UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________
Form 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 28, 2013
______________________________
LED LIGHTING COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE |
| 000-54146 |
| 27-3566984 |
(State or other jurisdiction of incorporation or organization) |
| Commission file number |
| (IRS Employer Identification No.) |
4000 Bridgeway, Suite 400
Sausalito, California 94965
(Address of principal executive offices)
(877) 823-0653
(Registrant’s telephone number)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01
Entry Into A Material Definitive Agreement
On May 28, 2013, the Company entered into a Share Cancellation Agreement with the then 3 existing stockholders of the Company pursuant to which the stockholders agreed to collectively cancel 18,900,000 of their issued and outstanding shares resulting in 1,100,000 shares issued and outstanding among the 3 stockholders. One of the 3 existing stockholders is Joseph Merhi, who is also a director of the Company. The summary of the Share Cancellation Agreement is qualified in its entirety by reference to the Share Cancellation Agreement which is filed as an exhibit to this current report.
On May 28, 2013, the Company entered into a Consulting Agreement with George Mainas pursuant to which the Company agreed to pay $140,000 in exchange for certain consulting services to the Company. The summary of the Consulting Agreement is qualified in its entirety by reference to the Consulting Agreement which is filed as an exhibit to this current report.
Effective June 1, 2013, the Company entered into a Consulting Agreement with Mark Wolff pursuant to which he has agreed to be engaged as the Vice President of Sales and Marketing of the Company. The agreement is for a period of one (1) year, subject to any earlier termination. The compensation payable to Mr. Wolff under the agreement is $20,833 per month. The Company also agreed to issue Mr. Wolff a Warrant to purchase up to 500,000 shares of Company common stock at an exercise price of $1.00 per share, vesting in 12 monthly increments and terminating in 3 years. The summary of the Consulting Agreement and form of Warrant is qualified in its entirety by reference to the agreements which are filed as exhibits to this current report.
Item 3.02
Unregistered Sales of Registered Securities
Effective May 28, 2013, the Company entered into subscription agreements with 15 accredited investors pursuant to which the Company agreed to issue a total of 3,335,000 shares of common stock at $.10 per share, and three-year warrants to purchase up to 3,335,00 shares of common stock at $1.00 per share, in exchange for cash proceeds and in-kind payments totaling $335,000. The agreement for the issuance of shares and warrants to the investors was made in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The summary of the subscription agreement is qualified in its entirety by reference to the form of subscription agreement which is filed as an exhibit to this current report.
The information included in Item 1.01 regarding the Warrant for Mark Wolff provides a summary of the material terms of the Warrant and is incorporated herein by reference into this Item 3.02. The issuance of shares and warrants to the investors was made in reliance on the exemption provided by Section 4(2) of the Securities Act for the offer and sale of securities not involving a public offering.
The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there were only a limited number of investors; (c) there were no subsequent or contemporaneous public offerings of the securities by us; (d) the securities were not broken down into smaller denominations; and (e) the negotiations for the sale or issuance of the securities took place directly between the investor and the Company.
Item 5.02
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On May 28, 2013, Joseph Merhi resigned all of his officer positions with the Company. Mr. Merhi remains on the Board of Directors of the Company.
On May 28, 2013, the Company appointed Kevin Kearney as a director of the Company, and appointed Mr. Kearney as the Chief Executive Officer, Chief Financial Officer, President and Secretary of the Company. Mr. Kearney, age 60, is the President of Kearney & O’Banion, Inc., which he founded in 1980. Kearney & O’Banion specializes in commercial properties in San Francisco and the surrounding Bay area and has generated revenues in excess of $180 million. Mr. Kearney is responsible for marketing and sales efforts, developing and presenting proposals with cost estimates, contract negotiations, pre-construction consulting, and design and project management services. Since
2001, Mr. Kearney has also been a member of the Board of Directors of Promia, Inc., an established development firm and software provider for cyber security. Promia specializes in providing solutions designed to support highly secure, reliable, scalable and interoperable business applications for large corporations, and its customers include the U.S. Navy, National Security Agency as well as a number of Fortune 500 companies. Mr. Kearney received his MFA, Magna Cum Laude, from the University of California, Davis. Mr. Kearney also serves on the Board of Directors of Sugarmade, Inc., a publicly traded company which sells tree-free paper products.
On May 28, 2013, the Company’s board of directors and stockholders approved the adoption of the LED Lighting Company 2013 Equity Incentive Plan (the “2013 Plan”). The 2013 Plan is intended to aid the Company in recruiting and retaining key employees, directors or consultants and to motivate them by providing incentives through the granting of awards of stock options or other stock based awards. The 2013 Plan is administered by the board of directors. Directors, officers, employees and consultants of the Company and its affiliates are eligible to participate under the 2013 Plan. A total of 1,500,000 shares of common stock have been reserved for awards under the 2013 Plan. The summary of the 2013 Plan described above is qualified in its entirety by reference to the 2013 Plan which is filed as an exhibit to this current report.
Item 5.03
Amendment to Articles of Incorporation or Bylaws; Change in Fiscal Year
On May 28, 2013, the Company’s board of directors and stockholders approved an amendment to the Company’s Certificate of Formation to change its corporate name to “LED Lighting Company”, and the amendment was filed with the Secretary of State of the State of Delaware on May 30, 2013. The summary of the amendment is qualified in its entirety by reference to the amendment which is filed as an exhibit to this current report.
Item 5.07
Submission of Matters to a Vote of Security Holders
On May 28, 2013, the Company’s stockholders approved by written consent (i) an amendment to the Company’s Certificate of Formation to change its corporate name to “LED Lighting Company”; and (ii) the adoption of the 2013 Equity Incentive Plan described above. The matters were approved by all of the outstanding shares of the Company.
Item 8.01
Other Events
Effective May 28, 2013, the Company’s principal place of business has changed to 4000 Bridgeway, Suite 400, Sausalito, California 94965.
Item 9.01
Financial Statements and Exhibits
(d) Exhibits
No. |
| Description |
3.2 | Certificate of Amendment to Certificate of Formation dated May 28, 2013 | |
10.1 | Share Cancellation Agreement dated May 28, 2013 | |
10.2 | Consulting Agreement with George Mainas dated May 28, 2013 | |
10.3 | Consulting Agreement with Mark Wolff dated June 1, 2013 | |
10.4 | Form of Warrant Agreement with Mark Wolff dated June 1, 2013 | |
10.5 | Form of Subscription Agreement | |
10.6 | 2013 Equity Incentive Plan | |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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| LED LIGHTING COMPANY | ||||
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Dated: June 4, 2013 |
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| By: |
| /s/ Kevin Kearney | ||
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| Kevin Kearney Chief Executive Officer |
Exhibit 3.2
CERTIFICATE OF AMENDMENT
TO
THE CERTIFICATE OF INCORPORATION
OF
FUN WORLD MEDIA INC.
Fun World Media Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the ‘‘Corporation’’),
DOES HEREBY CERTIFY:
1.
That the Certificate of Incorporation of the Corporation be amended by deleting Article ONE thereof and replacing it in its entirety as follows:
“ARTICLE ONE
NAME
The name of the Corporation is: LED Lighting Company”
2.
That a resolution was duly adopted by unanimous written consent of the directors of the Corporation, pursuant to Section 242 of the General Corporation Law of the State of Delaware, setting forth the above-mentioned amendment to the Certificate of Incorporation and declaring said amendment to be advisable.
3.
That said amendment was duly adopted by written consent of the stockholders in accordance with the provisions of Sections 228 and 242 of the General Corporation Law by obtaining the affirmative consent of all of the outstanding shares of Common Stock of the Corporation.
IN WITNESS WHEREOF, this Certificate of Amendment of the Certificate of Incorporation has been signed by the Chief Executive Officer of the Corporation this 28th day of May, 2013.
FUN WORLD MEDIA INC.
By: /s/ Kevin Kearney
Kevin Kearney
President and Secretary
Exhibit 10.1
CANCELLATION AGREEMENT
This Cancellation Agreement, dated May 28, 2013 (this "Agreement"), is made and entered into by and among Fun World Media, Inc., a Delaware corporation (the "Company"), and Joseph Merhi, Tiber Creek Corporation, a Delaware corporation, and MB Americus LLC, a California limited liability company (each, a “Cancelling Party”, and together, the "Canceling Parties"), with respect to the following facts:
A. On or about the date hereof, the Company has entered into subscription agreement for the sale of shares of Company common stock and warrants to purchase shares of Company common stock (the “Financing”).
B. The Cancelling Parties hold, as of the date of this Agreement, 20,000,000 restricted shares of the Company's outstanding common stock, and as a condition to the Financing, the Company has required that the Cancelling Parties reduce the aggregate number of shares held by them to no more than 1,100,000 shares.
C. The Canceling Parties are entering into this Agreement to, among other things, induce the Company to complete the Financing as the investors in the Financing would not consummate the transactions contemplated by the subscription agreements unless the transactions contemplated hereby are effectuated in accordance herewith.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants contained herein, and intending to be legally bound, the parties hereto agree as follows:
1.
Cancellation of Shares. The Canceling Parties shall deliver to the Company for cancellation stock certificates representing the share of the Company's common stock held by each of them as set out below along with duly executed medallion guaranteed stock powers covering the shares (or such other documents acceptable to the Company's transfer agent) and hereby irrevocably instructs the Company and the Company's transfer agent to cancel the shares in the following amounts:
Register Holder | Total Shares Held | Shares Cancelled | Shares Remaining After cancellation |
Joseph Merhi | 19,500,000 | 18,500,000 | 1,000,000 |
Tiber Creek Corporation | 250,000 | 200,000 | 50,000 |
MB Americus LLC | 250,000 | 200,000 | 50,000 |
1
Following such cancellation the shares common stock will no longer be outstanding on the stock ledger of the Company and the Canceling Parties shall no longer have any interest in the shares whatsoever. The Company shall immediately deliver to the Company's transfer agent or secretary irrevocable instructions providing for the cancellation of the shares.
2.
Representations by the Canceling Parties.
