ACL SEMICONDUCTORS, INC.
2006 INCENTIVE EQUITY STOCK PLAN
1. PURPOSES OF THE PLAN. The purposes of this Plan are to attract and
retain the best available personnel for positions of substantial responsibility,
to provide additional incentive to Employees, Directors and Consultants and to
promote the success of the Company's business. Options granted under the Plan
may be Incentive Stock Options or Nonstatutory Stock Options, as determined by
the Administrator at the time of grant. Stock Purchase Rights, Stock Awards and
Stock Bonuses may also be granted under the Plan.
2. DEFINITIONS. As used herein, the following definitions shall apply:
a. "AWARD" means any award under this Plan, including any Option,
Stock Award or Stock Bonus.
b. "ADMINISTRATOR" means the Board or any of its Committees as shall
be administering the Plan in accordance with Section 4 hereof.
c. "APPLICABLE LAWS" means the requirements relating to the
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any other country or jurisdiction where Options or Stock Purchase Rights are
granted under the Plan.
d. "BOARD" means the Board of Directors of the Company.
e. "CODE" means the Internal Revenue Code of 1986, as amended.
f. "COMMITTEE" means a committee of Directors appointed by the Board
in accordance with Section 4 hereof.
g. "COMMON STOCK" means the Common Stock, par value $0.001 per share,
of the Company.
h. "COMPANY" means ACL Semiconductors, Inc., a Delaware corporation.
i. "CONSULTANT" means any person who is engaged by the Company or any
Parent or Subsidiary to render consulting services to such entity.
j. "DIRECTOR" means a member of the Board of Directors of the Company.
k. "DISABILITY" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
l. "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. A person
shall not cease
to be an Employee in the case of (i) any leave of absence approved by the
Company or (ii) transfers between locations of the Company or between the
Company, its Parent, any Subsidiary, or any successor. For purposes of Incentive
Stock Options, no such leave may exceed ninety days, unless reemployment upon
expiration of such leave is guaranteed by statute or contract. If reemployment
upon expiration of a leave of absence approved by the Company is not so
guaranteed, on the 181st day of such leave any Incentive Stock Option held by
the Optionee shall cease to be treated as an Incentive Stock Option and shall be
treated for tax purposes as a Nonstatutory Stock Option. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.
m. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
n. "FAIR MARKET VALUE" means, as of any date, the value of Common
Stock determined as follows:
i. If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq Small Cap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
THE WALL STREET JOURNAL or such other source as the Administrator deems
reliable;
ii. If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high bid and low asked prices for the Common Stock
on the last market trading day prior to the day of determination; or
iii. In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Administrator.
o. "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.
p. "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify
as an Incentive Stock Option.
q. "OFFICER" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
r. "OPTION" means a stock option granted pursuant to the Plan.
s. "OPTION AGREEMENT" means a written or electronic agreement between
the Company and an Optionee evidencing the terms and conditions of an individual
Option grant. The Option Agreement is subject to the terms and conditions of the
Plan.
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t. "OPTION EXCHANGE PROGRAM" means a program whereby outstanding
Options are exchanged for Options with a lower exercise price.
u. "OPTIONED STOCK" means the Common Stock subject to an Option or a
Stock Purchase Right.
v. "OPTIONEE" means the holder of an outstanding Option or Stock
Purchase Right granted under the Plan.
w. "PARENT" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
x. "PARTICIPANT" means a person who receives an Award under this Plan.
y. "PERFORMANCE STOCK BONUS AGREEMENT" means an award agreement
pursuant to which Stock Bonuses are granted for achieving certain performance
goals.
z. "PLAN" means this 2006 Incentive Equity Stock Plan.
aa. "PURCHASE PRICE" means the price at which the Participant of a
Stock Award may purchase the Shares.
bb. "RESTRICTED STOCK" means shares of Common Stock acquired pursuant
to a grant of a Stock Purchase Right under Section 12 below.
cc. "SERVICE PROVIDER" means an Employee, Consultant or other service
provider.
dd. "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 18 below.
