Exhibit
99.1
KNOW LABS, INC.
2021 EQUITY INCENTIVE PLAN
SECTION 1. PURPOSE
The
purpose of the Know Labs, Inc. 2021 Equity Incentive Plan is to
attract, retain and motivate employees, officers, directors,
consultants, agents, advisors and independent contractors of the
Company and its Related Companies by providing them the opportunity
to acquire a proprietary interest in the Company and to align their
interests and efforts to the long-term interests of the
Company’s stockholders.
SECTION
2. DEFINITIONS
Certain
capitalized terms used in the Plan have the meanings set forth in
Appendix
A.
SECTION
3. ADMINISTRATION
3.1 Administration
of the Plan
The
Plan shall be administered by the Board. Notwithstanding the
foregoing, the Board may delegate concurrent responsibility for
administering the Plan, including with respect to designated
classes of Eligible Persons, to a committee or committees (which
term includes subcommittees) consisting of two or more members of
the Board, subject to such limitations as the Board deems
appropriate. Members of any committee shall serve for such term as
the Board may determine, subject to removal by the Board at any
time. All references in the Plan to the “Plan
Administrator” shall be, as applicable, to the Board
or any committee to whom the Board has delegated authority to
administer the Plan.
3.2 Administration
and Interpretation by Plan Administrator
(a) Except
for the terms and conditions explicitly set forth in the Plan and
to the extent permitted by applicable law, the Plan Administrator
shall have full power and exclusive authority, subject to such
orders or resolutions not inconsistent with the provisions of the
Plan as may from time to time be adopted by the Board or a
committee composed of members of the Board, to (i) select the
Eligible Persons to whom Awards may from time to time be granted
under the Plan; (ii) determine the type or types of Awards to
be granted to each Participant under the Plan; (iii) determine
the number of shares of Common Stock to be covered by each Award
granted under the Plan; (iv) determine the terms and
conditions of any Award granted under the Plan; (v) approve
the forms of notice or agreement for use under the Plan;
(vi) determine whether, to what extent and under what
circumstances Awards may be settled in cash, shares of Common Stock
or other property or canceled or suspended; (vii) interpret
and administer the Plan and any instrument evidencing an Award,
notice or agreement executed or entered into under the Plan;
(viii) establish such rules and regulations as it shall deem
appropriate for the proper administration of the Plan;
(ix) delegate ministerial duties to such of the
Company’s employees as it so determines; and (x) make
any other determination and take any other action that the Plan
Administrator deems necessary or desirable for administration of
the Plan.
(b) The effect on the
vesting of an Award of a Company-approved leave of absence or a
Participant’s reduction in hours of employment or service
shall be determined by the Company’s chief human resources
officer or other person performing that function or, with respect
to directors or executive officers, by the Plan Administrator,
whose determination shall be final.
(c) Decisions of the
Plan Administrator shall be final, conclusive and binding on all
persons, including the Company, any Participant, any stockholder
and any Eligible Person. A majority of the members of the Plan
Administrator may determine its actions.
SECTION
4. SHARES SUBJECT TO THE PLAN
4.1 Authorized
Number of Shares
Subject to the provisions of Section 14.1, the maximum
aggregate number of Shares that may be issued under the Plan is
twenty million (20,000,000),
plus (i) the number of Shares added to the Plan pursuant to
Section 4.2 and (ii) the sum of (A) any Shares that, as
of the date of stockholder approval of this Plan, have been
reserved but not issued pursuant to any awards granted under the
Company’s 2011 Stock Incentive Plan, as amended (the
“2011 Plan”), and (B) any Shares subject to stock
options or similar awards granted under the 2011 Plan that, after
the date of stockholder approval of this Plan, expire or otherwise
terminate without having been exercised in full and Shares issued
pursuant to awards granted under the 2011 Plan that are forfeited
to or repurchased by the Company, with the maximum number of Shares
to be added to the Plan pursuant to clause (ii) equal to
14,650,120. The Shares may be authorized, but unissued,
or reacquired Common Stock.
4.2 Automatic
Share Reserve Increase
Subject to the provisions of Section 14 of the Plan, the
number of Shares available for issuance under the Plan will be
increased on the first day of each calendar year beginning January
1, 2022 and ending on and including January 1, 2030 in an amount
equal to the least of (i) 2,000,000 Shares, (ii) four
percent (4%) of the outstanding Shares on the last day of the
immediately preceding Fiscal Year or (iii) such number of
Shares determined by the Board; provided, that such determination
under clause (iii) will be made no later than the last day of
the immediately preceding Fiscal Year.
4.3 Share
Usage
(a) Shares
of Common Stock covered by an Award shall not be counted as used
unless and until they are actually issued and delivered to a
Participant. If any Award lapses, expires, terminates or is
canceled prior to the issuance of shares thereunder or if shares of
Common Stock are issued under the Plan to a Participant and
thereafter are forfeited to or otherwise reacquired by the Company,
the shares subject to such Awards and the forfeited or reacquired
shares shall again be available for issuance under the Plan. Any
shares of Common Stock (i) tendered by a Participant or
retained by the Company as full or partial payment to the Company
for the purchase price of an Award or to satisfy tax withholding
obligations in connection with an Award, or (ii) covered by an
Award that is settled in cash or in a manner such that some or all
of the shares covered by the Award are not issued, shall be
available for Awards under the Plan. The number of shares of Common
Stock available for issuance under the Plan shall not be reduced to
reflect any dividends or dividend equivalents that are reinvested
into additional shares of Common Stock or credited as additional
shares of Common Stock subject or paid with respect to an
Award.
(b) The Plan
Administrator shall also, without limitation, have the authority to
grant Awards as an alternative to or as the form of payment for
grants or rights earned or due under other compensation plans or
arrangements of the Company.
(c) Notwithstanding any
other provision of the Plan to the contrary, the Plan Administrator
may grant Substitute Awards under the Plan. In the event that a
written agreement between the Company and an Acquired Entity
pursuant to which a merger, consolidation or statutory share
exchange is completed is approved by the Board and that agreement
sets forth the terms and conditions of the substitution for or
assumption of outstanding awards of the Acquired Entity, those
terms and conditions shall be deemed to be the action of the Plan
Administrator without any further action by the Plan Administrator,
and the persons holding such awards shall be deemed to be
Participants.
(d) Notwithstanding any
other provisions in this Section 4 to the contrary, the
maximum number of shares that may be issued upon the exercise of
Incentive Stock Options shall equal the aggregate share number
stated in Section 4.1, subject to increase as set forth in
Section 4.2 and subject further to adjustment as provided in
Section 14.1.
SECTION
5. ELIGIBILITY
An
Award may be granted to any employee, officer or director of the
Company or a Related Company whom the Plan Administrator from time
to time selects. An Award may also be granted to any consultant,
agent, advisor or independent contractor for bona fide services
rendered to the Company or any Related Company that (a) are
not in connection with the offer and sale of the Company’s
securities in a capital-raising transaction and (b) do not
directly or indirectly promote or maintain a market for the
Company’s securities.
SECTION 6. AWARDS
6.1 Form,
Grant and Settlement of Awards
The
Plan Administrator shall have the authority, in its sole
discretion, to determine the type or types of Awards to be granted
under the Plan. Such Awards may be granted either alone or in
addition to or in tandem with any other type of Award. Any Award
settlement may be subject to such conditions, restrictions and
contingencies as the Plan Administrator shall
determine.
6.2 Evidence
of Awards
Awards
granted under the Plan shall be evidenced by a written, including
an electronic, instrument that shall contain such terms,
conditions, limitations and restrictions as the Plan Administrator
shall deem advisable and that are not inconsistent with the
Plan.
