shall be final and binding upon all persons having an interest in the Plan or such Award.

 

3.2           Authority of Officers.  Any Officer shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, determination or election which is the responsibility of or which is allocated to the Company herein, provided the Officer has apparent authority with respect to such matter, right, obligation, determination or election.

 

3.3           Powers of the Board.  In addition to any other powers set forth in the Plan and subject to the provisions of the Plan, the Board shall have the full and final power and authority, in its discretion:

 

(a)           to determine the persons to whom, and the time or times at which, Awards shall be granted and the number of shares of Stock to be subject to each Award;

 

(b)           to designate Options as Incentive Stock Options or Nonstatutory Stock Options;

 

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(c)           to determine the Fair Market Value of shares of Stock or other property;

 

(d)           to determine the terms, conditions and restrictions applicable to each Award (which need not be identical) and any shares acquired upon the exercise thereof, including, without limitation, (i) the exercise price of the Award, (ii) the method of payment for shares purchased upon the exercise of the Award, (iii) the method for satisfaction of any tax withholding obligation arising in connection with the Award or such shares, including by the withholding or delivery of shares of stock, (iv) the timing, terms and conditions of the exercisability of the Award or the vesting of any shares acquired upon the exercise thereof, (v) the time of the expiration of the Award, (vi) the effect of the Participant’s termination of Service on any of the foregoing, and (vii) all other terms, conditions and restrictions applicable to the Award or such shares not inconsistent with the terms of the Plan;

 

(e)           to approve one or more forms of Award Agreement;

 

(f)            to amend, modify, extend, cancel or renew any Award or to waive any restrictions or conditions applicable to any Award or any shares acquired upon the exercise thereof;

 

(g)           to accelerate, continue, extend or defer the exercisability of any Award or the vesting of any shares acquired upon the exercise thereof, including with respect to the period following a Participant’s termination of Service;

 

(h)           to prescribe, amend or rescind rules, guidelines and policies relating to the Plan, or to adopt supplements to, or alternative versions of, the Plan, including, without limitation, as the Board deems necessary or desirable to comply with the laws of, or to accommodate the tax policy or custom of, foreign jurisdictions whose citizens may be granted Awards; and

 

(i)            to correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award Agreement and to make all other determinations and take such other actions with respect to the Plan or any Award as the Board may deem advisable to the extent not inconsistent with the provisions of the Plan or applicable law.

 

3.4           Administration with Respect to Insiders.  With respect to participation by Insiders in the Plan, at any time that any class of equity security of the Company is registered pursuant to Section 12 of the Exchange Act, the Plan shall be administered in compliance with the requirements, if any, of Rule 16b-3.

 

3.5           Indemnification.  In addition to such other rights of indemnification as they may have as members of the Board or officers or employees of the Participating Company Group, members of the Board and any officers or employees of the Participating Company Group to whom authority to act for the Board or the Company is delegated shall be indemnified by the Company against all reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any right granted

 

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hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct in duties; provided, however, that within sixty (60) days after the institution of such action, suit or proceeding, such person shall offer to the Company, in writing, the opportunity at its own expense to handle and defend the same.

 

4.             SHARES SUBJECT TO PLAN.

 

4.1           Maximum Number of Shares Issuable.  Subject to adjustment as provided in Section 4.2, the maximum aggregate number of shares of Stock that may be issued under the Plan shall be Eighteen Million Five Hundred Twenty-Nine Thousand Five Hundred Eighty-Seven (18,529,587) which shall consist of authorized but unissued or reacquired shares of Stock or any combination thereof.  If an outstanding Award for any reason expires or is terminated or canceled or if shares of Stock are acquired upon the exercise of an Award subject to a Company repurchase option and are repurchased by the Company at the Participant’s exercise or purchase price, the shares of Stock allocable to the unexercised portion of such Award or such repurchased shares of Stock shall again be available for issuance under the Plan.  Notwithstanding the foregoing, at any such time as the offer and sale of securities pursuant to the Plan is subject to compliance with Section 260.140.45 of Title 10 of the California Code of Regulations (“Section 260.140.45”), the total number of shares of Stock issuable upon the exercise of all outstanding Awards (together with options outstanding under any other stock plan of the Company) and the total number of shares provided for under any stock bonus or similar plan of the Company shall not exceed thirty percent (30%) (or such other higher percentage limitation as may be approved by the stockholders of the Company pursuant to Section 260.140.45) of the then outstanding shares of the Company as calculated in accordance with the conditions and exclusions of Section 260.140.45.

 

4.2           Adjustments for Changes in Capital Structure.  Subject to any required action by the stockholders of the Company, in the event of any change in the Stock effected without receipt of consideration by the Company, whether through merger, consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of shares, or similar change in the capital structure of the Company, or in the event of payment of a dividend or distribution to the stockholders of the Company in a form other than Stock (excepting normal cash dividends) that has a material effect on the Fair Market Value of shares of Stock, appropriate and proportionate adjustments shall be made in the number and kind of shares subject to the Plan and to any outstanding Awards, in the ISO Share Limit set forth in Section 5.3(a), and in the exercise or purchase price per share of any outstanding Awards in order to prevent dilution or enlargement of Participants’ rights under the Plan.  For purposes of the foregoing, conversion of any convertible securities of the Company shall not be treated as “effected without receipt of consideration by the Company.”  If a majority of the shares which are of the same class as the shares that are subject to outstanding Awards are exchanged for, converted into, or otherwise become (whether or not pursuant to an Ownership Change Event) shares of another corporation (the “New Shares”), the Board may unilaterally amend the outstanding Awards to provide that such Awards are for New Shares.  In the event of any such

 

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amendment, the number of shares subject to, and the exercise or purchase price per share of, the outstanding Awards shall be adjusted in a fair and equitable manner as determined by the Board, in its discretion.  Any fractional share resulting from an adjustment pursuant to this Section 4.2 shall be rounded down to the nearest whole number, and the exercise price per share shall be rounded up to the nearest whole cent.  In no event may the exercise price of any Award be decreased to an amount less than the par value, if any, of the stock subject to the Award.  Such adjustments shall be determined by the Board, and its determination shall be final, binding and conclusive.

 

5.             ELIGIBILITY AND OPTION LIMITATIONS.

 

5.1           Persons Eligible for Awards.  Awards may be granted only to Employees, Consultants and Directors.

 

5.2           Participation in Plan.  Awards are granted solely at the discretion of the Board.  Eligible persons may be granted more than one Award.  However, eligibility in accordance with this Section shall not entitle any person to be granted an Award, or, having been granted an Award, to be granted an additional Award.

 

5.3           Incentive Stock Option Limitations.

 

(a)           Maximum Number of Shares Issuable Pursuant to Incentive Stock Options.  Subject to Section 4.1 and adjustment as provided in Section 4.2, the maximum aggregate number of shares of Stock that may be issued under the Plan pursuant to the exercise of Incentive Stock Options shall not exceed Thirteen Million Six Hundred Thirty Two Thousand Five Hundred Eighty Seven (13,632,587)  shares (the “ISO Share Limit”).  The maximum aggregate number of shares of Stock that may be issued under the Plan pursuant to all Awards other than Incentive Stock Options shall be the number of shares determined in accordance with Section 4.1, subject to adjustment as provided in Section 4.2.

 

(b)           Persons Eligible.  An Incentive Stock Option may be granted only to a person who, on the effective date of grant, is an Employee.  Any person who is not an Employee on the effective date of the grant of an Option to such person may be granted only a Nonstatutory Stock Option.  An Incentive Stock Option granted to a prospective Employee upon the condition that such person become an Employee shall be deemed granted effective on the date such person commences Service as an Employee, with an exercise price determined as of such date in accordance with Section 6.1.

 

(c)           Fair Market Value Limitation.  To the extent that options designated as Incentive Stock Options (granted under all stock plans of the Participating Company Group, including the Plan) become exercisable by a Participant for the first time during any calendar year for stock having a Fair Market Value greater than One Hundred Thousand Dollars ($100,000), the portions of such options which exceed such amount shall be treated as Nonstatutory Stock Options.  For purposes of this Section 5.3, options designated as Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of stock shall be determined as of the time the option with respect to such stock is granted.  If the Code is amended to provide for a different limitation from that set forth

 

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in this Section, such different limitation shall be deemed incorporated herein effective as of the date and with respect to such Options as required or permitted by such amendment to the Code.  If an Option is treated as an Incentive Stock Option in part and as a Nonstatutory Stock Option in part by reason of the limitation set forth in this Section, the Participant may designate which portion of such Option the Participant is exercising.  In the absence of such designation, the Participant shall be deemed to have exercised the Incentive Stock Option portion of the Option first.  Separate certificates representing each such portion shall be issued upon the exercise of the Option.