(a)
Each of the Canceling Parties owns the shares of common stock being cancelled or redeemed hereunder, of record and beneficially, free and clear of all liens, claims, charges, security interests, and encumbrances of any kind whatsoever. Each of the Canceling Parties has sole control over such shares or sole discretionary authority over any account in which they are held. Except for this Agreement, no person has any option or right to purchase or otherwise acquire the shares, whether by contract of sale or otherwise, nor is there a "short position" as to the shares. Each of the Canceling Parties owns only the shares of Company common stock set forth next to its name in Section 1 above, and does not own any other shares, options, warrants or other securities of the Company.
(b)
Each of the Canceling Parties has full right, power and authority to execute, deliver and perform this Agreement and to carry out the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by the Canceling Parties and constitutes a valid, binding obligation of the Canceling Parties, enforceable against it in accordance with its terms (except as such enforceability may be limited by laws affecting creditor's rights generally).
3.
Further Assurances. Each party to this Agreement will use his or its commercially reasonable efforts to take all action and to do all things necessary, proper, or advisable in order to consummate and make effective the transactions contemplated by this Agreement (including the execution and delivery of such other documents and agreements as may be necessary to effectuate the cancellation or redemption of the shares).
4.
Amendment and Waiver. Any term, covenant, agreement or condition of this Agreement may be amended, with the written consent of the Company and the Canceling Parties, or compliance therewith may be waived (either generally or in a particular instance and either retroactively or prospectively), by one or more substantially concurrent written instruments signed by the Company and the Canceling Parties.
5.
Survival of Agreements, Representations and Warranties, etc. All representations and warranties contained herein shall survive the execution and delivery of this Agreement.
6.
Successors and Assigns. This Agreement shall bind and inure to the benefit of and be enforceable by the Company and the Canceling Parties, and their respective successors and assigns.
7.
Governing Law. This Agreement (including the validity thereof and the rights and obligations of the parties hereunder and thereunder) and all amendments and supplements
2
hereof and thereof and all waivers and consents hereunder and thereunder shall be construed in accordance with and governed by the internal laws of the State of California without regard to its conflict of laws rules, except to the extent the laws of Delaware are mandatorily applicable.
8.
Miscellaneous. This Agreement embodies the entire agreement and understanding between the parties hereto and supersedes all prior agreements and understandings relating to the subject matter hereof. Each party to this Agreement hereby represents and warrants to the other party that it has had an opportunity to seek the advice of its own independent legal counsel with respect to the provisions of this Agreement and that its decision to execute this Agreement is not based on any reliance upon the advice of the Company, its officer, directors, representatives or legal counsel. This Agreement shall be construed neutrally, without regard to the party responsible for its preparation. This Agreement may be executed in any number of counterparts and may be delivered by facsimile transmission or electronic mail in portable document format or other means intended to preserve the original graphic content of a signature. Each such counterpart shall constitute an original but all such counterparts shall together constitute but one and the same instrument. This Agreement shall become effective with respect to each Cancelling Party once the Company and such Cancelling Party has executed the Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
Fun World Media, Inc.
By: /s/ Kevin Kearney
Name: Kevin Kearney
Title: Chief Executive Officer
/s/ Joseph Merhi
Joseph Merhi
Tiber Creek Corporation
By: /s/ James Cassidy
James Cassidy, Sole Shareholder
And officer
MB Americus LLC
By: /s/ James McKillop
James McKillop, Sole Member and
Manager
[Signature Page to Cancellation Agreement]
3
Exhibit 10.2
FUN WORLD M EDIA, INC.
4000 Bridgeway, Suite 400
Sausalito, California 94965
May 28, 2013
George Mainas
_____________
_____________
Re:
Agreement For Consulting Services
Dear George:
This letter agreement (the "Agreement") will set forth the terms and conditions whereby George Mainas (“Consultant”) has agreed to provide certain consulting services to Fun World Media, Inc. (the “Company”).
In consideration of the promises and mutual covenants hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and Consultant hereby agree as follows:
1.
Description of Services. The Consultant shall provide the consulting services described in Exhibit A (the "Services") to Company. The Services shall be performed in a prompt, diligent, thorough manner, and to the satisfaction of Company.
2.
Compensation. The Company shall compensate Consultant for the Services in the amount of One Hundred Forty Thousand Dollars ($140,000.00). The compensation shall be paid promptly after the execution of this Agreement and shall be non-refundable to the Company.
3.
Term and Termination. This Agreement shall be for a term of one year.
4.
Independent Contractor. The parties expressly intend and agree that Consultant is acting as an independent contractor of Company. Nothing contained in this Agreement shall be deemed to create a partnership, joint venture or agency relationship between the parties, nor does it grant either party any authority to assume or create any obligation on behalf of or in the name of the other.
5.
Assignment. Consultant shall not assign any of its rights or obligations under this Agreement without the prior written consent of Company. This Agreement shall be binding upon and inure to the benefit of the parties hereto, their successors and permitted assigns. Company may assign its rights, duties and obligations under this Agreement to any third party without the prior consent of Consultant.
6.
Applicable Law. This Agreement shall be governed by the laws of the State of California without regard to its conflict of laws and choice of law provisions, and any action to enforce or interpret the provisions of this Agreement or the rights and obligations of the parties arising hereunder shall be maintained only in and the parties hereby expressly consent to the jurisdiction of, the courts of San Francisco County, California.
7.
Entire Agreement; Modification. This Agreement, together with the exhibits attached hereto, which are incorporated herein by this reference, constitutes the entire agreement between the parties and supersedes all prior oral or written negotiations and agreements between the parties with respect to the subject matter hereof. No modification, variation or amendment of this Agreement (including any exhibit hereto) shall be effective unless made in writing and signed by both parties.
8.
Severability; Non-Waiver. In the event that any of the terms, conditions or provisions of this Agreement are held to be illegal, unenforceable or invalid by any court of competent jurisdiction, the remaining terms, conditions or provisions hereof shall remain in full force and effect. The failure or delay of either party to enforce at any time any provision of this Agreement shall not constitute a waiver of such party’s right thereafter to enforce each and every provision of this Agreement.
Representation by Counsel; Construction. Each party to this Agreement hereby represents and warrants to the other party that it has had an opportunity to seek the advice of its own independent legal counsel with respect to the provisions of this Agreement and that its decision to execute this Agreement is not based on any reliance upon the advice of any other party or its legal counsel. Each party represents and warrants to the other party that in executing this Agreement such party has completely read this Agreement and that such party understands the terms of this Agreement and its significance. This Agreement shall be construed neutrally, without regard to the party responsible for its preparation.
10.
Authority; Capacity.
Each party to this Agreement hereby represents and warrants to the other party that (i) the execution, performance and delivery of this Agreement has been authorized by all necessary corporate action by such party; (ii) the representative executing this Agreement on behalf of such party has been granted all necessary corporate power and authority to act on behalf of such party with respect to the execution, performance and delivery of this Agreement; and (iii) the representative executing this Agreement on behalf of such party is of legal age and capacity to enter into agreements which are fully binding and enforceable against such party.
11.
Counterparts.
This Agreement may be executed in any number of counterparts and delivered by electronic transmission, all of which taken together shall constitute a single instrument.
Please acknowledge your agreement to these terms by signing below and returning a copy of this Agreement to me. Thank you.
Sincerely,
/s/ Kevin Kearney
Kevin Kearney, CEO
Acknowledged and Agreed:
/s/ George Mainas
__________________________
George Mainas
EXHIBIT A
Description of Consulting Services
Consultant will perform the following tasks and have the following responsibilities:
·
Develop a strategy for consummating a share exchange or reverse merger (a “Public Transaction”) with Polybrite International, Inc. with a capitalization structure and financing plan reasonably acceptable to the Company;
·
Advise the Company as to the timing, structure, capitalization, and pricing of a Public Transaction;
·
Assist the Company in the execution and closing (the “Closing”) of a Public Transaction;
·
Assist the Company with executing and performing the Sales Representative Agreement and Distribution Agreement with Polybrite International, Inc.;
·
Assist the Company with identifying and securing warehouse and office space;
·
Assist the Company with identifying and retaining management and administrative personnel;
·
Assist the Company with identifying and closing sales and distribution transactions;
·
Provide general advice to the Company and otherwise assist the Company with respect to such services as are customary for similar assignments.
Notwithstanding the foregoing, the Company shall retain the sole and absolute discretion to determine whether to consummate a Public Transaction.
Exhibit 10.3
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the “Agreement”) is made and entered into as of June 1, 2013 (the “Effective Date”) by and between LED Lighting Company, a Delaware corporation (the “Company”), and Mark L. Wolff (the “Consultant”).
A.
The Company desires to retain the services of the Consultant as the Vice President of Sales and Marketing to the Company from the Effective Date.
B.
The Consultant is willing to be retained by the Company on the terms and subject to the conditions set forth in this Agreement.
THE PARTIES AGREE AS FOLLOWS:
1.
Services. The Consultant shall perform the services set forth in Exhibit A attached hereto (the “Services”). The Consultant shall comply with the statutes, rules, regulations and orders of any governmental or quasi-governmental authority, applicable to the performance of the Services.
2.
Terms of Engagement.
2.1
Definitions. For purposes of this Agreement, the following terms shall have the following meanings:
(a)
“Accrued Expenses” shall mean any appropriate and Company approved business expenses incurred by the Consultant in connection with the Services provided hereunder, all to the extent unpaid or unreimbursed on the date of termination.
(b)
“Confidential Information” is all information related to any aspect of the Company’s business which is either information not known by actual or potential competitors of the Company or is proprietary information of the Company, whether of a technical nature or otherwise.
2.2
Independent Contractor. The parties hereto understand and agree that the Consultant is an independent contractor and not an employee of the Company. The Consultant has no authority to obligate or bind the Company by contract or otherwise, unless such authority is granted by written consent of the Company Chief Executive Officer (which consent may be by email). The Consultant will not be eligible for any employee benefits, and the Company will not make deductions from the Consultant’s fees for taxes (except as otherwise required by applicable law or regulation). Any taxes imposed on the Consultant due to activities performed hereunder will be the sole responsibility of the Consultant.
2.3
Term of Service. This Agreement shall continue for a period of one (1) year from the Effective Date; provided that the Agreement may be terminated by either the Company or by Consultant upon forty-five (45) days prior written notice, with or without cause. Upon termination of the Consultant, the Company shall pay the Consultant any outstanding compensation obligations and Accrued Expenses, if any.
3.
Compensation and Expenses.
