Exhibit 1
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MONACO GROUP INC. 2004 STOCK PLAN
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SECTION 1. ESTABLISHMENT AND PURPOSE.
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The purpose of the Plan is to offer selected persons opportunities to acquire a
proprietary interest in the Company, or to increase such interest, by purchasing
Shares of the Company's Stock. The Plan provides both for the direct award or
sale of Shares and for the grant of Options to purchase Shares. Options granted
under the Plan may include Nonstatutory Options as well as ISOs intended to
qualify under Section 422 of the Code.
Capitalized terms are defined in Section 12 of the Plan.
SECTION 2. ADMINISTRATION.
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(a) Committees of the Board of Directors. The Plan may be administered by one or
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more Committees. Each Committee shall consist of one or more members of the
Board of Directors who have been appointed by the Board of Directors. Each
Committee shall have such authority and be responsible for such functions as the
Board of Directors has assigned to it. If no Committee has been appointed, the
Board of Directors shall administer the Plan. Any reference to the Board of
Directors in the Plan shall be construed as a reference to the Committee (if
any) to whom the Board of Directors has assigned a particular function.
(b) Authority of the Board of Directors. Subject to the provisions of the Plan,
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the Board of Directors shall have complete and unfettered authority and
discretion to take any actions it deems necessary or advisable for the
administration of the Plan. All decisions, interpretations, and other actions of
the Board of Directors shall be final and obligate all Purchasers, all
Optionees, and all persons deriving their rights from a Purchaser or Optionee.
SECTION 3. ELIGIBILITY.
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(a) General Rule. Only Employees, Outside Directors and Consultants shall be
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eligible for the grant of Options or the direct award or sale of Shares. Only
Employees shall be eligible for the grant of ISOs.
(b) Ten-Percent Stockholders. A person who owns more than 10% of the total
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combined voting power of all classes of outstanding stock of the Company, its
Parent or any of its Subsidiaries shall not be eligible for designation as an
Optionee or Purchaser unless (i) the Exercise Price is at least 110% of the Fair
Market Value of a Share on the date of grant, (ii) the Purchase Price (if any)
is at least 100% of the Fair Market Value of a Share and (iii) in the case of an
ISO, such ISO, by its terms, is not exercisable after the expiration of 5 years
from the date of grant. For purposes of this Subsection (b), in determining
stock ownership, the attribution rules of Section 424(d) of the Code shall be
applied.
(c) Award of Shares. The Committee, in its sole and absolute discretion, may
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determine to award Shares to one or more Employees, Outside Directors, and
Consultants, in exchange for their services to the Company, which award shall be
on those terms and subject to those conditions as so determined by the
Committee.
SECTION 4. STOCK SUBJECT TO PLAN.
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(a) Basic Limitation. Shares offered under the Plan may be authorized but
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unissued Shares or treasury Shares. The aggregate number of Shares that may be
issued under the Plan (upon exercise of Options or other rights to acquire
Shares) shall not exceed 1,500,000 Shares, subject to adjustment pursuant to
Section 8 of the Plan. The number of Shares that are subject to Options or other
rights issued and outstanding at any time under the Plan shall not exceed the
number of Shares that then remain available for issuance under the Plan. The
Company, during the term of the Plan, shall, at all times, reserve and keep
available sufficient Shares to satisfy the requirements of the Plan.
(b) Additional Shares. In the event that any outstanding Option or other right,
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for any reason, expires or is canceled or otherwise terminated, the Shares
allocable to the unexercised portion of such Option or other right shall be
available for the purposes of the Plan. In the event that Shares issued under
the Plan are reacquired by the Company pursuant to any forfeiture provision,
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right of repurchase, or right of first refusal, such Shares shall again be
available for the purposes of the Plan, except that the aggregate number of
Shares which may be issued upon the exercise of ISOs shall in no event exceed
1,000,000 Shares (subject to adjustment pursuant to Section 8 of the Plan).
SECTION 5. TERMS AND CONDITIONS OF AWARDS OR SALES.
