Exhibit 10.1
Form 8-K
Viking Systems, Inc.
File No. 000-49636
VIKING SYSTEMS, INC.
STOCK INCENTIVE PLAN
March 31, 2004
Section 1. Purpose.
The purposes of the Viking Systems, Inc. Stock Incentive Plan (the "Plan")
are to: (i) aid in maintaining and developing key employees capable of assuring
the future success of Viking Systems, Inc. (the "Company"), and to offer such
personnel incentives to put forth maximum efforts for the success of the
Company's business; and (ii) to afford such key employees an opportunity to
acquire a proprietary interest in the Company, thereby aligning their interests
with the interests of the Company's shareholders.
Section 2. Definitions.
As used in the Plan, the following terms shall have the meanings set forth
below:
(a) "Affiliate" shall mean (i) any entity that, directly or indirectly
through one or more intermediaries, is controlled by the Company and (ii) any
entity in which the Company has a significant equity interest, as determined by
the Committee.
(b) "Award" shall mean any Option, Stock Appreciation Right, Restricted
Stock, Restricted Stock Unit, Dividend Equivalent or Performance Award granted
under the Plan.
(c) "Award Agreement" shall mean any written agreement, contract or other
instrument or document evidencing any Award granted under the Plan.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and any regulations promulgated thereunder.
(e) "Committee" shall mean a committee of the Board that the Board
designates to administer the Plan. The Committee shall consist of not less than
two directors, each of whom shall qualify as a "non-employee director" within
the meaning of Rule 16b-3 ("Rule 16b-3") under the 1934 Act, or any successor
provisions thereto, as an "outside director" under Section 162(m)(4)(C) of the
Internal Revenue Code of 1986, as amended (the "Code"), or any successor
provisions thereto and as an "independent" director pursuant to the definition
of independence in the listing requirements of the principal national securities
exchange, national securities association or over-the-counter market on which
the Common Stock is traded, if any. If at any time the Committee shall not be in
existence, then the members of the Board that do qualify as non-employee
directors, outside directors and independent directors shall administer the Plan
and shall be deemed to be the Committee for purposes of the Plan.
(f) "Dividend Equivalent" shall mean any right granted under Section 6(e)
of the Plan.
(g) "Fair Market Value" means the fair market value of the Common Stock
determined by such methods or procedures as shall be established from time to
time by the Committee; provided, however, that so long as the Common Stock is
traded on the Nasdaq National Market, the Nasdaq Smallcap Market or another
over-the-counter market, the Fair Market Value shall be the average of the bid
and asked prices of a share of Common Stock in the applicable over-the-counter
market on the specified date, as reported by the National Association of
Securities Dealers (or if no sales occurred on such date, the last preceding
date on which sales occurred); provided, however, that if the principal market
for the Common Stock is then a national securities exchange, the Fair Market
Value shall be the average of the high and low prices of a share of Common Stock
on the principal securities exchange on which the Common Stock is traded on the
specified date (or if no sales occurred on such date, the last preceding date on
which sales occurred).
(h) "Incentive Stock Option" shall mean an option granted under Section
6(a) of the Plan that is intended to meet the requirements of Section 422 of the
Code or any successor provision thereto.
(i) "Key Employee" shall mean any employee of the Company or any Affiliate
who the Committee determines to be a key employee.
(j) "Non-Qualified Stock Option" shall mean an option granted under Section
6(a) of the Plan that is not intended to be an Incentive Stock Option.
(k) "Option" shall mean an Incentive Stock Option or a Non-Qualified Stock
Option.
(m) "Participant" shall mean either a Key Employee designated to be granted
an Award under the Plan.
(n) "Performance Award" shall mean any right granted under Section 6(d) of
the Plan.
(o) "Person" shall mean any individual, corporation, partnership,
association or trust.
(p) "Restricted Stock" shall mean any Share granted under Section 6(c) of
the Plan.
(q) "Restricted Stock Unit" shall mean any unit granted under Section 6(c)
of the Plan evidencing the right to receive a Share at some future date.