3.1
Compensation. In consideration of the Services provided pursuant to this Agreement, Consultant shall be paid the consideration set forth on Exhibit A. Consultant shall be paid one-half of the monthly consulting fee on each of the 15th and last day of each month during the term. Consultant acknowledges and agrees that Company’s sole obligation to Consultant shall be the payment of the consideration described in this Agreement and the Company shall not have any additional obligations to the Consultant with respect to any compensation, remuneration or reimbursement.
3.2
Expense Reimbursement. The Company agrees to reimburse the Consultant for all reasonable, ordinary and necessary out-of-pocket travel and other expenses incurred by the Consultant in conjunction with his services to the Company, which expenses if over $1,000 must be approved in advance in writing by the Company. The Company will reimburse such expenses within thirty (30) days after Consultant has provided to the Company, in form and substance reasonably satisfactory to the Company, appropriate documentation evidencing such expenses.
3.3
Warrants.
Consultant shall also receive a warrant to purchase up to 500,000 shares of Company common stock at $1.00 per share vesting monthly pursuant to the terms of the Warrant Agreement entered into with the Company dated June 1, 2013.
4.
Non-competition; No Restrictions. During the term of this Agreement, the Consultant shall not, directly or indirectly, either as an employee, employer, consultant, agent, principal, partner, stockholder, corporate officer, director, or in any other individual or representative capacity, engage, participate in or perform services for any business that is in competition with the business of the Company. The Consultant represents that except as disclosed in writing to the Company, the Consultant has no employments, consultancies or undertakings which would restrict or impair the Consultant’s performance of this Agreement.
5.
Confidentiality Obligation; Work Product. The Consultant will hold all Company Confidential Information in confidence and will not disclose, use, copy, publish, summarize, or remove from the premises of the Company any Confidential Information, except as necessary to carry out the Consultant’s assigned responsibilities as a Company Consultant. In the event the Consultant is required to disclose any Confidential Information pursuant to law or government regulation, the Consultant will promptly notify the Company in order to allow the Company the maximum time to obtain protective or confidential treatment of the Confidential Information before it is disclosed. Confidential Information does not include information that: (i) is or later becomes available to the public through no breach of this Agreement by the Consultant; (ii) is obtained by the Consultant from a third party who had the legal right to disclose the information to the Consultant; (iii) is already in the possession of the Consultant on the date this Agreement becomes effective; or (iv) was developed by the Consultant independent of the performance of the Services. As additional consideration for the compensation to be paid to Consultant under this Agreement, Consultant shall assign to the Company all of its right, title and interest in and to all new work product, contacts and customers lists which are created during the term of this Agreement and are relating to the Services immediately upon origination, preparation or discovery thereof and regardless of the medium of expression thereof, and Consultant shall not be permitted to use the newly created work product, contacts or customer lists after the termination or expiration of this Agreement; provided, however, nothing herein shall be deemed to prohibit, restrict or limit the right of Consultant to use the contacts or customers lists which Consultant already has prior to the term of this Agreement.
6.
Information of Others. The Consultant will safeguard and keep confidential the proprietary information of customers, vendors, consultants, and other parties with which the Company does business to the same extent as if it were Company Confidential Information. The Consultant will not use or disclose to the Company any confidential, trade secret, or other proprietary information or material of any previous employer or other person, and will not bring onto the Company’s premises any unpublished document or any other property belonging to any former or current employer without the written consent of that former or current employer.
7.
Miscellaneous.
7.1
Waiver. The waiver of the breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach of the same or other provision hereof.
7.2
Assignment. The rights and liabilities of the parties hereto shall bind and inure to the benefit of their respective successors, heirs, executors and administrators, as the case may be; provided, however, that as the Company has specifically contracted for the services to be provided by the Consultant hereunder, the Consultant may not assign or delegate the Consultant’s obligations under this Agreement either in whole or in part without the prior written consent of the Company.
7.3
Governing Law; Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of California applicable to contracts entered into and wholly to be performed within the State of California by California residents. Any disputes that arise under this Agreement, even after the termination of this Agreement, will be heard only in the state or federal courts located in San Francisco, California. The parties hereto expressly agree to submit themselves to the exclusive jurisdiction of the foregoing courts in San Francisco, California.
7.4
Counterparts. This Agreement may be executed in one or more counterparts and may be delivered by facsimile transmission or electronic transmission in PDF format,, all of which taken together shall constitute one and the same Agreement.
7.5
Entire Agreement; Modifications; Miscellaneous. Except as otherwise provided herein or in the exhibits hereto, this Agreement represents the entire understanding among the parties with respect to the subject matter of this Agreement, and this Agreement supersedes any and all prior and contemporaneous understandings, agreements, plans, and negotiations, whether written or oral, with respect to the subject matter hereof. All modifications to the Agreement must be in writing and signed by each of the parties hereto. Each party to this Agreement hereby represents and warrants to the other party that it has had an opportunity to seek the advice of its own independent legal counsel with respect to the provisions of this Agreement and that its decision to execute this Agreement is not based on any reliance upon the advice of any other party or its legal counsel. This Agreement shall be construed neutrally, without regard to the party responsible for its preparation. Any notices required to be provided by the Company may be given by email correspondence.
IN WITNESS WHEREOF, the parties hereto have executed this Consulting Agreement as of the date first written above.
LED LIGHTING COMPANY
/s/ Kevin Kearney
By:
Kevin Kearney, CEO
CONSULTANT
/s/ Mark L. Wolff
By:
Mark L. Wolff
[Signature Page to LED Lighting Company Consultant Agreement]
1
Exhibit A
Name and Address of Consultant:
Mark L. Wolff
________________
________________
Description of Services:
·
Report directly to Company Chief Executive Officer
·
Develop plans and strategies for closing business and achieving the Company’s sales goals
·
Develop Company budget and business plan
·
Provide detailed sales forecasting
·
Participate in Company investor and partner meetings and presentations
·
Identify, contact and close distribution agreements for LED products
·
Identify, contact and close sales of Company products to customers
·
Assist the Company in the due diligence for potential acquisitions
·
Identify and retain sales team (planned to be put in place after first 90 days)
·
Manage the sales teams, operations and resources to deliver profitable growth
·
Define and oversee incentive programs that motivate the sales team to achieve their sales targets
·
Travel for in-person meetings with customers and partners and to develop key relationships
·
Assist with building company infrastructure
·
Other services as requested by the Company
Consulting Fees:
$20,833 per month ($10,416.66 paid on the 15th and last day of each month)
INITIALS:
(Company)
(Consultant)
Exhibit 10.4
THE SECURITIES EVIDENCED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF SUCH SECURITIES REASONABLY SATISFACTORY TO THE COMPANY STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
June 1, 2013
WARRANT TO PURCHASE COMMON STOCK
OF
LED LIGHTING COMPANY
FOR VALUE RECEIVED, and subject to the terms and conditions herein set forth, during the Exercise Period and prior to the Termination Date, Mark L. Wolff (“Holder”) is entitled to purchase from LED Lighting Company, a Delaware corporation (the “Company”), the Warrant Stock at a price per share equal to the Exercise Price. This Warrant is being issued in connection with the Consulting Agreement (the “Consulting Agreement”) between Holder and the Company of even date herewith.
1.
Certain Definitions. The following definitions shall apply for purposes of this Warrant.
(a)
“Common Stock” shall mean the common stock of the Company.
(b)
“Exercise Period” shall mean the period commencing as of the date which the shares are vested as described in the next sentence and ending on the Termination Date. Holder’s rights to exercise the Warrants shall vest as follows: 41,666.66 shares shall vest on July 1, 2013 and on the first day of each month thereafter; provided, however, all vesting shall terminate on the date of termination if the Consulting Agreement is terminated for any reason.
(b)
“Exercise Price” means one dollar ($1.00), subject to adjustments as described below.
(c)
“Holder” shall mean Mark L. Wolff, and his successors and assigns.
(d)
“Termination Date” shall mean the three (3) year anniversary of the date of this Warrant.
(e)
“Warrant” means this Warrant and any warrant(s) delivered in substitution or exchange therefor, as provided herein.
(f)
“Warrant Stock” means up to 500,000 shares of Common Stock, subject to the vesting and any adjustments as described herein.
2.
Adjustments and Notices. The Exercise Price shall be subject to adjustment from time to time in accordance with the following provisions:
(a)
Subdivision, Stock Dividends or Combinations. In case the Company shall, at any time, subdivide the outstanding shares of the Common Stock or shall issue a stock dividend with respect to the Common Stock, the Exercise Price in effect immediately before such subdivision or the issuance of such dividend shall be proportionately decreased and the number of shares of Warrant Stock shall be proportionately increased, and in case the Company shall at any time combine the outstanding shares of the Common Stock, the Exercise Price in effect immediately before such combination shall be proportionately increased and the number of shares of Warrant Stock shall be proportionately decreased, effective at the close of business on the date of such subdivision, dividend or combination, as the case may be.
(b)
Reclassification, Exchange, Substitution, In-Kind Distribution. Upon any reclassifications, exchange, substitution, or other event that results in a change of the number and/or class of the securities issuable upon exercise of this Warrant or upon the payment of a dividend in securities or property other than Common Stock, the Holder shall be entitled to receive, upon exercise of this Warrant, the number and kind of securities and property that Holder would have received for the Warrant Stock if this Warrant had been exercised immediately before the record date for such reclassification, exchange, substitution, or other event or immediately prior to the record date for such dividend. The Company or its successor shall promptly issue to Holder a new Warrant for such new securities or other property. The new Warrant shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 2 including, without limitation, adjustments to the Exercise Price and to the number of securities or property issuable upon exercise of the new Warrant. The provisions of this Section 2(b) shall similarly apply to successive reclassifications, exchanges, substitutions, or other events and successive dividends.
(c)
Notice. Upon any adjustment of the Exercise Price and any increase or decrease in the number of shares of the Common Stock purchasable upon the exercise of this Warrant, then, and in each such case, the Company, as promptly as practicable thereafter, shall give written notice thereof to the Holder of this Warrant at the address of such Holder as shown on the books of the Company which notice shall state the Exercise Price as adjusted and the increased or decreased number of shares purchasable upon the exercise of this Warrant, setting forth in reasonable detail the method of calculation of each, if possible. The Company further agrees to notify the Holder of this Warrant in writing of a reorganization, merger, sale, voluntary dissolution, liquidation or winding-up of the Company, or upon the Company's taking of a record of the holders of its Common Stock (or other stock or securities at the time receivable upon the exercise of this Warrant) for the purpose of entitling them to receive any dividend or other distribution, or any right to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right, at least twenty (20) days prior to the effective date thereof.