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(a) Stock Purchase Agreement. Each sale of Shares under the Plan (other than
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upon exercise of an Option) shall be evidenced by a Stock Purchase Agreement
among the Purchaser and the Company. Such award or sale shall be subject to all
applicable terms and conditions of the Plan and may be subject to any other
terms and conditions which are not inconsistent with the Plan and which the
Board of Directors deems appropriate for inclusion in a Stock Purchase
Agreement. The provisions of the various Stock Purchase Agreements entered into
under the Plan are not required to be identical.
(b) Duration of Offers and Nontransferability of Rights. Any right to acquire
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Shares under the Plan (other than an Option) shall automatically expire if not
exercised by the Purchaser within 30 days after the grant of such right was
communicated to the Purchaser by the Company. Such right shall not be
transferable and shall be exercisable only by the Purchaser to whom such right
was granted.
(c) Purchase Price. The Purchase Price of Shares to be offered under the Plan
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shall not be less than 85% of the Fair Market Value of such Shares, and a higher
percentage may be required by Section 3(b) of the Plan. Subject to the preceding
sentence, the Purchase Price shall be determined by the Board of Directors at
its sole discretion. The Purchase Price shall be paid as specified in Section 7
of the Plan.
(d) Withholding Taxes. As a condition to the purchase of Shares, the Purchaser
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shall make such arrangements as the Board of Directors may require for the
satisfaction of any federal, state, local, or foreign withholding tax
obligations that may result from such purchase.
(e) Restrictions on Transfer of Shares and Minimum Vesting. Any Shares awarded
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or sold under the Plan shall be subject to such special forfeiture conditions,
rights of repurchase, rights of first refusal, and other transfer restrictions
as the Board of Directors may determine. Such restrictions shall be set forth in
the applicable Stock Purchase Agreement and shall apply in addition to any
restrictions that may apply to holders of Shares generally. In the case of a
Purchaser who is not an officer of the Company, an Outside Director or a
Consultant, any right to repurchase the Purchaser's Shares at the original
Purchase Price (if any) upon termination of the Purchaser's Service shall
terminate 20% per year during the 5 year period commencing on the date of the
award or sale of the Shares. Any such right may be exercised only within 90 days
after the termination of the Purchaser's Service for cash or for cancellation of
indebtedness incurred in purchasing the Shares.
(f) Accelerated Vesting. Unless the applicable Stock Purchase Agreement provides
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otherwise, any right to repurchase a Purchaser's Shares at the original Purchase
Price (if any) upon termination of the Purchaser's Service shall lapse, and all
of such Shares shall become vested if (i) the Company is subject to a Change in
Control before such Purchaser's Service terminates and (ii) the repurchase right
is not assigned to the entity that employs the Purchaser immediately after the
Change in Control or its parent or subsidiary.
SECTION 6. TERMS AND CONDITIONS OF OPTIONS.
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(a) Stock Option Agreement. Each grant of an Option under the Plan shall be
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evidenced by a Stock Option Agreement among the Optionee and the Company. Such
Option shall be subject to all applicable terms and conditions of the Plan and
may be subject to any other terms and conditions which are not inconsistent with
the Plan and which the Board of Directors deems appropriate for inclusion in a
Stock Option Agreement. The provisions of the various Stock Option Agreements
entered into under the Plan are not required to be identical.
(b) Number of Shares. Each Stock Option Agreement shall specify the number of
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Shares that are subject to the Option and shall provide for the adjustment of
such number in accordance with Section 8of the Plan. The Stock Option Agreement
shall also specify whether the Option is an ISO or a Nonstatutory Option.
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(c) Exercise Price. Each Stock Option Agreement shall specify the Exercise
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Price. The Exercise Price of an ISO shall not be less than 100% of the Fair
Market Value of a Share on the date of grant, and a higher percentage may be
required by Section 3(b) of the Plan. The Exercise Price of a Nonstatutory
Option shall not be less than 85% of the Fair Market Value of a Share on the
date of grant, and a higher percentage may be required by Section 3(b) of the
Plan. Subject to the preceding two sentences, the Exercise Price under any
Option shall be determined by the Board of Directors at its sole discretion. The
Exercise Price shall be paid as specified in Section 7 of the Plan.