(r) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended, or
any successor rule or regulation thereto.
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(s) "Shares" shall mean shares of Common Stock, $.001 par value, of the
Company or such other securities or property as may become subject to Awards
pursuant to an adjustment made under Section 4(c) of the Plan.
(t) "Stock Appreciation Right" shall mean any right granted under Section
6(b) of the Plan.
Section 3. Administration.
(a) Power and Authority of the Committee. The Plan shall be administered by
the Committee. Subject to the terms of the Plan and applicable law, the
Committee shall have full power and authority to:
(i) designate Participants;
(ii) determine the type or types of Awards to be granted to each
Participant under the Plan;
(iii) determine the number of Shares to be covered by (or with respect
to which payments are to be calculated in connection with) Awards;
(iv) determine the terms and conditions of any Award or Award
Agreement;
(v) amend the terms and conditions of any Award or Award Agreement and
accelerate the exercisability of Options or the lapse of restrictions
relating to Restricted Stock or Restricted Stock Units;
(vi) determine whether, to what extent and under what circumstances
Awards may be exercised in cash, Shares, other securities, other Awards or
other property, or canceled, forfeited or suspended;
(vii) determine whether, to what extent and under what circumstances
cash or Shares payable with respect to an Award under the Plan shall be
deferred either automatically or at the election of the holder thereof or
the Committee;
(viii) interpret and administer the Plan and any instrument or
agreement relating to, or Award made under, the Plan;
(ix) establish, amend, suspend or waive such rules and regulations and
appoint such agents as it shall deem appropriate for the proper
administration of the Plan; and
(x) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the Plan.
Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations and other decisions under or with respect
to the Plan or any Award shall be within the sole discretion of the
Committee, may be made at any time and shall be final, conclusive and
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binding upon any Participant, any holder or beneficiary of any Award and
any employee of the Company or any Affiliate.
(b) Meetings of the Committee. The Committee shall select one of its
members as its chairman and shall hold its meetings at such times and places as
the Committee may determine. A majority of the Committee's members shall
constitute a quorum. All determinations of the Committee shall be made by not
less than a majority of its members. Any decision or determination reduced to
writing and signed by all of the members of the Committee shall be fully
effective as if it had been made by a majority vote at a meeting duly called and
held. The Committee may appoint a secretary and may make such rules and
regulations for the conduct of its business as it shall deem advisable.
Section 4. Shares Available for Awards.
(a) Shares Available. Subject to adjustment as provided in Section 4(c),
the number of Shares available for the issuance of shares under outstanding
Awards and the granting of future Awards under the Plan shall be 75,000,000. If
any Shares covered by an Award or to which an Award relates are not purchased or
are forfeited, or if an Award otherwise terminates without delivery of any
Shares or cash payments to be received thereunder, then the number of Shares
counted against the aggregate number of Shares available under the Plan with
respect to such Award, to the extent of any such forfeiture or termination,
shall again be available for granting Awards under the Plan. In addition, any
Shares that are used by a Participant as full or partial payment to the Company
of the purchase price of Shares acquired upon exercise of an Option or to
satisfy applicable tax withholding requirements (including social insurance
requirements) upon the exercise or vesting of an Award shall again be available
for granting Awards.
(b) Accounting for Awards. For purposes of this Section 4,
(i) if an Award entitles the holder thereof to receive or purchase
Shares, the number of Shares covered by such Award or to which such Award
relates shall be counted on the date of grant of such Award against the
aggregate number of Shares available for granting Awards under the Plan;
and
(ii) if an Award entitles the holder to receive cash payments but the
amount of such payments are denominated in or based on a number of Shares,
such number of Shares shall be counted on the date of grant of such Award
against the aggregate number of Shares available for granting Awards under
the Plan
provided, however, that Awards that operate in tandem with (whether granted
simultaneously with or at a different time from), or that are substituted
for, other Awards may be counted or not counted under procedures adopted by
the Committee in order to avoid double counting.
