UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14C INFORMATION
(Rule 14c-101)
INFORMATION STATEMENT PURSUANT TO SECTION 14(C)
OF THE SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14c-5(d)
(2))
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EUGENE SCIENCE, INC.
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(Name of Registrant As Specified In Its Charter)
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EUGENE SCIENCE, INC.
16-7 SAMJUNG-DONG, OJUNG-GU
BUCHEON, KYONGGI-DO KOREA
NOTICE OF ACTION WITHOUT A MEETING
To the Stockholders of Eugene Science, Inc.:
This Information Statement is being furnished on or about April 28, 2006
by Eugene Science, Inc., a Delaware corporation (the "Company"), to holders of
the Company's outstanding common stock, par value $0.0001 per share ("Common
Stock"), as of the close of business on March 3, 2006, pursuant to Rule 14c-2
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
purpose of this Information Statement is:
(1) to inform the Company's stockholders that the Company has obtained the
written consent of the holders of a majority of the outstanding shares of Common
Stock as of the close of business on the record date to approve and adopt the
Company's 2006 Stock Incentive Plan (the "2006 Plan"); and
(2) to serve as notice of the foregoing actions in accordance with Section
228(e) of the Delaware General Corporation Law (the "DGCL").
The close of business on March 3, 2006 is the record date for the
determination of the holders of Common Stock entitled to receive this
Information Statement with respect to the action by written consent approving
and adopting the 2006 Plan. The Company had 31,165,974 shares of Common Stock
issued and outstanding as of the close of business on the record date. Each
share of Common Stock entitles the holder thereof to one vote on all matters
submitted a vote of the Company's stockholders.
Under Section 228 of the DGCL, action by stockholders may be taken without
a meeting, without prior notice, by written consent of the holders of
outstanding capital stock having not less than the minimum number of votes that
would be necessary to authorize the action at a meeting at which all shares
entitled to vote thereon were present and voted. Under Section 242 of the DGCL,
the affirmative vote of the holders of a majority of the outstanding shares of
Common Stock as of the close of business on the record date is required to
approve the Plan. On April 13, 2006, in accordance with Section 242 of the DGCL,
the holders of a majority of the outstanding shares of Common Stock executed a
written consent approving the Plan. No other vote or stockholder action is
required to approve and adopt the 2006 Plan. WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
This Information Statement is being sent by the Company to the holders of
Common Stock as of the close of business on the record date on or about April
28, 2006, and is being furnished to the holders of Common Stock for
informational purposes only.
By Order of the Board of Directors,
/s/ Seung Kwon Noh
---------------------------------------
Seung Kwon Noh
Chief Executive Officer and President
EUGENE SCIENCE, INC.
16-7 SAMJUNG-DONG, OJUNG-GU
BUCHEON, KYONGGI-DO, KOREA
INFORMATION STATEMENT
This Information Statement is being furnished to the stockholders of
Eugene Science, Inc., a Delaware corporation, in connection with the approval
and adoption of our 2006 Stock Incentive Plan (the "2006 Plan") by our board of
directors and by the written consent of the holders of a majority of the
outstanding shares of our common stock, par value $0.0001 per share ("Common
Stock"), as of the close of business on March 3, 2006. These actions were taken
in accordance with the requirements of the Delaware General Corporation Law (the
"DGCL"). No action is required by you with respect to this matter. The terms
"Eugene Science," "Company," "we," "us," or "our" as used herein refer to Eugene
Science, Inc.
This Information Statement is being sent to our stockholders to comply
with the requirements of Section 14(c) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and Section 228(e) of the DGCL. We are
providing information to our stockholders regarding the action by written
consent taken on April 13, 2006 by the holders of a majority of the outstanding
shares of Common Stock as of the close of business on the record date to approve
and adopt our 2006 Stock Incentive Plan (the "2006 Plan"). This consent is
sufficient under Section 242 of the DGCL to approve and adopt the 2006 Plan.