(d) Withholding Taxes. As a condition to the exercise of an Option, the Optionee
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shall make such arrangements as the Board of Directors may require for the
satisfaction of any federal, state, local, or foreign withholding tax
obligations that may result from such exercise. The Optionee shall also make
such arrangements as the Board of Directors may require for the satisfaction of
any federal, state, local, or foreign withholding tax obligations that may arise
in connection with the disposition of Shares acquired by exercising an Option.
(e) Exercisability. Each Stock Option Agreement shall specify the date when all
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or any portion of the Option is to become exercisable. In the case of an
Optionee who is not an officer of the Company, an Outside Director or a
Consultant, an Option shall become exercisable 20% per year during the five-year
period commencing on the date of grant. Subject to the preceding sentence, the
exercisability provisions of any Stock Option Agreement shall be determined by
the Board of Directors at its sole discretion.
(f) Accelerated Exercisability. Unless the applicable Stock Option Agreement
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provides otherwise, all of an Optionee's Options shall become exercisable
completely if (i) the Company is subject to a Change in Control before the
Optionee's Service terminates, (ii) such Options do not remain outstanding,
(iii) such Options are not assumed by the surviving corporation or its parent,
and (iv) the surviving corporation or its parent does not substitute options
with substantially the same terms for such Options.
(g) Basic Term. The Stock Option Agreement shall specify the term of the Option.
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The term shall not exceed 10 years from the date of grant, and a shorter term
may be required by Section 3(b) of the Plan. Subject to the preceding sentence,
the Board of Directors at its sole discretion shall determine when an Option is
to expire.
(h) Nontransferability. No Option shall be transferable by the Optionee, other
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than by beneficiary designation, Will or the laws of descent and distribution.
An Option may be exercised during the lifetime of the Optionee only by the
Optionee or by the Optionee's guardian or legal representative. No Option or
interest therein may be transferred, assigned, pledged, or hypothecated by the
Optionee during the Optionee's lifetime, whether by operation of law or
otherwise, or be made subject to execution, attachment or similar process.
(i) Termination of Service (Except by Death). If an Optionee's Service
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terminates for any reason other than the Optionee's death, the Optionee's
Options shall expire on the earliest of the following occasions:
(i) The expiration date determined pursuant to Subsection (g) above;
(ii) The date 3 months after the termination of the Optionee's Service for
any reason other than Disability, or such later date as the Board of
Directors may determine; or
(iii) The date 6 months after the termination of the Optionee's Service by
reason of Disability, or such later date as the Board of Directors may
determine.
The Optionee may exercise all or part of the Optionee's Options at any time
before the expiration of such Options under the preceding sentence, but only to
the extent that such Options had become exercisable before the Optionee's
Service terminated (or became exercisable as a result of the termination) and
the underlying Shares had vested before the Optionee's Service terminated (or
vested as a result of the termination). The remainder of such Options shall
terminate when the Optionee's Service terminates. In the event that the Optionee
dies after the termination of the Optionee's Service but before the expiration
of the Optionee's Options, all or part of such Options may be exercised (prior
to expiration) by the executors or administrators of the Optionee's estate or by
any person who has acquired such Options directly from the Optionee by
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beneficiary designation, bequest or inheritance, but only to the extent that
such Options had become exercisable before the Optionee's Service terminated (or
became exercisable as a result of the termination) and the underlying Shares had
vested before the Optionee's Service terminated (or vested as a result of the
termination).
(j) Leaves of Absence. For purposes of Subsection (i) above, Service shall be
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deemed to continue while the Optionee is on a bona fide leave of absence, if
such leave was approved by the Company in writing and if continued crediting of
Service for this purpose is expressly required by the terms of such leave or by
applicable law (as determined by the Company).
(k) Death of Optionee. If an Optionee dies while the Optionee is in Service,
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then the Optionee's Options shall expire on the earlier of the following dates:
(i) The expiration date determined pursuant to Subsection (g) above; or
(ii) The date 12 months after the Optionee's death.
