Annex A: 5BARz International, Inc. 2013 Stock Incentive Plan
5BARZINTERNATIONAL, INC. 2013 STOCK INCENTIVE PLAN
(Adopted May 17, 2013)
SECTION1.PURPOSE
The purposeofthe5BARZINTERNATIONAL, INC. 2013 Stock IncentivePlan(the"Plan") isto enhance the long-term stockholder value of 5BARZINTERNATIONAL, INC., a Nevada corporation(the "Company"), by offering opportunities to selected Persons to participate in the Company'sgrowth and success, and to encourage them to remain in the service of the Companyor a RelatedCompany(as defined inSection2) and to acquire and maintain stock ownership in the Company.
SECTION 2. DEFINITIONS
ln the Plan:
"Award" means any Option or Stock Award.
"Board" means the Board of Directors of theCompany.
"Cause,"unless otherwise defined in the instrument evidencing the Award or in an employment or services agreement between the Company or aRelated Company and aParticipant, meansdishonesty, fraud, misconduct, unauthorized use or disclosure ofconfidential information ortrade secrets or violation of noncompetition and confidentialityagreements, or conviction or confession ofa crimepunishable by law (except minor violations), in each caseas determined by the Plan Administrator, and itsdetermination shall beconclusive and binding.
"Code" meansthe InternalRevenue Codeof 1986, asamended from time totime.
"Committee" shall meana committee, or subcommittee, consisting oftwo or more directorswhoshallbe appointed byand serve at the pleasure of theBoard. To the extentnecessary for compliance with Rule 16b-3, or any successor provision, eachof the members of the Committee shall be a "non-employeedirector."Solely forpurposes of this Section l(e),"non-employeedirector" shall have the same meaning as set forth in Rule 16b-3under the Exchange Act, or any successor provision,asthenin effect.
"Common Stock" or "Stock" means the common stock,$0.001 par value per share,of the Company. "Company"means5BARZ INTERNATIONAL, INC.,a Nevada corporation.
"Company Transaction" unless otherwise defined in the instrument evidencing theAward or ina written employment or services agreement between a Participant andthe Companyor aRelatedCompanyanda Participant, means consummationof either:
(a) amerger or consolidation of theCompany with or into any other entity; or
(b) asale, lease, exchange or othertransfer in one transaction or aseries of relatedtransactions undertaken witha commonpurposeof all or substantiallyallthe Company's then outstandingsecuritiesor allor substantiallyall theCompany'sassets;provided,however, thata Company Transaction shall not includea Related Party Transaction.
"Disability,"unless otherwise defined by the PlanAdministrator, means amental or physical impairmentof a Participantthat is expected to resultindeathor thathas lastedor isexpected to last for a continuousperiod of twelve (12) months or more andthat causes a Participant to be unable,inthe opinion ofthe Company, to perform his orher duties fortheCompany or aRelated Company and to be engaged in any substantial gainful activity.
"Early Retirement" means Termination of Service (as defined below) prior to Retirement on termsand conditions approved by thePlan Administrator.
"ExchangeAct" means theSecurities Exchange Act of 1934, as amended,and therules and regulationsofthe Securities and Exchange Commission promulgated thereunder.
"Fair Market Value" means the per share value of theCommon Stock asestablished in good faith by the Plan Administrator or, if the Common Stock is: (a) listed on a national stock exchange (includinganytier of The Nasdaq Stock Market, TheNew York Stock Exchangeor TheAmerican Stock Exchange),the closingsales price for the CommonStock as reported by thatmarket for regular session tradingfor a singletrading day;or (b) quoted on OTC Bulletin Board, OTCQX or by the Pink OTCMarkets Inc.,the closing sales pricereported by such service for a single trading day. Ifthere isnosuch reportedprice for theCommon Stockfor thedate inquestion, thensuch price on the lastpreceding datefor whichsuch price existsshall be determinativeof Fair MarketValue.
"GrantDate" means the dateon which the Plan Administrator completesthe corporate action relatingtothe grant of an Awardor such later date specifiedby thePlan Administrator, andon whichallconditionsprecedent to the grant havebeen satisfied;provided, however,thatconditions totheexercisability or vesting of Awards shallnot defer theGrant Date.
"IncentiveStock Option" means an Option grantedwiththe intention, as reflected in the instrument evidencing the Option, that itqualify as an "incentive stock option"as thatterm isdefined in Section 422 of the Code.
"Nonqualified Stock Option" means anOption other than anIncentive Stock Option.
"Option" meanstheright topurchase Common Stock granted under Section 7.
"Option Expiration Date" has the meaning set forth in Section 7.6.
"Option Term'' hasthe meaning set forth in Section 7.3.
"Participant" means the Person to whom an Award is granted.
"Plan"means the 5BARZINTERNATIONAL, INC. 2013StockIncentive Plan.
"Plan Administrator" shall mean theBoard, orone or more Committees appointedbythe Board, asthecase may be.
"Person"meansany individual,corporation,partnership, limited liabilitycompany, firm, joint venture,association, joint-stock company, trust,incorporated,organization, governmental or regulatoryor other entity.
"Related Company"means any entity that, directly orindirectly, is in control of,oris controlled by, or isunder common controlwith the Company.
"Related Party Transaction" means (a)a merger or consolidation ofthe Company in which the holders ofthe outstandingvoting securities of theCompany immediately priorto themerger or consolidationhold atleasta majority of the outstanding voting securities of the SuccessorCompanyimmediatelyafter the merger or consolidation;(b) a sale, lease,exchange or other transfer of the Company'sassets toa majority-owned subsidiary company; (c) a transaction undertaken for the principal purposeof restructuring the capitalof the Company, includingbutnot limited to,reincorporating the Company in a different jurisdiction or creating a holdingcompany; or (d) a corporate dissolution or liquidation.