Accordingly, this matter will not be submitted to our other stockholders for a
vote. The written consent will be deemed effective on or about May 22, 2006,
which is approximately 20 calendar days after the date this Information
Statement is first mailed to all stockholders of record in accordance with Rule
14c-2(b) promulgated under the Exchange Act.
Under Section 228 of the DGCL, we are also required to provide notice of
the taking of any corporate action without a meeting by less than unanimous
written consent to those stockholders who have not consented in writing and who,
if the action had been taken at a meeting, would have been entitled to notice of
the meeting if the record date for such meeting had been the date that written
consents signed by a sufficient number of stockholders to take the action were
delivered to us. On March 3, 2006, there were 31,165,974 shares of our common
stock outstanding, each of which would have been entitled to one vote at a
meeting called to approve the 2006 Plan. Our stockholders have no rights to
appraisal of their shares of Common Stock or other rights to dissent under the
DGCL, our certificate of incorporation, as amended, or our bylaws with respect
to the approval and adoption of the 2006 Plan.
We have asked brokers and other custodians as well as fiduciaries to
forward this Information Statement to the beneficial owners of the Common Stock
held of record by such persons and will pay all costs associated with the
distribution of this Information Statement including the costs of printing and
mailing. We will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending this Information
Statement to the beneficial owners of our common stock.
THE 2006 PLAN HAS BEEN APPROVED AND ADOPTED BY STOCKHOLDERS WHO HOLD
SUFFICIENT VOTING SECURITIES TO APPROVE THE ACTION. THIS INFORMATION STATEMENT
IS BEING PROVIDED TO YOU SOLELY FOR YOUR INFORMATION. WE ARE NOT ASKING YOU FOR
A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
1
CHANGE OF CONTROL
On September 30, 2005, pursuant to an Exchange Agreement dated September
1, 2005 (the "Exchange Agreement") by and among Ezcomm Enterprises, Inc., Eugene
Science, a corporation organized under the laws of the Republic of Korea
("Eugene Science"), and certain stockholders of Eugene Science (the "Eugene
Science Stockholders"), we acquired approximately 89.5% of the issued and
outstanding shares of Eugene Science common stock in exchange for an aggregate
of 272,790,924 shares of our Common Stock (the "Exchange Transaction"). We will
continue to offer any remaining Eugene Science stockholders the opportunity to
exchange their shares for our Common Stock on the same terms and conditions as
provided in the Exchange Agreement, which may result in the issuance of up to
approximately 32,094,000 additional shares of our Common Stock.
In addition, and pursuant to the Exchange Agreement, we exchanged an equal
amount of cash with the Eugene Science Stockholders (an aggregate of
$103,514.48) and we assumed all of Eugene Science's outstanding options. As a
result of the Exchange Transaction, Eugene Science is now our subsidiary, and
the Eugene Science Stockholders hold approximately 89% of our voting stock on a
fully-diluted basis. Prior to the Exchange Transaction, we were a "shell
company" as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as
amended. In conjunction with the Exchange Transaction we also issued a warrant
to purchase 7,073,760 shares of our common stock to WestPark Capital, Inc., at
$0.17 per share, as partial compensation for their investment banking services
with respect to the Exchange Transaction. We are presently in negotiations with
WestPark Capital to reduce the number of shares available to them upon exercise
of this warrant.
We are presently authorized under our Certificate of Incorporation to
issue 480,000,000 shares of common stock, par value $0.0001 per share, and
20,000,000 shares of preferred stock, par value $0.0001 per share. Immediately
prior to the Exchange Transaction, we had 35,368,800 shares of common stock
issued and outstanding and no shares of preferred stock issued and outstanding.
Immediately after giving effect to the Exchange Transaction, we had 308,159,748
shares of common stock issued and outstanding and no shares of preferred stock
issued and outstanding. Our issued and outstanding common stock prior to the
Exchange Transaction represented approximately 11% of our total common stock on
a fully-diluted basis (assuming exercise of all Eugene Science stock options
outstanding immediately prior the Exchange Transaction) immediately following
the Exchange Transaction.