All or part of the Optionee's Options may be exercised at any time before the
expiration of such Options under the preceding sentence by the executors or
administrators of the Optionee's estate or by any person who has acquired such
Options directly from the Optionee by beneficiary designation, bequest, or
inheritance, but only to the extent that such Options had become exercisable
before the Optionee's death or became exercisable as a result of the death. The
remainder of such Options shall terminate when the Optionee dies.
(1) No Rights as a Stockholder. An Optionee, or a transferee of an Optionee,
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shall have no rights as a stockholder of the Company with respect to any Shares
subject to such Optionee's Option until such Optionee becomes entitled to
receive such Shares by filing a notice of exercise and paying the Exercise Price
pursuant to the terms of such Option.
(m) Modification, Extension and Assumption of Options. Within the limitations of
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the Plan, the Board of Directors may modify, extend, or assume issued and
outstanding Options or may accept the cancellation of outstanding Options
(whether granted by the Company or another issuer) as a result of the grant of
new Options for the same or a different number of Shares and at the same or a
different Exercise Price. The foregoing notwithstanding, no modification of an
Option shall, without the consent of the Optionee, impair such Optionee's rights
or increase such Optionee's obligations under such Option.
(n) Restrictions on Transfer of Shares and Minimum Vesting. Any Shares issued
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upon exercise of an Option shall be subject to such special forfeiture
conditions, rights of repurchase, rights of first refusal, and other transfer
restrictions as the Board of Directors may determine. Such restrictions shall be
set forth in the applicable Stock Option Agreement and shall apply in addition
to any restrictions that may apply to holders of Shares generally. In the case
of an Optionee who is not an officer of the Company, an Outside Director or a
Consultant:
(i) Any right to repurchase the Optionee's Shares at the original Exercise
Price upon termination of the Optionee's Service shall lapse 20% per year
during the five-year period commencing on the date of the option grant;
(ii) Any such right may be exercised only for cash or for cancellation of
indebtedness incurred in purchasing the Shares; and
(iii) Any such right may be exercised only within 90 days after the later
of (A) the termination of the Optionee's Service or (B) the date of the
option exercise.
(o) Accelerated Vesting. Unless the applicable Stock Option Agreement provides
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otherwise, any right to repurchase an Optionee's Shares at the original Exercise
Price upon termination of the Optionee's Service shall lapse and all of such
Shares shall become vested if (i) the Company is subject to a Change in Control
before the Optionee's Service terminates and (ii) the repurchase right is not
assigned to the entity that employs the Optionee immediately after the Change in
Control or its parent or subsidiary.
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SECTION 7. PAYMENT FOR SHARES.
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(a) General Rule. The Purchase Price or Exercise Price of Shares issued under
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the Plan shall be payable in cash or cash equivalents at the time when such
Shares are purchased, except as otherwise provided in this Section 7.
(b) Surrender of Stock. To the extent that a Stock Option Agreement so provides,
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all or any part of the Exercise Price may be paid by surrendering, or attesting
to the ownership of, Shares that are already owned by the Optionee. Such Shares
shall be surrendered to the Company in good form for transfer and shall be
valued at their Fair Market Value on the date when the Option is exercised. The
Optionee shall not surrender, or attest to the ownership of, Shares in payment
of the Exercise Price, if such action would cause the Company to recognize
compensation expense (or additional compensation expense) with respect to the
Option for financial reporting purposes.
(c) Services Rendered. At the discretion of the Board of Directors, Shares may
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be awarded under the Plan in consideration of services rendered to the Company,
a Parent or a Subsidiary prior to the award. At the discretion of the Board of
Directors, Shares may also be awarded under the Plan in consideration of
services to be rendered to the Company, a Parent or a Subsidiary after the
award, except that the par value of such Shares, if newly issued, shall be paid
in cash or cash equivalents.
(d) Exercise/Sale. To the extent that a Stock Option Agreement so provides, and
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if Stock is publicly traded, payment may be made all or in part by the delivery
(on a form prescribed by the Company) of an irrevocable direction to a
securities broker approved by the Company to sell Shares and to deliver all or
part of the sales proceeds to the Company in payment of all or part of the
Exercise Price and any withholding taxes.
SECTION 8. ADJUSTMENT OF SHARES.