6.3 Dividends
and Distributions
Participants
may, if the Plan Administrator so determines, be credited with
dividends or dividend equivalents paid with respect to shares of
Common Stock underlying an Award in a manner determined by the Plan
Administrator in its sole discretion. The Plan Administrator may
apply any restrictions to the dividends or dividend equivalents
that the Plan Administrator deems appropriate. The Plan
Administrator, in its sole discretion, may determine the form of
payment of dividends or dividend equivalents, including cash,
shares of Common Stock, Restricted Stock or Stock Units.
Notwithstanding the foregoing, the right to any dividends or
dividend equivalents declared and paid on the number of shares
underlying an Option or Stock Appreciation Right may not be
contingent, directly or indirectly, on the exercise of the Option
or Stock Appreciation Right, and must comply with or qualify for an
exemption under Section 409A. Also notwithstanding the
foregoing, the right to any dividends or dividend equivalents
declared and paid on Restricted Stock must (a) be paid at the
same time they are paid to other stockholders and (b) comply
with or qualify for an exemption under
Section 409A.
SECTION 7. OPTIONS
7.1 Grant
of Options
The
Plan Administrator may grant Options designated as Incentive Stock
Options or Nonqualified Stock Options.
7.2 Option
Exercise Price
Options
shall be granted with an exercise price per share not less than
100% of the Fair Market Value of the Common Stock on the Grant Date
(and not less than the minimum exercise price required by
Section 422 of the Code with respect to Incentive Stock
Options), except in the case of Substitute Awards. Notwithstanding
the foregoing, the Plan Administrator may grant Nonqualified Stock
Options with an exercise price per share less than the Fair Market
Value of the Common Stock on the Grant Date if the Option meets all
the requirements for Awards that are considered “deferred
compensation” within the meaning of
Section 409A.
7.3 Term
of Options
Subject
to earlier termination in accordance with the terms of the Plan and
the instrument evidencing the Option, the maximum term of an Option
(the “Option Term”)
shall be ten years from the Grant Date. For Incentive Stock
Options, the maximum Option Term shall be as specified in
Section 8.4.
7.4 Exercise
of Options
The
Plan Administrator shall establish and set forth in each instrument
that evidences an Option the time at which, or the installments in
which, the Option shall vest and thus become exercisable, any of
which provisions may be waived or modified by the Plan
Administrator at any time. If not so established in the instrument
evidencing the Option, the Option shall vest and become exercisable
according to the following schedule, which may be waived or
modified by the Plan Administrator at any time:
|
Period of
Participant’s Continuous Employment or Service with
theCompany or Its Related Companies
|
Portion of Total
Option that is Vested and Exercisable from the Vesting Commencement
Date
|
|
12
months
|
25%
|
|
13 to
48 months
|
1/48th
per month
|
To the
extent an Option has vested and become exercisable, the Option may
be exercised in whole or from time to time in part by delivery to
or as directed or approved by the Company of a properly executed
stock option exercise agreement or notice, in a form and in
accordance with procedures established by the Company, setting
forth the number of shares with respect to which the Option is
being exercised, the restrictions imposed on the shares purchased
under such exercise agreement or notice, if any, and such
representations and agreements as may be required by the Plan
Administrator, accompanied by payment in full as described in
Section 7.5. An Option may be exercised only for whole shares
and may not be exercised for less than a reasonable number of
shares at any one time, as determined by the Company.
7.5 Payment
of Exercise Price
The
exercise price for shares purchased under an Option shall be paid
in full to the Company by delivery of consideration equal to the
product of the Option exercise price and the number of shares
purchased. Such consideration must be paid before the Company will
issue the shares being purchased and must be in a form or a
combination of forms acceptable to the Plan Administrator for that
purchase, which forms may include:
(a) cash;
(b) check or wire
transfer;
(c) having the Company
withhold shares of Common Stock that would otherwise be issued on
exercise of the Option that have an aggregate Fair Market Value
equal to the aggregate exercise price of the shares being purchased
under the Option;
(d) tendering (either
actually or, if and so long as the Common Stock is registered under
Section 12(b) or 12(g) of the Exchange Act, by attestation)
shares of Common Stock owned by the Participant that have an
aggregate Fair Market Value equal to the aggregate exercise price
of the shares being purchased under the Option;
(e) if and so long as
the Common Stock is registered under Section 12(b) or 12(g) of
the Exchange Act, and to the extent permitted by law, delivery of a
properly executed exercise agreement or notice, together with
irrevocable instructions to a brokerage firm designated or approved
by the Company to deliver promptly to the Company the aggregate
amount of proceeds to pay the Option exercise price and any tax
withholding obligations that may arise in connection with the
exercise, all in accordance with the regulations of the Federal
Reserve Board; or
(f) such other
consideration as the Plan Administrator may permit.
In
addition, to assist a Participant (including directors and
executive officers) in acquiring shares of Common Stock pursuant to
an Option granted under the Plan, the Plan Administrator, in its
sole discretion and only to the extent permitted by applicable law,
may authorize, either at the Grant Date or at any time before the
acquisition of Common Stock pursuant to the Option, (i) the
payment by a Participant of the purchase price of the Common Stock
by a promissory note or (ii) the guarantee by the Company of a
loan obtained by the Participant from a third party. Such notes or
loans must be full recourse to the extent necessary to avoid
adverse accounting charges to the Company’s earnings for
financial reporting purposes. Subject to the foregoing, the Plan
Administrator shall in its sole discretion specify the terms of any
loans or loan guarantees, including the interest rate and terms of
and security for repayment.
7.6 Effect
of Termination of Service
The
Plan Administrator shall establish and set forth in each instrument
that evidences an Option whether the Option shall continue to be
exercisable, and the terms and conditions of such exercise, after a
Termination of Service, any of which provisions may be waived or
modified by the Plan Administrator at any time. If not so
established in the instrument evidencing the Option, the Option
shall be exercisable according to the following terms and
conditions, which may be waived or modified by the Plan
Administrator at any time:
(a) Any portion of an
Option that is not vested and exercisable on the date of a
Participant’s Termination of Service shall expire on such
date.
(b) Any portion of an
Option that is vested and exercisable on the date of a
Participant’s Termination of Service shall expire on the
earliest to occur of:
(i) if the
Participant’s Termination of Service occurs for reasons other
than Cause, Disability or death, the date that is three months
after such Termination of Service;
(ii) if
the Participant’s Termination of Service occurs by reason of
Disability or death, the one-year anniversary of such Termination
of Service; and
(iii) the
Option Expiration Date.
Notwithstanding
the foregoing, if a Participant dies after such Participant’s
Termination of Service but while an Option is otherwise
exercisable, the portion of the Option that is vested and
exercisable on the date of such Termination of Service shall expire
upon the earlier to occur of (y) the Option Expiration Date
and (z) the one-year anniversary of the date of death, unless
the Plan Administrator determines otherwise.
Also
notwithstanding the foregoing, in case a Participant’s
Termination of Service occurs for Cause, all Options granted to the
Participant shall automatically expire upon first notification to
the Participant of such termination, unless the Plan Administrator
determines otherwise. If a Participant’s employment or
service relationship with the Company is suspended pending an
investigation of whether the Participant shall be terminated for
Cause, all the Participant’s rights under any Option shall
likewise be suspended during the period of investigation. If any
facts that would constitute termination for Cause are discovered
after a Participant’s Termination of Service, any Option then
held by the Participant may be immediately terminated by the Plan
Administrator, in its sole discretion.