 

6.             TERMS AND CONDITIONS OF OPTIONS.

 

Options shall be evidenced by Award Agreements specifying the number of shares of Stock covered thereby, in such form as the Board shall from time to time establish.  Award Agreements may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:

 

6.1           Exercise Price.  The exercise price for each Option shall be established in the discretion of the Board; provided, however, that (a) the exercise price per share for an Option shall be not less than the Fair Market Value of a share of Stock on the effective date of grant of the Option and (b) no Incentive Stock Option (or, if required by Applicable California Law, no Option) granted to a Ten Percent Stockholder shall have an exercise price per share less than one hundred ten percent (110%) of the Fair Market Value of a share of Stock on the effective date of grant of the Option.  Notwithstanding the foregoing, an Option (whether an Incentive Stock Option or a Nonstatutory Stock Option) may be granted with an exercise price lower than the minimum exercise price set forth above if such Option is granted pursuant to an assumption or substitution for another option in a manner qualifying under the provisions of Section 424(a) of the Code.

 

6.2           Exercisability and Term of Options.  Options shall be exercisable at such time or times, or upon such event or events, and subject to such terms, conditions, performance criteria and restrictions as shall be determined by the Board and set forth in the Award Agreement evidencing such Option; provided, however, that (a) no Option shall be exercisable after the expiration of ten (10) years after the effective date of grant of such Option, (b) no Incentive Stock Option granted to a Ten Percent Stockholder shall be exercisable after the expiration of five (5) years after the effective date of grant of such Option, and (c) with the exception of an Option granted to an Officer, a Director or a Consultant, if required by Applicable California Law, no Option shall become exercisable at a rate less than twenty percent (20%) per year over a period of five (5) years from the effective date of grant of such Option, subject to the Participant’s continued Service.  Subject to the foregoing, unless otherwise specified by the Board in the grant of an Option, any Option granted hereunder shall terminate ten (10) years after the effective date of grant of the Option, unless earlier terminated in accordance with its provisions.

 

6.3           Payment of Exercise Price.

 

(a)           Forms of Consideration Authorized.  Except as otherwise provided below, payment of the exercise price for the number of shares of Stock being purchased

 

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pursuant to any Option shall be made (i) in cash or by check or cash equivalent, (ii) by tender to the Company, or attestation to the ownership, of shares of Stock owned by the Participant having a Fair Market Value not less than the exercise price, (iii) by delivery of a properly executed notice together with irrevocable instructions to a broker providing for the assignment to the Company of the proceeds of a sale or loan with respect to some or all of the shares being acquired upon the exercise of the Option (including, without limitation, through an exercise complying with the provisions of Regulation T as promulgated from time to time by the Board of Governors of the Federal Reserve System) (a “Cashless Exercise”), (iv) by delivery of a properly executed notice electing a Net-Exercise, (v) by such other consideration as may be approved by the Board from time to time to the extent permitted by applicable law, or (vi) by any combination thereof.  The Board may at any time or from time to time, by approval of or by amendment to the standard forms of Award Agreement described in Section 8, or by other means, grant Options which do not permit all of the foregoing forms of consideration to be used in payment of the exercise price or which otherwise restrict one or more forms of consideration.

 

(b)           Limitations on Forms of Consideration.

 

(i)            Tender of Stock.  Notwithstanding the foregoing, an Option may not be exercised by tender to the Company, or attestation to the ownership, of shares of Stock to the extent such tender or attestation would constitute a violation of the provisions of any law, regulation or agreement restricting the redemption of the Company’s stock.  Unless otherwise provided by the Board, an Option may not be exercised by tender to the Company, or attestation to the ownership, of shares of Stock unless such shares either have been owned by the Participant for more than six (6) months or such other period, if any, required by the Company (and were not used for another Option exercise by attestation during such period) or were not acquired, directly or indirectly, from the Company.

 

(ii)           Cashless Exercise.  The Company reserves, at any and all times, the right, in the Company’s sole and absolute discretion, to establish, decline to approve or terminate any program or procedures for the exercise of Options by means of a Cashless Exercise.

 

6.4           Effect of Termination of Service.

 

(a)           Option Exercisability.  Subject to earlier termination of the Option as otherwise provided by this Plan and unless a longer exercise period is provided by the Board in the grant of an Option and set forth in the Award Agreement, an Option shall terminate immediately upon the Participant’s termination of Service to the extent that it is then unvested and shall be exercisable after the Participant’s termination of Service to the extent it is then vested only during the applicable time period determined in accordance with this Section and thereafter shall terminate:

 

(i)            Disability.  If the Participant’s Service terminates because of the Disability of the Participant, the Option, to the extent unexercised and exercisable on the date on which the Participant’s Service terminated, may be exercised by the Participant (or the Participant’s guardian or legal representative) at any time prior to the expiration of twelve (12) months after the date on which the Participant’s Service terminated, but in any event no later

 

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than the date of expiration of the Option’s term as set forth in the Award Agreement evidencing such Option (the “Option Expiration Date”).

 

(ii)           Death.  If the Participant’s Service terminates because of the death of the Participant, the Option, to the extent unexercised and exercisable on the date on which the Participant’s Service terminated, may be exercised by the Participant’s legal representative or other person who acquired the right to exercise the Option by reason of the Participant’s death at any time prior to the expiration of twelve (12) months after the date on which the Participant’s Service terminated, but in any event no later than the Option Expiration Date.  The Participant’s Service shall be deemed to have terminated on account of death if the Participant dies within three (3) months (or such longer period of time as determined by the Board, in its discretion) after the Participant’s termination of Service.

 

(iii)          Termination for Cause.  Notwithstanding any other provision of the Plan to the contrary, if the Participant’s Service is terminated for Cause, the Option shall terminate and cease to be exercisable immediately upon such termination of Service.

 

(iv)          Other Termination of Service.  If the Participant’s Service terminates for any reason, except Disability, death or for Cause, the Option, to the extent unexercised and exercisable by the Participant on the date on which the Participant’s Service terminated, may be exercised by the Participant at any time prior to the expiration of three (3) months after the date on which the Participant’s Service terminated, but in any event no later than the Option Expiration Date.

 

(b)           Extension if Exercise Prevented by Law.  Notwithstanding the foregoing other than termination for Cause, if the exercise of an Option within the applicable time periods set forth in Section 6.4(a) is prevented by the provisions of Section 11 below, the Option shall remain exercisable until thirty (30) days after the date such exercise first would no longer be prevented by such provisions, but in any event no later than the Option Expiration Date.

 

6.5           Transferability of Options.  During the lifetime of the Participant, an Option shall be exercisable only by the Participant or the Participant’s guardian or legal representative.  No Option shall be assignable or transferable by the Participant, except by will or by the laws of descent and distribution.  Notwithstanding the foregoing, to the extent permitted by the Board, in its discretion, and set forth in the Award Agreement evidencing such Option, a Nonstatutory Stock Option shall be assignable or transferable subject to the applicable limitations, if any, described in Rule 701 under the Securities Act, and the General Instructions to Form S-8 Registration Statement under the Securities Act.

 

7.             TERMS AND CONDITIONS OF STOCK PURCHASE RIGHTS.

 

Stock Purchase Rights shall be evidenced by Award Agreements, specifying the number of shares of Stock covered thereby, in such form as the Board shall from time to time establish.  Award Agreements may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:

 

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7.1           Purchase Price.  The purchase price under each Stock Purchase Right shall be established by the Board; provided, however, that, to the extent required by Applicable California Law, (a) the purchase price per share shall be at least eighty-five percent (85%) of the Fair Market Value of a share of Stock either on the effective date of grant of the Stock Purchase Right or on the date on which the purchase is consummated and (b) the purchase price per share under a Stock Purchase Right granted to a Ten Percent Stockholder shall be at least one hundred percent (100%) of the Fair Market Value of a share of Stock either on the effective date of grant of the Stock Purchase Right or on the date on which the purchase is consummated.

 

7.2           Purchase Period.  A Stock Purchase Right shall be exercisable within a period established by the Board, which shall in no event exceed thirty (30) days from the effective date of the grant of the Stock Purchase Right.

 

7.3           Payment of Purchase Price.  Except as otherwise provided below, payment of the purchase price for the number of shares of Stock being purchased pursuant to any Stock Purchase Right shall be made (a) in cash or by check or cash equivalent, (b) in the form of the Participant’s past service rendered to a Participating Company or for its benefit having a value not less than the aggregate purchase price of the shares being acquired, (c) by such other consideration as may be approved by the Board from time to time to the extent permitted by applicable law, or (d) by any combination thereof.  The Board may at any time or from time to time, by adoption of or by amendment to the standard form of Award Agreement described in Section 8, or by other means, grant Stock Purchase Rights which do not permit all of the foregoing forms of consideration to be used in payment of the purchase price or which otherwise restrict one or more forms of consideration.

 

7.4           Vesting and Restrictions on Transfer.  Shares issued pursuant to any Stock Purchase Right may or may not be made subject to vesting conditioned upon the satisfaction of such Service requirements, conditions, restrictions or performance criteria (the “Vesting Conditions”) as shall be established by the Board and set forth in the Award Agreement evidencing such Award.  During any period in which shares acquired pursuant to a Stock Purchase Right remain subject to Vesting Conditions, such shares may not be sold, exchanged, transferred, pledged, assigned or otherwise disposed of other than pursuant to an Ownership Change Event or as provided in Section 7.5.  Upon request by the Company, each Participant shall execute any agreement evidencing such transfer restrictions prior to the receipt of shares of Stock hereunder and shall promptly present to the Company any and all certificates representing shares of Stock acquired hereunder for the placement on such certificates of appropriate legends evidencing any such transfer restrictions.