"Retirement" unless otherwise definedbythe Plan Administrator from time totime forpurposesof thePlan, means Termination of Service on or after the date the individual reaches "normal retirement age" as that term is defined in Section 41l(a)(8)ofthe Code.
"Securities Act" means the Securities Act of 1933,as amended.
"StockAward"means anaward of shares of Common Stockor unitsdenominatedinCommon Stockgranted under Section 9,the rightsof ownership of whichmay besubject to restrictions prescribed by the Plan Administrator.
"SuccessorCompany"means the surviving company,the successor company or its parent, asapplicable, in connectionwith aCompany Transaction.
“Termination of Service" meansatermination of employment or service relationship with the Company ora Related Company for any reason, whether voluntary or involuntary,including death, Disability, Early Retirement or Retirement, asdetermined by the Administrator in its sole discretion. Any questionas towhether and when there has been aTermination of Service for the purposes of an Award and the cause of suchTermination of Service shallbe determined by the Plan Administrator andits determination shall be final.Transfer of a Participant's employment or service relationship between Related Corporations, or between the Company and any Related Corporation, shall not be considered aTermination of Service for purposesof anAward, but unless the Plan Administrator determines otherwise, aTermination of Service shall be deemed to occur if a Participant's employment or servicerelationship is with an entity that has ceased tobe aRelated Corporation.
"Vesting Commencement Date" means the Grant Date or such other dateselected by the Plan Administrator asthe date from which the Option beginsto vest for purposes of Section 7.4.
SECTION 3. ADMINISTRATION
3.1 Plan Administrator
The Plan shall be administered bythe Plan Administrator. ffand so long as the Common Stock is registered under Section l2(b) or 12(g) of the Exchange Act, the Board shall consider in selecting the members ofany Committee acting as Plan Administrator, with respect toany members of suchCommittee(s) subject or likelyto become subject to Section 16 of the Exchange Act, the provisions regarding (a) "outside directors" ascontemplated by Section 162(m) of the Code and (b)"nonemployeedirectors" ascontemplated by Rule16b-3 under the Exchange Act. Notwithstanding the foregoing, the Board may delegate the responsibility for administering the Plan with respect todesignated classes of eligible Persons to different Committees, subject to such limitations as theBoard deemsappropriate. A Committee member shall serveatthe pleasure of the Board for suchterm asthe Board may determine,subject to removal by the Board at any time. Tothe extent consistent with applicable law, the Board may authorize one or more seniorexecutive officers of the Company to grant Awards to designated classes of eligible Persons, within the limitsspecifically prescribed by the Board.
3.2 Administration and Interpretation by Plan Administrator
Except for the terms and conditions explicitly set forth inthis Plan,the Plan Administratorshall have exclusive authority, in its discretion,to determine all matters relating toAwards under the Plan,including the selection of individualsto be grantedAwards, thetype ofAwards, the number of shares of Common Stock subject to anAward, allterms, conditions,restrictions and limitations, if any, of an Awardandthe terms of any instrument thatevidences the Award.ThePlan Administratorshall also have exclusive authority to interpret the Plan and the terms of any instrument evidencing the Award and may from time to time adoptandchange rulesand regulations of general application for the Plan'sadministration.The Plan Administrator's interpretation ofthe Plan andits rules and regulations, and all actions taken and determinations made by the Plan Administrator pursuanttothe Plan, shall be conclusive and bindingon all partiesinvolved or affected. The Plan Administrator may delegate ministerial duties to such of theCompany's officersas it so determines.
SECTION 4.STOCK SUBJECT TO THE PLAN
4.1 Authorized Number of Shares
Subject to adjustment from time to time as provided in Section 12.1, a maximumoftwenty million(20,000,000) shares ofCommon Stock shall be available for issuance under the Plan. Shares issued under the Plan shall bedrawn from authorized and unissued shares of Common Stockor shares of Common Stock nowheld or subsequently acquired by the Company.
4.2 Reuse of Shares
Any sharesof Common Stock thathave been made subjectto anAward that cease to be subject tothe Award(other than byreason ofexercise orsettlement of the Award to the extent it isexercised for or settledin shares) shallagain be available for issuance inconnection with future grants of Awards under the Plan. Inthe event shares of CommonStockissued underthePlan arereacquired bytheCompanypursuant to anyforfeitureprovision, right of repurchase orright offirst refusal, suchsharesshall again be available forthe purposes ofthe Plan; provided, however, that the maximum number of shares that may be issued upon the exercise of Incentive StockOptions shallequal the share numberstated inSection 4.1, subject to adjustment from timeto time as provided in Section 12.1.
SECTION 5. ELIGIBILITY
An Award may be granted to eligiblePersons,including anyofficer, director or employee of the Company, or a Related Company, that the PlanAdministrator from time to time selects. IfanAward is granted to anyconsultant, advisor or independentcontractorwho provides services totheCompanyor any RelatedCompany, theservices rendered mustbe bona fideservices that(i) are not in connection withthe offerand/or sale of any of the Company'ssecurities in acapital-raising transaction,and(ii)do not directly or indirectly promoteor maintain amarketforany of theCompany's securities.