SECTION
8. INCENTIVE STOCK OPTION LIMITATIONS
Notwithstanding
any other provisions of the Plan to the contrary, the terms and
conditions of any Incentive Stock Options shall in addition comply
in all respects with Section 422 of the Code, or any successor
provision, and any applicable regulations thereunder, including, to
the extent required thereunder, the following:
8.1 Dollar
Limitation
To the
extent the aggregate Fair Market Value (determined as of the Grant
Date) of Common Stock with respect to which a Participant’s
Incentive Stock Options become exercisable for the first time
during any calendar year (under the Plan and all other stock option
plans of the Company and its parent and subsidiary corporations)
exceeds $100,000, such portion in excess of $100,000 shall be
treated as a Nonqualified Stock Option. In the event the
Participant holds two or more such Options that become exercisable
for the first time in the same calendar year, such limitation shall
be applied on the basis of the order in which such Options are
granted.
8.2 Eligible
Employees
Individuals
who are not employees of the Company or one of its parent or
subsidiary corporations on the Grant Date may not be granted
Incentive Stock Options.
8.3 Exercise
Price
Incentive
Stock Options shall be granted with an exercise price per share not
less than 100% of the Fair Market Value of the Common Stock on the
Grant Date, and in the case of an Incentive Stock Option granted to
a Participant who owns more than 10% of the total combined voting
power of all classes of the stock of the Company or of its parent
or subsidiary corporations (a “Ten Percent
Stockholder”), shall be granted with an exercise price
per share not less than 110% of the Fair Market Value of the Common
Stock on the Grant Date. The determination of more than 10%
ownership shall be made in accordance with Section 422 of the
Code.
8.4 Option
Term
Subject
to earlier termination in accordance with the terms of the Plan and
the instrument evidencing the Option, the maximum term of an
Incentive Stock Option shall not exceed ten years, and in the case
of an Incentive Stock Option granted to a Ten Percent Stockholder,
shall not exceed five years.
8.5 Exercisability
An
Option designated as an Incentive Stock Option shall cease to
qualify for favorable tax treatment as an Incentive Stock Option to
the extent it is exercised (if permitted by the terms of the
Option) (a) more than three months after the date of a
Participant’s termination of employment if termination was
for reasons other than death or disability, (b) more than one
year after the date of a Participant’s termination of
employment if termination was by reason of disability, or
(c) more than six months following the first day of a
Participant’s leave of absence that exceeds three months,
unless the Participant’s reemployment rights are guaranteed
by statute or contract.
8.6 Taxation
of Incentive Stock Options
In
order to obtain certain tax benefits afforded to Incentive Stock
Options under Section 422 of the Code, the Participant must
hold the shares acquired upon the exercise of an Incentive Stock
Option for the later of two years after the Grant Date and one year
after the date of exercise.
A
Participant may be subject to the alternative minimum tax at the
time of exercise of an Incentive Stock Option. The Participant
shall give the Company prompt notice of any disposition of shares
acquired on the exercise of an Incentive Stock Option prior to the
expiration of such holding periods.
8.7 Code
Definitions
For the
purposes of this Section 8, “disability,”
“parent corporation” and “subsidiary
corporation” shall have the meanings attributed to those
terms for purposes of Section 422 of the Code.
8.8 Promissory
Notes
The
amount of any promissory note delivered pursuant to
Section 7.5 in connection with an Incentive Stock Option shall
bear interest at a rate specified by the Plan Administrator, but in
no case less than the rate required to avoid imputation of interest
(taking into account any exceptions to the imputed interest rules)
for federal income tax purposes.
SECTION
9. STOCK APPRECIATION RIGHTS
9.1 Grant
of Stock Appreciation Rights
The
Plan Administrator may grant Stock Appreciation Rights to
Participants at any time on such terms and conditions as the Plan
Administrator shall determine in its sole discretion. A SAR may be
granted in tandem with an Option (“tandem SAR”)
or alone (“freestanding
SAR”). The grant price of a tandem SAR shall be equal
to the exercise price of the related Option. The grant price of a
freestanding SAR shall be established in accordance with procedures
for Options set forth in Section 7.2. A SAR may be exercised
upon such terms and conditions and for the term as the Plan
Administrator determines in its sole discretion; provided, however, that, subject to earlier
termination in accordance with the terms of the Plan and the
instrument evidencing the SAR, the maximum term of a freestanding
SAR shall be ten years, and in the case of a tandem SAR,
(a) the term shall not exceed the term of the related Option
and (b) the tandem SAR may be exercised for all or part of the
shares subject to the related Option upon the surrender of the
right to exercise the equivalent portion of the related Option,
except that the tandem SAR may be exercised only with respect to
the shares for which its related Option is then
exercisable.
9.2 Payment
of SAR Amount
Upon
the exercise of a SAR, a Participant shall be entitled to receive
payment in an amount determined by multiplying: (a) the
difference between the Fair Market Value of the Common Stock on the
date of exercise over the grant price of the SAR by (b) the
number of shares with respect to which the SAR is exercised. At the
discretion of the Plan Administrator as set forth in the instrument
evidencing the Award, the payment upon exercise of a SAR may be in
cash, in shares, in some combination thereof or in any other manner
approved by the Plan Administrator in its sole
discretion.
9.3 Waiver
of Restrictions
The
Plan Administrator, in its sole discretion, may waive any other
terms, conditions or restrictions on any SAR under such
circumstances and subject to such terms and conditions as the Plan
Administrator shall deem appropriate.
SECTION
10. STOCK AWARDS, RESTRICTED STOCK AND STOCK
UNITS
10.1 Grant
of Stock Awards, Restricted Stock and Stock Units
The
Plan Administrator may grant Stock Awards, Restricted Stock and
Stock Units on such terms and conditions and subject to such
repurchase or forfeiture restrictions, if any, which may be based
on continuous service with the Company or a Related Company or the
achievement of any Performance Goals, as the Plan Administrator
shall determine in its sole discretion, which terms, conditions and
restrictions shall be set forth in the instrument evidencing the
Award.
10.2 Vesting
of Restricted Stock and Stock Units
Upon
the satisfaction of any terms, conditions and restrictions
prescribed with respect to Restricted Stock or Stock Units, or upon
a Participant’s release from any terms, conditions and
restrictions of Restricted Stock or Stock Units, as determined by
the Plan Administrator, (a) the shares of Restricted Stock
covered by each Award of Restricted Stock shall become freely
transferable by the Participant subject to the terms and conditions
of the Plan (including the restrictions on Transfer set forth in
Section 13, the rights of first refusal and repurchase set
forth in Section 15 and the market standoff requirements set
forth in Section 16), the instrument evidencing the Award, and
applicable securities laws, and (b) Stock Units shall be paid
in shares of Common Stock or, if set forth in the instrument
evidencing the Award, in cash or a combination of cash and shares
of Common Stock. Any fractional shares subject to such Awards shall
be paid to the Participant in cash.
10.3 Waiver
of Restrictions
The
Plan Administrator, in its sole discretion, may waive the
repurchase or forfeiture period and any other terms, conditions or
restrictions on any Restricted Stock or Stock Units under such
circumstances and subject to such terms and conditions as the Plan
Administrator shall deem appropriate.
SECTION
11. OTHER STOCK OR CASH-BASED AWARDS
Subject
to the terms of the Plan and such other terms and conditions as the
Plan Administrator deems appropriate, the Plan Administrator may
grant other incentives payable in cash or in shares of Common Stock
under the Plan.
SECTION 12. WITHHOLDING
The
Company may require the Participant to pay to the Company the
amount of (a) any taxes that the Company is required by
applicable federal, state, local or foreign law to withhold with
respect to the grant, vesting or exercise of an Award
(“tax
withholding obligations”) and (b) any amounts due
from the Participant to the Company or to any Related Company
(“other
obligations”). Notwithstanding any other provision of
the Plan to the contrary, the Company shall not be required to
issue any shares of Common Stock or otherwise settle an Award under
the Plan until such tax withholding obligations and other
obligations are satisfied.