(d)
Fractional Shares. No fractional shares shall be issuable upon exercise of the Warrant and the number of shares to be issued shall be rounded down to the nearest whole share. If a fractional share interest arises upon any exercise of the Warrant, the Company shall eliminate such fractional share interest by paying the Holder an amount computed by multiplying the fractional interest by the fair market value of a full share.
3.
No Stockholder Rights. This Warrant, by itself, as distinguished from any shares purchased hereunder, shall not entitle its Holder to any of the rights of a stockholder of the Company.
4.
Exercise of Warrant. This Warrant may be exercised in whole or part (but in any event in minimum increments of 25,000 shares) by the Holder, during the Exercise Period, as applicable, and before the termination of this Warrant, by the surrender of this Warrant, together with the Notice of Exercise in the form attached hereto as Attachment 1, and any other reasonably requested investor representations, duly completed and executed, at the principal office of the Company, specifying the portion of the Warrant to be exercised and accompanied by payment in full of the Exercise Price in cash or by cashier’s check with respect to the shares of Warrant Stock being purchased. No cashless exercise of this Warrant shall be permitted. This Warrant shall be deemed to have been exercised immediately before the close of business on the date of its surrender for exercise as provided above, and the person entitled to receive the shares of Warrant Stock issuable upon such exercise shall be treated for all purposes as Holder of such shares of record as of the close of business on such date. As promptly as practicable after such date, the Company shall issue and deliver to the person or persons entitled to receive the same a certificate or certificates for the number of full shares of Warrant Stock issuable upon such exercise, which shares shall be duly and validly issued. If the Warrant shall be exercised for less than the total number of shares of Warrant Stock then issuable upon exercise, promptly after surrender of the Warrant upon such exercise, the Company will execute and deliver a new Warrant of like tenor in the name of the Holder, dated the date hereof, evidencing the right of the Holder to the balance of the Warrant Stock purchasable hereunder upon the same terms and conditions set forth herein.
5.
Replacement of Warrant. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and substance to the Company or, in the case of mutilation, on surrender and cancellation of this Warrant, the Company at its expense shall execute and deliver, in lieu of this Warrant, a new warrant of like tenor and amount.
6.
Issuance of Stock. The Company covenants that all shares that may be issued upon the exercise of rights represented by this Warrant, upon exercise of the rights represented by this Warrant and payment of the Exercise Price, all as set forth herein, will be free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously or otherwise specified herein). The Company agrees that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Common Stock upon the exercise of this Warrant.
7.
Amendments. Any term of this Warrant may be amended with the written consent of the Company and the Holder. No waivers of, or exceptions to, any term, condition or provision of this Warrant, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision.
8.
No Impairment. The Company will not, by any voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holders of this Warrant against impairment.
9.
Reservation of Stock Issuable on Exercise of Warrant. The Company will at all times reserve and keep available, solely for issuance and delivery on the exercise of this Warrant, a number of shares of Common Stock equal to the total number of shares of Common Stock from time to time issuable upon exercise of this Warrant.
10.
Miscellaneous. This Warrant shall be governed by the laws of the State of California, without regard for the conflicts of law provisions of the State of California or of any other state. The headings in this Warrant are for purposes of convenience and reference only, and shall not be deemed to constitute a part hereof. Neither this Warrant nor any term hereof may be changed or waived orally, but only by an instrument in writing signed by the Company and the Holder of this Warrant. All notices and other communications from the Company to the Holder of this Warrant shall be delivered personally or mailed by first class mail, postage prepaid, to the address furnished to the Company in writing by the last Holder of this Warrant who shall have furnished an address to the Company in writing, and if mailed shall be deemed given three days after deposit in the United States mail. This Warrant may only be assigned by Holder upon receipt of the written consent of the Company.
11.
Investor Representations. Holder represents and warrants to the Company as follows: (a) he acknowledges and agrees the Warrant and common stock to be issued upon exercise of the Warrant (collectively, the “Securities”) are restricted securities and have not been registered under the Securities Act, or under any state securities laws, and are being offered and sold in reliance upon federal and state exemptions for transactions not involving any public offering; (b) he is acquiring the Securities solely for its own account for investment purposes, and not with a view to the distribution thereof in a transaction that would violate the Securities Act of 1933, as amended (the “Act”) or the securities laws of any State of the United States or any other applicable jurisdiction; (c) he is a sophisticated purchaser with such knowledge and experience in business and financial matters that it is capable of evaluating the merits and risks of receiving the Securities as compensation, and is an “accredited investor” as defined under the Act; (d) he has had the opportunity to obtain from the Company such information as desired in order to evaluate the merits and the risks inherent in holding the Securities; (e) he is able to bear the economic risk and lack of liquidity inherent in holding the Securities; (f) he either has a pre-existing personal or business relationship with the Company or its officers, directors or controlling persons, or by reason of his business or financial experience, or the business or financial experience of their professional advisors who are unaffiliated with and who are not compensated by the Company, directly or indirectly, have the capacity to protect their own interests in connection with the receipt of the Securities; (g) his principal residence is in the state of set forth below his signature on the signature page of this Agreement; (h) in no event will he make a disposition of any Securities unless and until he shall have furnished the Company with an opinion of counsel satisfactory to the Company to the effect that (A) appropriate action necessary for compliance with the applicable securities laws has been taken or an exemption from the registration requirements of the securities laws is available, and (B) the proposed transfer will not violate any of said laws; and (i) he acknowledges that the Securities must be held indefinitely unless subsequently registered under the Act or an exemption from such registration is available.
COMPANY:
LED LIGHTING COMPANY
By: ___________________________
Kevin Kearney, CEO
HOLDER:
By: ______________________________
Mark L. Wolff
Address:
___________________________
___________________________
1
Attachment 1
NOTICE OF EXERCISE
TO:
LED Lighting Company
1.
The undersigned hereby elects to purchase ____________________ shares of the Warrant Stock of the LED Lighting Company pursuant to the terms of the attached Warrant, and tenders herewith payment of the Exercise Price, together with all applicable transfer taxes, if any.
2.
Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below:
Dated:
(Typed or Printed Name)
By:
(Signature)
(Title)
(Address)
2
Exhibit 10.5
SUBSCRIPTION AGREEMENT
This Subscription Agreement (the “Agreement”) is entered into effective as of as of May ___, 2013 by and between the investor listed on the signature page hereto (“Investor”), and Fun World Media, Inc., a Delaware corporation (the “Company”), with reference to the following facts:
WHEREAS, the Company is conducting an offering (the “Offering”) of up to sixteen (16) units (each, a “Unit” or the “Units”), at a purchase price of $25,000.00 per Unit, with each Unit consisting of 250,000 shares of Company common stock and warrants to purchase up to an additional 250,000 shares of Company common stock at an exercise price of one dollar ($1.00 ) per share for a period of three years, as described in more detail in the Transaction Term Sheet attached hereto as Exhibit A;
WHEREAS, Investor desires to purchase a Unit or Units, and the Company desires to sell the Unit or Units to the Investor based on the terms contained herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Investor and Company agree as follows:
1.
Payment of Purchase Price; Issuance of Common Stock. In exchange for Investor’s payment of the purchase price in the amount set forth on the signature page, the Company shall issue the number of Unit(s) set forth on the signature page, with each Unit consisting of 250,000 shares of Company common stock and 250,000 warrants to purchase shares of Company common stock. The purchase price shall be paid by wire transfer pursuant to the instructions to be provided by the Company. Upon the completion of the restructuring referenced in the Transaction Term Sheet, the Company shall issue the stock certificate and warrant to the Investor. The warrant agreement shall be in a customary form and shall provide for cashless exercise.
2.
Investor Representations. The Company is issuing the Units which consist of common stock and warrants (collectively, the “Securities’) to Investor in reliance upon the following representations made by Investor:
(a)
Investor acknowledges and agrees that the Securities are characterized as “restricted securities” under the Securities Act of 1933 (as amended and together with the rules and regulations promulgated thereunder, the “Securities Act”) and that, under the Securities Act and applicable regulations thereunder, such securities may not be resold, pledged or otherwise transferred without registration under the Securities Act or an exemption therefrom. Investor acknowledges and agrees that () the Securities are being offered in a transaction not involving any public offering in the United States within the meaning of the Securities Act, and the shares of Common Stock have not yet been registered under the Securities Act, and () the Securities may be offered, resold, pledged or otherwise transferred only in a transaction registered under the Securities Act, or meeting the requirements of Rule 144, or in accordance with another exemption from the registration requirements of the Securities Act (and based upon an opinion of counsel if the Company so requests) and in accordance with any applicable securities laws of any State of the United States or any other applicable jurisdiction.
(b)
Investor acknowledges and agrees that () the registrar or transfer agent for the shares of Common Stock will not be required to accept for registration of transfer any shares except upon presentation of evidence satisfactory to the Company that the restrictions on transfer under the Securities Act have been complied with, and () any shares of Common Stock in the form of definitive physical certificates will bear a restrictive legend.
(c)
Investor acknowledges and agrees that: (a) the Securities are being offered and sold in reliance upon federal and state exemptions for transactions not involving any public offering; (b) Investor is acquiring the Securities solely for its own account for investment purposes, and not with a view to the distribution thereof in a transaction that would violate the Securities Act or the securities laws of any State of the United States or any other applicable jurisdiction; (c) Investor is a sophisticated purchaser with such knowledge and experience in business and financial matters that it is capable of evaluating the merits and risks of purchasing the Securities; (d) Investor has had the opportunity to obtain from the Company such information as desired in order to evaluate the merits and the risks inherent in holding the Securities; (e) Investor is able to bear the economic risk and lack of liquidity inherent in holding the Securities; (f) Investor is an “accredited investor” within the meaning of Rule 501(a) under the Securities Act, and the attached ACCREDITED INVESTOR QUESTIONNAIRE has been completed by Investor truthfully and accurately; and (g) Investor either has a pre-existing personal or business relationship with the Company or its officers, directors or controlling persons, or by reason of Investor’s business or financial experience, or the business or financial experience of their professional advisors who are unaffiliated with and who are not compensated by the Company, directly or indirectly, have the capacity to protect their own interests in connection with the purchase of the Securities.