 

7.5           Effect of Termination of Service.  Unless otherwise provided by the Board in the grant of a Stock Purchase Right and set forth in the Award Agreement, if a Participant’s Service terminates for any reason, whether voluntary or involuntary (including the Participant’s death or disability), then the Company shall have the option to repurchase for the purchase price paid by the Participant any shares acquired by the Participant pursuant to a Stock Purchase Right which remain subject to Vesting Conditions as of the date of the Participant’s termination of Service; provided, however, that with the exception of shares acquired pursuant to a Stock Purchase Right by an Officer, a Director or a Consultant, the Company’s repurchase option must lapse, to the extent required by Applicable California Law, at the rate of at least

 

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twenty percent (20%) of the shares per year over the period of five (5) years from the effective date of grant of the Stock Purchase Right (without regard to the date on which the Stock Purchase Right was exercised) and the repurchase option must be exercised, if at all, for cash or cancellation of purchase money indebtedness for the shares within ninety (90) days following the Participant’s termination of Service.  The Company shall have the right to assign at any time any repurchase right it may have, whether or not such right is then exercisable, to one or more persons as may be selected by the Company.

 

7.6           Nontransferability of Stock Purchase Rights.  Rights to acquire shares of Stock pursuant to a Stock Purchase Right may not be assigned or transferred in any manner except by will or the laws of descent and distribution, and, during the lifetime of the Participant, shall be exercisable only by the Participant.

 

8.             STANDARD FORMS OF AWARD AGREEMENTS.

 

8.1           Award Agreements.  Each Award shall comply with and be subject to the terms and conditions set forth in the appropriate form of Award Agreement approved by the Board and as amended from time to time.  No Award or purported Award shall be a valid and binding obligation of the Company unless evidenced by a fully executed Award Agreement.  Any Award Agreement may consist of an appropriate form of Notice of Grant and a form of Agreement incorporated therein by reference, or such other form or forms, including electronic media, as the Board may approve from time to time.

 

8.2           Authority to Vary Terms.  The Board shall have the authority from time to time to vary the terms of any standard form of Award Agreement either in connection with the grant or amendment of an individual Award or in connection with the authorization of a new standard form or forms; provided, however, that the terms and conditions of any such new, revised or amended standard form or forms of Award Agreement are not inconsistent with the terms of the Plan.

 

9.             CHANGE IN CONTROL.

 

9.1           Effect of Change in Control on Awards.

 

(a)           Accelerated Vesting.  The Board may, in its sole discretion, provide in any Award Agreement or, in the event of a Change in Control, may take such actions as it deems appropriate to provide for the acceleration of the exercisability and vesting in connection with such Change in Control of any or all outstanding Awards and shares acquired upon the exercise thereof upon such conditions, including termination of the Participant’s Service prior to, upon, or following such Change in Control, and to such extent as the Board shall determine.

 

(b)           Assumption or Substitution of Awards.  In the event of a Change in Control, the surviving, continuing, successor, or purchasing entity or parent thereof, as the case may be (the “Acquiror”), may, without the consent of any Participant, assume or continue the Company’s rights and obligations under each or any Award or portion thereof outstanding immediately prior to the Change in Control or substitute for each or any such outstanding Award or portion thereof a substantially equivalent award for the Acquiror’s stock.  For purposes of this

 

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Section, if so determined by the Board in its discretion, an Award shall be deemed assumed if, following the Change in Control, the Award confers the right to receive, subject to the terms and conditions of the Plan and the applicable Award Agreement, for each share of Stock subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, other securities or property or a combination thereof) to which a holder of a share of Stock on the effective date of the Change in Control was entitled; provided, however, that if such consideration is not solely common stock of the Acquiror, the Board may, with the consent of the Acquiror, provide for the consideration to be received upon the exercise of the Award, for each share of Stock subject to the Award, to consist solely of common stock of the Acquiror equal in Fair Market Value to the per share consideration received by holders of Stock pursuant to the Change in Control.  If any portion of such consideration may be received by holders of Stock pursuant to the Change in Control on a contingent or delayed basis, the Board may, in its sole discretion, determine such Fair Market Value per share as of the time of the Change in Control on the basis of the Board’s good faith estimate of the present value of the probable future payment of such consideration.  Any Award or portion thereof which is neither assumed or continued by the Acquiror in connection with the Change in Control nor exercised as of the time of consummation of the Change in Control shall terminate and cease to be outstanding effective as of the time of consummation of the Change in Control.  Notwithstanding the foregoing, shares acquired upon exercise of an Award prior to the Change in Control and any consideration received pursuant to the Change in Control with respect to such shares shall continue to be subject to all applicable provisions of the Award Agreement evidencing such Award except as otherwise provided in such Award Agreement.

 

(c)           Cash-Out of Awards.  The Board may, in its sole discretion and without the consent of any Participant, determine that, upon the occurrence of a Change in Control, each or any Award or portion thereof outstanding immediately prior to the Change in Control shall be canceled in exchange for a payment with respect to each vested share (and each unvested share, if so determined by the Board) of Stock subject to such canceled Award in (i) cash, (ii) stock of the Company or of a corporation or other business entity a party to the Change in Control, or (iii) other property which, in any such case, shall be in an amount having a Fair Market Value equal to the Fair Market Value of the consideration to be paid per share of Stock in the Change in Control over the exercise price per share under such Award (the “Spread”).  If any portion of such consideration may be received by holders of Stock pursuant to the Change in Control on a contingent or delayed basis, the Board may, in its sole discretion, determine such Fair Market Value per share as of the time of the Change in Control on the basis of the Board’s good faith estimate of the present value of the probable future payment of such consideration.  In the event such determination is made by the Board, the Spread (reduced by applicable withholding taxes, if any) shall be paid to Participants in respect of their canceled Awards as soon as practicable following the date of the Change in Control and in respect of the unvested portion of their canceled Awards in accordance with the vesting schedule applicable to such Awards as in effect prior to the Change in Control.

 

9.2           Federal Excise Tax Under Section 4999 of the Code.

 

(a)           Excess Parachute Payment.  In the event that any acceleration of vesting pursuant to an Award and any other payment or benefit received or to be received by a Participant would subject the Participant to any excise tax pursuant to Section 4999 of the Code

 

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due to the characterization of such acceleration of vesting, payment or benefit as an “excess parachute payment” under Section 280G of the Code, the Participant may elect, in his or her sole discretion, to reduce the amount of any acceleration of vesting called for under the Award in order to avoid such characterization.

 

(b)           Determination by Independent Accountants.  To aid the Participant in making any election called for under Section 9.2(a), no later than the date of the occurrence of any event that might reasonably be anticipated to result in an “excess parachute payment” to the Participant as described in Section 9.2(a), the Company shall request a determination in writing by independent public accountants selected by the Company (the “Accountants”).  As soon as practicable thereafter, the Accountants shall determine and report to the Company and the Participant the amount of such acceleration of vesting, payments and benefits which would produce the greatest after-tax benefit to the Participant.  For the purposes of such determination, the Accountants may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code.  The Company and the Participant shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make their required determination.  The Company shall bear all fees and expenses the Accountants may reasonably charge in connection with their services contemplated by this Section 9.2(b).

 

10.           TAX WITHHOLDING.

 

10.1         Tax Withholding in General.  The Company shall have the right to deduct from any and all payments made under the Plan, or to require the Participant, through payroll withholding, cash payment or otherwise, including by means of a Cashless Exercise of an Option, to make adequate provision for, the federal, state, local and foreign taxes (including any social insurance tax), if any, required by law to be withheld by the Participating Company Group with respect to an Award or the shares acquired pursuant thereto.  The Company shall have no obligation to deliver shares of Stock or to release shares of Stock from an escrow established pursuant to an Award Agreement until the Participating Company Group’s tax withholding obligations have been satisfied by the Participant.

 

10.2         Withholding in Shares.  The Company shall have the right, but not the obligation, to deduct from the shares of Stock issuable to a Participant upon the exercise of an Award, or to accept from the Participant the tender of, a number of whole shares of Stock having a Fair Market Value, as determined by the Company, equal to all or any part of the tax withholding obligations of the Participating Company Group.  The Fair Market Value of any shares of Stock withheld or tendered to satisfy any such tax withholding obligations shall not exceed the amount determined by the applicable minimum statutory withholding rates.

 

11.           COMPLIANCE WITH SECURITIES LAW.

 

The grant of Awards and the issuance of shares of Stock upon exercise of Awards shall be subject to compliance with all applicable requirements of federal, state and foreign law with respect to such securities.  Awards may not be exercised if the issuance of shares of Stock upon exercise would constitute a violation of any applicable federal, state or foreign securities laws or other law or regulations or the requirements of any stock exchange or market system

 

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upon which the Stock may then be listed.  In addition, no Award may be exercised unless (a) a registration statement under the Securities Act shall at the time of exercise of the Award be in effect with respect to the shares issuable upon exercise of the Award or (b) in the opinion of legal counsel to the Company, the shares issuable upon exercise of the Award may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act.  The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any shares hereunder shall relieve the Company of any liability in respect of the failure to issue or sell such shares as to which such requisite authority shall not have been obtained.  As a condition to the exercise of any Award, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company.

