| US BIODEFENSE, INC. |
| 2007 STOCK INCENTIVE PLAN |
| EFFECTIVE AS OF APRIL 1, 2007 |
| |
| |
| 1. | | General Provisions | | |
| |
| | | 1.1 | | Purposes of the Plan. This Stock Incentive Plan (the "Plan") is intended to allow |
| certain officers, employees and consultants (all of whom are sometimes collectively referred to |
| herein as the "Employees," or individually as the "Employee") of US Biodefense, Inc., a Utah |
| corporation (the "Company") and its Subsidiaries (as that term is defined below) which they |
| may have from time to time (the Company and such Subsidiaries are referred to herein as the |
| "Company") to receive certain options (the "Stock Options") to purchase common stock of the |
| Company, par value $0.001 per share (the "Common Stock"), and to receive grants of the |
| Common Stock subject to certain restrictions (the "Awards"). As used in this Plan, the term |
| "Subsidiary" shall mean each corporation which is a "subsidiary corporation" of the |
| Company within the meaning of Section 424(f) of the Internal Revenue Code of 1986, as |
| amended (the "Code"). The purpose of this Plan is to provide the Employees, who make |
| significant and extraordinary contributions to the long-term growth and performance of the |
| Company, with equity-based compensation incentives, and to attract and retain the Employees. |
| |
| | | 1.2 | | Administration. |
| |
| | | | | 1.2.1. The Plan shall be administered by the Board of Directors of the Company |
| (the "Board"). The Board shall act by vote of a majority of a quorum, or by unanimous |
| written consent. A majority of its members shall constitute a quorum. The Board shall be |
| governed by the provisions of the Company's Bylaws and of Utah law applicable to the Board, |
| except as otherwise provided herein or determined by the Board. |
| |
| | | | | 1.2.2. The Board shall have full and complete authority, in its discretion, but |
| subject to the express provisions of this Plan (a) to approve the Employees nominated by the |
| management of the Company to be granted Awards or Stock Options; (b) to determine the |
| number of Awards or Stock Options to be granted to an Employee; (c) to determine the time or |
| times at which Awards or Stock Options shall be granted; (d) to establish the terms and |
| conditions upon which Awards or Stock Options may be exercised; (e) to remove or adjust |
| any restrictions and conditions upon Awards or Stock Options; (f) to specify, at the time of |
| grant, provisions relating to exercisability of Stock Options and to accelerate or otherwise |
| modify the exercisability of any Stock Options; and (g) to adopt such rules and regulations and |
| to make all other determinations deemed necessary or desirable for the administration of this |
| Plan. All interpretations and constructions of this Plan by the Board, and all of its actions |
| hereunder, shall be binding and conclusive on all persons for all purposes. |
| |
| | | | | 1.2.3. The Company hereby agrees to indemnify and hold harmless each Board |
| member and each Employee, and the estate and heirs of such Board member or Employee, |
| against all claims, liabilities, expenses, penalties, damages or other pecuniary losses, |
| including legal fees, which such Board member or Employee, his estate or heirs may suffer |
| |
| - 1 - |
| as a result of his responsibilities, obligations or duties in connection with this Plan, to the |
| extent that insurance, if any, does not cover the payment of such items. No member of the |
| Board shall be liablefor any action or determination made in good faith with respect to this |
| Plan or any Award or Stock Option granted pursuant to this Plan. |
| |
| | | 1.3 | | Eligibility and Participation.The Employees eligible under this Plan shall be |
| approved by the Board from those Employees who, in the opinion of the management of the |
| Company, are in positions which enable them to make significant contributions to the long- |
| term performance and growth of the Company. In selecting the Employees to whom |
| Award or Stock Options may be granted, consideration shall be given to factors such as |
| employment position, duties and responsibilities, ability, productivity, length of service, morale, |
| interest in the Company and recommendations of supervisors. |
| |
| | | 1.4 | | Shares Subject to this Plan.The maximum number of shares of the Common |
| Stock that may be issued pursuant to this Plan shall be 10,000,000 subject to adjustment |
| pursuant to the provisions of Paragraph 4.1. If shares of the Common Stock awarded or issued |
| under this Plan are reacquired by the Company due to a forfeiture or for any other reason, |
| such shares shall be cancelled and thereafter shall again be available for purposes of this |
| Plan. If a Stock Option expires, terminates or is cancelled for any reason without having been |
| exercised in full, the shares of the Common Stock not purchased thereunder shall again be |
| available for purposes of this Plan. |
| |
| 2. | | Provisions Relating to Stock Options |
| |