(d)
Investor's investment in the Company pursuant to the Securities is consistent, in both nature and amount, with Investor’s overall investment program and financial condition. Investor has had the opportunity to review the Company’s public reports filed with the Securities and Exchange Commission which contain the most recent public information regarding the Company (the “SEC Filings”), including the Company’s current status as a “shell company”. Investor has not been furnished any literature other than this Agreement and the SEC Filings and is not relying on any information, representation or warranty by the Company or any of its affiliates or agents, other than information contained in this Agreement and the SEC Filings, in determining whether to purchase the Securities. Investor acknowledges there is no minimum amount to be raised in the Offering and that the Company may spend the proceeds from the Offering as funds are received.
(e)
Investor’s principal residence/principal place of business is in the state identified on the signature page below.
3.
Miscellaneous.
(a)
This Agreement shall be construed and enforced in accordance with the laws of the State of California.
(b)
This Agreement constitutes the entire agreement between the parties and supersedes all prior oral or written negotiations and agreements between the parties with respect to the subject matter hereof. No modification, variation or amendment of this Agreement shall be effective unless made in writing and signed by both parties.
(c)
Each party to this Agreement hereby represents and warrants to the other party that it has had an opportunity to seek the advice of its own independent legal counsel with respect to the provisions of this Agreement and that its decision to execute this Agreement is not based on any reliance upon the advice of the Company, its officer, directors, representatives or legal counsel. This Agreement shall be construed neutrally, without regard to the party responsible for its preparation.
(d)
Each party to this Agreement hereby represents and warrants to the other party that (i) the execution, performance and delivery of this Agreement has been authorized by all necessary action by such party; and (ii) the representative executing this Agreement on behalf of such party has been granted all necessary power and authority to act on behalf of such party with respect to the execution, performance and delivery of this Agreement and the Agreement is fully binding and enforceable against such party.
(e)
This Agreement may be executed in any number of counterparts and may be delivered by facsimile transmission or by electronic transmission in PDF format, all of which taken together shall constitute a single instrument.
This Agreement is entered into and effective as of the date first written above.
COMPANY: Fun World Media, Inc. By: ___________________________ Print Name: ____________________ Print Title: _____________________ | INVESTOR: ____________________________________ Print Name: __________________________ Purchase Price: $________________ Number of Units: ________________ Address: _______________________
_______________________ |
[Signature Page to Subscription Agreement]
1
LED LIGHTING COMPANY
2013 STOCK OPTION/STOCK ISSUANCE PLAN
ARTICLE 1
GENERAL PROVISIONS
I.
PURPOSE OF THE PLAN
This 2013 Stock Option/Stock Issuance Plan is intended to promote the interests of the LED Lighting Company, a Delaware corporation (the “Corporation”), by providing eligible persons with the opportunity to acquire a proprietary interest, or otherwise increase their proprietary interest, in the Corporation as an incentive for them to remain in the service of the Corporation. Capitalized terms herein shall have the meanings assigned to such terms in the attached Appendix.
The 2013 Stock Option/Stock Issuance Plan was adopted by the board of directors of the Corporation on May 28, 2013, and by the stockholders of the Corporation on May 28, 2013.
II.
STRUCTURE OF THE PLAN
A.
The Plan shall be divided into two (2) separate equity programs:
(i)
the Option Grant Program under which eligible persons may, at the discretion of the Plan Administrator, be granted stock options to purchase shares of Common Stock, and
(ii)
the Stock Issuance Program under which eligible persons may, at the discretion of the Plan Administrator, be issued shares of Common Stock directly, either through the immediate purchase of such shares or as a bonus for Services rendered to the Corporation (or any Parent or Subsidiary).
B.
The provisions of and shall apply to both equity programs under the Plan and shall accordingly govern the interests of all persons under the Plan.
C.
The Plan in aggregate, including both the Option Grant Program and Stock Issuance Program will have a maximum number of shares issued not to exceed 1,500,000 shares.
III.
ADMINISTRATION OF THE PLAN
A.
The Plan shall be administered by the Board. However, any or all administrative functions otherwise exercisable by the Board may be delegated to the Committee. Members of the Committee shall serve for such periods of time as the Board may determine and shall be subject to removal by the Board at any time. The Board may also at any time terminate the functions of the Committee and reassume all powers and authority previously delegated to the Committee.
B.
The Plan Administrator shall have full power and authority (subject to the provisions of the Plan) to establish such rules and regulations as it may deem appropriate for proper administration of the Plan and to make such determinations under, and issue such interpretations of, the Plan and any outstanding stock options or stock issuances thereunder as it may deem necessary or advisable. Decisions of the Plan Administrator shall be final and binding on all parties who have an interest in the Plan or any stock option or stock issuance thereunder.
C.
The Plan Administrator shall have full authority to determine, (i) with respect to the stock option grants under the Option Grant Program, which eligible persons are to receive stock option grants, the time or times when such stock option grants are to be made, the number of shares to be covered by each such grant, the status of the granted stock option as either an Incentive Option or a Non-Statutory Option, the time or times at which each stock option is to become exercisable, the vesting schedule (if any) applicable to the stock option shares and the maximum term for which the stock option is to remain outstanding, and (ii) with respect to stock issuances under the Stock Issuance Program, which eligible persons are to receive stock issuances, the time or times when such issuances are to be made, the number of shares to be issued to each Participant, the vesting schedule (if any) applicable to the issued shares and the consideration to be paid by the Participant for such shares. The Plan Administrator shall also have fully authority and discretion to:
1.
correct any defect, supply any omission, or reconcile or clarify any inconsistency in the Plan or any Stock Option Award Agreement or Stock Issuance Agreement;
2.
accelerate the vesting, or extend the post-termination exercise term, or waive restrictions, of stock option or stock awards at any time and under such terms and conditions as it deems appropriate;
3.
interpret the Plan and any Stock Option Award Agreement or Stock Issuance Agreement;
4.
make all other decisions relating to the operation of the Plan; and
5.
grant stock option or stock awards to Employees, non-employee members of the Board or the board of directors of any Parent or Subsidiary or consultants who are foreign nationals on such terms and conditions different from those specified in the Plan, which may be necessary or desirable to foster and promote achievement of the purposes of the Plan, and adopt such modifications, procedures, and/or subplans (with any such subplans attached as appendices to the Plan) and the like as may be necessary or desirable to comply with provisions of the laws or regulations of other countries or jurisdictions to ensure the viability of the benefits from stock option or stock awards granted to Optionees or Participants employed in such countries or jurisdictions, or to meet the requirements that permit the Plan to operate in a qualified or tax efficient manner, and/or comply with applicable foreign laws or regulations.
IV.
ELIGIBILITY
A.
The persons eligible to participate in the Plan are as follows:
(i)
Employees,
(ii)
non-employee members of the Board or the non-employee members of the board of directors of any Parent or Subsidiary, and
(iii)
consultants and other independent advisors who provide services to the Corporation (or any Parent or Subsidiary).
V.
STOCK SUBJECT TO THE PLAN
A.
The stock issuable under the Plan shall be shares of authorized but unissued or reacquired Common Stock. The maximum number of shares of Common Stock which may be issued:
1.
under the Plan shall not exceed One Million Five Hundred Thousand (1,500,000) shares of Common Stock (the "Share Limit"); and
2.
pursuant to the exercise of Incentive Options granted under this Plan shall not exceed One Million Five Hundred Thousand (1,500,000) shares of Common Stock (the "ISO Limit").
3.
pursuant to the Plan, including any shares that could be issued under the Option Grant Program in addition to any stock issued under the Stock Issuance Program combined together shall not exceed 1,500,000 shares.
B.
Shares of Common Stock subject to outstanding stock options shall be available for subsequent issuance under the Plan to the extent (i) the stock options expire or terminate for any reason prior to exercise in full or (ii) the stock options are cancelled in accordance with the cancellation/re-grant provisions of . Unvested shares issued under the Plan and subsequently repurchased by the Corporation, at the stock option exercise price paid per share, pursuant to the Corporation’s repurchase rights under the Plan shall be added back to the number of shares of Common Stock reserved for issuance under the Plan and shall accordingly be available for reissuance through one or more subsequent stock option grants or direct stock issuances under the Plan.
C.
Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration, appropriate adjustments shall be made to (i) the Share Limit and ISO Limit, (ii) the number and/or class of outstanding securities issuable under the Plan, (iii) the number and/or class of securities available for awards, (iv) the number and/or class of securities covered by each outstanding award and (v) the number and/or class of securities and the exercise price per share in effect under each outstanding stock option in order to prevent the dilution or enlargement of benefits thereunder. The adjustments determined by the Plan Administrator shall be final, binding and conclusive. In no event shall any such adjustments be made in connection with the conversion of one or more outstanding shares of the Corporation’s preferred stock into shares of Common Stock. Any adjustment of shares of Common Stock pursuant to this Article One, Section V(C) shall be rounded down to the nearest whole number of shares of Common Stock. Under no circumstances shall the Corporation be required to authorize or issue fractional shares. To the extent permitted by applicable law, no consideration shall be provided as a result of any fractional shares not being issued or authorized.
VI.
INDEMNIFICATION
To the maximum extent permitted by applicable law, each member of the Plan Administrator, or of the Board, or any persons (including without limitation Employees and officers) who are delegated by the Board or Plan Administrator to perform administrative functions in connection with the Plan, shall be indemnified and held harmless by the Corporation against and from (i) any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan or any award agreement, and (ii) from any and all amounts paid by him or her in settlement thereof, with the Corporation’s approval, or paid by him or her in satisfaction of any judgment in any such claim, action, suit, or proceeding against him or her, provided he or she shall give the Corporation an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Corporation’s articles of incorporation or bylaws, by contract, as a matter of law, or otherwise, or under any power that the Corporation may have to indemnify them or hold them harmless.
VII.
BENEFICIARIES
An Optionee or Participant may designate one or more beneficiaries with respect to an award by timely filing the prescribed form with the Corporation. A beneficiary designation may be changed by filing the prescribed form with the Corporation at any time before the Participant’s or Optionee's death. If no beneficiary was designated or if no designated beneficiary survives the Participant or Optionee, then after a Participant’s or Optionee's death any vested award(s) shall be transferred or distributed to the Participant’s or Optionee's estate.