(c) Adjustments. In the event that the Committee shall determine that any
dividend or other distribution (whether in the form of cash, Shares, other
securities or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
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repurchase or exchange of Shares or other securities of the Company, issuance of
warrants or other rights to purchase Shares or other securities of the Company
or other similar corporate transaction or event affects the Shares such that an
adjustment is determined by the Committee to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan, then the Committee shall, in such manner as it
may deem equitable, adjust any or all of (i) the number and type of Shares (or
securities or other property) which thereafter may be made the subject of
Awards, (ii) the number and type of Shares (or securities or other property)
subject to outstanding Awards and (iii) the exercise price with respect to any
Award; provided, however, that the number of Shares covered by any Award or to
which such Award relates shall always be a whole number.
Section 5. Eligibility.
Any Key Employee, including any Key Employee who is an officer or director
of the Company or any Affiliate, shall be eligible to be designated a
Participant; provided, however, that an Incentive Stock Option shall not be
granted to an employee of an Affiliate unless such Affiliate is also a
"subsidiary corporation" of the Company within the meaning of Section 424(f) of
the Code.
Section 6. Awards.
(a) Options. The Committee is hereby authorized to grant Options to
Participants with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the Plan as the
Committee shall determine:
(i) Exercise Price. The purchase price per Share purchasable under an
Option shall be determined by the Committee; provided, however, that such
purchase price shall not be less than the Fair Market Value of a Share
(Rounded down to the nearest whole cent).
(ii) Option Term. The term of each Option shall be fixed by the
Committee, but such term shall not exceed 10 years from the date on which
such Option is granted.
(iii) Time and Method of Exercise. The Committee shall determine the
time or times at which an Option may be exercised in whole or in part and
the method or methods by which, and the form or forms (including, without
limitation, cash, Shares, other securities, other Awards or other property,
or any combination thereof, having a Fair Market Value on the exercise date
equal to the relevant exercise price) in which payment of the exercise
price with respect thereto may be made or deemed to have been made
(b) Stock Appreciation Rights. The Committee is hereby authorized to grant
Stock Appreciation Rights to Participants subject to the terms of the Plan and
any applicable Award Agreement. A Stock Appreciation Right granted under the
Plan shall confer on the holder thereof a right to receive upon exercise thereof
the excess of (i) the Fair Market Value of one Share on the date of exercise
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(or, if the Committee shall so determine, at any time during a specified period
before or after the date of exercise) over (ii) the grant price of the Stock
Appreciation Right as specified by the Committee, which price shall not be less
than the exercise price for an Option as described in Section 6(a)(i) hereof on
the date of grant of the Stock Appreciation Right. Subject to the terms of the
Plan and any applicable Award Agreement, the grant price, term, methods of
exercise, dates of exercise, methods of settlement and any other terms and
conditions of any Stock Appreciation Right shall be as determined by the
Committee. The Committee may impose such conditions or restrictions on the
exercise of any Stock Appreciation Right as it may deem appropriate.
(c) Restricted Stock and Restricted Stock Units. The Committee is hereby
authorized to grant Awards of Restricted Stock and Restricted Stock Units to
Participants with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the Plan as the
Committee shall determine:
(i) Restrictions. Shares of Restricted Stock and Restricted Stock
Units shall be subject to such restrictions as the Committee may impose
(including, without limitation, any limitation on the right to vote a Share
of Restricted Stock or the right to receive any dividend or other right or
property with respect thereto), which restrictions may lapse separately or
in combination at such time or times, in such installments or otherwise as
the Committee may deem appropriate.
(ii) Stock Certificates. Any Restricted Stock granted under the Plan
shall be evidenced by issuance of a stock certificate or certificates. Such
certificate or certificates shall be registered in the name of the
Participant and shall bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such Restricted Stock.