The
Plan Administrator may permit or require a Participant to satisfy
all or part of the Participant’s tax withholding obligations
and other obligations by (i) paying cash to the Company,
(ii) having the Company withhold an amount from any cash
amounts otherwise due or to become due from the Company to the
Participant, (iii) having the Company withhold a number of
shares of Common Stock that would otherwise be issued to the
Participant (or become vested, in the case of Restricted Stock or
Stock Units) having a Fair Market Value equal to the tax
withholding obligations and other obligations, or
(iv) surrendering a number of shares of Common Stock the
Participant already owns having a value equal to the tax
withholding obligations and other obligations. The value of the
shares so withheld or tendered may not exceed the employer’s
minimum required tax withholding rate.
SECTION
13. ASSIGNABILITY
(a) No
Award may be Transferred by a Participant other than by will, or by
the applicable laws of descent and distribution, to one or more of
such Participant’s Immediate Family Members or by gratuitous
Transfer to a trust, family limited partnership, family limited
liability company or other bona fide estate planning or planned
gifting vehicle for the benefit of such Participant or one or more
of such Participant’s Immediate Family Members. During a
Participant’s lifetime, an Award may be exercised only by the
Participant. Notwithstanding the foregoing and to the extent
permitted by Section 422 of the Code, the Plan Administrator,
in its sole discretion, may permit a Participant to Transfer an
Award, subject to such terms and conditions as the Plan
Administrator shall specify.
(b) In addition to the
restrictions set forth above in Section 13(a), no shares of
Transfer Restricted Common Stock received in connection with an
Award may be Transferred, whether by a Participant or any other
person or entity, except pursuant to a Permitted Transfer. As a
condition to any Permitted Transfer, the person or entity to whom
Transfer Restricted Common Stock is to be so Transferred shall be
obligated to execute an agreement in form and substance prescribed
by the Plan Administrator under which the recipient agrees
(i) to be bound by the terms and conditions of the Plan
(including, without limitation, the restrictions on Transfer set
forth in this Section 13, the rights of first refusal and
repurchase set forth in Section 15 and the market standoff
requirements set forth in Section 16), and (ii) that the
shares so Transferred to the recipient will continue to constitute
Transfer Restricted Common Stock subject to this Section 13
following such Permitted Transfer. The restrictions on Transfer
imposed by this Section 13(b) shall terminate upon the earlier
to occur of (x) the closing of an underwritten public offering
by the Company of its equity securities pursuant to an effective
registration statement filed under the Securities Act and
(y) the closing of a Company Transaction that is not a Related
Party Transaction. This Section 13(b), and any determination
or agreement that a given Transfer of Transfer Restricted Common
Stock would be deemed a Permitted Transfer, will in no way limit or
reduce the Company’s rights under Section 15 with
respect to such Transfer.
SECTION 14. ADJUSTMENTS
14.1 Adjustment
of Shares
In the
event, at any time or from time to time, a stock dividend, stock
split, spin-off, combination or exchange of shares,
recapitalization, merger, consolidation, statutory share exchange,
distribution to stockholders other than a normal cash dividend, or
other change in the Company’s corporate or capital structure
results in (a) the outstanding shares of Common Stock, or any
securities exchanged therefor or received in their place, being
exchanged for a different number or kind of securities of the
Company or any other company or (b) new, different or
additional securities of the Company or any other company being
received by the holders of shares of Common Stock, then the Plan
Administrator shall make proportional adjustments in (i) the
maximum number and kind of securities available for issuance under
the Plan; (ii) the maximum number and kind of securities
issuable as Incentive Stock Options as set forth in
Section 4.3(d); and (iii) the number and kind of
securities that are subject to any outstanding Award and the per
share price of such securities, without any change in the aggregate
price to be paid therefor. The determination by the Plan
Administrator as to the terms of any of the foregoing adjustments
shall be conclusive and binding.
Notwithstanding
the foregoing, the issuance by the Company of shares of stock of
any class, or securities convertible into shares of stock of any
class, for cash or property, or for labor or services rendered,
either upon direct sale or upon the exercise of rights or warrants
to subscribe therefor, or upon conversion of shares or obligations
of the Company convertible into such shares or other securities,
shall not affect, and no adjustment by reason thereof shall be made
with respect to, outstanding Awards. Also notwithstanding the
foregoing, a dissolution or liquidation of the Company or a Change
of Control shall not be governed by this Section 14.1 but
shall be governed by Sections 14.2 and 14.3,
respectively.
14.2 Dissolution
or Liquidation
To the
extent not previously exercised or settled, and unless otherwise
determined by the Plan Administrator in its sole discretion, Awards
shall terminate immediately prior to the dissolution or liquidation
of the Company. To the extent a vesting condition, forfeiture
provision or repurchase right applicable to an Award has not been
waived by the Plan Administrator, the Award shall be forfeited
immediately prior to the consummation of the dissolution or
liquidation.
14.3 Change
of Control
(a) Notwithstanding
any other provision of the Plan to the contrary, unless the Plan
Administrator determines otherwise with respect to a particular
Award in the instrument evidencing the Award or in a written
employment, services or other agreement between the Participant and
the Company or a Related Company, in the event of a Change of
Control:
(i) If and to the
extent an outstanding Award is not converted, assumed, substituted
for or replaced by the Successor Company, then effective
immediately prior to the Change of Control, any such Award held by
a Participant whose employment or service has not terminated prior
to such Change of Control shall become additionally vested and
exercisable or payable, and applicable restrictions or forfeiture
provisions shall lapse, with respect to 100% of the unvested
portion of such Award. Awards shall then terminate upon
effectiveness of the Change of Control if and to the extent not
exercised at or prior to consummation of the Change of
Control.
(ii) If
and to the extent the Successor Company converts, assumes,
substitutes for or replaces an outstanding Award, the vesting
and/or exercisability restrictions and/or forfeiture or repurchase
provisions applicable to such Award shall not be accelerated or
lapse, and all such vesting and/or exercisability restrictions
and/or forfeiture or repurchase provisions shall continue with
respect to any shares of the Successor Company or other
consideration that may be received with respect to such
Award.
(a) For the purposes of
Section 14.3(a), an Award shall be considered converted,
assumed, substituted for or replaced by the Successor Company if
following the Change of Control the Award confers the right to
purchase or receive, for each share of Common Stock subject to the
Award immediately prior to the Change of Control, the consideration
(whether stock, cash or other securities or property) received in
the Change of Control by holders of Common Stock for each share
held on the effective date of the transaction (and if holders were
offered a choice of consideration, the type of consideration chosen
by the holders of a majority of the outstanding shares);
provided, however, that if such consideration
received in the Change of Control is not solely common stock of the
Successor Company, the Plan Administrator may, with the consent of
the Successor Company, provide for the consideration to be received
pursuant to the Award, for each share of Common Stock subject
thereto, to be solely common stock of the Successor Company
substantially equal in fair market value to the per share
consideration received by holders of Common Stock in the Change of
Control. The determination of such substantial equality of value of
consideration shall be made by the Plan Administrator, and its
determination shall be conclusive and binding.