SECTION 6.AWARDS
| 6.1 | Form and Grant of Awards |
The Plan Administrator shallhave the authority, in its sole discretion, to determine the type ortypes ofAwards to be granted under the Plan. Awards may be granted singly or in combination.
| 6.2 | Settlement of Awards |
TheCompany may settle Awardsthrough the delivery of sharesof CommonStock,the grantingof replacement Awardsor any combinationthereof as the PlanAdministratorshall determine.Any Award settlement, including payment deferrals, may be subject to such conditions,restrictionsandcontingencies as the Plan Administrator shall determine. The Plan Administrator maypermitor requirethe deferral ofany Award payment, subject to suchrules and proceduresasit may establish, which mayinclude provisionsfor the paymentorcreditingof interest, or dividend equivalents, including converting such credits into deferred stock equivalents.
| 6.3 | Acquired CompanyAwards |
Notwithstanding anything in the Plan to the contrary, thePlan Administrator may grant Awards under the Plan in substitution for awards issued under otherplans, or assume under the Plan awards issued under otherplans, iftheother plans are orwere plans of other acquired entities,orthe parent of such acquired entity ("Acquired Entities") and the new Award is substituted, orthe old award is assumed,by reason of a merger, consolidation, acquisition of property or stock, reorganization or liquidation (the"Acquisition Transaction").In the event that a written agreement pursuant to which the Acquisition Transaction is completed is approved by the Board and said agreement sets forth the terms and conditions of the substitution for orassumption of outstanding awards of theAcquired Entity, said terms and conditions shall be deemed to be the action of the Plan Administrator withoutany further actionbythe Plan Administrator, except as maybe required for compliance with Rule l6b-3 under theExchange Act, and thePersons holding such awards shall be deemed to be Participants.
SECTION 7. AWARDS OF OPTIONS
7.1 Grantof Options
The Plan Administrator shall have the authority, in its sole discretion,to grant Options designated asIncentive Stock Optionsor as Nonqualified Stock Options.
| 7.2 | Option Exercise Price |
Theexercise price forshares purchased under an Option shall be as determined by thePlan Administrator, but shall not be lessthan the minimum exercise price required by Section 8.3with respect to Incentive StockOptions.
7.3 Term of Options
Subject to earlier termination in accordance with the termsof thePlan and the instrument evidencing the Option, the maximum term of an Option (the "Option Term") shallbe as established forthat Optionby the PlanAdministrator, or if not so established, shall be ten (10) years from theGrant Date. For Incentive Stock Options, the Option Term shall beas specified in Section 8.4.
| 7.4 | Exercise of Options |
The Plan Administrator shall establish andset forth in each instrument that evidences an Option the time at which, or the installments in which, theOption shall vest and become exercisable, anyofwhich provisions may be waived or modified by the Plan Administrator atany time. If not so established in the instrument evidencing the Option, the Option shall vest and becomeexercisable according to the followingschedule, which may be waived or modified by the Plan Administrator atany time:
| Period of Participant's Continuous Employment or Service With the Company or Its Related Companies From the Vesting Commencement Date | Portion of Total Option That Is Vested and Exercisable | |
| After 1 year | 33% | |
| Each additional one-month period of continuous employment or service completed thereafter | 1/36"' of the remaining 75% | |
| After 3 years | 100% |
| The PlanAdministrator, in its sole discretion, may adjustthevesting schedule of an Option heldby a Participant whoworksless than"fulltime"as thatterm isdefined by thePlan Administrator orwhotakesaCompany approvedleave of absence. |
| Tothe extent an Option hasvested and become exercisable, the Option may be exercised in whole or, from timeto time,in part by delivery to the Company of a written stockoption exercise agreement or notice, in a form and inaccordance with procedures established by the Plan Administrator, setting forth thenumberof shares with respect to which the Option is being exercised, the restrictions imposed on theshares purchased under such exercise agreement, ifany, and such representations and agreements as may be required by the Plan Administrator, accompanied by payment in full asdescribed in Section 7.5.An Option may be exercised only for whole sharesand may not be exercised for less than areasonable number of shares at any onetime, as determined by the Plan Administrator. |
| 7.5 | Paymentof Exercise Price |
| The exercise price for shares purchased under an Option shall be paid in full to the Company by deliveryof consideration equal to the product ofthe Optionexercise priceand the number of shares purchased. Such consideration must be paid before the Company will issue the sharesbeing purchased and must be in a form ora combination of forms acceptable to the Plan Administrator forthatpurchase, which forms may include: |
| (a) | cash; |
| (b) | check; |
| (c) | tendering (either actually or, if the Common Stockis registered under Section 12(b) or12(g) of the ExchangeAct, byattestation)shares ofCommon Stock already owned bya Participantfor atleast six (6) months(or any shorter period necessary to avoida charge to the Company's earnings for financial reporting purposes) that on the day prior to the exercise date have aFair Market Value equal to the aggregate exercise price of the shares being purchased under the Option; |
| (d) | if the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, delivery of a properlyexecuted exercise notice, together with irrevocable instructions to a brokerage firm designated by the Company to deliver promptly to the Company the aggregate amount of saleor loan proceeds topay the Option exercise price and any withholding tax obligations that may arise in connection with the exercise,all in accordance with the regulations of the Federal Reserve Board;or |
| (e) | such other consideration as the Plan Administrator may permit. |
