RED SWOOSH, INC.
2001 ADVISOR STOCK OPTION PLAN
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.
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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