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RED SWOOSH, INC. 2001 ADVISOR STOCK OPTION PLAN

Stock Option Agreement

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RED SWOOSH, INC

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Title: RED SWOOSH, INC. 2001 ADVISOR STOCK OPTION PLAN
Governing Law: California     Date: 4/26/2007
Industry: Computer Services     Sector: Technology

RED SWOOSH, INC. 2001 ADVISOR STOCK OPTION PLAN, Parties: red swoosh  inc
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Exhibit 99.1

RED SWOOSH, INC.
2001 ADVISOR STOCK OPTION PLAN

Article 1. DEFINITIONS.

     Each capitalized term used herein shall have the meaning ascribed thereto, and the following terms shall have the following meanings:

     “ 10% Shareholder ” shall have the meaning set forth in subsection 3.2.1.

     “ Accelerated Grant ” shall have the meaning set forth in Section 4.2.

     “ Agreement ” shall have the meaning set forth in Section 2.2.

     “ Applicable Laws ” means the requirements relating to the administration of stock option plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Stock is listed or quoted and the applicable laws of any other country or jurisdiction where Options are Granted under the Plan.

     “ Board ” means the board of directors of the Company.

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

     “ Committee ” shall have the meaning set forth in Section 2.2.

     “ Common Stock ” means the common stock of the Company.

     “ Company ” means Red Swoosh, Inc., a California corporation, and its successors.

     “ Consultants ” means advisors and other consultants to the Company (i) who are natural persons; (ii) who are not directors, officers, or employees of the Company; (iii) who provide bona fide services to the Company and /or its Subsidiaries; and (iv) whose services are not rendered in connection with the offer or sale of securities in a capital-raising transaction, and do not directly or indirectly promote or maintain a market for the Company’s securities.

     “ Disability ” means the inability or failure, by reason of physical or mental disability, to perform such Optionee’s duties to the Company.

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

     “ Fair Market Value ” or “ FMV ” means, as of a specific date, the value of a share of Common Stock determined as follows:

 


 

     (i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Committee deems reliable;

     (ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Common Stock on the last market trading day prior to the day of determination; or

     (iii) In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Committee whose determination shall be binding and conclusive on all Optionees.

     “ Grant ” means a grant by the Committee to a designated Optionee of an Option.

     “ Harmful Activity ” shall have the meaning set forth in Section 3.5.1.

     “ IPO ” means the initial public offering of the Common Stock by the Company to the public pursuant to a firm commitment registered public offering under the Securities Act.

     “ Lock-up Period ” shall have the meaning set forth in Section 3.4.

     “ NQSO ” shall have the meaning set forth in Section 3.1.

     “ Option ” means an option to acquire a specified number of shares of Common Stock at a specified price per share Granted pursuant to this Plan, as those numbers may be adjusted in accordance with this Plan.

     “ Option Gain ” means, as to each Option exercised, the gain represented by the Fair Market Value of the shares of Common Stock for which such Option is exercised on the date of exercise over the aggregate Option exercise price for such shares.

     “ Optionee ” means a holder of an Option.

     “ Plan ” means the 2001 Advisor Stock Option Plan of the Company.

     “ Reporting Company ” means a company that is subject to the reporting requirements of the Exchange Act.

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

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     “ Subsidiary ” means any entity that is majority-owned by the Company, whether now or hereafter existing.

     “ Tax Date ” shall have the meaning set forth in Section 5.4.

     “ Termination Date ” means the date of termination of such Optionee’s services as a Consultant.

     “ Transaction ” shall have the meaning set forth in Section 4.1.

     “ Underwriters’ Representative ” means, with respect to any underwritten offering of securities by the Company, the underwriter who is acting as the managing underwriter for such offering.

Article 2. GENERAL.