ee. "STOCK AWARD" means an award of Shares pursuant to Section 10.
ff. "STOCK BONUS" means an award of Shares, or cash in lieu of Shares,
pursuant to Section 11.
gg. "STOCK AWARD AGREEMENT" means the award agreement pursuant to
which Stock Awards are granted.
hh. "STOCK BONUS AGREEMENT" means the award agreement pursuant to
which Stock Bonuses are granted.
ii. "STOCK PURCHASE RIGHT" means a right to purchase Common Stock
pursuant to Section 12 below.
jj. "SUBSIDIARY" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
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3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 18 of
the Plan, the maximum aggregate number of Shares that may be subject to option
or otherwise available for grant and issuance under the Plan is 5,000,000
Shares. The Shares may be authorized but unissued, or reacquired Common Stock.
If an Award or Stock Purchase Right expires or becomes unexercisable
without having been exercised in full, or is surrendered pursuant to an Option
Exchange Program, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated). However, Shares that have actually been issued under the Plan, upon
exercise of either an Award or Stock Purchase Right, shall not be returned to
the Plan and shall not become available for future distribution under the Plan,
except that if Shares of Restricted Stock are repurchased by the Company at
their original purchase price, such Shares shall become available for future
grant under the Plan.
4. ADMINISTRATION OF THE PLAN.
a. ADMINISTRATOR. The Plan shall be administered by the Board or a
Committee appointed by the Board, which Committee shall be constituted to comply
with Applicable Laws.
b. POWERS OF THE ADMINISTRATOR. Subject to the provisions of the Plan
and, in the case of a Committee, the specific duties delegated by the Board to
such Committee, and subject to the approval of any relevant authorities, the
Administrator shall have the authority in its discretion:
i. to determine Fair Market Value;
ii. to select the Service Providers to whom Awards and Stock
Purchase Rights may from time to time be granted hereunder;
iii. to determine the number of Shares to be covered by each such
award granted hereunder;
iv. to approve forms of agreement for use under the Plan;
v. to determine the terms and conditions, of any Award or Stock
Purchase Right granted hereunder. Such terms and conditions include, but are not
limited to, the exercise price, the time or times when Awards or Stock Purchase
Rights may be exercised (which may be based on performance criteria), any
vesting acceleration or waiver of forfeiture restrictions, and any restriction
or limitation regarding any Award or Stock Purchase Right or the Common Stock
relating thereto, based in each case on such factors as the Administrator, in
its sole discretion, shall determine;
vi. to determine whether and under what circumstances an Award
may be settled in cash under subsection 8(e) instead of Common Stock;
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vii. to reduce the exercise price of any Award to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Award has declined since the date the Award was granted;
viii. to initiate an Option Exchange Program;
ix. to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment under
foreign tax laws;
x. to allow Participants to satisfy withholding tax obligations
by electing to have the Company withhold from the Shares to be issued upon
exercise of an Award or Stock Purchase Right that number of Shares having a Fair
Market Value equal to the amount required to be withheld. The Fair Market Value
of the Shares to be withheld shall be determined on the date that the amount of
tax to be withheld is to be determined. All elections by Participants to have
Shares withheld for this purpose shall be made in such form and under such
conditions as the Administrator may deem necessary or advisable; and
xi. to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan.
c. EFFECT OF ADMINISTRATOR'S DECISION. All decisions, determinations
and interpretations of the Administrator shall be final and binding on all
Participants.
5. ELIGIBILITY.
a. Nonstatutory Stock Options and Stock Purchase Rights may be granted
to Service Providers. Incentive Stock Options may be granted only to Employees.
b. Each Award shall be designated in the Option Agreement as either an
Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding
such designation, to the extent that the aggregate Fair Market Value of the
Shares with respect to which Incentive Stock Options are exercisable for the
first time by the Optionee during any calendar year (under all plans of the
Company and any Parent or Subsidiary) exceeds $100,000, such Awards shall be
treated as Nonstatutory Stock Options. For purposes of this Section 5(b),
Incentive Stock Options shall be taken into account in the order in which they
were granted. The Fair Market Value of the Shares shall be determined as of the
time the Award with respect to such Shares is granted.
c. Neither the Plan nor any Award or Stock Purchase Right shall confer
upon any Optionee or Participant any right with respect to continuing the
Participant's relationship as a Service Provider with the Company, nor shall it
interfere in any way with his or her right or the Company's right to terminate
such relationship at any time, with or without cause.