Pursuant to the Exchange Agreement our former sole director, Dr. Peter
Braun, resigned, effective as of the closing of the Exchange Transaction, and
the following directors were appointed: Seung Kwon Noh (Eugene Science's
president and chief executive officer), Tae Hwan Lee (Eugene Science's senior
vice president, marketing), Se Cheon Ahn (Eugene Science's senior vice
president, plant/manufacturing), and Tony Kim. The current size of the board is
four members and may be increased by the board to five members.
Also effective as of the closing of the Exchange Transaction, our existing
officers resigned and the following officers were appointed by the board of
directors.
Seung Kwon Noh Chief Executive Officer and President
Jae Hong Yoo Chief Financial Officer
Eun Young Lee Secretary
2
VOTING SECURITIES
A total of 26 stockholders holding approximately 52.03% of the issued and
outstanding shares of Common Stock approved the 2006 Stock Incentive Plan by
means of written consent on April 13, 2006. As of March 3, 2006, the record date
for the determination of stockholders entitled to receive this information
statement, we had 31,165,974 shares of common stock outstanding.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to us regarding
the beneficial ownership of our common stock as of March 31, 2006 by: (i) each
stockholder known to us to be a beneficial owner of more than five percent (5%)
of our common stock; (ii) each of our directors; (iii) our named executive
officer; and (iv) all of our current directors and executive officers as a
group.
Number of Shares Percentage of
Name and Address (1) Beneficially Owned (2) Outstanding Shares (2)
- -------------------- ---------------------- ----------------------
Seung Kwon Noh(3)................................................. 10,301,079 33.05%
Tony Kim(4)....................................................... 2,306,339 7.4%
Se Cheon Ahn(5)................................................... 92,253 *
Tae Hwan Lee...................................................... -- *
H&Q Asia Pacific(6)............................................... 2,767,606 8.88%
Telos, LLC(7)..................................................... 2,306,339 7.4%
All directors and executive officers as a group (5 persons)
(3)(4)(5)......................................................... 12,699,676 40.75%
- ---------------------------
* less than one percent (1%).
(1) Unless otherwise indicated, the business address of each holder is: c/o
Eugene Science, Inc., 16-7 Samjung-dong, Ojung-gu, Bucheon, Kyonggi-Do,
Korea.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting and investment
power with respect to shares. Unless otherwise indicated, the persons
named in the table have sole voting and sole investment control with
respect to all shares beneficially owned, subject to community property
laws where applicable. The number and percentage of shares beneficially
owned are based on 31,165,974 shares of common stock outstanding as of
March 31, 2006. Shares of common stock subject to options and warrants
currently exercisable, or exercisable within 60 days of March 31, 2006,
are deemed beneficially owned and outstanding for purposes of computing
the percentage of the person holding such securities, but are not
considered outstanding for computing the percentage of any other person.
(3) Includes (i) 728,346 shares beneficially owned by Mr. Noh's spouse, and
(ii) 922,536 shares held by OnBio Corporation, an entity of which Mr. Noh
is an executive officer and has an ownership interest. Mr. Noh may be
deemed to beneficially own the shares held by OnBio Corporation, but
disclaims beneficial ownership in such shares except to the extent of his
pecuniary interest therein.
(4) Consists of 2,306,339 shares of common stock held by Telos, LLC, an entity
of which Mr. Kim is a director and executive officer and has an ownership
interest. Mr. Kim may be deemed to beneficially own the shares held by
Telos, LLC, but disclaims beneficial ownership in such shares except to
the extent of his pecuniary interest therein.
(5) Consists of 92,253 shares subject to options exercisable within 60 days
after March 31, 2006.
(6) Includes 1,383,803 shares held by APGF3 Korea Investment and 1,282,803
shares held by KGRF Korea Investment, both of which are affiliates of H&Q
Asia Pacific.
(7) Address is 6300 Wilshire Blvd., Suite 1730, Los Angeles, California 90048.
Mr. Kim is a director and executive officer and has an ownership interest
in Telos, LLC.