      2.1 Purposes . The purposes of the Plan are (i) to align the interests of the Company’s shareholders and the recipients of Options by increasing the proprietary interest of such recipients in the Company’s growth and success, (ii) to advance the interests of the Company by attracting and retaining Consultants, and (iii) to motivate such persons to act in the long-term, best interests of the Company’s shareholders. For purposes of this Plan, references to engagement by the Company shall also mean engagement by a Subsidiary.

      2.2 Administration . This Plan shall be administered either by the Board or by a committee designated by the Board consisting of two or more members of the Board. Notwithstanding the designation by the Board of such committee, the Board shall, subject to the requirements of Section 162(m) of the Code if the Board wishes to qualify under such Section, continue to have the right to administer this Plan in whole or in part. If at the time of any Grant, the Company is a Reporting Company, each member of such committee shall be a “Non-Employee Director” within the meaning of Rule 16b-3 under the Exchange Act, and, if the Board wishes to qualify under Section 162(m) of the Code, an “outside director” within the meaning of Section 162(m) of the Code. As used herein, the term “ Committee ” shall mean the Board if no such committee is designated, and shall mean both the Board (if and to the extent that the Board takes any action that could have been taken by the Committee) and such committee.

     The Committee shall, subject to the terms of this Plan, select eligible persons for participation in this Plan and shall determine the number of shares of Common Stock subject to each Option Granted hereunder, the vesting schedule of each Option or share of Common Stock subject to each Option, the per share exercise price of such Option and all other terms and conditions of either the Grant or the exercise of such Option, including without limitation, the form of the written agreement between the Company and the Optionee that evidences each Grant and sets forth the terms and conditions thereof (an “ Agreement ” which term shall be deemed to include any employment, consulting or other written agreement between the Company or a Subsidiary and an Optionee, if and to the extent such

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agreement addresses issues relating to a Grant to such Optionee). The Committee shall, subject to the terms of this Plan, interpret this Plan and the application thereof, establish such form or forms of Agreement (which need not be identical) as may be necessary or desirable and interpret such Agreements, and establish such rules and regulations as the Committee deems necessary or desirable for the administration of this Plan; and the Committee may impose, incidental to a Grant, conditions with respect to such Grant, such as limiting competitive employment or engagement or other activities. All such interpretations, rules, regulations and conditions shall be final, binding and conclusive.

     Notwithstanding any other provision of this Plan, the Committee may, in its sole and absolute discretion and for any reason at any time, (i) subject to the requirements imposed under Section 162(m) of the Code and regulations promulgated thereunder in the case of a Grant intended to be qualified performance-based compensation, take action such that any or all outstanding Options held by the recipient of such Grant shall become exercisable in part or in full, or (ii) with the consent of an Optionee, repurchase Options held by such Optionee for such consideration and on such terms as the Committee may determine in its sole and absolute discretion.

     The Committee may, subject to the requirements of Section 162(m) of the Code if the Board wishes to qualify under such Section, delegate some or all of its power and authority hereunder to the Chief Executive Officer or such other executive officer of the Company as the Committee deems appropriate; provided, however, that if the Company is a Reporting Company, the Committee may not delegate its power and authority with regard to the selection for participation in this Plan of an officer or other person subject to Section 16 of the Exchange Act or decisions concerning the timing or pricing of, or amount of shares subject to, an Option Granted to such an officer or other person.

     No member of the Board of Directors or the Committee, and neither the President, the Chief Executive Officer nor any other executive officer to whom the Committee delegates any of its power and authority hereunder, shall be liable for any act, omission, interpretation, construction or determination made in connection with this Plan in good faith, and such members of the Board of Directors and the Committee and the President, the Chief Executive Officer or such other executive officer shall be entitled to indemnification and reimbursement by the Company in respect of any claim, loss, damage or expense (including attorneys’ fees) arising therefrom to the full extent permitted by law and under any directors’ and officers’ liability insurance that may be in effect from time to time.