6. TERM OF PLAN. The Plan shall become effective upon its adoption by the
Board. It shall continue in effect for a term of ten (10) years unless sooner
terminated under Section 20 of the Plan.
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7. OPTION EXERCISE PRICE AND CONSIDERATION.
a. The per share exercise price for the Shares to be issued upon
exercise of an Option shall be such price as is determined by the Administrator,
but shall be subject to the following:
i. In the case of an Incentive Stock Option
A. granted to an Employee who, at the time of grant of such
Option, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the exercise
price shall be no less than 110% of the Fair Market Value per Share on the date
of grant.
B. granted to any other Employee, the per Share exercise
price shall be no less than 100% of the Fair Market Value per Share on the date
of grant.
ii. In the case of a Nonstatutory Stock Option
A. granted to a Service Provider who, at the time of grant
of such Option, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the exercise price shall be no less than 110% of the Fair Market Value per Share
on the date of grant.
B. granted to any other Service Provider, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
iii. Notwithstanding the foregoing, Options may be granted with a
per Share exercise price other than as required above pursuant to a merger or
other corporate transaction.
b. The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). Such consideration may consist of (1) cash,
(2) check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six months on the date of surrender, and (y) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which such Option shall be exercised, (5) consideration received by the Company
under a cashless exercise program implemented by the Company in connection with
the Plan, or (6) any combination of the foregoing methods of payment. In making
its determination as to the type of consideration to accept, the Administrator
shall consider if acceptance of such consideration may be reasonably expected to
benefit the Company.
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8. EXERCISE OF OPTION.
a. PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any Option granted
hereunder shall be exercisable according to the terms hereof at such times and
under such conditions as determined by the Administrator and set forth in the
Option Agreement. Except in the case of Options granted to Officers, Directors
and Consultants or as otherwise provided in the Option Agreement, Options shall
become exercisable at a rate of no less than 20% per year over five (5) years
from the date the Options are granted. Unless the Administrator provides
otherwise, vesting of Options granted hereunder to Officers and Directors shall
be tolled during any unpaid leave of absence. An Option may not be exercised for
a fraction of a Share.
An Option shall be deemed exercised when the Company receives: (i)
written or electronic notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Shares, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 18 of the Plan.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares thereafter available, both for purposes of the Plan and for
sale under the Option, by the number of Shares as to which the Option is
exercised.
b. TERMINATION OF RELATIONSHIP AS A SERVICE PROVIDER. If an Optionee
ceases to be a Service Provider (other than by reason of Disability or Death),
such Optionee may exercise his or her Option within such period of time as is
specified in the Option Agreement (of at least thirty (30) days) to the extent
that the Option is vested on the date of termination (but in no event later than
the expiration of the term of the Option as set forth in the Option Agreement).
In the absence of a specified time in the Option Agreement, the Option shall
remain exercisable for three (3) months following the Optionee's termination.
If, on the date of termination, the Optionee is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the Option shall
revert to the Plan. If, after termination, the Optionee does not exercise his or
her Option within the time specified by the Administrator, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
c. DISABILITY OF OPTIONEE. If an Optionee ceases to be a Service
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option Agreement
(of at least six (6) months) to the extent the Option is vested on the date of
termination (but in no event later than the expiration of the term of such
Option as set forth in the Option Agreement). In the absence of a specified time
in the Option Agreement, the Option shall remain exercisable for twelve (12)
months following the Optionee's termination. If, on the date of termination, the
Optionee is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall revert to the Plan.