(b) Notwithstanding the
foregoing, the Plan Administrator, in its sole discretion, may
instead provide in the event of a Change of Control that a
Participant’s outstanding Awards shall terminate upon or
immediately prior to such Change of Control and that each such
Participant shall receive, in exchange therefor, a cash payment
equal to the amount (if any) by which (i) the Acquisition
Price multiplied by the number of shares of Common Stock subject to
such outstanding Awards (either to the extent then vested and
exercisable, or subject to restrictions and/or forfeiture
provisions, or whether or not then vested and exercisable, or
subject to restrictions and/or forfeiture provisions, as determined
by the Plan Administrator in its sole discretion) exceeds
(ii) if applicable, the respective aggregate exercise, grant
or purchase price payable with respect to shares of Common Stock
subject to such Awards.
(c) For the avoidance
of doubt, nothing in this Section 14.3 requires all Awards to
be treated similarly.
14.4 Further
Adjustment of Awards
Subject
to Sections 14.2 and 14.3, the Plan Administrator shall have the
discretion, exercisable at any time before a sale, merger,
statutory share exchange, consolidation, reorganization,
liquidation, dissolution or change of control of the Company, as
defined by the Plan Administrator, to take such further action as
it determines to be necessary or advisable with respect to Awards.
Such authorized action may include (but shall not be limited to)
establishing, amending or waiving the type, terms, conditions or
duration of, or restrictions on, Awards so as to provide for
earlier, later, extended or additional time for exercise, lifting
restrictions and other modifications, and the Plan Administrator
may take such actions with respect to all Participants, to certain
categories of Participants or only to individual Participants. The
Plan Administrator may take such action before or after granting
Awards to which the action relates and before or after any public
announcement with respect to such sale, merger, consolidation,
reorganization, liquidation, dissolution or change of control that
is the reason for such action.
14.5 No
Limitations
The
grant of Awards shall in no way affect the Company’s right 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.
14.6 Fractional
Shares
In the
event of any adjustment in the number of shares covered by any
Award, each such Award shall cover only the number of full shares
resulting from such adjustment, and any fractional shares resulting
from such adjustment shall be disregarded.
14.7 Section 409A
Subject
to Section 18.5(b), but notwithstanding any other provision of
the Plan to the contrary, (a) any adjustments made pursuant to
this Section 14 to Awards that are considered “deferred
compensation” within the meaning of Section 409A shall
be made in compliance with the requirements of Section 409A
and (b) any adjustments made pursuant to this Section 14
to Awards that are not considered “deferred
compensation” subject to Section 409A shall be made in
such a manner as to ensure that after such adjustment the Awards
either (i) continue not to be subject to Section 409A or
(ii) comply with the requirements of
Section 409A.
SECTION
15. FIRST REFUSAL AND REPURCHASE RIGHTS;
OTHER RIGHTS AND VOTING
RESTRICTIONS
15.1 First
Refusal Rights
Until
the date on which the initial registration of the Common Stock
under Section 12(b) or 12(g) of the Exchange Act first becomes
effective, the Company shall have the right of first refusal with
respect to any proposed sale or other disposition by a Participant
of any shares of Common Stock issued pursuant to an Award. Such
right of first refusal shall be exercisable in accordance with the
terms and conditions established by the Plan Administrator and set
forth in the stock purchase agreement evidencing the
Participant’s acquisition of the shares or, if applicable, in
a stockholders agreement or other similar agreement.
15.2 Repurchase
Rights for Vested Shares
Until
the date on which the initial registration of the Common Stock
under Section 12(b) or 12(g) of the Exchange Act first becomes
effective, upon a Participant’s Termination of Service, all
vested shares of Common Stock issued pursuant to an Award (whether
issued before or after such Termination of Service) shall be
subject to repurchase by the Company, at the Company’s sole
discretion, at the Fair Market Value of such shares on the date of
such repurchase. The terms and conditions upon which such
repurchase right shall be exercisable (including the period and
procedure for exercise) shall be established by the Plan
Administrator and set forth in the agreement evidencing the
Participant’s acquisition of the shares or, if applicable, in
a stockholders agreement or other similar agreement.
15.3 Other
Rights and Voting Restrictions
Until
the date on which the initial registration of the Common Stock
under Section 12(b), or 12(g) of the Exchange Act first
becomes effective, the Plan Administrator may require a
Participant, as a condition to receiving shares under the Plan, to
become a party to a stock purchase agreement and/or a stockholders
agreement or other similar agreement, in the form designated by the
Plan Administrator, pursuant to which the Participant grants to the
Company and/or its other stockholders certain rights, including but
not limited to co-sale rights, and agrees to certain voting
restrictions with respect to the shares acquired by the Participant
under the Plan.
15.4 General
The
Company’s rights under this Section 15 are assignable by
the Company at any time.
SECTION16. MARKET
STANDOFF
In the
event of an underwritten public offering by the Company of its
equity securities pursuant to an effective registration statement
filed under the Securities Act, including the Company’s
initial public offering, no person may sell, make any short sale
of, loan, hypothecate, pledge, grant any option for the purchase
of, or otherwise dispose of or transfer for value or otherwise
agree to engage in any of the foregoing transactions with respect
to any shares issued pursuant to an Award granted under the Plan
without the prior written consent of the Company or its
underwriters. Such limitations shall be in effect for such period
of time as may be requested by the Company or such underwriters;
provided, however, that in no event shall such
period exceed (a) 180 days after the effective date of the
registration statement for such public offering or (b) such
longer period requested by the underwriters as is necessary to
comply with regulatory restrictions on the publication of research
reports (including, but not limited to, NYSE Rule 472 or NASD
Conduct Rule 2711, or any successor rules or amendments thereto).
The limitations of this Section 16 shall in all events
terminate two years after the effective date of the Company’s
initial public offering.
In the
event of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting
the Company’s outstanding Common Stock effected as a class
without the Company’s receipt of consideration, any new,
substituted or additional securities distributed with respect to
the shares issued under the Plan shall be immediately subject to
the provisions of this Section 16, to the same extent the
shares issued under the Plan are at such time covered by such
provisions.
In
order to enforce the limitations of this Section 16, the
Company may impose stop-transfer instructions with respect to the
shares until the end of the applicable standoff
period.
SECTION
17. AMENDMENT AND TERMINATION
17.1 Amendment,
Suspension or Termination
The
Board may amend, suspend or terminate the Plan or any portion of
the Plan at any time and in such respects as it shall deem
advisable; provided,
however, that, to the
extent required by applicable law, regulation or stock exchange
rule, stockholder approval shall be required for any amendment to
the Plan. Subject to Section 17.3, the Plan Administrator may
amend the terms of any outstanding Award, prospectively or
retroactively.
17.2 Term
of the Plan
Unless
sooner terminated, the 2021 Plan shall terminate on August 12,
2031. After the Plan is terminated, no future Awards may be
granted, but Awards previously granted shall remain outstanding in
accordance with their applicable terms and conditions and the
Plan’s terms and conditions. Notwithstanding the foregoing,
no Incentive Stock Options may be granted more than ten years after
the later of (a) the adoption of the Plan by the Board and
(b) the adoption by the Board of any amendment to the Plan
that constitutes the adoption of a new plan for purposes of
Section 422 of the Code.
17.3 Consent
of Participant
The
amendment, suspension or termination of the Plan or a portion
thereof or the amendment of an outstanding Award shall not, without
the Participant’s consent, materially adversely affect any
rights under any Award theretofore granted to the Participant under
the Plan. Any change or adjustment to an outstanding Incentive
Stock Option shall not, without the consent of the Participant, be
made in a manner so as to constitute a “modification”
that would cause such Incentive Stock Option to fail to continue to
qualify as an Incentive Stock Option. Notwithstanding the
foregoing, any adjustments made pursuant to Section 14 shall
not be subject to these restrictions.
Subject
to Section 18.5, but notwithstanding any other provision of
the Plan to the contrary, the Plan Administrator shall have broad
authority to amend the Plan or any outstanding Award without the
consent of the Participant to the extent the Plan Administrator
deems necessary or advisable to comply with, or take into account,
changes in applicable tax laws, securities laws, accounting rules
or other applicable law, rule or regulation.