     A majority of the Committee shall constitute a quorum. The Committee shall act either by (i) a majority of the members of the Committee present at any meeting at which a quorum is present, or (ii) a writing signed by all of the members of the Committee without a meeting.

      2.3 Eligibility . Participants in this Plan shall consist of such Consultants of the Company and/or its Subsidiaries from time to time as the Committee in its sole and absolute discretion may select from time to time. The Committee’s selection of a person to

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participate in this Plan at any time shall not require the Committee to select such person to participate in this Plan at any other time.

      2.4 Shares Available . Subject to adjustment as provided in Section 5.6 hereof, 50,000 shares of Common Stock shall be available for Grants of Options, reduced by the sum of the aggregate number of shares of Common Stock that become subject to outstanding Options. The shares may be authorized but unissued, or reacquired, Common Stock. To the extent that shares subject to an outstanding Option are not issued or delivered by reason of the expiration, termination or forfeiture of such Option (other than by reason of the delivery or withholding of shares to pay all or a portion of the exercise price of such Option, or to satisfy all or a portion of the tax withholding obligations relating to such Option), or are purchased by the Company, then such shares shall again be available under this Plan, unless the Plan has been terminated.

     The maximum aggregate number of shares of Common Stock for which Grants of Options may be made in any calendar year to any one single participant shall be twenty five thousand (25,000) shares.

Article 3. STOCK OPTIONS.

      3.1 Grants of Options . The Committee may, in its discretion, at any time prior to the tenth anniversary of the date on which this Plan is adopted or approved by the Company’s shareholders, Grant Options to such eligible persons as may be selected by the Committee. All such Options shall be non-qualified stock options (“ NQSO s”), that is, options that are not intended to satisfy the requirements applicable to an “incentive stock option” described in Section 422(b) of the Code.

      3.2 Terms of Options . Options shall be subject to the following terms and conditions and shall be subject to such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable:

           3.2.1 The number of shares of Common Stock subject to an Option and the purchase price per share of Common Stock purchasable upon exercise of such Option shall be determined by the Committee; provided, however, that the per share exercise price shall not be less than 85% of the FMV on the date of the Grant; and provided, further, that the per share exercise price of an Option that is intended to constitute qualified performance-based compensation under Section 162(m) of the Code will not be less than the FMV on the date of Grant; and provided, further, the per share exercise price of an Option Granted to a person who directly or by attribution owns on the date of Grant more than 10% of the total combined voting power of all classes of stock of the Company, any Subsidiary or any parent of the Company (a “ 10% Shareholder ”) shall not be less than 110% of the FMV on the date of Grant.

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           3.2.2 Options may be exercisable immediately or may be exercisable within the times or upon the events determined by the Committee as set forth in the Agreement governing such Option; provided, however, that no Option shall be exercisable after the expiration of ten years from the date the Option is Granted and provided, further, that no Option Granted to a 10% Shareholder shall be exercisable after the expiration of five years from the date the Option is Granted. The Committee also may provide for Options to become exercisable at one time or from time to time, periodically or otherwise, for such numbers of shares or percentage of shares subject thereto as the Committee determines.

           3.2.3 Options may be exercised (i) by giving written notice to the Company specifying the number of whole shares of Common Stock to be purchased and accompanied by payment therefor in full (or arrangement made for such payment to the Company’s satisfaction) either (A) in cash, (B) if at the time of exercise the Company is a Reporting Company, by delivery of previously owned whole shares of Common Stock (i) that the Optionee has held for at least six months prior to the delivery of such shares or that the Optionee purchased on the open market and in each case for which the Optionee has good title, free and clear of all liens and encumbrances and (ii) that have an aggregate FMV, determined as of the date of exercise, equal to the aggregate purchase price payable by reason of such exercise, (C) if at the time of exercise the Company is a Reporting Company, in cash by a broker-dealer acceptable to the Company to whom the Optionee has submitted an irrevocable notice of exercise, (D) in consideration received by t


 
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