3
EXECUTIVE COMPENSATION
Ezcomm Enterprises, Inc. (now Eugene Science, Inc.)
Ezcomm Enterprises did not have a bonus, profit sharing, or deferred
compensation plan for the benefit of its employees, officers or directors during
any of the three most recently completed fiscal years. Ezcomm Enterprises has
not paid any salaries or other compensation to its officers, directors or
employees in an amount equal to or in excess of $100,000 since its inception.
Further, Ezcomm Enterprises has not entered into employment agreements with its
officers, directors or any other persons. Ezcomm Enterprises, Inc. has not
accrued any officer compensation.
There were no option grants to any executive officers during Ezcomm
Enterprises' fiscal year ended May 31, 2005, and no options were exercised by
any executive officer during the fiscal year ended May 31, 2005.
Ezcomm Enterprises did not compensate any director in the 2003, 2004 or
2005 fiscal years.
Eugene Science, Inc.
The following table sets forth the salary and bonus earned for the three
fiscal years ended December 31, 2005 by our chief executive officer. None of our
other executive officers earned total annual salary and bonus in excess of
$100,000 during the 2005 fiscal year. Our chief executive officer shall be
referred to in this information statement as the "named executive officer."
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
Securities All Other
Underlying Compensation
Name and Principal Position Year Salary ($) Bonus ($) Options (#) ($)
------------ --------------------- ------------------- ------------------
Seung Kwon Noh 2005 $ 110,000 -- -- --
Chief Executive Officer and 2004 110,000 -- -- --
President 2003 110,000 -- -- --
Stock Options
No options were granted to our named executive officer during the 2005
fiscal year nor were any options exercised by our named executive officer during
the 2005 fiscal year.
Director Compensation.
We currently do not pay any fees to our directors or any fees for each
board or committee meeting which is attended in person or telephonically. We do,
however, reimburse directors for their reasonable travel expenses to attend
meetings.
Employment Agreements.
We have not entered into an employment agreement with our named executive
officer.
4
APPROVAL OF THE 2006 STOCK INCENTIVE PLAN
On February 27, 2006, our board of directors approved the Eugene Science,
Inc. 2006 Stock Incentive Plan (the "2006 Plan") and recommended that the 2006
Plan be submitted to our stockholders for approval. We subsequently obtained, on
April 13, 2006, written consent from stockholders holding a majority of the
outstanding shares of our common stock entitled to vote thereon approving the
2006 Plan. A copy of the 2006 Plan is attached as Appendix A to this Information
Statement.
Although we believe that the 2006 Plan is in the best interests of our
stockholders and is necessary in order to attract and retain qualified
directors, executive officers, key employees and service providers, the 2006
Plan authorizes the grant of options to purchase up to 4,000,000 shares of our
common stock and the future grant and exercise of the options may tend to dilute
the ownership interests of our stockholders. Furthermore, the nature of the
options is such that the options may be exercised at a time that we likely would
be able to derive a higher price for our shares than the exercise price.
We previously had no stock option or other stock incentive plan. As a
small company with limited financial resources, we expect to rely, in part, on
the grant of stock options to attract and retain directors, executive officers,
other key employees and service providers. We believe that the 2006 Plan is
necessary to make shares available for the grant of stock options to current and
future directors, executive officers, other key employees and service providers.
The following is a summary of the material terms of the 2006 Plan. This
summary does not purport to be complete and is qualified in its entirety by
reference to the full test of the 2006 Plan, which is attached as Appendix A to
this Information Statement and incorporated herein by reference.
Summary of the 2006 Stock Incentive Plan
The 2006 Plan was approved by our board of directors on February 27, 2006
and by our stockholders on April 13, 2006. Such approval by our stockholders
will be deemed effective on or about May 22, 2006.