SECTION 18. GENERAL
18.1 No
Individual Rights
No
individual or Participant shall have any claim to be granted any
Award under the Plan, and the Company has no obligation for
uniformity of treatment of Participants under the
Plan.
Furthermore,
nothing in the Plan or any Award granted under the Plan shall be
deemed to constitute an employment contract or confer or be deemed
to confer on any Participant any right to continue in the employ
of, or to continue any other relationship with, the Company or any
Related Company or limit in any way the right of the Company or any
Related Company to terminate a Participant’s employment or
other relationship at any time, with or without cause.
18.2 Issuance
of Shares
Notwithstanding
any other provision of the Plan to the contrary, the Company shall
have no obligation to issue or deliver any shares of Common Stock
under the Plan or make any other distribution of benefits under the
Plan unless, in the opinion of the Company’s counsel, such
issuance, delivery or distribution would comply with all applicable
laws (including, without limitation, the requirements of the
Securities Act or the laws of any state or foreign jurisdiction)
and the applicable requirements of any securities exchange or
similar entity.
The
Company shall be under no obligation to any Participant to register
for offering or resale or to qualify for exemption under the
Securities Act, or to register or qualify under the laws of any
state or foreign jurisdiction, any shares of Common Stock, security
or interest in a security paid or issued under, or created by, the
Plan, or to continue in effect any such registrations or
qualifications if made.
As a
condition to the exercise of an Option or any other receipt of
Common Stock pursuant to an Award under the Plan, the Company may
require (a) the Participant to represent and warrant at the
time of any such exercise or receipt that such shares are being
purchased or received only for the Participant’s own account
and without any present intention to sell or distribute such shares
and (b) such other action or agreement by the Participant as
may from time to time be necessary to comply with the federal,
state and foreign securities laws. At the option of the Company, a
stop-transfer order against any such shares may be placed on the
official stock books and records of the Company, and a legend
indicating that such shares may not be pledged, sold or otherwise
transferred, unless an opinion of counsel is provided (concurred in
by counsel for the Company) stating that such transfer is not in
violation of any applicable law or regulation, may be stamped on
stock certificates to ensure exemption from registration. The Plan
Administrator may also require the Participant to execute and
deliver to the Company a purchase agreement or such other agreement
as may be in use by the Company at such time that describes certain
terms and conditions applicable to the shares. To the extent the
Plan or any instrument evidencing an Award provides for issuance of
stock certificates to reflect the issuance of shares of Common
Stock, the issuance may be effected on a noncertificated basis, to
the extent not prohibited by applicable law or the applicable rules
of any stock exchange.
18.3 Indemnification
Each
person who is or shall have been a member of the Board or a
committee appointed by the Board in accordance with
Section 3.1 shall be indemnified and held harmless by the
Company against and from any loss, cost, liability or expense that
may be imposed upon or reasonably incurred by such person in
connection with or resulting from any claim, action, suit or
proceeding to which such person may be a party or in which such
person may be involved by reason of any action taken or failure to
act under the Plan and against and from any and all amounts paid by
such person in settlement thereof, with the Company’s
approval, or paid by such person in satisfaction of any judgment in
any such claim, action, suit or proceeding against such person,
unless such loss, cost, liability or expense is a result of such
person’s own willful misconduct or except as expressly
provided by statute; provided, however, that such person shall give
the Company an opportunity, at its own expense, to handle and
defend the same before such person undertakes to handle and defend
it on such person’s own behalf.
The
foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such person may be
entitled tinder the Company’s articles of incorporation or
bylaws, as a matter of law, or otherwise, or of any power that the
Company may have to indemnify or hold harmless.
18.4 No
Rights as a Stockholder
Unless
otherwise provided by the Plan Administrator or in the instrument
evidencing the Award or in a written employment, services or other
agreement, no Award, other than a Stock Award, shall entitle the
Participant to any cash dividend, voting or other right of a
stockholder unless and until the date of issuance under the Plan of
the shares that are the subject of such Award.
18.5 Compliance
with Laws and Regulations
(a) In
interpreting and applying the provisions of the Plan, any Option
granted as an Incentive Stock Option pursuant to the Plan shall, to
the extent permitted by law, be construed as an “incentive
stock option” within the meaning of Section 422 of the
Code.
(b) The Plan and Awards
granted under the Plan are intended to be exempt from the
requirements of Section 409A to the maximum extent possible,
whether pursuant to the short-term deferral exception described in
Treasury Regulation Section 1.409A-1(b)(4), the exclusion
applicable to stock options, stock appreciation rights and certain
other equity-based compensation under Treasury Regulation
Section 1.409A-l(b)(5), or otherwise. To the extent
Section 409A is applicable to the Plan or any Award granted
under the Plan, it is intended that the Plan and any Awards granted
under the Plan comply with the deferral, payout, plan termination
and other limitations and restrictions imposed under
Section 409A. Notwithstanding any other provision of the Plan
or any Award granted under the Plan to the contrary, the Plan and
any Award granted under the Plan shall be interpreted, operated and
administered in a manner consistent with such intentions;
provided, however, that the Plan Administrator
makes no representations that Awards granted under the Plan shall
be exempt from or comply with Section 409A and makes no
undertaking to preclude Section 409A from applying to Awards
granted under the Plan. Without limiting the generality of the
foregoing, and notwithstanding any other provision of the Plan or
any Award granted under the Plan to the contrary, with respect to
any payments and benefits under the Plan or any Award granted under
the Plan to which Section 409A applies, all references in the
Plan or any Award granted under the Plan to the termination of the
Participant’s employment or service are intended to mean the
Participant’s “separation from service,” within
the meaning of Section 409A(a)(2)(A)(i) to the extent
necessary to avoid subjecting the Participant to the imposition of
any additional tax under Section 409A. In addition, if the
Participant is a “specified employee,” within the
meaning of Section 409A, then to the extent necessary to avoid
subjecting the Participant to the imposition of any additional tax
under Section 409A, amounts that would otherwise be payable
under the Plan or any Award granted under the Plan during the
six-month period immediately following the Participant’s
“separation from service,” within the meaning of
Section 409A(a)(2)(A)(i), shall not be paid to the Participant
during such period, but shall instead be accumulated and paid to
the Participant (or, in the event of the Participant’s death,
the Participant’s estate) in a lump sum on the first business
day after the earlier of the date that is six months following the
Participant’s separation from service or the
Participant’s death. Notwithstanding any other provision of
the Plan to the contrary, the Plan Administrator, to the extent it
deems necessary or advisable in its sole discretion, reserves the
right, but shall not be required, to unilaterally amend or modify
the Plan and any Award granted under the Plan so that the Award
qualifies for exemption from or complies with
Section 409A.
18.6 Participants
in Other Countries or Jurisdictions
Without
amending the Plan, the Plan Administrator may grant Awards to
Eligible Persons who are foreign nationals on such terms and
conditions different from those specified in the Plan, as may, in
the judgment of the Plan Administrator, be necessary or desirable
to foster and promote achievement of the purposes of the Plan and
shall have the authority to adopt such modifications, procedures,
subplans and the like as may be necessary or desirable to comply
with provisions of the laws or regulations of other countries or
jurisdictions in which the Company or any Related Company may
operate or have employees to ensure the viability of the benefits
from Awards granted to Participants employed in such countries or
jurisdictions, meet the requirements that permit the Plan to
operate in a qualified or tax efficient manner, comply with
applicable foreign laws or regulations and meet the objectives of
the Plan.