| | | 2.1 | | Grantsof Stock Options.The Board may grant Stock Options in such amounts, |
| at such times, and to the Employees nominated by the management of the Company as the |
| Board, in its discretion, may determine. Stock Options granted under this Plan shall constitute |
| "incentive stock options" within the meaning of Section 422 of the Code, if so designated by |
| the Board on the date of grant. The Board shall also have the discretion to grant Stock |
| Options which do not constitute incentive stock options, and any such Stock Options shall be |
| designated non-statutory stock options by the Board on the date of grant. The aggregate Fair |
| Market Value (determined as of the time an incentive stock option is granted) of the Common |
| Stock with respect to which incentive stock options are exercisable for the first time by any |
| Employee during any one calendar year (under all plans of the Company and any parent or |
| subsidiary of the Company) may not exceed the maximum amount permitted under Section |
| 422 of the Code (currently, $100,000.00). Non-statutory stock options shall not be subject to |
| the limitations relating to incentive stock options contained in the preceding sentence. Each |
| Stock Option shall be evidenced by a written agreement (the "Option Agreement") in a form |
| approved by the Board, which shall be executed on behalf of the Company and by the Employee |
| to whom the Stock Option is granted, and which shall be subject to the terms and conditions of |
| this Plan. In the discretion of the Board, Stock Options may include provisions (which need |
| not be uniform), authorized by the Board in its discretion, that accelerate an Employee's |
| rights to exercise Stock Options following a "Change in Control," upon termination of the |
| Employee's employment by the Company without "Cause" or by the Employee for "Good |
| Reason," as such terms are defined in Paragraph 6.1 hereof. The holder of a Stock Option shall |
| |
| - 2 - |
| not be entitled to the privileges of stock ownership as to any shares of the Common Stock not |
| actually issued to such holder. |
| |
| | | 2.2 | | Purchase Price.The purchase price (the "Exercise Price") of shares of the |
| Common Stock subject to each Stock Option (the "Option Shares") shall not be less than 85 |
| percent of the Fair Market Value of the Common Stock on the date of the grant of the option. |
| For an Employee holding greater than 10 percent of the total voting power of all stock of the |
| Company, either Common or Preferred, the Exercise Price of an incentive stock option shall be |
| at least 110 percent of the Fair Market Value of the Common Stock on the date of the grant of |
| the option. As used herein, "Fair Market Value" means the mean between the highest and |
| lowest reported sales prices of the Common Stock on the New York Stock Exchange |
| Composite Tape or, if not listed on such exchange, on any other national securities exchange |
| on which the Common Stock is listed or on The Nasdaq Stock Market, or, if not so listed |
| on any other national securities exchange or The Nasdaq Stock Market, then the average of the |
| bid price of the Common Stock during the last five trading days on the OTC Bulletin Board |
| immediately preceding the last trading day prior to the date with respect to which the Fair |
| Market Value is to be determined. If the Common Stock is not then publicly traded, then the |
| Fair Market Value of the Common Stock shall be the book value of the Company per share as |
| determined on the last day of March, June, September, or December in any year closest to |
| the date when the determination is to be made. For the purpose of determining book value |
| hereunder,book value shall be determined by adding as of the applicable date called for |
| herein the capital, surplus, and undivided profits of the Company, and after having deducted any |
| reserves theretofore established; the sum of these items shall be divided by the number of |
| shares of the Common Stock outstanding as of said date, and the quotient thus obtained shall |
| represent the book value of each share of the Common Stock of the Company. |
| |
| | | 2.3 | | Option Period.The Stock Option period (the "Term") shall commence on the |
| date of grant of the Stock Option and shall be 10 years or such shorter period as is determined |
| by the Board. Each Stock Option shall provide that it is exercisable over its term in such |
| periodic installments as the Board may determine, subject to the provisions of Paragraph 5.4.1. |
| Section 16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") |
| exempts persons normally subject to the reporting requirements of Section 16(a) of the |
| Exchange Act (the "Section 16 Reporting Persons") pursuant to a qualified employee stock |
| option plan from the normal requirement of not selling until at least six months and one day |
| from the date the Stock Option is granted. |
| |
| | | 2.4 | | Exercise of Options. |
| |
| | | 2.4.1 Each Stock Option may be exercised in whole or in part (but not as to |