(iii) Forfeiture; Delivery of Shares. Except as otherwise determined
by the Committee, upon termination of employment or upon resignation or
removal as an Outside Director (as determined under criteria established by
the Committee) during the applicable restriction period, all Shares of
Restricted Stock and all Restricted Stock Units at such time subject to
restriction shall be forfeited and reacquired by the Company; provided,
however, that the Committee may, when it finds that a waiver would be in
the best interest of the Company, waive in whole or in part any or all
remaining restrictions with respect to Shares of Restricted Stock or
Restricted Stock Units. Shares representing Restricted Stock that are no
longer subject to restrictions shall be delivered to the holder thereof
promptly after the applicable restrictions lapse or are waived. In the case
of Restricted Stock Units, no Shares shall be issued at the time such
Awards are granted. Upon the lapse or waiver of restrictions and the
restricted period relating to Restricted Stock Units evidencing the right
to receive Shares, such Shares shall be issued and delivered to the holders
of the Restricted Stock Units.
(iv) Limit on Restricted Stock and Restricted Stock Units Awards.
Grants of Restricted Stock and Restricted Stock Units shall be subject to
the limitations set forth in Section 6(f) hereof.
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(d) Performance Awards. The Committee is hereby authorized to grant
Performance Awards to Participants subject to the terms of the Plan and any
applicable Award Agreement. A Performance Award granted under the Plan (i) shall
be granted and payable in Shares (including, without limitation, Restricted
Stock) and (ii) shall confer on the holder thereof the right to receive Shares
upon the achievement of such performance goals during such performance periods
as the Committee shall establish. Subject to the terms of the Plan and any
applicable Award Agreement, the performance goals to be achieved during any
performance period, the length of any performance period, the amount of any
Performance Award granted and the number of shares to be issued pursuant to any
Performance Award shall be determined by the Committee. Grants of Performance
Awards shall be subject to the limitations set forth in Section 6(f) hereof.
(e) Dividend Equivalents. The Committee is hereby authorized to grant to
Participants Dividend Equivalents under which such Participants who hold
Restricted Stock Units or Performance Awards shall be entitled to receive
payments (in cash or Shares, as determined in the discretion of the Committee)
equivalent to the amount of cash dividends paid by the Company to holders of
Shares. Subject to the terms of the Plan and any applicable Award Agreement,
such Dividend Equivalents may have such terms and conditions as the Committee
shall determine.
(f) General.
(i) No Cash Consideration for Awards. Except as otherwise determined
by the Committee, Awards shall be granted for no cash consideration or for
such minimal cash consideration as may be required by applicable law.
(ii) Awards May Be Granted Separately or Together. Awards may, in the
discretion of the Committee, be granted either alone or in addition to, in
tandem with or in substitution for any other Award or any award granted
under any plan of the Company or any Affiliate other than the Plan. Awards
granted in addition to or in tandem with other Awards or in addition to or
in tandem with awards granted under any such other plan of the Company or
any Affiliate may be granted either at the same time as or at a different
time from the grant of such other Awards or awards.
(iii) Forms of Payment Under Awards. Subject to the terms of the Plan
and of any applicable Award Agreement, payments to be made by the Company
or an Affiliate upon the grant, exercise or payment of an Award may be made
in Shares, cash or a combination thereof as the Committee shall determine,
and may be made in a single payment, in installments or on a deferred
basis, in each case in accordance with rules and procedures established by
the Committee. Such rules and procedures may include, without limitation,
provisions for the payment or crediting of reasonable interest on
installments or deferred payments.
(iv) Limits On Transfer of Awards. No Award and no right under any
such Award shall be assignable, alienable, salable or transferable by a
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Participant otherwise than by will or by the laws of descent and
distribution; provided, however, that a Participant may, in the manner
established by the Committee:
(A) designate a beneficiary or beneficiaries to exercise the
rights of the Participant and receive any property distributable with
respect to any Award upon the death of the Participant, or
(B) transfer a Non-Qualified Stock Option to any "family member"
(as such term is used in Form S-8 under the Securities Act of 1933) of
such Participant, provided that (1) there is no consideration for such
transfer or such transfer is effected pursuant to a domestic relations
order in settlement of marital property rights, and (2) the
Non-Qualified Stock Options held by such transferees continue to be
subject to the same terms and conditions (including restrictions or
subsequent transfers) as were applicable to such Non-Qualified Stock
Options immediately prior to their transfer.