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If, after termination, the Optionee does not exercise his or her Option within
the time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.
d. DEATH OF OPTIONEE. If an Optionee dies while a Service Provider,
the Option may be exercised within such period of time as is specified in the
Option Agreement (of at least six (6) months) to the extent that the Option is
vested on the date of death (but in no event later than the expiration of the
term of such Option as set forth in the Option Agreement) by the Optionee's
estate or by a person who acquires the right to exercise the Option by bequest
or inheritance. In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the Optionee's
termination. If, at the time of death, the Optionee is not vested as to the
entire Option, the Shares covered by the unvested portion of the Option shall
immediately revert to the Plan. If the Option is not so exercised within the
time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.
e. BUYOUT PROVISIONS. The Administrator may at any time offer to buy
out for a payment in cash or Shares, an Option previously granted, based on such
terms and conditions as the Administrator shall establish and communicate to the
Optionee at the time that such offer is made.
9. TERM OF OPTION. The term of each Option shall be stated in the Option
Agreement; provided, however, that the term shall be no more than ten (10) years
from the date of grant thereof. In the case of an Incentive Stock Option granted
to an Optionee who, at the time the Option is granted, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the term of the Option shall be five (5)
years from the date of grant or such shorter term as may be provided in the
Option Agreement.
10. STOCK AWARD.
a. NATURE OF STOCK AWARD. A Stock Award is an offer by the Company to
sell to an eligible person Shares that may or may not be subject to
restrictions. The Committee will determine to whom an offer will be made, the
number of Shares the person may purchase, the price to be paid (the "Purchase
Price"), the restrictions to which the Shares will be subject, if any, and all
other terms and conditions of the Stock Award, subject to the following:
b. FORM OF STOCK AWARD. All purchases under a Stock Award made
pursuant to this Plan will be evidenced by an Award Agreement (the "Stock Award
Agreement") that will be in such form (which need not be the same for each
Participant) as the Committee will from time to time approve, and will comply
with and be subject to the terms and conditions of this Plan. The offer of a
Stock Award will be accepted by the Participant's execution and delivery of the
Stock Award Agreement (or similar agreement) and payment for the Shares to the
Company in accordance with the Stock Award Agreement.
c. PURCHASE PRICE. The Purchase Price of Shares sold pursuant to a
Stock Award will be determined by the Committee on the date the Stock Award is
granted and may not be less than 100% of the Fair Market Value of the Shares on
the grant date, except in the case of
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a sale to a Ten Percent Stockholder, in which case the Purchase Price will be
110% of the Fair Market Value.
d. TERMS OF STOCK AWARDS. Stock Awards may be subject to such
restrictions as the Committee may impose. These restrictions may be based upon
completion of a specified number of years of service with the Company or upon
completion of the performance goals as set out in advance in the Participant's
individual Stock Award Agreement. Stock Awards may vary from Participant to
Participant and between groups of Participants. Prior to the grant of a Stock
Award subject to restrictions, the Committee shall: (a) determine the nature,
length and starting date of any Performance Period for the Stock Award; (b)
select from among the Performance Factors to be used to measure performance
goals, if any; and (c) determine the number of Shares that may be awarded to the
Participant. Prior to the transfer of any Stock Award, the Committee shall
determine the extent to which such Stock Award has been earned. Performance
Periods may overlap and Participants may participate simultaneously with respect
to Stock Awards that are subject to different Performance Periods and have
different performance goals and other criteria.
e. TERMINATION DURING PERFORMANCE PERIOD. If a Participant is
terminated during a Performance Period for any reason, then such Participant
will be entitled to payment (whether in Shares, cash or otherwise) with respect
to the Stock Award only to the extent earned as of the date of Termination in
accordance with the Stock Award Agreement, unless the Committee determines
otherwise.