| fractional shares) by delivering it for surrender or endorsement to the Company, attention of |
| the Corporate Secretary, at the principal office of the Company, together with payment of the |
| Exercise Price and an executed Notice and Agreement of Exercise in the form prescribed by |
| Paragraph 2.4.2. Payment may be made (a) in cash, (b) by cashier's or certified check, (c) by |
| surrender of previously owned shares of the Common Stock valued pursuant to Paragraph 2.2 (if |
| the Board authorizes payment in stock in its discretion), (d) by withholding from the Option |
| Shares which would otherwise be issuable upon the exercise of the Stock Option that number of |
| |
| - 3 - |
| Option Shares equal to the exercise price of the Stock Option, if such withholding is |
| authorized by the Board in its discretion, or (e) in the discretion of the Board, by the delivery |
| to the Company of the optionee's promissory note secured by the Option Shares, bearing interest |
| at a rate sufficient to prevent the imputation of interest under Sections 483 or 1274 of the |
| Code, and having such other terms and conditions as may be satisfactory to the Board. |
| Subject to the provisions of this Paragraph 5.4 and Paragraph 5.5, the Employee has the right |
| to exercise his or her Stock Options at the rate of at least 20 percent per year over five years |
| from the date the Stock Option is granted. |
| |
| | | 2.4.2 Exercise of each Stock Option is conditioned upon the agreement of the |
| Employee to the terms and conditions of this Plan and of such Stock Option as evidenced by |
| the Employee's execution and delivery of a Notice and Agreement of Exercise in a form to |
| be determined by the Board in its discretion. Such Notice and Agreement of Exercise shall set |
| forth the agreement of the Employee that (a) no Option Shares will be sold or otherwise |
| distributed in violation of the Securities Act of 1933, as amended (the "Securities Act") or any |
| other applicable federal or state securities laws, (b) each Option Share certificate may be |
| imprinted with legends reflecting any applicable federal and state securities law restrictions |
| and conditions, (c) the Company may comply with said securities law restrictions and issue |
| "stop transfer" instructions to its Transfer Agent and Registrar without liability, (d) if the |
| Employee is a Section 16 Reporting Person, the Employee will furnish to the Company a copy |
| of each Form 4 or Form 5 filed by said Employee and will timely file all reports required |
| under federal securities laws, and (e) the Employee will report all sales of Option Shares to |
| the Company in writing on a form prescribed by the Company. |
| |
| | | 2.4.3 No Stock Option shall be exercisable unless and until any applicable |
| registration or qualification requirements of federal and state securities laws, and all other |
| legal requirements, have been fully complied with. At no time shall the total number of |
| securities issuable upon exercise of all outstanding options under this Plan, and the total |
| number of securities provided for under any bonus or similar plan or agreement of the Company |
| exceed a number of securities which is equal to 30 percent of the then outstanding securities |
| of the Company, unless a percentage higher than 30 percent is approved by at least two- |
| thirds of the outstanding securities entitled to vote. The Company will use reasonable efforts |
| to maintain the effectiveness of a Registration Statement under the Securities Act for the |
| issuance of Stock Options and shares acquired thereunder, but there may be times when no |
| such Registration Statement will be currently effective. The exercise of Stock Options may |
| be temporarily suspended without liability to the Company during times when no such |
| Registration Statement is currently effective, or during times when, in the reasonable opinion |
| of the Board, such suspension is necessary to preclude violation of any requirements of |
| applicable law or regulatory bodies having jurisdiction over the Company. If any Stock |
| Option would expire for any reason except the end of its term during such a suspension, then if |
| exercise of such Stock Option is duly tendered before its expiration, such Stock Option shall |
| be exercisable and exercised (unless the attempted exercise is withdrawn) as of the first day |
| after the end of such suspension. The Company shall have no obligation to file any Registration |
| Statement covering resales of Option Shares. |
| |
| - 4 - |
| | | 2.5 | | Continuous Employment.Except as provided in Paragraph 2.7 below, an |
| Employee may not exercise a Stock Option unless from the date of grant to the date of exercise |
| the Employee remains continuously in the employ of the Company. For purposes of this |
| Paragraph 2.5, the period of continuous employment of an Employee with the Company shall be |
| deemed to include (without extending the term of the Stock Option) any period during which the |
| Employee is on leave of absence with the consent of the Company, provided that such leave of |