| In addition, to assist aParticipant (including aParticipant who is an officer oradirector of the Company) in acquiring sharesofCommon Stockpursuant to an Award granted under thePlan, the Plan Administrator, in its solediscretion, may authorize, either at the Grant Dateorat any time before the acquisition of Common Stock pursuant to the Award, (i) the paymentby a Participant ofthe purchaseprice of the Common Stock by a full-recourse promissory note or (ii) the guarantee by the Company ofafull-recourse loan obtained by a Participant from a third party. Subject to the foregoing, the Plan Administrator shallin its sole discretion specify the terms of any loansorloan guarantees, including theinterest rate and terms ofand security for repayment. |
7.6 Post-Termination Exercises
| The PlanAdministrator shall establish and set forth in each instrument thatevidencesan Option whether the Option shall continue to be exercisable, andthe termsand conditions of such exercise, if aParticipant ceasestobe employed by,orto provide servicesto,the Company ora Related Company, whichprovisions maybe waived or modified by the Plan Administrator at any time. If notsoestablished in the instrument evidencing theOption, the Option shall be exercisable according tothe following terms and conditions, which may be waived or modified by the Plan Administrator at anytime: |
| (a) | Anyportion of an Optionthatisnotvestedand exercisableon the date of a Participant'sTerminationof Service shallexpire on such date. |
| (b) | Any portionof an Option thatis vested andexercisable on the date of a Participant's Terminationof Service shall expireon theearliest to occur of: |
| (i) | if theParticipant' s Termination of Serviceoccurs for reasons other thanCause, RetirementorEarlyRetirement, Disabilityor death, the datewhich is three (3) monthsafter such Terminationof Service; |
(ii) if the Participant 's Termination of Service occurs by reason ofRetirement orEarlyRetirement,
Disability or death, the one-year anniversary ofsuch Termination of Service; and
| (iii) | the last day of the Option Term(the"Option Expiration Date"). |
Notwithstanding the foregoing, if a Participant diesafterhis orher Terminationof Service but while an Option is otherwise exercisable, theportion of theOptionthat is vested and exercisable on such Termination of Service shall expire upon the earlier to occur of (y) the OptionExpiration Dateand (z) the one-year anniversary of the dateof death,unless thePlan Administrator determines otherwise.
Also notwithstanding the foregoing, in case a Participant' s Termination of Serviceoccurs forCause, all Options granted to a Participantshall automatically expireuponfirst notificationto theParticipant of suchtermination,unless the PlanAdministrator determinesotherwise.lfa Participant's employmentor servicerelationshipwiththe Companyis suspended pending an investigation of whether a Participantshall be terminated for Cause, all aParticipant's rightsunderany Option shall likewisebe suspendedduringthe periodof investigation. Ifany facts that wouldconstitute terminationfor Cause arediscovered after aParticipant's Termination of Service, anyOption then held by a Participant may be immediatelyterminated by the PlanAdministrator,in its solediscretion.
| (c) | A Participant's transferof employmentorservice relationship between or among the Company and any RelatedCompany, or a change in status from an employee to a consultant,advisor or independent contractor or a change in status from a consultant, advisor or independentcontractor to an employee,shall not be considered a Terminationof Service for purposesofthis Section 7. |
| (d) | Theeffect ofa Company-approved leave of absence onthe application ofthis Section 7 shall be determined by the Plan Administrator, in itssole discretion. |
SECTION 8. INCENTIVESTOCKOPTION LIMITATIONS
Notwithstanding any other provisions ofthe Plan, andto the extentrequired by Section 422 ofthe Code,Incentive Stock Options shall be subject to the following additional terms and conditions:
| 8.1 | Dollar Limitation |
To the extent the aggregate Fair Market Value (determined asofthe Grant Date) of Common Stock with respect to which a Participant's Incentive StockOptions become exercisable for the first time during anycalendar year (under the Plan and all other stock optionplans of the Company) exceeds $100,000, suchportion in excess of $100,000 shall be treated as aNonqualified Stock Option. In the event a Participant holdstwo or more such Options that become exercisable for the first time in the same calendar year, such limitation shall be applied on thebasis ofthe order in which such Options are granted.
| 8.2 | Eligible Employees |
Individuals who arenot employees of the Company or one of its parent companies or subsidiary companies may not begranted Incentive Stock Options.
| 8.3 | Exercise Price |
The exercise price of anIncentiveStock Optionshall be atleast one hundred percent(100%) of the Fair Market Value of the Common Stockonthe Grant Date, andin the case of an Incentive Stock Option granted to a Participant who owns more thanten percent ( 10%) of the totalcombinedvoting powerof all classesofthe stock oftheCompany or ofits parent orsubsidiary companies (a"Ten Percent Stockholder"), shallnotbe less than one hundred and ten percent (110%) of the Fair MarketValue of the CommonStock on the Grant Date.The determination of more than ten percent (10%)ownership shall be madein accordance with Section 422 of the Code.
| 8.4 | OptionTerm |
Subjectto earlier termination in accordance withthe terms of the Plan and the instrument evidencing the Option, the Option Term of an Incentive Stock Option shall not exceedten (10)years,and in the case of an IncentiveStock Option granted to aTen Percent Stockholder, shall not exceed five (5) years.
| 8.5 | Exercisability |
An Option designated as an Incentive Stock Option shall ceaseto qualify for favorable tax treatment as an Incentive StockOption tothe extent it is exercised (if permitted by the terms of the Option):
| (a) | more thanthree(3) monthsafter the date of a Participant'sTermination of Service,if termination was for reasons other thandeath ordisability; |
| (b) | more than one (1) year after thedateof a Participant'sTermination of Service, iftermination wasby reason of disability; or |
| (c) | after a Participant has been on leave of absence for more than ninety (90) days, unless aParticipant's reemploymentrights are guaranteed by statute or contract. |
| 8.6 | Taxationof Incentive Stock Options |
In order to obtain certain tax benefits afforded to Incentive Stock Options under Section422 of the Code, a Participant must hold the shares acquired upon theexercise of an Incentive Stock Option fortwo (2) years after the Grant Date and one (1) year after the date ofexercise.