11. STOCK BONUSES.
a. AWARDS OF STOCK BONUSES. A Stock Bonus is an award of Shares for
extraordinary services rendered to the Company or any Parent or Subsidiary of
the Company. A Stock Bonus will be awarded pursuant to an Award Agreement (the
"Stock Bonus Agreement") that will be in such form (which need not be the same
for each Participant) as the Committee will from time to time approve, and will
comply with and be subject to the terms and conditions of this Plan. A Stock
Bonus may be awarded upon satisfaction of such performance goals as are set out
in advance in the Participant's individual Award Agreement (the "Performance
Stock Bonus Agreement") that will be in such form (which need not be the same
for each Participant) as the Committee will from time to time approve, and will
comply with and be subject to the terms and conditions of this Plan. Stock
Bonuses may vary from Participant to Participant and between groups of
Participants, and may be based upon the achievement of the Company, Parent or
Subsidiary and/or individual performance factors or upon such other criteria as
the Committee may determine.
b. TERMS OF STOCK BONUSES. The Committee will determine the number of
Shares to be awarded to the Participant. If the Stock Bonus is being earned upon
the satisfaction of performance goals pursuant to a Performance Stock Bonus
Agreement, then the Committee will: (a) determine the nature, length and
starting date of any Performance Period for each Stock Bonus; (b) select from
among the Performance Factors to be used to measure the performance, if any; and
(c) determine the number of Shares that may be awarded to the Participant. Prior
to the payment of any Stock Bonus, the Committee shall determine the extent to
which such Stock Bonuses have been earned. Performance Periods may overlap and
Participants may participate simultaneously with respect to Stock Bonuses that
are subject to different Performance Periods and different performance goals and
other criteria. The number of Shares may be fixed or may
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vary in accordance with such performance goals and criteria as may be determined
by the Committee. The Committee may adjust the performance goals applicable to
the Stock Bonuses to take into account changes in law and accounting or tax
rules and to make such adjustments as the Committee deems necessary or
appropriate to reflect the impact of extraordinary or unusual items, events or
circumstances to avoid windfalls or hardships.
c. FORM OF PAYMENT. The earned portion of a Stock Bonus may be paid to
the Participant by the Company either currently or on a deferred basis, with
such interest or dividend equivalent, if any, as the Committee may determine.
Payment of an interest or dividend equivalent (if any) may be made in the form
of cash or whole Shares or a combination thereof, either in a lump sum payment
or in installments, all as the Committee will determine.
12. STOCK PURCHASE RIGHTS.
a. RIGHTS TO PURCHASE. Stock Purchase Rights may be issued either
alone, in addition to, or in tandem with other awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator determines
that it will offer Stock Purchase Rights under the Plan, it shall advise the
offeree in writing or electronically of the terms, conditions and restrictions
related to the offer, including the number of Shares that such person shall be
entitled to purchase, the price to be paid, and the time within which such
person must accept such offer. The offer shall be accepted by execution of a
Restricted Stock purchase agreement in the form determined by the Administrator.
b. REPURCHASE OPTION. Unless the Administrator determines otherwise,
the Restricted Stock purchase agreement shall grant the Company a repurchase
option exercisable upon the voluntary or involuntary termination of the
purchaser's service with the Company for any reason (including death or
disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at such rate as the
Administrator may determine. Except with respect to Shares purchased by
Officers, Directors and Consultants, the repurchase option shall in no case
lapse at a rate of less than 20% per year over five (5) years from the date of
purchase.
c. OTHER PROVISIONS. The Restricted Stock purchase agreement shall
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion.
d. RIGHTS AS A SHAREHOLDER. Once the Stock Purchase Right is
exercised, the purchaser shall have rights equivalent to those of a shareholder
and shall be a shareholder when his or her purchase is entered upon the records
of the duly authorized transfer agent of the Company. No adjustment shall be
made for a dividend or other right for which the record date is prior to the
date the Stock Purchase Right is exercised, except as provided in Section 18 of
the Plan.