| absence shall not exceed three months and that the Employee returns to the employ of the |
| Company at the expiration of such leave of absence. If the Employee fails to return to the |
| employ of the Company at the expiration of such leave of absence, the Employee's |
| employment with the Company shall be deemed terminated as of the date such leave of absence |
| commenced. The continuous employment of an Employee with the Company shall also be |
| deemed to include any period during which the Employee is a member of the Armed Forces of |
| the United States, provided that the Employee returns to the employ of the Company within 90 |
| days (or such longer period as may be prescribed by law) from the date the Employee first |
| becomes entitled to a discharge from military service. If an Employee does not return to the |
| employ of the Company within 90 days (or such longer period as may be prescribed by law) |
| from the date the Employee first becomes entitled to a discharge from military service, the |
| Employee's employment with the Company shall be deemed to have terminated as of the |
| date the Employee's military service ended. |
| |
| | | 2.6 | | Restrictions on Transfer.Each Stock Option granted under this Plan shall be |
| transferable only by will or the laws of descent and distribution. No interest of any Employee |
| under this Plan shall be subject to attachment, execution, garnishment, sequestration, the laws of |
| bankruptcy or any other legal or equitable process. Each Stock Option granted under this |
| Plan shall be exercisable during an Employee's lifetime only by the Employee or by the |
| Employee's legal representative. |
| |
| | | 2.7 | | Termination of Employment. |
| |
| | | 2.7.1 Upon an Employee's Retirement, Disability (both terms being defined |
| below) or death, (a) all Stock Options to the extent then presently exercisable shall remain in |
| full force and effect and may be exercised pursuant to the provisions thereof, and (b) unless |
| otherwise provided by the Board, all Stock Options to the extent not then presently exercisable |
| by the Employee shall terminate as of the date of such termination of employment and shall not |
| be exercisable thereafter. Unless employment is terminated for cause, as defined by |
| applicable law, the right to exercise in the event of termination of employment, to the extent that |
| the optionee is entitled to exercise on the date the employment terminates as follows: |
| |
| | | (i) At least six months from the date of termination if termination |
| | | was caused by death or disability. |
| |
| | | (ii) At least 30 days from the date of termination if termination was |
| | | caused by other than death or disability. |
| |
| | | 2.7.2 Upon the termination of the employment of an Employee for any reason |
| other than those specifically set forth in Paragraph 2.7.1, (a) all Stock Options to the extent |
| |
| - 5 - |
| then presently exercisable by the Employee shall remain exercisable only for a period of 90 |
| days after the date of such termination of employment (except that the 90 day period shall be |
| extended to 12 months if the Employee shall die during such 90 day period), and may be |
| exercised pursuant to the provisions thereof, including expiration at the end of the fixed term |
| thereof, and (b) unless otherwise provided by the Board, all Stock Options to the extent not |
| then presently exercisable by the Employee shall terminate as of the date of such termination |
| of employment and shall not be exercisable thereafter. |
| |
| | | 2.7.3 For purposes of this Plan: |
| |
| | | | | (a) "Retirement" shall mean an Employee's retirement from the |
| | | | | employ of the Company on or after the date on which the Employee |
| | | | | attains the age of 65 years; and |
| |
| | | | | (b) "Disability" shall mean total and permanent incapacity of an |
| | | | | Employee, due to physical impairment or legally established mental |
| | | | | incompetence, to perform the usual duties of the Employee's employment |
| | | | | with the Company, which disability shall be determined (i) on medical |
| | | | | evidence by a licensed physician designated by the Board, or (ii) on |
| | | | | evidence that the Employee has become entitled to receive primary |
| | | | | benefits as a disabled employee under the Social Security Act in effect |
| | | | | on the date of such disability. |
| |
| 3. | | Provisions Relating to Awards |
| |
| | | 3.1 | | Grant of Awards.Subject to the provisions of this Plan, the Board shall have |
| full and complete authority, in its discretion, but subject to the express provisions of this Plan, |
| to (1) grant Awards pursuant to this Plan, (2) determine the number of shares of the Common |
| Stock subject to each Award (the "Award Shares"), (3) determine the terms and conditions |
| (which need not be identical) of each Award, including the consideration (if any) to be paid by |
| the Employee for such Common Stock, which may, in the Board's discretion, consist of the |