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(a) General. In the event of a division of issued and outstanding Stock, a
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declaration of a dividend payable in Shares, a declaration of an extraordinary
dividend payable in a form other than Shares in an amount that has a material
effect on the Fair Market Value of the Stock, a combination or consolidation of
the outstanding Stock into a lesser number of Shares, a recapitalization, a
spin-off, a reclassification or a similar occurrence, the Board of Directors
shall make appropriate adjustments in one or more of (i) the number of Shares
available for future grants under Section 4 of the Plan, (ii) the number of
Shares contemplated by each outstanding Option or (iii) the Exercise Price under
each outstanding Option.
(b) Mergers and Consolidations. In the event that the Company is a party to a
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merger or consolidation, issued and outstanding Options shall be subject to the
agreement of merger or consolidation. Such agreement, without the Optionees'
consent, may provide for:
(i) The continuation of such outstanding Options by the Company (if the
Company is the surviving corporation);
(ii) The assumption of the Plan and such outstanding Options by the
surviving corporation or its parent;
(iii) The substitution by the surviving corporation or its parent of
options with substantially the same terms for such outstanding Options; or
(iv) The cancellation of such outstanding Options without payment of any
consideration.
(c) Reservation of Rights. Except as provided in this Section 8, an Optionee or
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Purchaser shall have no rights because of (i) any subdivision or consolidation
of shares of stock of any class, (ii) the payment of any dividend, or (iii) any
other increase or decrease in the number of shares of stock of any class. Any
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of Shares subject to an Option. The grant of an Option pursuant
to the Plan shall not affect, in any way, the right or power of the Company to
make adjustments, reclassifications, reorganizations, or changes of its capital
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or business structure, to merge or consolidate or to dissolve, liquidate, sell
or transfer all or any part of its business or assets.
SECTION 9. SECURITIES LAW REQUIREMENTS.
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(a) General. Shares shall not be issued under the Plan unless the issuance and
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delivery of such Shares comply with (or are exempt from) all applicable
requirements of law, including (without limitation) the Securities Act of 1933,
as amended, the rules and regulations promulgated thereunder, state securities
laws and regulations, and the regulations of any stock exchange or other
securities market on which the Company's securities may then be traded.
(b) Financial Reports. The Company each year shall furnish to Optionees,
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Purchasers, and stockholders who have received Stock under the Plan a copy of
the Company's balance sheet and income statement, unless such Optionees,
Purchasers or stockholders are key Employees whose duties with the Company
assure them access to equivalent information. Such balance sheet and income
statement are not required to be audited.
SECTION 10. NO RETENTION RIGHTS.
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No provision of in the Plan or in any right or Option granted under the Plan
shall confer upon the Purchaser or Optionee any right to continue in Service for
any period of specific duration or interfere with or otherwise restrict in any
way the rights of the Company (or any Parent or Subsidiary employing or
retaining the Purchaser or Optionee) or of Purchaser or Optionee, which rights
are hereby expressly reserved by each, to terminate his or her Service at any
time and for any reason, with or without cause.
SECTION 11. DURATION AND AMENDMENTS.
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(a) Term of the Plan. The Plan, as set forth herein, shall become effective on
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the date of its adoption by the Board of Directors, subject to the approval of
the Company's stockholders. In the event that those stockholders fail to approve
the Plan within 12 months after its adoption by the Board of Directors, any
grants of Options or sales or awards of Shares that have already occurred shall
be rescinded, and no additional grants, sales, or awards shall be made
thereafter under the Plan. The Plan shall terminate automatically 10 years after
its adoption by the Board of Directors and may be terminated on any earlier date
pursuant to Subsection (b) of this Section 11.
(b) Right to Amend or Terminate the Plan. The Board of Directors may amend,
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suspend, or terminate the Plan at any time and for any reason; provided,
however, that any amendment of the Plan which increases the number of Shares
available for issuance under the Plan (except as provided in Section 8 of the
Plan), or which materially changes the class of persons who are eligible for the
grant of ISOs, shall be subject to the approval of the Company's stockholders.
Stockholder approval shall not be required for any other amendment of the Plan.