 

12.           AMENDMENT OR TERMINATION OF PLAN.

 

The Board may amend, suspend or terminate the Plan at any time.  However, subject to changes in applicable law, regulations or rules that would permit otherwise, without the approval of the Company’s stockholders, there shall be (a) no increase in the maximum aggregate number of shares of Stock that may be issued under the Plan (except by operation of the provisions of Section 4.2), (b) no change in the class of persons eligible to receive Incentive Stock Options, and (c) no other amendment of the Plan that would require approval of the Company’s stockholders under any applicable law, regulation or rule, including the rules of any stock exchange or market system upon which the Stock may then be listed.  No amendment, suspension or termination of the Plan shall affect any then outstanding Award unless expressly provided by the Board.  Except as provided by the next sentence, no amendment, suspension or termination of the Plan may adversely affect any then outstanding Award without the consent of the Participant.  Notwithstanding any other provision of the Plan or any Award Agreement to the contrary, the Board may, in its sole and absolute discretion and without the consent of any Participant, amend the Plan or any Award Agreement, to take effect retroactively or otherwise, as it deems necessary or advisable for the purpose of conforming the Plan or such Award Agreement to any present or future law, regulation or rule applicable to the Plan, including, but not limited to, Section 409A of the Code.

 

13.           MISCELLANEOUS PROVISIONS.

 

13.1         Repurchase Rights.  Shares issued under the Plan may be subject to a right of first refusal, one or more repurchase options, or other conditions and restrictions as determined by the Board in its discretion at the time the Award is granted.  The Company shall have the right to assign at any time any repurchase right it may have, whether or not such right is then exercisable, to one or more persons as may be selected by the Company.  Upon request by the Company, each Participant shall execute any agreement evidencing such transfer restrictions prior to the receipt of shares of Stock hereunder and shall promptly present to the Company any and all certificates representing shares of Stock acquired hereunder for the placement on such certificates of appropriate legends evidencing any such transfer restrictions.

 

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13.2         Provision of Information.  At least annually, copies of the Company’s balance sheet and income statement for the just completed fiscal year shall be made available to each Participant and purchaser of shares of Stock upon the exercise of an Award.  The Company shall not be required to provide such information to key employees whose duties in connection with the Company assure them access to equivalent information.  Furthermore, the Company shall deliver to each Participant such disclosures as are required in accordance with Rule 701 under the Securities Act.

 

13.3         Rights as Employee, Consultant or Director.  No person, even though eligible pursuant to Section 5, shall have a right to be selected as a Participant, or, having been so selected, to be selected again as a Participant.  Nothing in the Plan or any Award granted under the Plan shall confer on any Participant a right to remain an Employee, Consultant or Director or interfere with or limit in any way any right of a Participating Company to terminate the Participant’s Service at any time.  To the extent that an Employee of a Participating Company other than the Company receives an Award under the Plan, that Award shall in no event be understood or interpreted to mean that the Company is the Employee’s employer or that the Employee has an employment relationship with the Company.

 

13.4         Rights as a Stockholder.  A Participant shall have no rights as a stockholder with respect to any shares covered by an Award until the date of the issuance of such shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company).  No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date such shares are issued, except as provided in Section 4.2 or another provision of the Plan.

 

13.5         Fractional Shares.  The Company shall not be required to issue fractional shares upon the exercise or settlement of any Award.

 

13.6         Retirement and Welfare Plans.  Neither Awards made under this Plan nor shares of Stock or cash paid pursuant to such Awards shall be included as “compensation” for purposes of computing the benefits payable to any Participant under any Participating Company’s retirement plans (both qualified and non-qualified) or welfare benefit plans unless such other plan expressly provides that such compensation shall be taken into account in computing such benefits.

 

13.7         Severability.  If any one or more of the provisions (or any part thereof) of this Plan shall be held invalid, illegal or unenforceable in any respect, such provision shall be modified so as to make it valid, legal and enforceable, and the validity, legality and enforceability of the remaining provisions (or any part thereof) of the Plan shall not in any way be affected or impaired thereby.

 

13.8         No Constraint on Corporate Action.  Nothing in this Plan shall be construed to: (a) limit, impair, or otherwise affect the Company’s or another Participating Company’s right or power to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer all or any part of its business or assets; or (b) limit the right or power of the Company or another

 

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Participating Company to take any action which such entity deems to be necessary or appropriate.

 

13.9         Choice of Law.  Except to the extent governed by applicable federal law, the validity, interpretation, construction and performance of the Plan and each Award Agreement shall be governed by the laws of the State of Delaware, without regard to its conflict of law rules.

 

13.10       Stockholder Approval.  The Plan or any increase in the maximum aggregate number of shares of Stock issuable thereunder as provided in Section 4.1 (the “Authorized Shares”) shall be approved by a majority of the outstanding securities of the Company entitled to vote within twelve (12) months before or after the date of adoption thereof by the Board.  Awards granted prior to security holder approval of the Plan or in excess of the Authorized Shares previously approved by the security holders shall become exercisable no earlier than the date of security holder approval of the Plan or such increase in the Authorized Shares, as the case may be.

 

14.           Continuation of Initial Plan as to Outstanding Awards.

 

Any other provision of the Plan to the contrary notwithstanding, the terms of the Initial Plan (other than the maximum aggregate number of shares of Stock issuable thereunder) shall remain in effect and apply to all Awards granted pursuant to the Initial Plan.

 

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PLAN HISTORY

 

	
May 10,   2007
    	
Board   amends and restates the Company’s 2003 Stock Option and Restricted Stock Plan   in its entirety as the Plan and increases the reserve from 5,689,183 shares   to 10,301,344 shares.
    
	
 
    	
 
    
	
May 10,   2007
    	
Stockholders   of the Company approve amendment and restatement of the 2003 Stock Option and   Restricted Stock Plan as the Plan.
    
	
 
    	
 
    
	
December 18,   2007
    	
Board   amends the Company’s 2003 Stock Option and Restricted Stock Plan in its   entirety as the Plan and increases the reserve by 500,000 shares from   10,301,344 to 10,801,344 shares.
    
	
 
    	
 
    
	
December 18,   2007
    	
Stockholders   of the Company approve the 500,000 share increase to the Amended and Restated   2003 Stock Option and Restricted Stock Plan.
    
	
 
    	
 
    
	
February 14,   2008
    	
Board   amends the Company’s 2003 Stock Option and Restricted Stock Plan in its   entirety as the Plan and increases the reserve by 1,500,000 shares from   10,801,344 shares to 12,301,344 shares.
    
	
 
    	
 
    
	
February 20,   2008
    	
Stockholders   of the Company approve the 1,500,000 share increase to the Amended and   Restated 2003 Stock Option and Restricted Stock Plan.
    
	
 
    	
 
    
	
October 30,   2008
    	
Board   amends the Company’s 2003 Stock Option and Restricted Stock Plan in its   entirety as the Plan and increases the reserve by 1,328,243 shares from   12,301,344 shares to 13,632,587 shares.
    
	
 
    	
 
    
	
November 4,   2008
    	
Stockholders   of the Company approve the 1,328,243 share increase to the Amended and   Restated 2003 Stock Option and Restricted Stock Plan.
    
	
 
    	
 
    
	
September   30, 2009
    	
Board   amends the Company’s 2003 Stock Option and Restricted Stock Plan in its   entirety as the Plan and increases the reserve by 1,000,000 shares from   13,632,587 shares to 14,632,587 shares.
    
	
 
    	
 
    
	
October   5, 2009
    	
Stockholders   of the Company approve the 1,000,000 share increase to the Amended and   Restated 2003 Stock Option and Restricted Stock Plan.
    
	
 
    	
 
    
	
April   28, 2010
    	
Board   amends the Company’s 2003 Stock Option and Restricted Stock Plan in its   entirety as the Plan and increases the reserve by 1,000,000 shares from   14,632,587 shares to 15,632,587 shares.
    
	
 
    	
 
    
	
May   12, 2010
    	
Stockholders   of the Company approve the 1,000,000 share increase to the Amended and   Restated 2003 Stock Option and Restricted Stock Plan.
    
	
 
    	
 
    
	
May   2, 2011
    	
Board   amends the Company’s 2003 Stock Option and Restricted Stock Plan in its   entirety as the Plan and increases the reserve by 2.9 million shares from   15,632,587 shares to 18,529,587 shares.
    
	
 
    	
 
    
	
May   5, 2011
    	
Stockholders   of the Company approve the 2.9 million share increase to the Amended and   Restated 2003 Stock Option and Restricted Stock Plan.
    

 

 

THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAVE NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102, OR 25105 OF THE CALIFORNIA CORPORATIONS CODE.  THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.

 

THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.  NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

 

INTELEPEER, INC.

(FORMERLY VOEX, INC.)