13. PAYMENT FOR SHARE PURCHASES. Payment for Shares purchased pursuant to
this Plan may be made in case (by check) or, where expressly approved for the
Participant by the Committee and where permitted by law:
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a. by cancellation of indebtedness of the Company to the Participant;
b. by surrender of shares that either: (A) have been owned by the
Participant for more than six (6) months and have been paid for within the
meaning of SEC Rule 144; or (B) were obtained by the Participant in the public
market;
c. by waiver of compensation due or accrued to the participant for
services rendered;
d. with respect only to purchases upon exercise of an Option, and
provided that a public market for the Company's stock exists: (A) through a
"same day sale" commitment from the Participant and a broker-dealer that is a
member of the National Association of Securities Dealers (an "NASD Dealer")
whereby the Participant irrevocably elects to exercise the Option and to sell a
portion of the Shares so purchased to pay for the Exercise Price, and whereby
the NASD Dealer irrevocably commits upon receipt of such Shares to forward the
Exercise Price directly to the Company; or (B) through a "margin" commitment
from the Participant and a NASD Dealer whereby the Participant irrevocably
elects to exercise the Option and to pledge the Shares so purchased to the NASD
Dealer in a margin account as security for a loan from the NASD Dealer in the
amount of the Exercise Price, and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the Exercise Price directly the Company;
or
e. by any combination of the foregoing.
14. WITHHOLDING TAXES.
a. WITHHOLDING GENERALLY. Whenever Shares are to be issued in
satisfaction of Awards granted under this Plan, the Company may require the
participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. Whenever, under this Plan, payments
in satisfaction of Awards are to be made in cash, such payment will be net of an
amount sufficient to satisfy federal, state, and local withholding tax
requirements.
b. STOCK WITHHOLDING. When, under applicably tax laws, a participant
incurs tax liability in connection with the exercise or vesting of any Award
that is subject to tax withholding and the Participant is obligated to pay the
Company the amount required to be withheld, the Committee may allow the
participant to satisfy the minimum withholding tax obligation by electing to
have the Company withhold from the Shares to be issued that number of Shares
having a Fair Market Value equal to the minimum amount required to be withheld,
determined on the date that the amount of tax to be withheld is to be
determined. All elections by a participant to have Shares withheld for this
purpose will be made in accordance with the requirements established by the
Committee and will be in writing in a form acceptable to the Committee.
15. PRIVILEGES OF STOCK OWNERSHIP.
a. VOTING AND DIVIDENDS. No Participant will have any of the rights of
a stockholder with respect to any Shares until the Shares are issued to the
Participant. After Shares
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are issued to the Participant, the Participant will be a stockholder and will
have all the rights of a stockholder with respect to such Shares, including the
right to vote and receive all dividends or other distributions made or paid with
respect to such Shares; provided, that if such Shares are issued pursuant to a
Stock Award with restrictions, than any new, additional or different securities
the Participant may become entitled to receive with respect to such Shares by
virtue of a stock dividend, stock split or any other change in the corporate or
capital structure of the Company will be subject to the same restrictions as the
Stock Award; provided, further, that the Participant will have no right to
retain such stock dividends or stock distributions with respect to Shares that
are repurchased at the Participant's Purchase Price or Exercise Price pursuant
to Section 17.
b. FINANCIAL STATEMENTS. The Company will provide financial statements
to each Participant prior to such Participant's purchase of Shares under this
Plan, and to each Participant annually during the period such Participant has
Awards outstanding; provided, however, the Company will not be required to
provide such financial statements to Participants whose services in connection
with the Company assure them access to equivalent information.
16. NON-TRANSFERABILITY OF AWARDS AND STOCK PURCHASE RIGHTS. The Awards and
Stock Purchase Rights may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.
17. REPURCHASE RIGHTS. At the discretion of the Committee, the Company may
reserve to itself and/or its assignee(s) in the Award Agreement, a right to
repurchase a portion of or all of the unvested Shares held by a Participant
following such Participant's Termination Date. Such repurchase by the Company
shall be for cash and/or cancellation of purchase mony indebytedness and the
price per share shall be the Participant's Exercise Price or Purchase Price, as
applicable.
18. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER OR ASSET SALE.
a. CHANGES IN CAPITALIZATION. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Award or Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Award or Stock
Purchase Right, as well as the price per share of Common Stock covered by each
such outstanding Award or Stock Purchase Right, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company. The conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Award or Stock Purchase Right.