Each Award or right under any Award shall be exercisable during the
Participant's lifetime only by the Participant, by a transferee pursuant to
a transfer permitted by clause (B) of this Section 6(g)(iv), or, if
permissible under applicable law, by the Participant's or such transferee's
guardian or legal representative. No Award or right under any such Award
may be pledged, alienated, attached or otherwise encumbered, and any
purported pledge, alienation, attachment or encumbrance thereof shall be
void and unenforceable against the Company or any Affiliate.
(v) Term of Awards. Subject to the terms of the Plan, the term of each
Award shall be for such period as may be determined by the Committee.
(vi) Rule 16b-3 Six-Month Limitations. To the extent required in order
to comply with Rule 16b-3 only, any equity security offered pursuant to the
Plan may not be sold for at least six months after acquisition, except in
the case of death or disability, and any derivative security issued
pursuant to the Plan s all not b e exercisable for at 1east six months,
except in case of death or disability. Terms used in the preceding sentence
shall, for the purposes of such sentence only, have the meanings, if any,
assigned or attributed to them under Rule l6b-3.
(vii) Restrictions; Securities Exchange Listing. All certificates for
Shares delivered under the Plan pursuant to any Award or the exercise
thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan or the
rules, regulations and other requirements of the Securities and Exchange
Commission and any applicable federal, state or foreign securities laws,
and the Committee may cause a legend or legends to be placed on any such
certificates to make appropriate reference to such restrictions. If the
Shares are traded on a securities exchange, the Company shall not be
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required to deliver any Shares covered by an Award unless and until such
Shares have been admitted for trading on such securities exchange.
Section 7. Amendment and Termination; Adjustments.
Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Award Agreement or in the Plan:
(a) Amendments to the Plan. The Board of Directors of the Company may
amend, alter, suspend, discontinue or terminate the Plan; provided, however,
that, notwithstanding any other provision of the Plan or any Award Agreement,
without the approval of the shareholders of the Company, no such amendment,
alteration, suspension, discontinuation or termination shall be made that:
(i) absent such approval, would cause Rule 16b-3 to become unavailable
with respect to the Plan;
(ii) requires the approval of the Company's shareholders under any
rules or regulations of the National Association of Securities Dealers,
Inc. or any securities exchange that are applicable to the Company; or
(iii) requires the approval of the Company's shareholders under the
Code in order to permit Incentive Stock Options to be granted under the
Plan.
(b) Amendments to Awards. The Committee may waive any conditions of or
rights of the Company under any outstanding Award, prospectively or
retroactively, subject to Section 7(c) of the Plan. The Committee may not amend,
alter, suspend, discontinue or terminate any outstanding Award, prospectively or
retroactively, without the consent of the Participant or holder or beneficiary
thereof.
(c) Prohibition on Option Repricing. The Committee shall not reduce the
exercise price of any outstanding Option, whether through amendment,
cancellation or replacement grants, or any other means, without shareholder
approval.
(d) Correction of Defects, Omissions and Inconsistencies. The Committee may
correct any defect, supply any omission or reconcile any inconsistency in the
Plan or any Award in the manner and to the extent it shall deem desirable to
carry the Plan into effect.
Section 8. Income Tax Withholding; Tax Bonuses.
(a) Withholding. In order to comply with all applicable federal, state or
foreign income tax or social insurance contribution laws or regulations, the
Company may take such action as it deems appropriate to ensure that all
applicable federal, state or foreign payroll, withholding, income, social
insurance contributions or other taxes, which are the sole and absolute
responsibility of a Participant, are withheld or collected from such
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Participant. In order to assist a Participant in paying all federal, state and
foreign taxes to be withheld or collected upon exercise or receipt of (or the
lapse of restrictions relating to) an Award, the Committee, in its discretion
and subject to such additional terms and conditions as it may adopt, may permit
the Participant to satisfy such tax obligation by (i) electing to have the
Company withhold a portion of the Shares otherwise to be delivered upon exercise
or receipt of (or the lapse of restrictions relating to) such Award with a Fair
Market Value equal to the amount of such taxes or (ii) delivering to the Company
Shares other than Shares issuable upon exercise or receipt of (or the lapse of
restrictions relating to) such Award with a Fair Market Value equal to the
amount of such taxes. The election, if any, must be made on or before the date
that the amount of tax to be withheld is determined.