| delivery of the Employee's promissory note meeting the requirements of Paragraph 2.4.1, |
| (4) establish and modify performance criteria for Awards, and (5) make all of the |
| determinations necessary or advisable with respect to Awards under this Plan. Each Award |
| under this Plan shall consist of a grant of shares of the Common Stock subject to a restriction |
| period (after which the restrictions shall lapse), which shall be a period commencing on the date |
| the Award is granted and ending on such date as the Board shall determine (the |
| "Restriction Period"). The Board may provide for the lapse of restrictions in installments, for |
| acceleration of the lapse of restrictions upon the satisfaction of such performance or other |
| criteria or upon the occurrence of such events as the Board shall determine, and for the early |
| expiration of the Restriction Period upon an Employee's death, Disability or Retirement as |
| defined in Paragraph 2.7.3, or, following a Change of Control, upon termination of an |
| Employee's employment by the Company without "Cause" or by the Employee for "Good |
| Reason," as those terms are defined herein. For purposes of this Plan: |
| |
| - 6 - |
| "Change of Control" shall be deemed to occur (a) on the date the Company first has |
| actual knowledge that any person (as such term is used in Sections 13(d) and 14(d)(2) of the |
| Exchange Act) has become the beneficial owner (as defined in Rule 13(d)-3 under the |
| Exchange Act), directly or indirectly, of securities of the Company representing 80 percent or |
| more of the combined voting power of the Company's then outstanding securities, or (b) on |
| the date the stockholders of the Company approve (i) a merger of the Company with or into any |
| other corporation in which the Company is not the surviving corporation or in which the |
| Company survives as a subsidiary of another corporation, (ii) a consolidation of the |
| Company with any other corporation, or (iii) the sale or disposition of all or substantially all of |
| the Company's assets or a plan of complete liquidation. |
| |
| "Cause," when used with reference to termination of the employment of an Employee |
| by the Company for "Cause," shall mean: |
| |
| | | | | (a) The Employee's continuing willful and material breach of his |
| | | | duties to the Company, which will result or results in material harm to the |
| | | | Company, after he receives a demand from the Chief Executive of the |
| | | | Company specifying the manner in which he has willfully and |
| | | | materially breached such duties, other than any such failure resulting from |
| | | | Disability of the Employee or his resignation for "Good Reason," as |
| | | | defined herein; or |
| | | | |
| | | | (b) The conviction of the Employee of a felony; or |
| | | | |
| | | | (c) The Employee's commission of fraud in the course of his |
| | | | employment with the Company, such as embezzlement or other |
| | | | material and intentional violation of law against the Company; or |
| | | | |
| | | | (d) The Employee's gross misconduct causing material harm to the |
| | | | Company. |
| |
| "Good Reason" shall mean any one or more of the following, occurring following or |
| in connection with a Change of Control and within 90 days prior to the Employee's resignation, |
| unless the Employee shall have consented thereto in writing: |
| |
| | | | (a) The assignment to the Employee of duties inconsistent with his |
| | | | executive status prior to the Change of Control or a substantive change in |
| | | | theofficer or officers to whom he reports from the officer or officers to |
| | | | whom he reported immediately prior to the Change of Control; or |
| | | | |
| | | | (b) The elimination or reassignment of a majority of the duties and |
| | | | responsibilities that were assigned to the Employee immediately prior to |
| | | | the Change of Control; or |
| | | | |
| | | | (c) A reduction by the Company in the Employee's annual base salary |
| | | | as in effect immediately prior to the Change of Control; or |
| |
| - 7 - |
| | | | | (d) The Company requiring the Employee to be based anywhere |
| | | | | outside a 35-mile radius from his place of employment immediately prior |
| | | | | to the Change of Control, except for required travel on the Company's |
| | | | | business to an extent substantially consistent with the Employee's |
| | | | | business travel obligations immediately prior to the Change of Control; or |
| |
| | | | | (e) The failure of the Company to grant the Employee a |
| | | | | performance bonus reasonably equivalent to the same percentage of |
| | | | | salary the Employee normally received prior to the Change of Control, |
| | | | | given comparable performance by the Company and the Employee; or |
| |
| | | | | (f) The failure of the Company to obtain a satisfactory Assumption |
| | | | | Agreement (as defined in Paragraph 4.13 of this Plan) from a |
| | | | | successor, or the failure of such successor to perform such |
| | | | | Assumption Agreement. |
| |