VIII.
CALIFORNIA PARTICIPANTS
Awards to California Participants shall also be subject to the following terms regarding the time period to exercise vested stock options after termination of Service. These additional terms shall apply until such time that the shares of Common Stock are publicly traded and/or the Corporation is subject to the reporting requirements of the 1934 Act: In the event of termination of an Optionee's Service, (i) if such termination was for reasons other than death or Disability or cause, the Optionee shall have at least 30 days after the date of such termination to exercise any of his/her vested outstanding stock options (but in no event later than the expiration of the term of such stock options established by the Plan Administrator as of the award date) or (ii) if such termination was due to death or Disability, the Optionee shall have at least six months after the date of such termination to exercise any of his/her vested outstanding stock options (but in no event later than the expiration of the term of such stock options established by the Plan Administrator as of the award date).
IX.
CODE SECTION 409A
Notwithstanding anything in the Plan to the contrary, the Plan and awards granted hereunder are intended to comply with the requirements of Code Section 409A and shall be interpreted in a manner consistent with such intention. In the event that any provision of the Plan or an award agreement is determined by the Plan Administrator to not comply with the applicable requirements of Code Section 409A or the Treasury Regulations or other guidance issued thereunder, the Plan Administrator shall have the authority to take such actions and to make such changes to the Plan or an award agreement as the Plan Administrator deems necessary to comply with such requirements. Each payment to a Participant or Optionee made pursuant to this Plan shall be considered a separate payment and not one of a series of payments for purposes of Code Section 409A. Notwithstanding the foregoing or anything elsewhere in the Plan or an award agreement to the contrary, if upon a Participant’s or Optionee's Separation From Service he/she is then a “specified employee” (as defined in Code Section 409A), then solely to the extent necessary to comply with Code Section 409A and avoid the imposition of taxes under Code Section 409A, the Corporation shall defer payment of “nonqualified deferred compensation” subject to Code Section 409A payable as a result of and within six (6) months following such Separation From Service under this Plan until the earlier of (i) the first business day of the seventh month following the Participant’s or Optionee's Separation From Service, or (ii) ten (10) days after the Corporation receives written confirmation of the Participant’s or Optionee's death. Any such delayed payments shall be made without interest. In no event whatsoever shall the Corporation be liable for any additional tax, interest or penalties that may be imposed on a Participant or Optionee by Code Section 409A or any damages for failing to comply with Code Section 409A.
X.
GENERAL
A.
Electronic Communications. Subject to compliance with applicable law and/or regulations, an award agreement or other documentation or notices relating to the Plan and/or awards may be communicated to Participants and Optionees by electronic media.
B.
Unfunded Plan. Insofar as it provides for awards, the Plan shall be unfunded. Although bookkeeping accounts may be established with respect to Participants or Optionees who are granted awards under this Plan, any such accounts will be used merely as a bookkeeping convenience. The Corporation shall not be required to segregate any assets which may at any time be represented by awards, nor shall this Plan be construed as providing for such segregation, nor shall the Corporation or the Plan Administrator be deemed to be a trustee of stock or cash to be awarded under the Plan.
C.
Liability of Corporation Plan. The Corporation (or members of the Board or Plan Administrator) shall not be liable to a Participant or Optionee or other persons as to: (i) the non-issuance or sale of shares of Common Stock as to which the Corporation has been unable to obtain from any regulatory body having jurisdiction the authority deemed by the Corporation's counsel to be necessary to the lawful issuance and sale of any shares of Common Stock hereunder; and (ii) any unexpected or adverse tax consequence or any tax consequence expected, but not realized, by any Participant or Optionee or other person due to the grant, receipt, exercise or settlement of any award granted under this Plan.
D.
Reformation. In the event any provision of this Plan shall be held illegal or invalid for any reason, such provisions will be reformed by the Board if possible and to the extent needed in order to be held legal and valid. If it is not possible to reform the illegal or invalid provisions then the illegality or invalidity shall not affect the remaining parts of this Plan, and this Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
E.
Successor Provision. Any reference to a statute, rule or regulation, or to a section of a statute, rule or regulation, is a reference to that statute, rule, regulation, or section as amended from time to time, both before and after the date the Plan was adopted and including any successor provisions.
F.
Governing Law. This Plan, and (unless otherwise provided in the Stock Option Award Agreement or Stock Issuance Agreement) all awards, shall be construed in accordance with and governed by the laws of the State of California, but without regard to its conflict of law provisions. The Plan Administrator may provide that any dispute as to any award shall be presented and determined in such forum as the Plan Administrator may specify, including through binding arbitration. Unless otherwise provided in the Stock Option Award Agreement or Stock Issuance Agreement, recipients of an award under the Plan are deemed to submit to the exclusive jurisdiction and venue of the federal or state courts of California to resolve any and all issues that may arise out of or relate to the Plan or any related Stock Option Award Agreement or Stock Issuance Agreement.
ARTICLE 2
OPTION GRANT PROGRAM
I.
STOCK OPTION TERMS
Each stock option shall be evidenced by a Stock Option Award Agreement between the Optionee and the Corporation in a form approved by the Plan Administrator; provided, however, that each such agreement shall comply with the terms specified below. Each document evidencing an Incentive Option shall, in addition, be subject to the provisions of the Plan applicable to such stock options. The provisions of the various Stock Option Award Agreements entered into under the Plan need not be identical. The Stock Option Award Agreement shall also specify whether the stock option is an Incentive Option and if not specified then the stock option shall be a Non-Statutory Option. Additionally the Stock Option Award Agreement shall specify the number of shares of Common Stock that are subject to the stock option, set forth the stock option's exercise price (pursuant to the terms specified below), specify the date when all or any installment of the stock option is to become vested and/or exercisable and specify the term of the stock option.
A.
Exercise Price.
1.
The exercise price per share shall be fixed by the Plan Administrator in accordance with the following provisions:
(i)
The exercise price per share shall not be less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the stock option grant date.
(ii)
If the person to whom an Incentive Option is granted is a 10% Shareholder, then the exercise price per share shall not be less than one hundred ten percent (110%) of the Fair Market Value per share of Common Stock on the Incentive Option grant date.
2.
The exercise price shall become immediately due upon exercise of the stock option and shall, subject to the documents evidencing the stock option, be payable in cash or check made payable to the Corporation or by a promissory note as described in Section of . Should the Common Stock be registered under Section 12(g) of the 1934 Act at the time the stock option is exercised, then the exercise price may also be paid as follows:
(i)
in shares of Common Stock held for the requisite period necessary to avoid a charge to the Corporation’s earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date, or
(ii)
to the extent the stock option is exercised for vested shares, through a special sale and remittance procedure pursuant to which the Optionee shall concurrently provide irrevocable written instructions to the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale.
Except to the extent such sale and remittance procedure is utilized, payment of the exercise price for the purchased shares must be made on the Exercise Date.
B.
Exercise and Term of Stock Options. Each stock option shall be exercisable at such time or times, during such period and for such number of shares as shall be determined by the Plan Administrator and set forth in the documents evidencing the stock option grant. However, no stock option shall have a term in excess of ten (10) years measured from the stock option grant date.
C.
Effect of Termination of Service.
1.
Unless the applicable Stock Option Award Agreement or employment agreement provides otherwise (and in such case, the Stock Option Award Agreement or employment agreement shall govern as to the consequences of a termination of Service for such stock option awards subject to the subsection (C)), the following provisions shall govern the exercise of any stock options held by the Optionee at the time of cessation of Service or death:
(i)
Should the Optionee cease to remain in Service for any reason other than Disability or death, then the Optionee shall have a period of three (3) months following the date of such cessation of Service during which to exercise the vested portion of each outstanding stock option held by such Optionee and all unvested portions of any outstanding stock option award shall be forfeited without consideration as of the termination of Service date.
(ii)
Should Optionee’s Service terminate by reason of Disability, then the Optionee shall have a period of twelve (12) months following the date of such cessation of Service during which to exercise the vested portion of each outstanding stock option held by such Optionee and all unvested portions of any outstanding stock option award shall be forfeited without consideration as of the termination of Service date.
(iii)
If the Optionee dies while holding an outstanding stock option, then the personal representative of his or her estate or the person or persons to whom the stock option is transferred pursuant to the Optionee’s will or the laws of inheritance shall have a twelve (12)-month period following the date of the Optionee’s death to exercise the vested portion of such stock option and all unvested portions of any outstanding stock option award shall be forfeited without consideration as of the date of death.
(iv)
Under no circumstances, however, shall any such stock option be exercisable after the specified expiration of the stock option term.
(v)
During the applicable post-Service exercise period, the stock option may not be exercised in the aggregate for more than the number of vested shares for which the stock option is exercisable on the date of the Optionee’s cessation of Service. Upon the expiration of the applicable exercise period or (if earlier) upon the expiration of the stock option term, the stock option shall terminate and cease to be outstanding for any vested shares for which the stock option has not been exercised.
2.
The Plan Administrator shall have the discretion, either at the time a stock option is granted or at any time while the stock option remains outstanding, provided that such time is prior to the forfeiture of the stock option, to:
(i)
extend the period of time for which the stock option is to remain exercisable following Optionee’s cessation of Service or death from the limited period otherwise in effect for that stock option to such greater period of time as the Plan Administrator shall deem appropriate, but in no event beyond the expiration of the stock option term, and/or
(ii)
permit the stock option to be exercised, during the applicable post-Service exercise period, not only with respect to the number of vested shares of Common Stock for which such stock option is exercisable at the time of the Optionee’s cessation of Service but also with respect to one or more additional installments in which the Optionee would have vested under the stock option had the Optionee continued in Service.
D.
Shareholder Rights. The holder of a stock option shall have no shareholder rights with respect to the shares subject to the stock option until such person shall have exercised the stock option, paid the exercise price and any applicable withholding taxes and become a holder of record of the purchased shares.
E.
Unvested Shares. The Plan Administrator shall have the discretion to grant stock options which are exercisable for unvested shares of Common Stock. Should the Optionee cease Service while holding such unvested shares, the Corporation shall have the right to repurchase, at the exercise price paid per share, all or (at the discretion of the Corporation and with the consent of the Optionee) any of those unvested shares. The terms upon which such repurchase right shall be exercisable (including the period and procedure for exercise and the appropriate vesting schedule for the purchased shares) shall be established by the Plan Administrator and set forth in the document evidencing such repurchase right.