AParticipantmaybe subject tothe alternative minimum tax at the time of exercise of an Incentive Stock Option.AParticipant shall give the Company promptwritten notice of any disposition of shares acquired on the exercise of an Incentive StockOption prior tothe expiration of such holding periods.
| 8.7 | Promissory Notes |
Theamountof any promissory note delivered pursuant to Section7.5 herein in connection with an IncentiveStock Option shall bear interest at a rate specified by the Plan Administrator, but in no case less than the rate required to avoid imputation of interest (taking into account any exceptions to the imputed interest rules) for federal income tax purposes.
8.8 CodeDefinitions
Forthe purposes of this Section8,"parent corporation,""subsidiarycorporation" and "disability" shall have the meanings attributed to those terms for purposes of Section 422 of theCode.
SECTION 9. STOCK AWARDS
9.1 Grant of StockAwards
The Plan Administrator is authorized to makeAwards of shares of Common Stock orAwards denominated inunits of Common Stock on such terms and conditions and subject to such repurchase orforfeiture restrictions, if any (which may be based on continuous servicewith the Company orthe achievement of performance goals related toprofits, profit growth, profit-relatedreturn ratios, cash flow or total stockholder return, where such goals maybe stated in absolute terms or relative to comparison companies), asthe Plan Administrator shalldetermine, in its sole discretion, which terms, conditions and restrictions shall be setforth in the instrument evidencing the Award. The terms,conditions and restrictions that the Plan Administratorshall have the power to determine shall include, without limitation, the manner inwhich shares subject to Stock Awards are held during theperiods they are subject to restrictions and the circumstances under which repurchase or forfeiture of the StockAward shall occur byreason of a Participant's Terminationof Service.
9.2 Issuance ofShares
Upon the satisfaction ofany terms, conditions and restrictions prescribed in respect to a StockAward, or upon aParticipant's release from anyterms, conditions and restrictions of a StockAward, asdetermined by the Plan Administrator, the Company shall release, as soon as practicable, to a Participant or, in the case ofa Participant'sdeath,to the personal representative of a Participant'sestate or asthe appropriate court directs, theappropriate number of shares of Common Stock.
9.3 Waiver ofRestrictions
Notwithstanding anyother provision sof thePlan, the Plan Administratormay,in its sole discretion, waive therepurchase or forfeiture period and any other terms,conditions orrestrictions on any Stock Award under such circumstances and subject to such terms and conditions asthe Plan Administrator shall deem appropriate.
SECTION 10. WITHHOLDING
The Companymayrequire a Participant to payto the Companytheamount of any taxes that theCompany is required by applicablefederal, state,local or foreign law to withhold withrespect to the grant,vesting or exercise of an Award.The Companyshall notbe required to grant or issue anysecuritiesunder the Planuntil such obligations are satisfied.
The Plan Administrator may permit or require a Participant to satisfy all or part of his or her tax withholding obligations by (a) paying cash to the Company, (b) having the Company withhold from any cashamounts otherwise due or to become due from the Company to a Participant,or (c) having the Company withhold a numberof shares of Common Stock that would otherwise be issued to a Participant (or becomevested, asapplicable) having avalue equalto the tax withholding obligations (up tothe employer's minimum required tax withholding rate), or
(d)surrendering a number of shares of Common Stock a Participant already owns having avalue equal to the tax withholding obligations (up to the employer's minimumrequired tax withholding rate to the extent aParticipant has owned the surrendered shares forless than six (6)months if such a limitation isnecessary to avoid a charge to the Company forfinancial reporting purposes).
SECTION11. TRANSFERABILITY
Neither an Award nor any interesttherein may be assigned, pledged ortransferred by aParticipant ormade subject to attachmentorsimilar proceedings otherwise than by will orby the applicable laws ofdescent anddistribution,and, during a Participant's lifetime, such Awards may beexercised only by a Participant. Notwithstanding the foregoing, and tothe extent permitted by Section422 of the Code, the Plan Administrator, in its sole discretion may permit a Participantto assignor transferanAwardor may permit a Participantto designate a beneficiary who may exercise the Award or receive payment underthe Award after a Participant' sdeath; provided,however,that anAwardso assigned or transferred shall besubject to all the termsand conditions of the Plan and those contained in the instrument evidencingthe Award.
SECTION 12. ADJUSTMENTS
| 12.1Adjustment | of Shares |
Inthe event, at any time or from time to time, a stock dividend, stock split, spin-off, combination or exchange of shares, recapitalization,merger,consolidation, distribution to stockholders other than a normal cash dividend,or other change inthe Company's corporate or capital structure results in (a)the outstanding shares of Common Stock, or any securities exchanged thereforor received in their place, being exchanged for adifferent number or kind of securities of the Company or of any other company or (b) new, different or additional securities of the Company or of any other company being received by the holders of shares of Common Stock of the Company, then the Plan Administratorshall make proportional adjustments in (i) the maximum number and kindof securities subject to the Plan and issuable as Incentive StockOptions as set forthin Section4and (ii) the number and kindof securitiesthat are subject to any outstandingAward and the per share price of such securities, without any change in the aggregate price to be paid therefor. The determination by the Plan Administrator as to theterms of anyof the foregoing adjustments shall be conclusive and binding. Notwithstanding the foregoing, a dissolution or liquidation of the Company or a Company Transaction shall not begoverned by this Section 12.l but shall begoverned by Sections 12.2and12.3, respectively.