| | | 3.2 | | Incentive Agreements.Each Award granted under this Plan shall be evidenced |
| by a written agreement (an "Incentive Agreement") in a form approved by the Board and |
| executed by the Company and the Employee to whom the Award is granted. Each Incentive |
| Agreement shall be subject to the terms and conditions of this Plan and other such terms and |
| conditions as the Board may specify. |
| |
| | | 3.3 | | Amendment, Modification and Waiver of Restrictions.The Board may modify |
| or amend any Award under this Plan or waive any restrictions or conditions applicable to the |
| Award; provided, however, that the Board may not undertake any such modifications, |
| amendments or waivers if the effect thereof materially increases the benefits to any Employee, |
| or adversely affects the rights of any Employee without his consent. |
| |
| | | 3.4 | | Terms and Conditions of Awards.Upon receipt of an Award of shares of the |
| Common Stock under this Plan, even during the Restriction Period, an Employee shall be the |
| holder of record of the shares and shall have all the rights of a stockholder with respect to such |
| shares, subject to the terms and conditions of this Plan and the Award. |
| |
| | | | | 3.4.1 Except as otherwise provided in this Paragraph 3.4, no shares of the |
| Common Stock received pursuant to this Plan shall be sold, exchanged, transferred, pledged, |
| hypothecated or otherwise disposed of during the Restriction Period applicable to such |
| shares. Any purported disposition of such Common Stock in violation of this Paragraph 3.4 shall |
| be null and void. |
| |
| | | | | 3.4.2 If an Employee's employment with the Company terminates prior to the |
| expiration of the Restriction Period for an Award, subject to any provisions of the Award with |
| respect to the Employee's death, Disability or Retirement, or Change of Control, all shares of the |
| Common Stock subject to the Award shall be immediately forfeited by the Employee and |
| reacquired by the Company, and the Employee shall have no further rights with respect to |
| the Award. In the discretion of the Board, an Incentive Agreement may provide that, upon the |
| |
| - 8 - |
| forfeiture by an Employee of Award Shares, the Company shall repay to the Employee the |
| consideration (if any) which the Employee paid for the Award Shares on the grant of the |
| Award. In the discretion of the Board, an Incentive Agreement may also provide that such |
| repayment shall include an interest factor on such consideration from the date of the grant of |
| the Award to the date of such repayment. |
| |
| | | | | 3.4.3 The Board may require under such terms and conditions as it deems |
| appropriate or desirable that (a) the certificates for the Common Stock delivered under this |
| Plan are to be held in custody by the Company or a person or institution designated by the |
| Company until the Restriction Period expires, (b) such certificates shall bear a legend referring |
| to the restrictions on the Common Stock pursuant to this Plan, and (c) the Employee shall have |
| delivered to the Company a stock power endorsed in blank relating to the Common Stock. |
| |
| 4. | | Miscellaneous Provisions |
| |
| | | 4.1 | | Adjustments Upon Change in Capitalization. |
| |
| | | | | 4.1.1 Subject to any required action by the stockholders of the Company, the |
| number of shares of Common Stock covered by each outstanding Option, and the number of |
| shares of Common Stock which have been authorized for issuance under the Plan but as to which |
| no Options have yet been granted or which have been returned to the Plan upon cancellation or |
| expiration of an Option, as well as the price per share of Common Stock covered by each such |
| outstanding Option, shall be proportionately adjusted for any increase or decrease in the number |
| of issued Shares of Common Stock resulting from a stock split, reverse stock split, stock |
| dividend, combination or reclassification of the Common Stock, or any other increase or |
| decrease in the number of issued shares of Common Stock effected without receipt of |
| consideration by the Company; provided, however, that conversion of any convertible securities |
| of the Company shall not be deemed to have been "effected without receipt of consideration." |
| Such adjustment shall be made by the Board, whose determination in that respect shall be final, |
| binding and conclusive. Except as expressly provided herein, no issuance by the Company of |
| shares of stock of any class, or securities convertible into shares of stock of any class, shall |
| affect, and no adjustment by reason thereof shall be made with respect to, the number or price of |
| shares of Common Stock subject to an Option. |
| |
| | | | | 4.1.2 Upon a reorganization, merger or consolidation of the Company with |
| one or more corporations as a result of which the Company is not the surviving corporation |
| or in which the Company survives as a wholly-owned subsidiary of another corporation, or |
| upon a sale of all or substantially all of the property of the Company to another corporation, |