F.
First Refusal Rights. Until such time as the Common Stock is first registered under Section 12(g) of the 1934 Act, the Corporation shall have the right of first refusal with respect to any proposed disposition by the Optionee (or any successor in interest) of any shares of Common Stock issued under the Plan. Such right of first refusal shall be exercisable in accordance with the terms established by the Plan Administrator and set forth in the document evidencing such right.
G.
Limited Transferability of Stock Options. During the lifetime of the Optionee, the stock option shall be exercisable only by the Optionee and shall not be assignable or transferable other than by will or by the laws of descent and distribution following the Optionee’s death.
H.
Withholding. The Corporation’s obligation to deliver shares of Common Stock upon the exercise of any stock options granted under the Plan shall be subject to the satisfaction of all applicable federal, state and local income and employment tax withholding requirements.
II.
INCENTIVE OPTIONS
The terms specified below shall be applicable to all Incentive Options. Except as modified by the provisions of this Section II, all the provisions of the Plan shall be applicable to Incentive Options. Stock options which are specifically designated as Non-Statutory Options shall not be subject to the terms of this Section II.
A.
Eligibility. Incentive Options may only be granted to Employees.
B.
Exercise Price. The exercise price per share shall not be less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the stock option grant date.
C.
Dollar Limitation. The aggregate Fair Market Value of the shares of Common Stock (determined as of the respective date or dates of grant) for which one or more stock options granted to any Employee under the Plan (or any other stock option plan of the Corporation or any Parent or Subsidiary) may for the first time become exercisable as Incentive Options during any one (1) calendar year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the Employee holds two (2) or more such stock options which become exercisable for the first time in the same calendar year, the foregoing limitation on the exercisability of such stock options as Incentive Options shall be applied on the basis of the order in which such stock options are granted. If and to the extent that any shares of Common Stock are issued under a portion of any Incentive Option that exceeds the $100,000 limitation of Section 422 of the Code, such shares shall not be treated as issued under an Incentive Option notwithstanding any designation otherwise. Certain decisions, amendments, interpretations and actions by the Plan Administrator and certain actions by an Employee may cause an Incentive Option to cease to qualify as an Incentive Option pursuant to the Code and by accepting an Incentive Option the Employee agrees in advance to such disqualifying action taken by either the Employee, the Plan Administrator or the Corporation.
D.
10% Shareholder. If any Employee to whom an Incentive Option is granted is a 10% Shareholder, then the stock option term shall not exceed five (5) years measured from the stock option grant date.
III.
CORPORATE TRANSACTION
A.
The shares subject to each stock option outstanding under the Plan at the time of a Corporate Transaction shall automatically vest in full so that each such stock option shall, immediately prior to the effective date of the Corporate Transaction, become fully exercisable for all of the shares of Common Stock at the time subject to that stock option and may be exercised for any or all of those shares as fully vested shares of Common Stock. However, the shares subject to an outstanding stock option shall not vest on such an accelerated basis if and to the extent: (i) such stock option is assumed by the successor corporation (or parent thereof) in the Corporate Transaction and the Corporation’s repurchase rights with respect to the unvested stock option shares are concurrently assigned to such successor corporation (or parent thereof) or (ii) such stock option is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing on the unvested stock option shares at the time of the Corporate Transaction and provides for subsequent payout in accordance with the same vesting schedule applicable to those unvested stock option shares or (iii) the acceleration of such stock option is subject to other limitations imposed by the Plan Administrator at the time of the stock option grant.
B.
All outstanding repurchase rights shall also terminate automatically, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event of any Corporate Transaction, except to the extent: (i) those repurchase rights are assigned to the successor corporation (or parent thereof) in connection with such Corporate Transaction or (ii) such accelerated vesting is precluded by other limitations imposed by the Plan Administrator at the time the repurchase right is issued.
C.
Immediately following the consummation of the Corporate Transaction, all outstanding stock options shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof).
D.
Each stock option which is assumed in connection with a Corporate Transaction shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and class of securities which would have been issuable to the Optionee in consummation of such Corporate Transaction, had the stock option been exercised immediately prior to such Corporate Transaction. Appropriate adjustments shall also be made to (i) the number and class of securities available for issuance under the Plan following the consummation of such Corporate Transaction and (ii) the exercise price payable per share under each outstanding stock option, provided the aggregate exercise price payable for such securities shall remain the same.
E.
The Plan Administrator shall have the discretion, either at the time the stock option is granted or at any time while the stock option remains outstanding, to provide for the automatic acceleration (in whole or in part) of one or more outstanding stock options (and the automatic termination of one or more outstanding repurchase rights, with the immediate vesting of the shares of Common Stock subject to those terminated rights) upon the occurrence of a Corporate Transaction, whether or not those stock options are to be assumed or replaced (or those repurchase rights are to be assigned) in the Corporate Transaction.
F.
The Plan Administrator shall also have full power and authority, either at the time the stock option is granted or at any time while the stock option remains outstanding, to structure such stock option so that the shares subject to that stock option will automatically vest on an accelerated basis should the Optionee’s Service terminate by reason of an Involuntary Termination within a designated period (not to exceed eighteen (18) months) following the effective date of any Corporate Transaction in which the stock option is assumed and the repurchase rights applicable to those shares do not otherwise terminate. Any such stock option shall remain exercisable for the fully vested stock option shares until the earlier of (i) the expiration of the stock option term or (ii) the expiration of the one (1)-year period measured from the effective date of the Involuntary Termination. In addition, the Plan Administrator may provide that one or more of the outstanding repurchase rights with respect to shares held by the Optionee at the time of such Involuntary Termination shall immediately terminate on an accelerated basis, and the shares subject to those terminated rights shall accordingly vest.
G.
The portion of any Incentive Option accelerated in connection with a Corporate Transaction shall remain exercisable as an Incentive Option only to the extent the applicable One Hundred Thousand Dollar limitation is not exceeded. To the extent such dollar limitation is exceeded, the accelerated portion of such stock option shall be exercisable as a Non-Statutory Option under the Federal tax laws.
H.
The grant of stock options under the Plan shall in no way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.
IV.
CANCELLATION AND REGRANT OF STOCK OPTIONS
The Plan Administrator shall have the authority to effect, at any time and from time to time, with the consent of the affected stock option holders, the cancellation of any or all outstanding stock options under the Plan and to grant in substitution therefor new stock options covering the same or different number of shares of Common Stock but with an exercise price per share based on the Fair Market Value per share of Common Stock on the new stock option grant date.
ARTICLE 3
STOCK ISSUANCE PROGRAM
I.
STOCK ISSUANCE TERMS
Shares of Common Stock may be issued under the Stock Issuance Program through direct and immediate issuances without any intervening stock option grants. Each such stock issuance shall be evidenced by a Stock Issuance Agreement which complies with the terms specified below.
A.
Purchase Price.
1.
The purchase price per share shall be fixed by the Plan Administrator but shall not be less than eighty-five percent (85%) of the Fair Market Value per share of Common Stock on the issue date. However, the purchase price per share of Common Stock issued to a 10% Shareholder shall not be less than one hundred and ten percent (110%) of such Fair Market Value.
2.
Shares of Common Stock may be issued under the Stock Issuance Program for any of the following items of consideration which the Plan Administrator may deem appropriate in each individual instance:
(i)
cash or check made payable to the Corporation;
(ii)
past services rendered to the Corporation (or any Parent or Subsidiary); or
(iii)
a promissory note as described in Section of .
B.
Vesting Provisions.
1.
Shares of Common Stock issued under the Stock Issuance Program may, in the discretion of the Plan Administrator, be fully and immediately vested upon issuance or may vest in one or more installments over the Participant’s period of Service or upon attainment of specified performance objectives.
2.
Any new, substituted or additional securities or other property (including money paid other than as a regular cash dividend) which the Participant may have the right to receive with respect to the Participant’s unvested shares of Common Stock by reason of any stock dividend, stock split, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration shall be issued subject to (i) the same vesting requirements applicable to the Participant’s unvested shares of Common Stock and (ii) such escrow arrangements as the Plan Administrator shall deem appropriate.
3.
The Participant shall have full shareholder rights with respect to any shares of Common Stock issued to the Participant under the Stock Issuance Program, whether or not the Participant’s interest in those shares is vested. Accordingly, the Participant shall have the right to vote such shares and to receive any regular cash dividends paid on such shares.
4.
Should the Participant cease to remain in Service while holding one or more unvested shares of Common Stock issued under the Stock Issuance Program or should the performance objectives not be attained with respect to one or more such unvested shares of Common Stock, then those shares shall be immediately surrendered to the Corporation for cancellation, and the Participant shall have no further shareholder rights with respect to those shares. To the extent the surrendered shares were previously issued to the Participant for consideration paid in cash or cash equivalent (including the Participant’s purchase-money indebtedness), the Corporation shall repay to the Participant the cash consideration paid for the surrendered shares and shall cancel the unpaid principal balance of any outstanding purchase-money note of the Participant attributable to such surrendered shares.
5.
The Plan Administrator may in its discretion waive the surrender and cancellation of one or more unvested shares of Common Stock (or other assets attributable thereto) which would otherwise occur upon the non-completion of the vesting schedule applicable to such shares. Such waiver shall result in the immediate vesting of the Participant’s interest in the shares of Common Stock as to which the waiver applies. Such waiver may be effected at any time, whether before or after the Participant’s cessation of Service or the attainment or non-attainment of the applicable performance objectives.
II.
CORPORATE TRANSACTION
A.
Upon the occurrence of a Corporate Transaction, all outstanding repurchase rights under the Stock Issuance Program shall terminate automatically, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, except to the extent: (i) those repurchase rights are assigned to the successor corporation (or parent thereof) in connection with such Corporate Transaction or (ii) such accelerated vesting is precluded by other limitations imposed by the Plan Administrator at the time the repurchase right is issued.
B.
The Plan Administrator shall have the discretionary authority, exercisable either at the time the unvested shares are issued or any time while the Corporation’s repurchase rights with respect to those shares remain outstanding, to provide that those rights shall automatically terminate on an accelerated basis, and the shares of Common Stock subject to those terminated rights shall immediately vest, in the event the Participant’s Service should subsequently terminate by reason of an Involuntary Termination within a designated period (not to exceed eighteen (18) months) following the effective date of any Corporate Transaction in which those repurchase rights are assigned to the successor corporation (or parent thereof).