| 12.2 | Dissolution or Liquidation |
To the extentnotpreviously exercised or settled, and unless otherwise determined by the Plan Administrator in its solediscretion, Options and Stock Awards denominated in units shall terminate immediately prior to the dissolution or liquidation of the Company. To the extent a forfeiture provision or repurchase right applicable to an Award has not been waived by the Plan Administrator, the Awardshall be forfeited immediately prior to the consummation of the dissolution or liquidation.
| 12.3 | Company Transaction |
| 12.3.1 | Options |
In the event of a CompanyTransaction, except as otherwiseprovided in the instrumentevidencing an Option or in a written employment or servicesagreement between a Participant and the Company or a RelatedCompany, the following shall apply:
| (a) | Exceptas provided insubsection (b)below, each outstanding Optionshall be assumedor anequivalent optionor right substituted by the Successor Company. |
| (b) | lf inthe event ofa Company Transaction the Successor Company refuses to assumeor substitute for an Option,then each such outstanding Option shall become fully vested and exercisablewith respect to one hundred percent(100%) of the unvested portion of the Option. Jn such case, the Plan Administrator shall notifyaParticipant in writing orelectronically that one hundred percent (100%) of the unvested portion of the Option specified above shall be fully vested and exercisable for a specified time period. At the expiration of the time period, the Option shall terminate,provided that the Company Transaction is consummated. |
| (c) | For the purposes ofthis Section 12.3, the Option shall be considered assumed or substituted for if following the Company Transaction the option or right confers the rightto purchase orreceive, foreach share of Common Stock subject to theOption immediatelyprior to theCompanyTransaction, the consideration (whether stock,cash, or othersecuritiesor property)receivedin the Company Transaction by holders of CommonStock foreach share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by theholders of amajority of theoutstanding shares); provided, however, that if such consideration received in the Company Transaction isnot solely common stock of the Successor Company, the Plan Administrator may, with the consent of the Successor Company, provide for the consideration tobe received upon the exercise of the Option, for each share of Common Stock subject thereto, to be solely common stock of the Successor Company substantiallyequal in fairmarket value to the per share consideration received by holders of Common Stock inthe Company Transaction. The determination of such substantial equality of value of consideration shall be made by the Plan Administrator and itsdetermination shallbe conclusive and binding. |
| (d) | All Optionsshall terminateand cease to remainoutstanding immediately following theCompanyTransaction, except to the extent assumedby the Successor Company. |
12.3.2 Stock Awards
Intheevent of a CompanyTransaction, except as otherwiseprovided intheinstrument evidencing theAward orina written employmentor services agreementbetweena Participant and the Company or a Related Company, the vestingof shares subject to Stock Awards shall accelerate, and theforfeitureprovisions to which such shares are subject shalllapse, if andto the sameextent that the vestingof outstanding Options accelerates in connection with the CompanyTransaction. Ifunvested Optionsare to be assumed orsubstituted by a SuccessorCompany without acceleration upon the occurrence of aCompany Transaction, the repurchase or forfeiture provisions towhichsuch Stock Awardsaresubjectshall continue withrespect to shares of theSuccessorCompany that may be issuedin exchange for suchshares.
12.4 Further Adjustment of Awards
Subject to Sections 12.2 and 12.3, the Plan Administrator shall havethediscretion, exercisable atanytime beforeasale,merger,consolidation, reorganization,liquidation, dissolutionor change of controlof the Company, as defined bythePlan Administrator, to takesuch further action as itdetermines to benecessary or advisablewith respect to Awards. Such authorized actionmay include (butshall not be limitedto) establishing, amending or waiving thetype, terms, conditions or duration of, or restrictionson, Awards soas toprovide forearlier, later, extended oradditional time for exercise, liftingrestrictions and othermodifications, and the PlanAdministrator may take suchactions with respect to allParticipants,to certaincategories of Participantsor onlyto individual Participants. The Plan Administrator may takesuch action before orafter granting Awards to which theaction relatesand beforeor after any public announcement with respect to such sale, merger, consolidation, reorganization,liquidation, dissolutionor changeof controlthatisthe reasonforsuch action.
12.5 Limitations
The grant of Awards shall inno way affect theCompany'sright to adjust, reclassify, reorganizeor otherwisechange its capital or businessstructureor to merge,consolidate, dissolve, liquidate or sell or transferallor anypart of its business or assets.
12.6 FractionalShares
Intheeventof any adjustment in the numberof shares coveredbyanyAward, each suchAward shall cover only the number of full shares resulting from suchadjustment.
SECTION 13. (Intentionally Deleted)
SECTION14. MARKETSTANDOFF
In the event of an underwritten public offering by the Company of its equity securitiespursuantto an effectiveregistration statement filed under the SecuritiesAct, including the Company's initial public offering, no Person may sell, make any short sale of,loan,hypothecate,pledge, grant any option for the purchase of, or otherwise dispose ofortransfer forvalue orotherwise agree to engage in any ofthe foregoing transactions with respect to any shares issued pursuant to an Award granted under the Plan without the prior written consent of the Company or its underwriters. Such limitations shall be in effect forsuch period of time as may be requested by theCompanyorsuch underwriters;provided, however,that in no event shall such period exceed one hundred and eighty (180) days.
In the eventthe Company makes any public offering of its securities and determines in its sole discretion thatit is necessary toreduce the numberof issued but unexercised stock purchase rights soas to comply with any state's securities orBlue Sky Jaw limitations with respect thereto, the Board shall have the right in its solediscretion (i)to accelerate theexercisability of any Option and the date on which such Option must be exercised, providedthat the Company gives the Participant prior written notice of suchacceleration, and (ii) to cancel any Options or portions thereof which Participant does not exercise prior toorcontemporaneouslywith such public offering.