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b. DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Participant as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Participant
to have the right to exercise his or her Award or Stock Purchase Right until
fifteen (15) days prior to such transaction as to all of the Awarded Stock
covered thereby, including Shares as to which the Award or Stock Purchase Right
would not otherwise be exercisable. In addition, the Administrator may provide
that any Company repurchase option applicable to any Shares purchased upon
exercise of an Award or Stock Purchase Right shall lapse as to all such Shares,
provided the proposed dissolution or liquidation takes place at the time and in
the manner contemplated. To the extent it has not been previously exercised, an
Award or Stock Purchase Right will terminate immediately prior to the
consummation of such proposed action.
c. MERGER OR ASSET SALE. In the event of a merger of the Company with
or into another corporation, or the sale of substantially all of the assets of
the Company, each outstanding Award and Stock Purchase Right shall be assumed or
an equivalent option or right substituted by the successor corporation or a
Parent or Subsidiary of the successor corporation. In the event that the
successor corporation refuses to assume or substitute for the Award or Stock
Purchase Right, the Participant shall fully vest in and have the right to
exercise the Award or Stock Purchase Right as to all of the Awarded Stock,
including Shares as to which it would not otherwise be vested or exercisable. If
an Award or Stock Purchase Right becomes fully vested and exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Participant in writing or electronically that the
Award or Stock Purchase Right shall be fully exercisable for a period of fifteen
(15) days from the date of such notice, and the Award or Stock Purchase Right
shall terminate upon the expiration of such period. For the purposes of this
paragraph, the Award or Stock Purchase Right shall be considered assumed if,
following the merger or sale of assets, the option or right confers the right to
purchase or receive, for each Share of Awarded Stock subject to the Award or
Stock Purchase Right immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, or other securities or property) received in
the merger or sale of assets 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 merger or sale of assets is not solely common stock of the successor
corporation or its Parent, the Administrator may, with the consent of the
successor corporation, provide for the consideration to be received upon the
exercise of the Award or Stock Purchase Right, for each Share of Awarded Stock
subject to the Award or Stock Purchase Right, to be solely common stock of the
successor corporation or its Parent equal in Fair Market Value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.
19. TIME OF GRANTING OPTIONS AND STOCK PURCHASE RIGHTS. The date of grant
of an Award or Stock Purchase Right shall, for all purposes, be the date on
which the Administrator makes the determination granting such Award or Stock
Purchase Right, or such other date as is determined by the Administrator. Notice
of the determination shall be given to each Service Provider to whom an Award or
Stock Purchase Right is so granted within a reasonable time after the date of
such grant.
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20. AMENDMENT AND TERMINATION OF THE PLAN.
a. AMENDMENT AND TERMINATION. The Board may at any time amend, alter,
suspend or terminate the Plan.
b. SHAREHOLDER APPROVAL. The Board shall obtain shareholder approval
of any Plan amendment to the extent necessary and desirable to comply with
Applicable Laws.
c. EFFECT OF AMENDMENT OR TERMINATION. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any
Participant, unless mutually agreed otherwise between the Participant and the
Administrator, which agreement must be in writing and signed by the Participant
and the Company. Termination of the Plan shall not affect the Administrator's
ability to exercise the powers granted to it hereunder with respect to Awards
granted under the Plan prior to the date of such termination.
21. CONDITIONS UPON ISSUANCE OF SHARES.
a. LEGAL COMPLIANCE. Shares shall not be issued pursuant to the
exercise of an Award unless the exercise of such Award and the issuance and
delivery of such Shares shall comply with Applicable Laws and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.
b. INVESTMENT REPRESENTATIONS. As a condition to the exercise of an
Award, the Administrator may require the person exercising such Award to
represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required.
22. INABILITY TO OBTAIN AUTHORITY. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
23. RESERVATION OF SHARES. The Company, during the term of this Plan, shall
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
24. SHAREHOLDER APPROVAL. Issuances of Incentive Stock Options under this
Plan shall be subject to approval of the Plan by the shareholders of the Company
within twelve (12) months after the date the Plan is adopted by the Board. Such
shareholder approval shall be obtained in the degree and manner required under
Applicable Laws.