III.
SHARE ESCROW/LEGENDS
Unvested shares may, in the Plan Administrator’s discretion, be held in escrow by the Corporation until the Participant’s interest in such shares vests or may be issued directly to the Participant with restrictive legends on the certificates evidencing those unvested shares.
ARTICLE 4
MISCELLANEOUS
I.
FINANCING
The Plan Administrator may permit any Optionee or Participant to pay the stock option exercise price or the purchase price for shares issued to such person under the Plan by delivering a full-recourse, interest-bearing promissory note payable in one or more installments and secured by the purchased shares. However, any promissory note delivered by a consultant must be secured by property in addition to the purchased shares of Common Stock. In no event shall the maximum credit available to the Optionee or Participant exceed the sum of (i) the aggregate stock option exercise price or purchase price payable for the purchased shares plus (ii) any federal, state and local income and employment tax liability incurred by the Optionee or the Participant in connection with the stock option exercise or share purchase.
II.
EFFECTIVE DATE AND TERM OF PLAN
A.
The Plan shall become effective when adopted by the Board, but no stock option granted under the Plan may be exercised, and no shares shall be issued under the Plan, until the Plan is approved by the Corporation’s shareholders. If such shareholder approval is not obtained within twelve (12) months after the date of the Board’s adoption of the Plan, then all stock options previously granted under the Plan shall terminate and cease to be outstanding, and no further stock options shall be granted and no shares shall be issued under the Plan. Subject to such limitation, the Plan Administrator may grant stock options and issue shares under the Plan at any time after the effective date of the Plan and before the date fixed herein for termination of the Plan.
B.
The Plan shall terminate upon the earliest of (i) the expiration of the ten (10) year period measured from the date the Plan is adopted by the Board, (ii) the date on which all shares available for issuance under the Plan shall have been issued or (iii) the termination of all outstanding stock options in connection with a Corporate Transaction. All stock options and unvested stock issuances outstanding at that time under the Plan shall continue to have full force and effect in accordance with the provisions of the documents evidencing such stock options or issuances.
III.
AMENDMENT OF THE PLAN
A.
The Board shall have complete and exclusive power and authority to amend or modify the Plan in any or all respects. However, no such amendment or modification shall adversely affect the rights and obligations with respect to stock options or unvested stock issuances at the time outstanding under the Plan unless the Optionee or the Participant consents to such amendment or modification. In addition, certain amendments may require shareholder approval pursuant to applicable laws and regulations.
B.
To the extent permitted by applicable law, stock options may be granted under the Option Grant Program and shares may be issued under the Stock Issuance Program which are in each instance in excess of the number of shares of Common Stock then available for issuance under the Plan, provided any excess shares actually issued under those programs shall be held in escrow until there is obtained shareholder approval of an amendment sufficiently increasing the number of shares of Common Stock available for issuance under the Plan. If such shareholder approval is not obtained within twelve (12) months after the date the first such excess issuances are made, then (i) any unexercised stock options granted on the basis of such excess shares shall terminate and cease to be outstanding and (ii) the Corporation shall promptly refund to the Optionees and the Participants the exercise or purchase price paid for any excess shares issued under the Plan and held in escrow, together with interest (at the applicable Short Term Federal Rate) for the period the shares were held in escrow, and such shares shall thereupon be automatically cancelled and cease to be outstanding.
IV.
USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares of Common Stock under the Plan shall be used for general corporate purposes.
V.
WITHHOLDING
The Corporation’s obligation to deliver shares of Common Stock upon the exercise of any stock options or upon the issuance or vesting of any shares issued under the Plan shall be subject to the satisfaction of all applicable federal, state and local income and employment tax withholding requirements.
VI.
LIMITATIONS ON RIGHTS
A.
Retention Rights. Neither the Plan nor any award granted under the Plan shall be deemed to give any individual a right to remain in Service as an Employee, consultant, or non-employee director of the Corporation, a Parent or a Subsidiary or to receive any future awards under the Plan. The Corporation and its Parents and Subsidiaries reserve the right to terminate the Service of any person at any time, and for any reason, subject to applicable laws, the Corporation's articles of incorporation and bylaws and a written employment agreement (if any).
B.
Regulatory Approvals. The implementation of the Plan, the granting of any stock options under the Plan and the issuance of any shares of Common Stock (i) upon the exercise of any stock option or (ii) under the Stock Issuance Program shall be subject to the Corporation’s procurement of all approvals and permits required by regulatory authorities having jurisdiction over the Plan, the stock options granted under it and the shares of Common Stock issued pursuant to it.
C.
Clawback Policy. The Corporation may (i) cause the cancellation of any award, (ii) require reimbursement of any award by a Participant or Optionee and (iii) effect any other right of recoupment of equity or other compensation provided under this Plan or otherwise in accordance with Corporation policies and/or applicable law (each, a “Clawback Policy”). In addition, a Participant or Optionee may be required to repay to the Corporation certain previously paid compensation, whether provided under this Plan or an award agreement or otherwise, in accordance with the Clawback Policy.
VII.
NO EMPLOYMENT OR SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee or the Participant any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining such person) or of the Optionee or the Participant, which rights are hereby expressly reserved by each, to terminate such person’s Service at any time for any reason, with or without cause.
1
APPENDIX
The following definitions shall be in effect under the Plan:
A.
Board shall mean the Corporation’s Board of Directors.
B.
California Participants shall mean a Participant or Optionee whose award under the Plan was issued in reliance on Section 25102(o) of the California Corporation Code.
C.
Code shall mean the Internal Revenue Code of 1986, as amended.
D.
Committee shall mean a committee of two (2) or more Board members appointed by the Board to exercise one or more administrative functions under the Plan.
E.
Common Stock shall mean the Corporation’s common stock.
F.
Corporate Transaction shall mean either of the following shareholder-approved transactions to which the Corporation is a party:
(i)
a merger or consolidation in which securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation’s outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction, or
(ii)
the sale, transfer or other disposition of all or substantially all of the Corporation’s assets in complete liquidation or dissolution of the Corporation.
G.
Corporation shall mean LED Lighting Company a Delaware corporation.
H.
Disability shall mean the inability of the Optionee or the Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can expected to last for a continuous period of not less than twelve (12) months and shall be determined by the Plan Administrator on the basis of such medical evidence as the Plan Administrator deems warranted under the circumstances.
I.
Employee shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance.
J.
Exercise Date shall mean the date on which the Corporation shall have received written notice of the stock option exercise.
K.
Fair Market Value per share of Common Stock on any relevant date shall be determined in accordance with the following provisions:
(i)
If the Common Stock is at the time traded on the Nasdaq National Market, quoted on the OTCBB, quoted on the OTCQB, quoted on the pink sheets then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as such price is reported by the National Association of Securities Dealers on the Nasdaq National Market or any successor system, or at the last price traded in the over-the-counter market that is reported by the OTCBB, OTCQB or pink sheets. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.
(ii)
If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined by the Plan Administrator to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.
(iii)
If the Common Stock is at the time neither listed on any Stock Exchange nor traded on the Nasdaq National Market, nor quoted on the OTCBB, nor quoted on the OTCQB, nor quoted on the pink sheets then the Fair Market Value shall be determined by the Plan Administrator after taking into account such factors as the Plan Administrator shall deem appropriate including the pricing of any recent capital raising the company has completed or is proposed to complete.
L.
Incentive Option shall mean a stock option which satisfies the requirements of Code Section 422.
M.
Involuntary Termination shall mean the termination of the Service of any individual which occurs by reason of:
(i)
such individual’s involuntary dismissal or discharge by the Corporation for reasons other than Misconduct, or
(ii)
such individual’s voluntary resignation following (A) a change in his or her position with the Corporation which materially reduces his or her level of responsibility, (B) a reduction in his or her level of compensation (including base salary, fringe benefits and target bonuses under any corporate-performance based bonus or incentive programs) by more than fifteen percent (15%) or (C) a relocation of such individual’s place of employment by more than fifty (50) miles, provided and only if such change, reduction or relocation is effected without the individual’s consent.
N.
Misconduct shall mean the commission of any act of fraud, embezzlement or dishonesty by the Optionee or Participant, any unauthorized use or disclosure by such person of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by such person adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary) in a material manner. The foregoing definition shall not be deemed to be inclusive of all the acts or omissions which the Corporation (or any Parent or Subsidiary) may consider as grounds for the dismissal or discharge of any Optionee, Participant or other person in the Service of the Corporation (or any Parent or Subsidiary).
O.
1934 Act shall mean the Securities Exchange Act of 1934, as amended.
P.
Non-Statutory Option shall mean a stock option that is not an Incentive Option.
Q.
Option Grant Program shall mean the stock option grant program in effect under the Plan.
R.
Optionee shall mean any person to whom a stock option is granted under the Plan.
S.
Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
T.
Participant shall mean any person who is issued shares of Common Stock under the Stock Issuance Program.
U.
Plan shall mean this LED Lighting Company 2013 Stock Option/Stock Issuance Plan as it may be amended from time to time.
V.
Plan Administrator shall mean either the Board or the Committee acting in its capacity as administrator of the Plan.
W.
Service shall mean the provision of services to the Corporation (or any Parent or Subsidiary) by a person in the capacity of an Employee, a non-employee member of the board of directors or a consultant, except to the extent otherwise specifically provided in the documents evidencing the stock option grant.
X.
Stock Exchange shall mean either the American Stock Exchange or the New York Stock Exchange.
Y.
Stock Issuance Agreement shall mean the written agreement entered into by the Corporation and the Participant at the time of issuance of shares of Common Stock under the Stock Issuance Program.
Z.
Stock Issuance Program shall mean the stock issuance program in effect under the Plan.
AA.
Stock Option Award Agreement shall mean the written agreement described in Article Two, Section I evidencing each award of a stock option under the Plan.
BB.
Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
CC.
10% Shareholder shall mean the owner of stock (as determined under Code Section 424(d)) possessing more than ten percent (10%) of the total combined voting power of all classes of outstanding stock of the Corporation (or any Parent or Subsidiary).
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