18.7 No
Trust or Fund
The
Plan is intended to constitute an “unfunded” plan.
Nothing contained herein shall require the Company to segregate any
monies or other property, or shares of Common Stock, or to create
any trusts, or to make any special deposits for any immediate or
deferred amounts payable to any Participant, and no Participant
shall have any rights that are greater than those of a general
unsecured creditor of the Company.
18.8 Successors
All
obligations of the Company under the Plan with respect to Awards
shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect
purchase, merger, consolidation, or otherwise, of all or
substantially all the business and/or assets of the
Company.
18.9 Severability
If any
provision of the Plan or any Award is determined to be invalid,
illegal or unenforceable in any jurisdiction, or as to any person,
or would disqualify the Plan or any Award under any law deemed
applicable by the Plan Administrator, such provision shall be
construed or deemed amended to conform to applicable laws, or, if
it cannot be so construed or deemed amended without, in the Plan
Administrator’s determination, materially altering the intent
of the Plan or the Award, such provision shall be stricken as to
such jurisdiction, person or Award, and the remainder of the Plan
and any such Award shall remain in full force and
effect.
18.10 Choice
of Law and Venue
The
Plan, all Awards granted thereunder and all determinations made and
actions taken pursuant hereto, to the extent not otherwise governed
by the laws of the United States, shall be governed by the laws of
the State of Washington without giving effect to principles of
conflicts of law. Participants irrevocably consent to the
nonexclusive jurisdiction and venue of the state and federal courts
located in the State of Washington.
18.11 Legal
Requirements
The
granting of Awards and the issuance of shares of Common Stock under
the Plan are subject to all applicable laws, rules and regulations,
and to such approvals by any governmental agencies or national
securities exchanges as may be required.
SECTION
19. EFFECTIVE DATE
The
effective date (the “Effective
Date”) is the date on which the Plan is adopted by the
Board. If the stockholders of the Company do not approve the Plan
or an amendment thereto that requires
stockholder approval pursuant to Section 422 of the Code, as
applicable, within 12 months before or after the Board’s
adoption of the Plan, any Incentive Stock Options granted under the
Plan will be treated as Nonqualified Stock Options. For purposes of
determining the appropriate treatment of stock options granted
under the Plan, the adoption of any amendment to the Plan requiring
stockholder approval pursuant to Section 422 of the Code shall
constitute the adoption of a new plan.
APPENDIX A
DEFINITIONS
As used
in the Plan,
“Acquired
Entity” means any entity acquired by the Company or a
Related Company or with which the Company or a Related Company
merges or combines.
“Acquisition
Price” means the fair market value of the securities,
cash or other property, or any combination thereof, receivable or
deemed receivable upon a Change of Control in respect of a share of
Common Stock, as determined by the Plan Administrator in its sole
discretion.
“Award”
means any Option, Stock Appreciation Right, Stock Award, Restricted
Stock, Stock Unit or cash-based award or other incentive payable in
cash or in shares of Common Stock, as may be designated by the Plan
Administrator from time to time.
“Board”
means the Board of Directors of the Company.
“Cause,”
unless otherwise defined in the instrument evidencing an Award or
in a written employment, services or other agreement between the
Participant and the Company or a Related Company, means the
Participant’s (a) willful and continued failure to
substantially perform the Participant’s duties to the Company
after a written demand for substantial performance is delivered to
the Participant by the Board or Chief Executive Officer of the
Company, which demand specifically identifies the manner in which
the Participant has not substantially performed the
Participant’s duties, and which gives the Participant at
least 10 days to cure such deficiencies; (b) unauthorized use
or disclosure of the confidential information or trade secrets of
the Company; (c) indictment of, conviction of, or a plea of
“guilty” or “no contest” to a felony under
the laws of the United States or any state thereof; or
(d) willful misconduct, which is demonstrably and materially
injurious to the Company, monetarily or otherwise.
“Change
of Control,” unless the Plan Administrator determines
otherwise with respect to an Award at the time the Award is granted
or unless otherwise defined for purposes of an Award in a written
employment, services or other agreement between the Participant and
the Company or a Related Company, means consummation
of:
(a) a merger or
consolidation of the Company with or into any other company or
other entity;
(a) a statutory share
exchange pursuant to which the Company’s outstanding shares
are acquired or a sale, in one transaction or a series of
transactions undertaken with a common purpose, of at least 50% of
the Company’s outstanding voting securities; or
(b) a sale, lease,
exchange or other transfer, in one transaction or a series of
related transactions, undertaken with a common purpose of all or
substantially all of the Company’s property or
business.
Notwithstanding
the foregoing, a Change of Control shall not include (i) a
merger or consolidation of the Company, or a statutory share
exchange pursuant to which the Company’s outstanding shares
are acquired, in which the holders of the outstanding voting
securities of the Company immediately prior to the merger,
consolidation or statutory share exchange hold at least a majority
of the outstanding voting securities of the Successor Company
immediately after the merger, consolidation or statutory share
exchange; (ii) a sale, lease, exchange or other transfer of
all or substantially all of the Company’s assets to a
majority-owned subsidiary company; (iii) a transaction
undertaken for the principal purpose of restructuring the capital
of the Company, including, but not limited to, reincorporating the
Company in a different jurisdiction, converting the Company to a
limited liability company or creating a holding company; or
(iv) an equity financing in which the Company is the surviving
company.
Where a
series of transactions undertaken with a common purpose is deemed
to be a Change of Control, the date of such Change of Control shall
be the date on which the last of such transactions is
consummated.
“Code”
means the Internal Revenue Code of 1986, as amended from time to
time.
“Common
Stock” means the common stock, par value $.001 per
share, of the Company.
“Company”
means the Know Labs, Inc., a Nevada corporation.
“Disability,”
unless otherwise defined by the Plan Administrator for purposes of
the Plan or in the instrument evidencing an Award or in a written
employment, services or other agreement between the Participant and
the Company or a Related Company, means a mental or physical
impairment of the Participant that is expected to result in death
or that has lasted or is expected to last for a continuous period
of 12 months or more and that causes the Participant to be unable
to perform his or her material duties for the Company or a Related
Company and to be engaged in any substantial gainful activity, in
each case as determined by the Company’s chief human
resources officer or other person performing that function or, in
the case of directors and executive officers, the Plan
Administrator, each of whose determination shall be conclusive and
binding.
“Effective
Date” has the meaning set forth in
Section 19.
“Eligible
Person” means any person eligible to receive an Award
as set forth in Section 5.
“Exchange
Act” means the Securities Exchange Act of 1934, as
amended from time to time.
“Fair
Market Value” means the per share fair market value of
the Common Stock as established in good faith by the Plan
Administrator or, if the Common Stock is publicly traded, the
closing price for the Common Stock on any given date during regular
trading, or if not trading on that date, such price on the last
preceding date on which the Common Stock was traded, unless
determined otherwise by the Plan Administrator using such methods
or procedures as it may establish.
“Grant
Date” means the later of (a) the date on which
the Plan Administrator completes the corporate action authorizing
the grant of an Award or such later date specified by the Plan
Administrator and (b) the date on which all conditions
precedent to an Award have been satisfied, provided that conditions
to the exercisability or vesting of Awards shall not defer the
Grant Date.
“Immediate
Family Member” means a child, stepchild, grandchild,
step-grandchild, parent, stepparent, grandparent, spouse, former
spouse, sibling, mother-in-law, father-in-law, son-in law,
daughter-in-law, brother-in-law, or sister-in-law, including
adoptive relationships.
“Incentive
Stock Option” means an Option granted with the
intention that it qualify as an “incentive stock
option” as that term is defined for purposes of
Section 422 of the Code or any successor
provision.