(b) Tax Bonuses. The Committee, in its discretion, shall have the
authority, at the time of grant of any Award under this Plan or at any time
thereafter to approve bonuses to designated Participants to be paid upon their
exercise or receipt of (or the lapse of restrictions relating to) Awards in
order to provide funds to pay all or a portion of federal, state and foreign
taxes due as a result of such exercise or receipt (or the lapse of such
restrictions). The Committee shall have full authority in its discretion to
determine the amount of any such tax bonus.
Section 9. General Provisions.
(a) No Rights to Awards. No Key Employee, Participant or other Person shall
have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Key Employees, Participants or holders
or beneficiaries of Awards under the Plan. The terms and conditions of Awards
need not be the same with respect to different Participants.
(b) Delegation. The Committee may delegate to one or more officers of the
Company or any affiliate or a committee of such officers the authority, subject
to such terms and limitations as the Committee shall determine, to grant Awards
to Key Employees who are not officers or directors of the Company for purposes
of Section 16 of the Securities Exchange Act of 1934, as amended.
(c) Terms of Awards. The specific terms of an Award pursuant to the Plan
shall be set forth in an Award Agreement duly executed (by manual, facsimile or
electronic signature) on behalf of the Company.
(d) No Limit on Other Compensation Arrangements. Nothing contained in the
Plan shall prevent the Company or any Affiliate from adopting or continuing in
effect other or additional compensation arrangements, and such arrangements may
be either generally applicable or applicable only in specific cases.
(e) No Right to Employment or Directorship. The grant of an Award shall not
be construed as giving a Participant the right to be retained in the employ of
the Company or any Affiliate or any right to remain as a member of the Board of
Directors, as the case may be. In addition, the Company or an Affiliate may at
any time dismiss a Participant from employment (or remove an Outside Director),
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free from any liability or any claim under the Plan, unless otherwise expressly
provided in the Plan or in any Award Agreement.
(f) Governing Law. The validity, construction and effect of the Plan and
any rules and regulations relating to the Plan shall be determined in accordance
with the laws of the State of Nevada.
(g) Severability. If any provision of the Plan or any Award is or becomes
or is deemed to be invalid, illegal or unenforceable in any jurisdiction or
would disqualify the Plan or any Award under any law deemed applicable by the
Committee, 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 determination of the Committee, materially altering the purpose or intent of
the Plan or the Award, such provision shall be stricken as to such jurisdiction
or Award, and the remainder of the Plan or any such Award shall remain in full
force and effect.
(h) No Trust or Fund Created. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any other
Person. To the extent that any Person acquires a right to receive payments from
the Company or any Affiliate pursuant to an Award, such right shall be no
greater than the right of any unsecured general creditor of the Company or any
Affiliate.
(i) No Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award, and the Committee shall determine whether
cash shall be paid in lieu of any fractional Shares or whether such fractional
Shares or any rights thereto shall be canceled, terminated or otherwise
eliminated.
(j) Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.
Section 10. Effective Date of the Plan.
The Plan shall be effective as of the date of its approval by the
shareholders of the Company ("Effective Date").
Section 11. Term of the Plan.
Awards shall be granted under the Plan during a period commencing the
Effective Date, through March 31, 2014. However, unless otherwise expressly
provided in the Plan or in an applicable Award Agreement, any Award theretofore
granted may extend beyond the ending date of the period stated above, and the
authority of the Committee provided for hereunder with respect to the Plan and
any Awards, and the authority of the Board of Directors of the Company to amend
the Plan, shall extend beyond the end of such period.
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