| or any dividend or distribution to stockholders of more than 10 percent of the Company's |
| assets, proportionate adjustment or other provisions shall be made by the Company or other |
| party to such transaction so that there shall remain and/or be substituted for the Option Shares |
| and Award Shares provided for herein, the shares, securities or assets which would have been |
| issuable or payable in respect of or in exchange for such Option Shares and Award Shares then |
| remaining, as if the Employee had been the owner of such shares as of the applicable date. |
| Any securities so substituted shall be subject to similar successive adjustments. |
| |
| - 9 - |
| | | 4.2 | | Withholding Taxes.The Company shall have the right at the time of exercise of |
| any Stock Option, the grant of an Award, or the lapse of restrictions on Award Shares, to |
| make adequate provision for any federal, state, local or foreign taxes which it believes are or |
| may be required by law to be withheld with respect to such exercise (the "Tax Liability"), to |
| ensure the payment of any such Tax Liability. The Company may provide for the payment of |
| any Tax Liability by any of the following means or a combination of such means, as determined |
| by the Board in its sole and absolute discretion in the particular case (1) by requiring the |
| Employee to tender a cash payment to the Company, (2) by withholding from the Employee's |
| salary, (3) by withholding from the Option Shares which would otherwise be issuable upon |
| exercise of the Stock Option, or from the Award Shares on their grant or date of lapse of |
| restrictions, that number of Option Shares or Award Shares having an aggregate Fair Market |
| Value (determined in the manner prescribed by Paragraph 2.2) as of the date the withholding |
| tax obligation arises in an amount which is equal to the Employee's Tax Liability or (4) by any |
| other method deemed appropriate by the Board. Satisfaction of the Tax Liability of a Section |
| 16 Reporting Person may be made by the method of payment specified in clause (3) above only |
| if the following two conditions are satisfied: |
| |
| | | | | (a) The withholding of Option Shares or Award Shares and the exercise |
| | | | | of the related Stock Option occur at least six months and one day |
| | | | | following the date of grant of such Stock Option or Award; and |
| |
| | | | | (b) The withholding of Option Shares or Award Shares is made either |
| | | | | (i) pursuant to an irrevocable election (the "Withholding Election") made |
| | | | | by the Employee at least six months in advance of the withholding of |
| | | | | Options Shares or Award Shares, or (ii) on a day within a 10-day |
| | | | | "window period" beginning on the third business day following the |
| | | | | date of release of the Company's quarterly or annual summary statement |
| | | | | of sales and earnings. |
| |
| Anything herein to the contrary notwithstanding, a Withholding Election may be |
| disapproved by the Board at any time. |
| |
| | | 4.3 | | Relationship to Other Employee Benefit Plans.Stock Options and Awards |
| granted hereunder shall not be deemed to be salary or other compensation to any Employee for |
| purposes of any pension, thrift, profit-sharing, stock purchase or any other employee benefit |
| plan now maintained or hereafter adopted by the Company. |
| |
| | | 4.4 | | Amendments and Termination.The Board of Directors may at any time suspend, |
| amend or terminate this Plan. No amendment, except as provided in Paragraph 3.3, or |
| modification of this Plan may be adopted, except subject to stockholder approval, which would |
| (1) materially increase the benefits accruing to the Employees under this Plan, (2) materially |
| increase the number of securities which may be issued under this Plan (except for adjustments |
| pursuant to Paragraph 4.1 hereof), or (3) materially modify the requirements as to eligibility |
| for participation in this Plan. |
| |
| - 10 - |
| | | 4.5 | | Successors in Interest.The provisions of this Plan and the actions of the |
| Board shall be binding upon all heirs, successors and assigns of the Company and of the |
| Employees. |
| |
| | | 4.6 | | Other Documents.All documents prepared, executed or delivered in connection |
| with this Plan (including, without limitation, Option Agreements and Incentive Agreements) |
| shall be, in substance and form, as established and modified by the Board; provided, |
| however, that all such documents shall be subject in every respect to the provisions of this Plan, |
| and in the event of any conflict between the terms of any such document and this Plan, the |
| provisions of this Plan shall prevail. |
| |
| | | 4.7 | | Fairness of the Repurchase Price.In the event that the Company =repurchases |
| securities upon termination of employment pursuant to this Plan, either: (a) the price will |
| not be less than the fair market value of the securities to be repurchased on the date of |
| termination of employment, and the right to repurchase will be exercised for cash or cancellation |