“Nonqualified
Stock Option” means an Option other than an Incentive
Stock Option.
“Option”
means a right to purchase Common Stock granted under
Section 7.
“Option
Expiration Date” means the last day of the maximum
term of an Option.
“Option
Term” means the maximum term of an Option as set forth
in Section 7.3.
“Participant”
means any Eligible Person to whom an Award is granted.
“Performance
Goals” means
performance goals established by the Plan Administrator which may
be based on earnings or earnings growth, sales, return on assets,
cash flow, total shareholder return, equity or investment,
regulatory compliance, satisfactory internal or external audits,
improvement of financial ratings, achievement of balance sheet or
income statement objectives, implementation or completion of one or
more projects or transactions, or any other objective goals
established by the Plan Administrator, and which may be absolute in
their terms or measured against or in relationship to other
companies comparably, similarly or otherwise
situated. Such performance goals may be particular to an
Eligible Person or the department, branch, Affiliate, or division
in which the Eligible Person works, or may be based on the
performance of the Company, one or more Affiliates, or the Company
and one or more Affiliates, and may cover such period as may be
specified by the Plan Administrator.
“Permitted
Transfer” means any Transfer of Transfer Restricted
Common Stock: (a) made gratuitously to one or more of the
Participant’s Immediate Family Members or made gratuitously
to a trust, family limited partnership, family limited liability
company or other bona fide estate planning or planned gifting
vehicle for the benefit of such Participant or one or more of such
Participant’s Immediate Family Members; (b) to any
person or entity who is a stockholder of the Company at the time of
such Transfer, provided that the price per share paid in such
Transfer is less than or equal to the then most recent fair market
value per share of Common Stock as determined by the Board; or
(c) that is approved in writing by the Plan
Administrator.
“Plan”
means the Know Labs, Inc. 2021 Equity Incentive Plan.
“Plan
Administrator” has the meaning set forth in
Section 3.1.
“Related
Company” means any entity that, directly or
indirectly, is in control of, is controlled by or is under common
control with the Company.
“Restricted
Stock” means an Award of shares of Common Stock
granted under Section 10, the rights of ownership of which are
subject to restrictions prescribed by the Plan
Administrator.
“Section 409A”
means Section 409A of the Code, including any regulations and
other guidance issued thereunder by the Department of the Treasury
and/or the Internal Revenue Service.
“Securities
Act” means the Securities Act of 1933, as amended from
time to time.
“Stock
Appreciation Right” or “SAR” means a
right granted under Section 9.1 to receive the excess of the
Fair Market Value of a specified number of shares of Common Stock
over the grant price.
“Stock
Award” means an Award of shares of Common Stock
granted under Section 10, the rights of ownership of which are
not subject to restrictions prescribed by the Plan
Administrator.
“Stock
Unit” means an Award denominated in units of Common
Stock granted under Section 10.
“Substitute
Awards” means Awards granted or shares of Common Stock
issued by the Company in substitution or exchange for awards
previously granted by an Acquired Entity.
“Successor
Company” means the surviving company, the successor
company, the acquiring company or its parent, as applicable, in
connection with a Change of Control.
“Ten
Percent Stockholder” has the meaning set forth in
Section 8.3.
“Termination
of Service” means a termination of employment or
service relationship with the Company or a Related Company for any
reason, whether voluntary or involuntary, including by reason of
death or Disability. Any question as to whether and when there has
been a Termination of Service for the purposes of an Award and the
cause of such Termination of Service shall be determined by the
Company’s chief human resources officer or other person
performing that function or, with respect to directors and
executive officers, by the Plan Administrator, whose determination
shall be conclusive and binding. Transfer of a Participant’s
employment or service relationship between the Company and any
Related Company shall not be considered a Termination of Service
for purposes of an Award. Unless the Plan Administrator determines
otherwise, a Termination of Service shall be deemed to occur if the
Participant’s employment or service relationship is with an
entity that has ceased to be a Related Company. A
Participant’s change in status from an employee of the
Company or a Related Company to a nonemployee director, consultant,
advisor or independent contractor of the Company or a Related
Company, or a change in status from a nonemployee director,
consultant, advisor or independent contractor of the Company or a
Related Company to an employee of the Company or a Related Company,
shall not be considered a Termination of Service.
“Transfer”
means, as the context may require, (a) any sale, assignment,
pledge, hypothecation, mortgage, encumbrance or other disposition,
whether by contract, gift, will, intestate succession, operation of
law or otherwise, of all or any part of an Award or shares issued
thereunder, as applicable, or (b) any verbal equivalent of the
foregoing.
“Transfer
Restricted Common Stock” means (a) shares of
Common Stock that are issued under the Plan and (b) or any
securities issued in exchange for the foregoing shares or received
in a stock dividend, recapitalization, stock split or otherwise in
respect of such shares.
“Vesting
Commencement Date” means the Grant Date or such other
date selected by the Plan Administrator as the date from which an
Award begins to vest.
APPENDIX B
TO THE KNOW LABS, INC.
2021 EQUITY INCENTIVE PLAN
(For California Residents Only)
This
Appendix to the Know Labs, Inc. 2021 Equity Incentive Plan (the
“Plan”) shall
have application only to Participants who are residents of the
State of California. Capitalized terms contained herein shall have
the same meanings given to them in the Plan, unless otherwise
provided in this Appendix. Notwithstanding any other provision of the Plan
to the contrary and to the extent required by applicable law, the
following terms and conditions shall apply to all Awards granted to
residents of the State of California, until such time as the Common
Stock becomes a “listed security” under the Securities
Act:
1.
Options shall have
a term of not more than ten years from the Grant Date.
2.
Awards shall be
nontransferable other than by will or the laws of descent and
distribution. Notwithstanding the foregoing, and to the extent
permitted by Section 422 of the Code, the Plan Administrator,
in its discretion, may permit transfer of an Award to a revocable
trust or as otherwise permitted by Rule 701 of the Securities
Act.
3.
Unless employment
or services are terminated for Cause, the right to exercise an
Option in the event of Termination of Service, to the extent that
the Participant is otherwise entitled to exercise an Option on the
date of Termination of Service, shall be
(a)
at least six months
from the date of a Participant’s Termination of Service if
termination was caused by death or Disability; and
(b)
at least 30 days
from the date of a Participant’s Termination of Service if
termination of employment was caused by other than death or
Disability;
(c)
but in no event
later than the Option Expiration Date.
4.
No Award may be
granted to a resident of California more than ten years after the
date the Board adopts the Plan and the date the stockholders
approve the Plan.
5.
Stockholders of the
Company must approve the Plan by the later of (a) within 12
months before or after the Plan is adopted by the Board and
(b)(i) with respect to Options, prior to or within 12 months
of the grant of an Option under the Plan to a resident of the State
of California, and (ii) with respect to Awards other than
Options, prior to the issuance of such Award to a resident of the
State of California. Any Option exercised by a California resident
or shares issued under an Award to a California resident shall be
rescinded if stockholder approval is not obtained in the foregoing
manner. Shares subject to such Awards shall not be counted in
determining whether such approval is obtained.
6.
To the extent
required by applicable law, the Company shall provide annual
financial statements of the Company to each California resident
holding an outstanding Award under the Plan. Such financial
statements need not be audited and need not be issued to key
persons whose duties at the Company assure them access to
equivalent information.
PLAN ADOPTION AND AMENDMENTS/ADJUSTMENTS
SUMMARY PAGE
|
|
|
Section/Effect
of Amendment
|
Date
of
Stockholder
Approval
|
|
August
12, 2021
|
Initial
Plan Adoption
|
|
|
|
|
Approved
by Stockholders
|
|
October
15, 2021
|