Inthe event of any stock split, stock dividend, recapitalization, combination of shares, exchangeof shares or other change affecting the Company's outstanding shares of Common Stock effected as aclass without the Company's receipt of consideration, any new, substituted or additional securitiesdistributed with respect to the purchased shares shall be immediately subject to the provisionsof this Section 14, tothe sameextent the purchased shares are at such time covered by such provisions.
In orderto enforce the limitationsof this Section 14, the Company may impose stop-transfer instructions with respect to the purchased shares until the end ofthe applicable standoffperiod.
SECTION 15.AMENDMENT AND TERMINATION
| 15.1 | Amendment,Suspension or Termination of Plan |
The Boardmay amend,suspend or terminate the Plan or any portion of the Plan at any time and in such respectsasitshall deem advisable; provided,however, that tothe extent required for compliance with Section 422 of the Codeor any applicable law or regulation, stockholder approval shall be required for any amendment that would:
| (a) | increase the totalnumber of shares of Common Stock availablefor issuance under the Plan; (b)modify the class of employees eligibleto receive Options; or (c) otherwise require stockholderapprovalunder any applicable law or regulation. Any amendment made to the Planthat would constitute a "modification" to Incentive Stock Options outstanding onthe date of such amendment shallnot, without the consentof a Participant, be applicableto such outstanding IncentiveStock Options butshallhave prospective effect only. |
| 15.2 | Term of Plan |
The Plan shallhave no fixed expiration date; provided, however, that no Incentive StockOptions may be granted more than ten (10) years after the laterof(a) the adoption by the Board of the Plan and (b)the adoptionbythe Board ofany amendment tothe Planthat constitutes the adoption ofanew plan forpurposes of Section 422 of the Code.
| 15.3 | Consentof Participant |
The suspension,amendment or termination of thePlan ora portion thereof orthe amendment of an outstanding Award shall not, without a Participant's consent, materially adversely affect any rightsunder anyAward theretofore granted toaParticipantunder the Plan. Any change or adjustmentto an outstandingIncentiveStock Option shallnot,withoutthe consent of aParticipant,be madein amanner so as toconstitute a "modification" that wouldcausesuch Incentive Stock Option to fail to continueto qualify as an Incentive Stock Option. Notwithstanding the foregoing, any adjustments made pursuantto Sections12.lthrough 12.3 shall not be subjectto theserestrictions.
SECTION 16.GENERAL
| 16.1 | Evidence ofAwards |
Awards granted under the Plan shallbe evidenced by a writteninstrument that shall contain suchterms,conditions, limitations and restrictions asthe Plan Administrator shall deem advisable and that are not inconsistent with the Plan.
| 16.2 | No Individual Rights |
Nothing in the Plan or any Awardgranted under the Plan shall bedeemedto constitute an employmentcontract or confer or bedeemed to confer on any Participant any right to continue in the employ of, or to continueany other relationshipwith the Companyor anyRelated Company or limitin any way the right of the Company or any RelatedCompanyto terminatea Participant 'semployment orother relationshipat any time,with orwithout Cause.
| 16.3 | Issuance of Shares |
Notwithstanding any other provision ofthe Plan, the Company shall have no obligation to issue or deliver any shares of Common Stock under the Planor make anyother distribution of benefits under the Planunless,in the opinion of the Company's counsel, such issuance, delivery or distribution would comply with all applicable laws (including, without limitation, the requirements ofthe Securities Act), and the applicable requirements of any securities exchange or similar entity.
The Company shall be under no obligation toany Participant to register for offering orresaleorto qualify for exemption under federal, state and/or other securities lawsany shares ofCommonStock,security or interest in a security paid or issued under, orcreated by,the Plan, or to continue in effect any such registrations or qualifications if made.
To the extent the Plan orany instrument evidencing an Award provides for issuance ofstock certificates toreflect the issuance of sharesof Common Stock, the issuance may beeffected on anoncertificatedbasis, to the extentnot prohibited byapplicable lawortheapplicable rules ofany stockexchange. Asacondition tothe exercise ofan Option orany other receipt of Common Stock pursuant to an Award under thePlan, the Company may require (a)a Participant torepresent and warrant atthe time of any such exercise or receipt that such sharesare being purchased orreceived only for a Participant's own account and without any present intention tosell or distribute such shares and (b) such other action or agreement by a Participant as may from time totime be necessary to comply with the federal, state and/orothersecurities laws. At the option of theCompany, astop-transfer order against any such shares may be placed on the official stock books and records ofthe Company, and a legend indicating that such shares may not be pledged, sold orotherwise transferred, unless an opinionof counsel is provided(concurredin by counsel for the Company) statingthat suchtransfer isnot in violation ofany applicable law orregulation, may be stamped on stock certificates to ensure exemption from registration. The Plan Administrator may alsorequire a Participant to execute and deliverto the Company a purchase agreement or such other agreement as may be in use by the Company at such time that describes certain terms and conditions applicable tothe shares.
| 16.4 | No Rightsas a Stockholder |
A Participant (or the Participant's successor or successors) shall have no rights as a stockholder with respect to any shares of Common Stock covered by an Option or Stock Award until thedate of theissuance of astock certificate evidencing suchhares.No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or otherproperty), distributions or otherrights for which the record date is prior tothe date such stock certificate isactuallyissued (except asotherwise provided in Section 14 of the Plan).