(c) Effect of Amendment or Termination. No Shares shall be issued or sold under
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the Plan after the termination thereof, except upon exercise of an Option
granted prior to such termination. The termination of the Plan, or any amendment
thereof, shall not affect any Share previously issued or any Option previously
granted under the Plan.
SECTION 12. DEFINITIONS.
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(a) "Board of Directors" shall mean the Board of Directors of the Company, as
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constituted from time to time.
(b) "Change in Control" shall mean:
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(i) The consummation of a merger or consolidation of the Company with or
into another entity or any other corporate reorganization, if persons who
were not shareholders of the Company immediately prior to such merger,
consolidation or other reorganization own immediately after such merger,
consolidation or other reorganization 50% or more of the voting power of
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the outstanding securities of each of (A) the continuing or surviving
entity and (B) any direct or indirect parent corporation of such continuing
or surviving entity; or
(ii) The sale, transfer, or other disposition of all or substantially all
of the Company's assets.
A transaction shall not constitute a Change in Control if its sole purpose is to
change the state of the Company's incorporation or to create a holding company
that will be owned in substantially the same proportions by the persons who held
the Company's securities immediately before such transaction.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
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(d) "Committee" shall mean a committee of the Board of Directors, as described
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in Section 2(a) of the Plan.
(e) "Company" shall mean Monaco Group Inc., a Delaware corporation.
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(f) "Consultant" shall mean a person who performs bona fide services for the
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Company, a Parent or a Subsidiary as a consultant or advisor, excluding
Employees and Outside Directors.
(g) "Disability" shall mean that the Optionee is unable to engage in any
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substantial gainful activity because of any medically determinable physical or
mental impairment.
(h) "Employee" shall mean any person who is a common-law employee of the
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Company, a Parent or a Subsidiary.
(i) "Exercise Price" shall mean the amount for which one Share may be purchased
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upon exercise of an Option, as specified by the Board of Directors in the
applicable Stock Option Agreement.
(j) "Fair Market Value" shall mean the fair market value of a Share, as
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determined by the Board of Directors in good faith. Such determination shall be
conclusive and obligate all persons.
(k) "ISO" shall mean an employee incentive stock option described in Section
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422(b) of the Code.
(l) "Nonstatutory Option" shall mean a stock option not described in Sections
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422(b) or 423(b) of the Code.
(m) "Option" shall mean an ISO or Nonstatutory Option granted under the Plan and
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entitling the holder to purchase Shares.
(n) "Optionee" shall mean a person who holds an Option.
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(o) "Outside Director" shall mean a member of the Board of Directors who is not
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an Employee.
(p) "Parent" shall mean any corporation (other than the Company) in an
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affiliation of corporations ending with the Company, if each such corporation
other than the Company owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
affiliation. A corporation that attains the status of a Parent on a date after
the adoption of the Plan shall be considered a Parent commencing as of such
date.
(q) "Plan" shall mean this Monaco Group Inc. 2004 Stock Plan.
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(r) "Purchase Price" shall mean the consideration for which one Share may be
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acquired under the Plan (other than upon exercise of an Option), as specified by
the Board of Directors.
(s) "Purchaser" shall mean a person to whom the Board of Directors has offered
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the right to acquire Shares under the Plan (other than upon exercise of an
Option).
(t) "Service" shall mean service as an Employee, Outside Director or Consultant.
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(u) "Share" shall mean one share of Stock, as adjusted in accordance with
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Section 8 of the Plan (if applicable).
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(v) "Stock" shall mean the Common Stock of the Company.
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(w) "Stock Option Agreement" shall mean the agreement among the Company and an
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Optionee which contains the terms, conditions and restrictions pertaining to the
Optionee's Option.
(x) "Stock Purchase Agreement" shall mean the agreement between the Company and
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a Purchaser who acquires Shares under the Plan which contains the terms,
conditions, and restrictions pertaining to the acquisition of such Shares.
(y) "Subsidiary" means any corporation (other than the Company) in an
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affiliation of corporations beginning with the Company, if each such corporation
other than the last corporation in such affiliation owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the
other corporations in such affiliation. A corporation that attains the status of
a Subsidiary on a date after the adoption of the Plan shall be considered a
Subsidiary commencing as of such date.
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