STOCK OPTION AGREEMENT

 

IntelePeer, Inc. has granted to the Participant named in the Notice of Grant of Stock Option (the “Grant Notice”) to which this Stock Option Agreement (the “Option Agreement”) is attached an option (the “Option”) to purchase certain shares of Stock upon the terms and conditions set forth in the Grant Notice and this Option Agreement.  The Option has been granted pursuant to and shall in all respects be subject to the terms and conditions of the IntelePeer, Inc. Amended and Restated 2003 Stock Option and Restricted Stock Plan (the “Plan”), as amended to the Date of Grant, the provisions of which are incorporated herein by reference.  By signing the Grant Notice, the Participant: (a) acknowledges receipt of, and represents that the Participant has read and is familiar with the terms and conditions of, the Grant Notice, this Option Agreement and the Plan, (b) accepts the Option subject to all of the terms and conditions of the Grant Notice, this Option Agreement and the Plan, and (c) agrees to accept as binding, conclusive and final all decisions or interpretations of the Board upon any questions arising under the Grant Notice, this Option Agreement or the Plan.

 

1.             DEFINITIONS AND CONSTRUCTION.

 

1.1           Definitions.  Unless otherwise defined herein, capitalized terms shall have the meanings assigned to such terms in the Grant Notice or the Plan.

 

1.2           Construction.  Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of this Option Agreement.  Except when otherwise indicated by the context, the singular shall include the plural

 

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and the plural shall include the singular.  Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.

 

2.             TAX CONSEQUENCES.

 

2.1           Tax Status of Option.  This Option is intended to have the tax status designated in the Grant Notice.

 

(a)           Incentive Stock Option.  If the Grant Notice so designates, this Option is intended to be an Incentive Stock Option within the meaning of Section 422(b) of the Code, but the Company does not represent or warrant that this Option qualifies as such.  The Participant should consult with the Participant’s own tax advisor regarding the tax effects of this Option and the requirements necessary to obtain favorable income tax treatment under Section 422 of the Code, including, but not limited to, holding period requirements.  (NOTE TO PARTICIPANT: If the Option is exercised more than three (3) months after the date on which you cease to be an Employee (other than by reason of your death or permanent and total disability as defined in Section 22(e)(3) of the Code), the Option will be treated as a Nonstatutory Stock Option and not as an Incentive Stock Option to the extent required by Section 422 of the Code.)

 

(b)           Nonstatutory Stock Option.  If the Grant Notice so designates, this Option is intended to be a Nonstatutory Stock Option and shall not be treated as an Incentive Stock Option within the meaning of Section 422(b) of the Code.

 

2.2           ISO Fair Market Value Limitation.  If the Grant Notice designates this Option as an Incentive Stock Option, then to the extent that the Option (together with all Incentive Stock Options granted to the Participant under all stock option plans of the Participating Company Group, including the Plan) becomes exercisable for the first time during any calendar year for shares having a Fair Market Value greater than One Hundred Thousand Dollars ($100,000), the portion of such options which exceeds such amount will be treated as Nonstatutory Stock Options.  For purposes of this Section 2.2, options designated as Incentive Stock Options are taken into account in the order in which they were granted, and the Fair Market Value of stock is determined as of the time the option with respect to such stock is granted.  If the Code is amended to provide for a different limitation from that set forth in this Section 2.2, such different limitation shall be deemed incorporated herein effective as of the date required or permitted by such amendment to the Code.  If the Option is treated as an Incentive Stock Option in part and as a Nonstatutory Stock Option in part by reason of the limitation set forth in this Section 2.2, the Participant may designate which portion of such Option the Participant is exercising.  In the absence of such designation, the Participant shall be deemed to have exercised the Incentive Stock Option portion of the Option first.  Separate certificates representing each such portion shall be issued upon the exercise of the Option.  (NOTE TO PARTICIPANT: If the aggregate Exercise Price of the Option (that is, the Exercise Price multiplied by the Number of Option Shares) plus the aggregate exercise price of any other Incentive Stock Options you hold (whether granted pursuant to the Plan or any other stock option plan of the Participating Company Group) is greater than $100,000, you should contact the Chief Financial Officer of the Company to ascertain whether the entire Option qualifies as an Incentive Stock Option.)

 

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3.             ADMINISTRATION.

 

All questions of interpretation concerning the Grant Notice, this Option Agreement and the Plan shall be determined by the Board.  All determinations by the Board shall be final and binding upon all persons having an interest in the Option.  Any Officer shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, or election which is the responsibility of or which is allocated to the Company herein, provided the Officer has apparent authority with respect to such matter, right, obligation, or election.

 

4.             EXERCISE OF THE OPTION.

 

4.1           Right to Exercise.  Except as otherwise provided herein, the Option shall be exercisable on and after the Initial Vesting Date and prior to the termination of the Option (as provided in Section 6) in an amount not to exceed the number of Vested Shares less the number of shares previously acquired upon exercise of the Option, subject to the Company’s repurchase rights set forth in Section 11.  In no event shall the Option be exercisable for more shares than the Number of Option Shares, as adjusted pursuant to Section 9.

 

4.2           Method of Exercise.  Exercise of the Option shall be by means of electronic or written notice (the “Exercise Notice”) in a form authorized by the Company.  An electronic Exercise Notice must be digitally signed or authenticated by the Participant in such manner as required by the notice and transmitted to the Company or an authorized representative of the Company (including a third-party administrator designated by the Company).  In the event that the Participant is not authorized or is unable to provide an electronic Exercise Notice, the Option shall be exercised by a written Exercise Notice addressed to the Company, which shall be signed by the Participant and delivered in person, by certified or registered mail, return receipt requested, by confirmed facsimile transmission, or by such other means as the Company may permit, to the Company, or an authorized representative of the Company (including a third-party administrator designated by the Company).  Each Exercise Notice, whether electronic or written, must state the Participant’s election to exercise the Option, the number of whole shares of Stock for which the Option is being exercised and such other representations and agreements as to the Participant’s investment intent with respect to such shares as may be required pursuant to the provisions of this Option Agreement.  Further, each Exercise Notice must be received by the Company prior to the termination of the Option as set forth in Section 6 and must be accompanied by full payment of the aggregate Exercise Price for the number of shares of Stock being purchased.  The Option shall be deemed to be exercised upon receipt by the Company of such electronic or written Exercise Notice and the aggregate Exercise Price.

 

4.3           Payment of Exercise Price.

 

(a)           Forms of Consideration Authorized.  Except as otherwise provided below, payment of the aggregate Exercise Price for the number of shares of Stock for which the Option is being exercised shall be made (i) in cash or by check or cash equivalent, (ii) if permitted by the Company, by tender to the Company, or attestation to the ownership, of whole shares of Stock owned by the Participant having a Fair Market Value not less than the aggregate Exercise Price, (iii) by means of a Cashless Exercise, as defined in Section 4.3(b),

 

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(iv) if permitted by the Company, by means of a Net-Exercise, or (v) by any combination of the foregoing.

 

(b)           Limitations on Forms of Consideration.

 

(i)            Tender of Stock.  Notwithstanding the foregoing, the Option may not be exercised by tender to the Company, or attestation to the ownership, of shares of Stock to the extent such tender or attestation would constitute a violation of the provisions of any law, regulation or agreement restricting the redemption of the Company’s stock.  If required by the Company, the Option may not be exercised by tender to the Company, or attestation to the ownership, of shares of Stock unless such shares either have been owned by the Participant for more than six (6) months or such other period, if any, required by the Company (and not used for another option exercise by attestation during such period) or were not acquired, directly or indirectly, from the Company.

 

(ii)           Cashless Exercise.  A “Cashless Exercise” means the delivery of a properly executed notice together with irrevocable instructions to a broker in a form acceptable to the Company providing for the assignment to the Company of the proceeds of a sale or loan with respect to some or all of the shares of Stock acquired upon the exercise of the Option pursuant to a program or procedure approved by the Company (including, without limitation, through an exercise complying with the provisions of Regulation T as promulgated from time to time by the Board of Governors of the Federal Reserve System).  The Company reserves, at any and all times, the right, in the Company’s sole and absolute discretion, to establish, decline to approve, or terminate any such program or procedure, including with respect to the Participant notwithstanding that such program or procedures may be available to others.

 

4.4           Tax Withholding.  At the time the Option is exercised, in whole or in part, or at any time thereafter as requested by the Company, the Participant hereby authorizes withholding from payroll and any other amounts payable to the Participant, and otherwise agrees to make adequate provision for (including by means of a Cashless Exercise to the extent permitted by the Company), any sums required to satisfy the federal, state, local and foreign tax withholding obligations of the Participating Company Group, if any, which arise in connection with the Option.  The Company shall have no obligation to deliver shares of Stock until the tax withholding obligations of the Participating Company Group have been satisfied by the Participant.

 

4.5           Certificate Registration.  Except in the event the Exercise Price is paid by means of a Cashless Exercise, the certificate for the shares as to which the Option is exercised shall be registered in the name of the Participant, or, if applicable, in the names of the heirs of the Participant.