16.5 Compliance With Laws and Regulations
Notwithstanding anything inthe Plan to the contrary, the Plan Administrator, inits sole discretion, may bifurcate the Plan so asto restrict, limit or condition the use ofany provision of the Plan to Participants who are officers or directors subject to Section 16 of the Exchange Act without so restricting, limiting or conditioning the Plan with respect to other Participants. Additionally,in interpreting and applying the provisions ofthePlan, any Option granted asanIncentive StockOption pursuant tothePlan shall,to theextent permitted bylaw, be construed as an
"incentive stock option"withinthemeaningof Section422 of theCode.
| 16.6 | Participants in Other Countries |
The Plan Administrator shall havethe authority to adopt such modifications, proceduresand subplans as may be necessary or desirable to comply with provisions of the laws of othercountries in which theCompany orany Related Companymayoperate to assurethe viabilityof the benefits from Awards granted to Participants employed in such countries and to meet the objectives ofthe Plan.
| 16.7 | Trust or Fund |
The Plan is intended to constitute an"unfunded" plan. Nothing contained hereinshall require the Company to segregate any monies or other property,or shares of CommonStock, or to create anytrusts,or to makeany special depositsfor any immediate or deferredamounts payable to any Participant,and noParticipantshall have anyrights that are greaterthan those of a generalunsecured creditor of the Company.
16.8Severability
If anyprovision of the Planor anyAward is determined to beinvalid, illegal orunenforceable in any jurisdiction , or as to anyPerson, orwould disqualify the Planorany Award under anylaw deemed applicable bythe PlanAdministrator, suchprovisionshall be construed ordeemed amended to conformto applicablelaws, or,if it cannot besoconstruedordeemed amended without,in thePlanAdministrator'sdetermination,materiallyaltering the
intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person orAward, and theremainder of the Plan and any such Award shall remain in full force and effect.
| 16.9 | Choice of Law |
The Planand all determinationsmade andactions taken pursuant hereto, to theextent nototherwise governed bythe lawsof the UnitedStates,shall be governed by the lawsof the State of Nevada withoutgiving effect to principles ofconflicts oflaw.
| 16.10 | AppendixProvisions |
Participants who are residents of theState of Californiashall be subject tothe additional terms and conditionsset forthinAppendix Ato the Plan, attached hereto,untilsuchtime as the Common Stockbecomes a "listed" security under theSecurities Act.
SECTION17.EFFECTIVE DATE
The "effective date" isthedate onwhich the Planisadopted bytheBoard.Ifthe stockholdersof theCompany do not approve thePlan within twelve (12) monthsafter the Board's adoption of thePlan,any Incentive StockOptions granted under the Planwill be treatedasNonqualifiedStock Options.
APPENDIX A TO THE
5BARZ INTERNATIONAL, lNC.2013 STOCK INCENTIVE PLAN
(ForCalifornia Residents Only)
ThisAppendixto the 5BARZ INTERNATIONA L, INC. 2013 Stock Incentive Plan (the"Plan") shall have application onlyto Participants who are residents of the State of California. Capitalizedtermscontainedhereinshall have the same meanings givento them in the Plan, unless otherwiseprovided in this Appendix. Notwithstanding any provision contained in the Plan to the contrary and to the extent required by applicable law, the following terms and conditions shall apply toall Awards granted to residents of the State of California, until such time as the Common Stock becomes a "listed security" under the Securities Act:
1.Options shallhave a term of not more than ten years from the Grant Date.
| 2. | Awards shallbe nontransferable other than by will or the laws of descent anddistribution. Notwithstanding the foregoing, and to the extent permitted bySection 422 of the Code, thePlan Administrator, in itsdiscretion, may permit transferof an Awardto a revocabletrust or asotherwise permittedby Rule 701ofthe Securities Act. |
3. Unlessemployment or services are terminatedfor Cause, the right toexercise an Option in the event of Termination of Service, to the extentthatthe Participant is otherwise entitledto exercise an Optionon the date of Terminationof Service,shall be(a) at least six months from the date of aParticipant'sTermination ofService if terminationwascaused bydeath or Disability, and (b) at least 30days from the date of aParticipant's Termination of Service iftermination of employmentwas caused by other than death or Disability, (c) but in no eventlater than theOption Expiration Date.
4. No Award may be granted toa resident of California morethan ten years after the earlierof the dateofadoption of the Plan and the date the Plan is approved bythestockholders.
5. Stockholders of the Company must approve the Plan bythe later of(a) within12 months before or after the Plan isadopted by the Board and (b)prior to or within12 months of the grant ofan Option under the Plan toa resident of the State of California, except that stockholders must approve the Plan prior to issuance of any securities under the Plan (other than Options) distributed or sold to Participants who are residents of the State of California. Any Option exercised by a California resident or sharesissued underan Award toa Californiaresident shall be rescinded if stockholder approval is not obtainedin the foregoing manner. Shares subject to such Awards shallnot be counted in determining whethersuch approval is obtained.
6. To the extentrequired by applicablelaw, the Company shall provide annual financial statements ofthe Company to each California resident holding an outstanding Award under the Plan. Such financial statements need not be audited and need not be issued to key persons whose duties at the Companyassure them access toequivalentinformation.
5BARZ INTERNATIONAL,INC.2013 STOCK INCENTIVE PLAN
ADOPTION ANDAMENDMENTS/ADJUSTMENTS SUMMARY PAGE
| Date of Board Action | Action | Section/Effect of Amendment | Stockholder Approval | |||
| May 17, 2013 | Initial Plan Adoption | None |