| of purchase money indebtedness for the securities within 90 days of termination of the |
| employment (or in the case of securities issued upon exercise of options after the date of |
| termination, within 90 days after the date of the exercise), and the right terminates when the |
| Company's securities become publicly traded, or (b) Company will repurchase securities at the |
| original purchase price, provided that the right to repurchase at the original purchase price |
| lapses at the rate of at least 20 percent of the securities per year over five years from the date |
| the option is granted (without respect to the date the option was exercised or became |
| exercisable) and the right to repurchase must be exercised for cash or cancellation of purchase |
| money indebtedness for the securities within 90 days of termination of employment (or in |
| case of securities issued upon exercise of options after the date of termination, within 90 days |
| after the date of the exercise). |
| |
| | | 4.8 | | No Obligation to Continue Employment.This Plan and the grants which |
| might be made hereunder shall not impose any obligation on the Company to continue to |
| employ any Employee. Moreover, no provision of this Plan or any document executed or |
| delivered pursuant to this Plan shall be deemed modified in any way by any employment |
| contract between an Employee (or other employee) and the Company. |
| |
| | | 4.9 | | Misconduct of an Employee.Notwithstanding any other provision of this Plan, |
| if an Employee commits fraud or dishonesty toward the Company or wrongfully uses or |
| discloses any trade secret, confidential data or other information proprietary to the Company, |
| or intentionally takes any other action which results in material harm to the Company, as |
| determined by the Board, in its sole and absolute discretion, the Employee shall forfeit all rights |
| and benefits under this Plan. |
| |
| | | 4.10 | | Term of Plan.No Stock Option shall be exercisable, or Award granted, |
| unless and until the Directors of the Company have approved this Plan and all other legal |
| requirements have been met. This Plan was adopted by the Board effective April 1, 2007. No |
| Stock Options or Awards may be granted under this Plan after April 1, 2017. |
| |
| - 11 - |
| | | 4.11 | | Governing Law.This Plan and all actions taken thereunder shall be governed |
| by, and construed in accordance with, the laws of the State of Utah. |
| |
| | | 4.12 | | Assumption Agreements.The Company will require each successor, (direct or |
| indirect, whether by purchase, merger, consolidation or otherwise), to all or substantially all of |
| the business or assets of the Company, prior to the consummation of each such transaction, to |
| assume and agree to perform the terms and provisions remaining to be performed by the |
| Company under each Incentive Agreement and Stock Option and to preserve the benefits to |
| the Employees thereunder. Such assumption and agreement shall be set forth in a written |
| agreement in form and substance satisfactory to the Board (an "Assumption Agreement"), |
| and shall include such adjustments, if any, in the application of the provisions of the Incentive |
| Agreements and Stock Options and such additional provisions, if any, as the Board shall require |
| and approve, in order to preserve such benefits to the Employees. Without limiting the |
| generality of the foregoing, the Board may require an Assumption Agreement to include |
| satisfactory undertakings by a successor: |
| | | | | |
| | | | (a) To provide liquidity to the Employees at the end of the Restriction |
| | | | Period applicable to the Common Stock awarded to them under this |
| | | | Plan, or on the exercise of Stock Options; |
| | | | |
| | | | (b) If the succession occurs before the expiration of any period |
| | | | specified in the Incentive Agreements for satisfaction of performance |
| | | | criteria applicable to the Common Stock awarded thereunder, to refrain |
| | | | from interfering with the Company's ability to satisfy such performance |
| | | | criteria or to agree to modify such performance criteria and/or waive |
| | | | any criteria that cannot be satisfied as a result of the succession; |
| | | | |
| | | | (c) To require any future successor to enter into an Assumption |
| | | | Agreement; and |
| | | | |
| | | | (d) To take or refrain from taking such other actions as the Board may |
| | | | require and approve, in its discretion. |
| |
| | | 4.13 | | Compliance with Rule 16b-3.Transactions under this Plan are intended to |
| comply with all applicable conditions of Rule 16b-3 promulgated under the Exchange Act. To |
| the extent that any provision of this Plan or action by the Board fails to so comply, it shall be |
| deemed null and void, to the extent permitted by law and deemed advisable by the Board. |
| |
| | | 4.14 | | Information to Shareholders.The Company shall furnish to each of its |
| stockholders financial statements of the Company at least annually. |
| |
| - 12 - |