 

4.6           Restrictions on Grant of the Option and Issuance of Shares.  The grant of the Option and the issuance of shares of Stock upon exercise of the Option shall be subject to compliance with all applicable requirements of federal, state or foreign law with respect to such securities.  The Option may not be exercised if the issuance of shares of Stock upon exercise would constitute a violation of any applicable federal, state or foreign securities laws or other law or regulations or the requirements of any stock exchange or market system upon which the

 

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Stock may then be listed.  In addition, the Option may not be exercised unless (i) a registration statement under the Securities Act shall at the time of exercise of the Option be in effect with respect to the shares issuable upon exercise of the Option or (ii) in the opinion of legal counsel to the Company, the shares issuable upon exercise of the Option may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act.  THE PARTICIPANT IS CAUTIONED THAT THE OPTION MAY NOT BE EXERCISED UNLESS THE FOREGOING CONDITIONS ARE SATISFIED.  ACCORDINGLY, THE PARTICIPANT MAY NOT BE ABLE TO EXERCISE THE OPTION WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED.  The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any shares subject to the Option shall relieve the Company of any liability in respect of the failure to issue or sell such shares as to which such requisite authority shall not have been obtained.  As a condition to the exercise of the Option, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company.

 

4.7           Fractional Shares.  The Company shall not be required to issue fractional shares upon the exercise of the Option.

 

5.             NONTRANSFERABILITY OF THE OPTION.

 

During the lifetime of the Participant, the Option shall be exercisable only by the Participant or the Participant’s guardian or legal representative.  The Option shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and distribution.  Following the death of the Participant, the Option, to the extent provided in Section 7, may be exercised by the Participant’s legal representative or by any person empowered to do so under the deceased Participant’s will or under the then applicable laws of descent and distribution.

 

6.             TERMINATION OF THE OPTION.

 

The Option shall terminate and may no longer be exercised after the first to occur of (a) the close of business on the Option Expiration Date, (b) the close of business on the last date for exercising the Option following termination of the Participant’s Service as described in Section 7, or (c) a Change in Control to the extent provided in Section 8.

 

7.             EFFECT OF TERMINATION OF SERVICE.

 

7.1           Option Exercisability.  The Option shall terminate immediately upon the Participant’s termination of Service to the extent that it is then unvested and shall be exercisable after the Participant’s termination of Service to the extent it is then vested only during the applicable time period as determined below and thereafter shall terminate.

 

(a)           Disability.  If the Participant’s Service terminates because of the Disability of the Participant, the Option, to the extent unexercised and exercisable for Vested Shares on the date on which the Participant’s Service terminated, may be exercised by the

 

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Participant (or the Participant’s guardian or legal representative) at any time prior to the expiration of twelve (12) months after the date on which the Participant’s Service terminated, but in any event no later than the Option Expiration Date.

 

(b)           Death.  If the Participant’s Service terminates because of the death of the Participant, the Option, to the extent unexercised and exercisable for Vested Shares on the date on which the Participant’s Service terminated, may be exercised by the Participant’s legal representative or other person who acquired the right to exercise the Option by reason of the Participant’s death at any time prior to the expiration of twelve (12) months after the date on which the Participant’s Service terminated, but in any event no later than the Option Expiration Date.  The Participant’s Service shall be deemed to have terminated on account of death if the Participant dies within three (3) months after the Participant’s termination of Service.

 

(c)           Termination for Cause.  Notwithstanding any other provision of this Option Agreement, if the Participant’s Service is terminated for Cause, the Option shall terminate and cease to be exercisable immediately upon such termination of Service.

 

(d)           Other Termination of Service.  If the Participant’s Service terminates for any reason, except Disability, death or Cause, the Option, to the extent unexercised and exercisable for Vested Shares by the Participant on the date on which the Participant’s Service terminated, may be exercised by the Participant at any time prior to the expiration of three (3) months after the date on which the Participant’s Service terminated, but in any event no later than the Option Expiration Date.

 

7.2           Extension if Exercise Prevented by Law.  Notwithstanding the foregoing other than termination for Cause, if the exercise of the Option within the applicable time periods set forth in Section 7.1 is prevented by the provisions of Section 4.6, the Option shall remain exercisable until thirty (30) days after the date such exercise first would no longer be prevented by such provisions, but in any event no later than the Option Expiration Date.

 

8.             EFFECT OF CHANGE IN CONTROL.

 

In the event of a Change in Control, the surviving, continuing, successor, or purchasing entity or parent thereof, as the case may be (the “Acquiror”), may, without the consent of the Participant, assume or continue in full force and effect the Company’s rights and obligations under the Option or any portion thereof or substitute for the Option or any portion thereof a substantially equivalent option for the Acquiror’s stock.  For purposes of this Section, the Option shall be deemed assumed if, following the Change in Control, the Option confers the right to receive, subject to the terms and conditions of the Plan and this Option Agreement, for each share of Stock subject to the Option immediately prior to the Change in Control, the consideration (whether stock, cash, other securities or property or a combination thereof) to which a holder of a share of Stock on the effective date of the Change in Control was entitled; provided, however, that if such consideration is not solely common stock of the Acquiror, the Board may, with the consent of the Acquiror, provide for the consideration to be received upon the exercise of the Option, for each share of Stock subject to the Option, to consist solely of common stock of the Acquiror equal in Fair Market Value to the per share consideration received by holders of Stock pursuant to the Change in Control.  If any portion of such

 

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consideration may be received by holders of Stock pursuant to the Change in Control on a contingent or delayed basis, the Board may, in its sole discretion, determine such Fair Market Value per share as of the time of the Change in Control on the basis of the Board’s good faith estimate of the present value of the probable future payment of such consideration.  In the event the Acquiror elects not to assume or continue the Company’s rights and obligations under the Option or substitute for the Option in connection with the Change in Control, and provided that the Participant’s Service has not terminated prior to such date, the Option shall be immediately exercisable and vested in full as of the date of the Change in Control.  Any exercise and vesting of the Option that was permissible solely by reason of this Section 8 shall be conditioned upon the consummation of the Change in Control.  The Option shall terminate and cease to be outstanding effective as of the time of consummation of the Change in Control to the extent that the Option is neither assumed or continued by the Acquiror in connection with the Change in Control nor exercised as of the date of the Change in Control.  Notwithstanding the foregoing, shares acquired upon exercise of the Option prior to the Change in Control and any consideration received pursuant to the Change in Control with respect to such shares shall continue to be subject to all applicable provisions of this Option Agreement except as otherwise provided herein.

 

9.             ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE.

 

Subject to any required action by the stockholders of the Company, in the event of any change in the Stock effected without receipt of consideration by the Company, whether through merger, consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of shares, or similar change in the capital structure of the Company, or in the event of payment of a dividend or distribution to the stockholders of the Company in a form other than Stock (excepting normal cash dividends) that has a material effect on the Fair Market Value of shares of Stock, appropriate and proportionate adjustments shall be made in the number, Exercise Price and kind of shares subject to the Option, in order to prevent dilution or enlargement of the Participant’s rights under the Option.  For purposes of the foregoing, conversion of any convertible securities of the Company shall not be treated as “effected without receipt of consideration by the Company.”  Any fractional share resulting from an adjustment pursuant to this Section shall be rounded down to the nearest whole number and the Exercise Price shall be rounded up to the nearest whole cent.  In no event may the Exercise Price be decreased to an amount less than the par value, if any, of the stock subject to the Option.  Such adjustments shall be determined by the Board, and its determination shall be final, binding and conclusive.

 

10.           RIGHTS AS A STOCKHOLDER, DIRECTOR, EMPLOYEE OR CONSULTANT.

 

The Participant shall have no rights as a stockholder with respect to any shares covered by the Option until the date of the issuance of the shares for which the Option has been exercised (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company).  No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date the shares are issued, except as provided in Section 9.  If the Participant is an Employee, the Participant understands and acknowledges that, except as otherwise provided in a separate, written employment agreement between a

 

7

 

Participating Company and the Participant, the Participant’s employment is “at will” and is for no specified term.  Nothing in this Option Agreement shall confer upon the Participant any right to continue in the Service of a Participating Company or interfere in any way with any right of the Participating Company Group to terminate the Participant’s Service as a Director, an Employee or Consultant, as the case may be, at any time.

 

11.           RIGHT OF FIRST REFUSAL.

 

11.1         Grant of Right of First Refusal.  Except as provided in Section 11.7 and Section 16 below, in the event the Participant, the Participant’s legal representative, or other holder of shares acquired upon exercise of the Option proposes to sell, exchange, transfer, pledge, or otherwise dispose of any Vested Shares (the “Transfer Shares”) to any person or entity, including, without limitation, any stockholder of a Participating Company, the Company shall have the right to repurchase the Transfer Shares under the terms and subject to the conditions set forth in this Section 11 (the “Right of First Refusal”).

 

11.2         Notice of Proposed Transfer.  Prior to any proposed transfer of the Transfer Shares, the Participant shall deliver written notice (the “Transfer Notice”) to the Company describing fully the proposed transfer, including the number of Transfer Shares, the name and address of the proposed transferee (the “Proposed Transferee”) and, if the transfer is voluntary, the proposed transfer price, and containing such information necessary to show the bona fide nature of the proposed transfer.  In the event of a bona fide gift or involuntary transfer, the proposed transfer price shall be deemed to be the Fair Market Value of the Transfer Shares, as determined by the Board in good faith.  If the Participant proposes to transfer any Transfer Shares to more than one Proposed Transferee, the Participant shall provide a separate Transfer Notice for the proposed transfer to each Proposed Transferee.  The Transfer Notice shall be signed by both the Participant and the Proposed Transferee and must constitute a binding commitment of the Participant and the Proposed Transferee for the transfer of the Transfer Shares to the Proposed Transferee subject only to the Right of First Refusal.