Authorized Number of Shares. In order to accomplish the purposes of the
2006 Plan, the 2006 Plan sets aside 4,000,000 shares of our common stock for
grants of incentive and nonqualified options and restricted stock purchase
rights. The maximum number of shares of common stock that may be the subject of
grants of options and restricted stock purchase rights issued under the 2006
Plan to any 2006 Plan participant in any one year may not exceed 4,000,000
shares. The number of shares authorized for issuance under the 2006 Plan, and
the foregoing limitations on the shares available for different awards and on
annual grants to 2006 Plan participants, will be subject to adjustment in the
event of stock splits, stock dividends and other similar changes in our capital
structure. As of April 13, 2006, there were 4,000,000 shares of our common stock
available for issuance under the 2006 Plan.
Administration of the 2006 Plan. The 2006 Plan shall be administered by
our board of directors or a committee of the board designated by it.
Incentive and Nonqualified Stock Options. Options to purchase common stock
granted under the 2006 Plan may be either "incentive stock options," within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended, or the
Code, or "nonqualified stock options," as determined by the board of directors
or the committee at the time of grant. Incentive stock options provide certain
income tax benefits to optionees under the Code that are not available to
holders of nonqualified options.
Eligibility to be Granted Incentive Stock Options under the 2006 Plan.
Only our officers and other employees, or the officers and other employees of
any of our subsidiaries, are eligible to receive incentive options under the
2006 Plan. An employee who is granted an incentive option may, if otherwise
eligible, be granted additional incentive options, or nonqualified options or
rights to purchase restricted stock, if the board of directors or the committee
so determines. However, if the aggregate market value of the incentive options
of an optionee that become exercisable for the first time in any year were to
exceed $100,000, only the first $100,000 of such options would be accorded
incentive stock option treatment under the Code. The remaining options, in that
event, would be treated as nonqualified options for income tax purposes. For
purposes of determining whether or not this limitation has been exceeded, such
options would be valued at the fair market value of the underlying shares
determined as of the date the options were granted.
5
Nonqualified Options and Rights to Purchase Restricted Stock. Officers and
other employees and members of the board of directors (whether or not they also
are employees) of, and independent contractors that provide services or supply
goods to, us or of any of our subsidiaries, will be eligible to receive
nonqualified options and restricted stock purchase rights under the 2006 Plan.
An individual who has been granted a nonqualified option or a right to purchase
restricted stock may be granted an incentive option (if he or she also is an
officer or employee of us or of any of our subsidiaries) or additional
nonqualified options or restricted stock purchase rights, if the board of
directors or the committee so determines.
Exercise Prices of Options and Payment for Shares. The exercise price of
any option granted under the 2006 Plan, whether it is an incentive or a
nonqualified option, must be at least equal to 100% of the fair market value per
share of our common stock on the date the option is granted, except in the case
of an incentive option that is granted to an optionee who owns 10% or more of
our outstanding shares of common stock, as to whom the exercise price must be at
least 110% of such fair market value. Payment of the exercise price of options
may be made, in the discretion of the board of directors or the committee, by
(i) cash, (ii) check, (iii) delivery of shares of our common stock already owned
by the optionee, (iv) cancellation of any indebtedness owed by us to, or a
waiver of compensation due to, the optionee, (v) a "same day sale" or "margin"
commitment from an optionee (provided he or she is not our executive officer),
or (vi) any combination of the foregoing methods or any other consideration or
method of payment permitted by applicable law.
Vesting and Termination of Options. When granting options under the 2006
Plan, the board of directors or the committee has the authority to determine the
time or times at which such options will become exercisable (that is, when and
in what increments options will "vest"), subject to the requirement that options
must expire no later than 10 years from the date of grant (or five years with
respect to any incentive options granted to a 10% stockholder). Accordingly, the
board of directors or the committee may determine to grant options that become
exercisable in full on the date of grant, which would entitle the optionee to
exercise the options at any time in full or from time to time in part, prior to
the expiration or earlier termination of the options. In the alternative, the
board of directors or the committee may decide to grant options on terms that
provide for them to become exercisable in periodic installments, such as, for
example, in five equal successive annual installments of 20% of the options
each, commencing on the first anniversary of the date of grant.