 

11.3         Bona Fide Transfer.  If the Company determines that the information provided by the Participant in the Transfer Notice is insufficient to establish the bona fide nature of a proposed voluntary transfer, the Company shall give the Participant written notice of the Participant’s failure to comply with the procedure described in this Section 11, and the Participant shall have no right to transfer the Transfer Shares without first complying with the procedure described in this Section 11.  The Participant shall not be permitted to transfer the Transfer Shares if the proposed transfer is not bona fide.

 

11.4         Exercise of Right of First Refusal.  If the Company determines the proposed transfer to be bona fide, the Company shall have the right to purchase all, but not less than all, of the Transfer Shares (except as the Company and the Participant otherwise agree) at the purchase price and on the terms set forth in the Transfer Notice by delivery to the Participant of a notice of exercise of the Right of First Refusal within thirty (30) days after the date the Transfer Notice is delivered to the Company.  The Company’s exercise or failure to exercise the Right of First Refusal with respect to any proposed transfer described in a Transfer Notice shall not affect the Company’s right to exercise the Right of First Refusal with respect to any proposed transfer described in any other Transfer Notice, whether or not such other Transfer Notice is

 

8

 

issued by the Participant or issued by a person other than the Participant with respect to a proposed transfer to the same Proposed Transferee.  If the Company exercises the Right of First Refusal, the Company and the Participant shall thereupon consummate the sale of the Transfer Shares to the Company on the terms set forth in the Transfer Notice within sixty (60) days after the date the Transfer Notice is delivered to the Company (unless a longer period is offered by the Proposed Transferee); provided, however, that in the event the Transfer Notice provides for the payment for the Transfer Shares other than in cash, the Company shall have the option of paying for the Transfer Shares by the present value cash equivalent of the consideration described in the Transfer Notice as reasonably determined by the Company.  For purposes of the foregoing, cancellation of any indebtedness of the Participant to any Participating Company shall be treated as payment to the Participant in cash to the extent of the unpaid principal and any accrued interest canceled.

 

11.5         Failure to Exercise Right of First Refusal.  If the Company fails to exercise the Right of First Refusal in full (or to such lesser extent as the Company and the Participant otherwise agree) within the period specified in Section 11.4 above, the Participant may conclude a transfer to the Proposed Transferee of the Transfer Shares on the terms and conditions described in the Transfer Notice, provided such transfer occurs not later than ninety (90) days following delivery to the Company of the Transfer Notice.  The Company shall have the right to demand further assurances from the Participant and the Proposed Transferee (in a form satisfactory to the Company) that the transfer of the Transfer Shares was actually carried out on the terms and conditions described in the Transfer Notice.  No Transfer Shares shall be transferred on the books of the Company until the Company has received such assurances, if so demanded, and has approved the proposed transfer as bona fide.  Any proposed transfer on terms and conditions different from those described in the Transfer Notice, as well as any subsequent proposed transfer by the Participant, shall again be subject to the Right of First Refusal and shall require compliance by the Participant with the procedure described in this Section 11.

 

11.6         Transferees of Transfer Shares.  All transferees of the Transfer Shares or any interest therein, other than the Company, shall be required as a condition of such transfer to agree in writing (in a form satisfactory to the Company) that such transferee shall receive and hold such Transfer Shares or interest therein subject to all of the terms and conditions of this Option Agreement, including this Section 11 providing for the Right of First Refusal with respect to any subsequent transfer.  Any sale or transfer of any shares acquired upon exercise of the Option shall be void unless the provisions of this Section 11 are met.

 

11.7         Transfers Not Subject to Right of First Refusal.  The Right of First Refusal shall not apply to any transfer or exchange of the shares acquired upon exercise of the Option if such transfer or exchange is in connection with an Ownership Change Event.  If the consideration received pursuant to such transfer or exchange consists of stock of a Participating Company, such consideration shall remain subject to the Right of First Refusal unless the provisions of Section 11.9 below result in a termination of the Right of First Refusal.

 

11.8         Assignment of Right of First Refusal.  The Company shall have the right to assign the Right of First Refusal at any time, whether or not there has been an attempted transfer, to one or more persons as may be selected by the Company.

 

9

 

11.9         Early Termination of Right of First Refusal.  The other provisions of this Option Agreement notwithstanding, the Right of First Refusal shall terminate and be of no further force and effect upon (a) the occurrence of a Change in Control, unless the Acquiror assumes the Company’s rights and obligations under the Option or substitutes a substantially equivalent option for the Acquiror’s stock for the Option, or (b) the existence of a public market for the class of shares subject to the Right of First Refusal.  A “public market” shall be deemed to exist if (i) such stock is listed on a national securities exchange (as that term is used in the Exchange Act) or (ii) such stock is traded on the over-the-counter market and prices therefor are published daily on business days in a recognized financial journal.

 

12.           STOCK DISTRIBUTIONS SUBJECT TO OPTION AGREEMENT.

 

If, from time to time, there is any stock dividend, stock split or other change, as described in Section 9, in the character or amount of any of the outstanding stock of the corporation the stock of which is subject to the provisions of this Option Agreement, then in such event any and all new, substituted or additional securities to which the Participant is entitled by reason of the Participant’s ownership of the shares acquired upon exercise of the Option shall be immediately subject to the Right of First Refusal with the same force and effect as the shares subject to the Right of First Refusal immediately before such event.

 

13.           NOTICE OF SALES UPON DISQUALIFYING DISPOSITION.

 

The Participant shall dispose of the shares acquired pursuant to the Option only in accordance with the provisions of this Option Agreement.  In addition, if the Grant Notice designates this Option as an Incentive Stock Option, the Participant shall (a) promptly notify the Chief Financial Officer of the Company if the Participant disposes of any of the shares acquired pursuant to the Option within one (1) year after the date the Participant exercises all or part of the Option or within two (2) years after the Date of Grant and (b) provide the Company with a description of the circumstances of such disposition.  Until such time as the Participant disposes of such shares in a manner consistent with the provisions of this Option Agreement, unless otherwise expressly authorized by the Company, the Participant shall hold all shares acquired pursuant to the Option in the Participant’s name (and not in the name of any nominee) for the one-year period immediately after the exercise of the Option and the two-year period immediately after Date of Grant.  At any time during the one-year or two-year periods set forth above, the Company may place a legend on any certificate representing shares acquired pursuant to the Option requesting the transfer agent for the Company’s stock to notify the Company of any such transfers.  The obligation of the Participant to notify the Company of any such transfer shall continue notwithstanding that a legend has been placed on the certificate pursuant to the preceding sentence.

 

14.           LEGENDS.

 

The Company may at any time place legends referencing the Right of First Refusal and any applicable federal, state or foreign securities law restrictions on all certificates representing shares of stock subject to the provisions of this Option Agreement.  The Participant shall, at the request of the Company, promptly present to the Company any and all certificates representing shares acquired pursuant to the Option in the possession of the Participant in order to carry out

 

10

 

the provisions of this Section.  Unless otherwise specified by the Company, legends placed on such certificates may include, but shall not be limited to, the following:

 

14.1         “THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 OR RULE 701 UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.”

 

14.2         “THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER, INCLUDING A RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE CORPORATION OR ITS ASSIGNEE SET FORTH IN AN AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED HOLDER, OR SUCH HOLDER S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THIS CORPORATION.”

 

14.3         “THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE CORPORATION TO THE REGISTERED HOLDER UPON EXERCISE OF AN INCENTIVE STOCK OPTION AS DEFINED IN SECTION 422 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (“ISO”).  IN ORDER TO OBTAIN THE PREFERENTIAL TAX TREATMENT AFFORDED TO ISOs, THE SHARES SHOULD NOT BE TRANSFERRED PRIOR TO [INSERT DISQUALIFYING DISPOSITION DATE HERE].  SHOULD THE REGISTERED HOLDER ELECT TO TRANSFER ANY OF THE SHARES PRIOR TO THIS DATE AND FOREGO ISO TAX TREATMENT, THE TRANSFER AGENT FOR THE SHARES SHALL NOTIFY THE CORPORATION IMMEDIATELY.  THE REGISTERED HOLDER SHALL HOLD ALL SHARES PURCHASED UNDER THE INCENTIVE STOCK OPTION IN THE REGISTERED HOLDER’S NAME (AND NOT IN THE NAME OF ANY NOMINEE) PRIOR TO THIS DATE OR UNTIL TRANSFERRED AS DESCRIBED ABOVE.”

 

15.           LOCK-UP AGREEMENT.

 

The Participant hereby agrees that in the event of any underwritten public offering of stock, including an initial public offering of stock, made by the Company pursuant to an effective registration statement filed under the Securities Act, the Participant shall not offer, sell, contract to sell, pledge, hypothecate, grant any option to purchase or make any short sale of, or otherwise dispose of any shares of stock of the Company or any rights to acquire stock of the Company for such period of time from and after the effective date of such registration statement as may be established by the underwriter for such public offering; provided, however, that such period of time shall not exceed one hundred eighty (180) days from the effective date of the registration statement to be filed in connection with such public offering.  The foregoing limitation shall not apply to shares registered in the public offering under the Securities Act.  The

 

11

 

Participant hereby agrees to enter into any agreement reasonably required by the underwriters to implement the foregoing within a reasonable timeframe if so requested by the Company.

 

16.           RESTRICTIONS ON TRANSFER OF SHARES.

 

No shares acquired upon exercise of the Option may be sold, exchanged, transferred (including, without limitation, any transfer to a nominee or agent of the Participant), assigned, pledged, hypothecated or otherwise disposed of, including by operation of law in any manner which violates any of the provisions of this Option Agreement, and any such attempted disposition shall be void.  The Company shall not be required (a) to transfer on its books any shares which will have been transferred in violation of any of the provisions set forth in this Option Agreement or (b) to treat as owner of such shares or to accord the right to vote as such owner or to pay dividends to any transferee to whom such shares will have been so transferred.

 

17.           MISCELLANEOUS PROVISIONS.

 

17.1         Further Instruments.  The parties hereto agree to execute such further instruments and to take such further action as may reasonably be necessary to carry out the intent of this Option Agreement.

 

17.2         Binding Effect.  Subject to the restrictions on transfer set forth herein, this Option Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns.

 

17.3         Termination or Amendment.  The Board may terminate or amend the Plan or the Option at any time; provided, however, that except as provided in Section 8 in connection with a Change in Control, no such termination or amendment may adversely affect the Option or any unexercised portion hereof without the consent of the Participant unless such termination or amendment is necessary to comply with any applicable law or government regulation.  No amendment or addition to this Option Agreement shall be effective unless in writing.

 

17.4         Delivery of Documents and Notices.  Any document relating to participation in the Plan, or any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given (except to the extent that this Option Agreement provides for effectiveness only upon actual receipt of such notice) upon personal delivery electronic delivery at the e-mail address, if any, provided for the Participant by the Participating Company, or, upon deposit in the U.S. Post Office or foreign postal service, by registered or certified mail, or with a nationally recognized overnight courier service with postage and fees prepaid, addressed to the other party at the address of such party set forth in the Grant Notice or at such other address as such party may designate in writing from time to time to the other party.

 

(a)           Description of Electronic Delivery.  The Plan documents, which may include but do not necessarily include: the Plan, the Grant Notice, this Option Agreement, and any reports of the Company provided generally to the Company’s shareholders, may be delivered to the Participant electronically.  In addition, if permitted by the Company, the Participant may deliver electronically the Grant Notice and Exercise Notice called for by Section 4.2 to the Company or to such third party involved in administering the Plan as the

 

12

 

Company may designate from time to time.  Such means of electronic delivery may include but do not necessarily include the delivery of a link to a Company intranet or the internet site of a third party involved in administering the Plan, the delivery of the document via e-mail or such other means of electronic delivery specified by the Company.

 

(b)           Consent to Electronic Delivery.  The Participant acknowledges that the Participant has read Section 17.4(a) of this Option Agreement and consents to the electronic delivery of the Plan documents and, if permitted by the Company, the delivery of the Grant Notice and Exercise Notice, as described in Section 17.4(a).  The Participant acknowledges that he or she may receive from the Company a paper copy of any documents delivered electronically at no cost to the Participant by contacting the Company by telephone or in writing.  The Participant further acknowledges that the Participant will be provided with a paper copy of any documents if the attempted electronic delivery of such documents fails.  Similarly, the Participant understands that the Participant must provide the Company or any designated third party administrator with a paper copy of any documents if the attempted electronic delivery of such documents fails.  The Participant may revoke his or her consent to the electronic delivery of documents described in Section 17.4(a) or may change the electronic mail address to which such documents are to be delivered (if Participant has provided an electronic mail address) at any time by notifying the Company of such revoked consent or revised e-mail address by telephone, postal service or electronic mail.  Finally, the Participant understands that he or she is not required to consent to electronic delivery of documents described in Section 17.4(a).

 

17.5         Integrated Agreement.  The Grant Notice, this Option Agreement and the Plan, together with any employment, service or other agreement with the Participant and a Participating Company referring to the Option, shall constitute the entire understanding and agreement of the Participant and the Participating Company Group with respect to the subject matter contained herein or therein and supersede any prior agreements, understandings, restrictions, representations, or warranties among the Participant and the Participating Company Group with respect to such subject matter.  To the extent contemplated herein or therein, the provisions of the Grant Notice, the Option Agreement and the Plan shall survive any exercise of the Option and shall remain in full force and effect.

 

17.6         Applicable Law.  This Option Agreement shall be governed by the laws of the State of California as such laws are applied to agreements between California residents entered into and to be performed entirely within the State of California.

 

17.7         Counterparts.  The Grant Notice may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

13

 

	
ä Incentive Stock Option
    	
Participant: 
    	
 
    
	
 
    	
 
    	
 
    
	
ä Nonstatutory Stock Option
    	
Date: 
    	
 
    
				

 

STOCK OPTION EXERCISE NOTICE

 

IntelePeer, Inc.

Attention: Chief Financial Officer

950 Tower Lane, Suite 450

Foster City, CA 94404

Ladies and Gentlemen:

 

1.             Option.  I was granted an option (the “Option”) to purchase shares of the common stock (the “Shares”) of IntelePeer, Inc. (the “Company”) pursuant to the Company’s Amended and Restated 2003 Stock Option and Restricted Stock Plan (the “Plan”), my Notice of Grant of Stock Option (the “Grant Notice”) and my Stock Option Agreement (the “Option Agreement”) as follows:

 

	
 
    	
Date   of Grant:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Number   of Option Shares:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Exercise   Price per Share:
    	
$
    

 

2.             Exercise of Option.  I hereby elect to exercise the Option to purchase the following number of Shares, all of which are Vested Shares, in accordance with the Grant Notice and the Option Agreement:

 

	
 
    	
Total   Shares Purchased:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Total   Exercise Price (Total Shares X Price per Share)
    	
$
    

 

3.             Payments.  I enclose payment in full of the total exercise price for the Shares in the following form(s), as authorized by my Option Agreement:

 

	
 
    	
ä Cash:
    	
$
    
	
 
    	
 
    	
 
    
	
 
    	
ä Check:
    	
$
    
	
 
    	
 
    	
 
    
	
 
    	
ä Tender of Company Stock:
    	
Contact   Plan Administrator
    

 

1

 

4.             Tax Withholding.  I authorize payroll withholding and otherwise will make adequate provision for the federal, state, local and foreign tax withholding obligations of the Company, if any, in connection with the Option.  If I am exercising a Nonstatutory Stock Option, I enclose payment in full of my withholding taxes, if any, as follows:

 

(Contact Plan Administrator for amount of tax due.)

 

	
 
    	
ä Cash:
    	
$
    
	
 
    	
 
    	
 
    
	
 
    	
ä Check:
    	
$
    
				

 

5.             Participant Information.

 

My address is:

 

 

My Social Security Number is:

 

6.             Notice of Disqualifying Disposition.  If the Option is an Incentive Stock Option, I agree that I will promptly notify the Chief Financial Officer of the Company if I transfer any of the Shares within one (1) year from the date I exercise all or part of the Option or within two (2) years of the Date of Grant.

 

7.             Binding Effect.  I agree that the Shares are being acquired in accordance with and subject to the terms, provisions and conditions of the Grant Notice, the Option Agreement, including the Right of First Refusal set forth therein, and the Plan, to all of which I hereby expressly assent.  This Agreement shall inure to the benefit of and be binding upon my heirs, executors, administrators, successors and assigns.

 

8.             Transfer.  I understand and acknowledge that the Shares have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and that consequently the Shares must be held indefinitely unless they are subsequently registered under the Securities Act, an exemption from such registration is available, or they are sold in accordance with Rule 144 or Rule 701 under the Securities Act.  I further understand and acknowledge that the Company is under no obligation to register the Shares.  I understand that the certificate or certificates evidencing the Shares will be imprinted with legends which prohibit the transfer of the Shares unless they are registered or such registration is not required in the opinion of legal counsel satisfactory to the Company.

 

I am aware that Rule 144 under the Securities Act, which permits limited public resale of securities acquired in a nonpublic offering, is not currently available with respect to the Shares and, in any event, is available only if certain conditions are satisfied.  I understand that any sale of the Shares that might be made in reliance upon Rule 144 may only be made in limited amounts in accordance with the terms and conditions of such rule and that a copy of Rule 144 will be delivered to me upon request.

 

I understand that I am purchasing the Shares pursuant to the terms of the Plan, the Grant Notice and my Option Agreement, copies of which I have received and carefully read and understand.

 

	
 
    	
Very   truly yours,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(Signature)
    

 

 

Receipt of the above is hereby acknowledged.

 

2

 

IntelePeer, Inc.

 

	
By:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Dated:
    	
 
    	
 
    
					

 

3

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