Options are generally nontransferable (except as otherwise provided by the
board of directors or the committee in an individual option agreement), other
than upon death, in which case they may be transferred by will or the laws of
descent and distribution, and generally may be exercised only by an employee
while employed by us. If an optionee's employment or service with us or any of
our subsidiaries is terminated for any reason, those of his or her options that
have not yet become exercisable will terminate automatically. Any options that
have previously become exercisable will remain exercisable for such period of
time after termination of employment, as shall be determined by the board of
directors or the committee at the time the options are granted. Upon termination
of any unexercised option, the shares subject to that option will again be
available for the grant of options under the 2006 Plan, as will any option
shares that may be repurchased by us.
Rights to Purchase Restricted Common Stock. Restricted stock purchase
rights entitle the recipient thereof to purchase a specified number of shares of
common stock pursuant to the terms and subject to the conditions of a restricted
stock purchase agreement. Upon exercise of those rights, the participant will
acquire ownership of the restricted shares subject to the grant. However, the
participant's right to continued ownership of the shares generally will be
subject to vesting requirements determined by the board of directors or the
committee and set forth in the stock purchase agreement, which will provide
that, if those vesting requirements are not satisfied, we will become entitled
to repurchase any or all of the unvested shares at the price paid for them by
the participant. If the purchase price for the shares is zero, then the unvested
shares may be transferred to us without consideration. Such vesting requirements
may include a requirement that the participant remain in our employ or service
for a specified period of time or that specified performance goals or objectives
be achieved by us or the participant. Since a participant will become the owner
of the restricted shares on his or her exercise of the right to purchase those
shares, the participant will (except as described below) have all of the rights
of a stockholder with respect to those shares, including the right to vote and
to receive any dividends that might be declared on our outstanding common stock.
6
However, it is expected that in most instances the stock purchase
agreements will provide that, until the vesting requirements have been
satisfied, we will be entitled to retain possession of the shares, the
transferability of which will be restricted, and to apply any dividends paid on
those shares to the payment of the then unpaid portion of the purchase price of
the restricted shares. The purchase price payable for restricted shares will be
determined by the board of directors or the committee at the time of grant and
may be less than the then fair market value of the shares, if deemed appropriate
by the board of directors or the committee; except that the purchase price
payable for restricted shares granted to our chief executive officer and our
four other highest compensated officers, may be no less than the fair market
value of our shares on the date such rights are granted. As is the case with
stock options granted under the 2006 Plan, the purchase price for restricted
shares may be paid in cash or in another form of consideration approved by the
board of directors or the committee, including the delivery of already owned
shares by the participant, as provided in the stock purchase agreement or as
approved by the board of directors or the committee. Upon any reacquisition by
us of the shares subject to restricted stock purchase grants, whether due to a
failure of those shares to have become vested or otherwise, those shares will
become available for the grant thereafter of stock options or restricted stock
purchase rights under the 2006 Plan.
Change in Control. Options and restricted stock offered under the 2006
Plan are subject to special provisions upon the occurrence of a "change in
control" (as defined in the 2006 Plan) transaction with respect to the Company.
Under the 2006 Plan, the board of directors or the committee shall provide in
each option agreement or restricted stock purchase agreement for vesting
arrangements upon a change in control. Such arrangements may provide for full
acceleration of vesting upon a change in control, or may permit the assumption
and/or replacement of an option or restricted stock in a change in control
transaction where the vesting of such option or restricted stock does not
accelerate.
Amendments to and Termination of the 2006 Plan. The board of directors or
the committee may from time to time alter, amend, suspend or terminate the 2006
Plan in such respects as the board of directors or the committee may approve.
However, no alteration, amendment, suspension or termination of the 2006 Plan
may substantially affect in an adverse manner, or impair, the rights of any
holder of any outstanding options or restricted shares without that holder's
prior consent. Unless sooner terminated, the 2006 Plan will terminate on the
tenth (10th) anniversary of its effective date.
Registration of Underlying Shares. We intend to file with the SEC a
registration statement on Form S-8 registering the shares of common stock
issuable upon each of our equity incentive plans.
Summary of Federal Income Tax Consequences of the Equity Plan. The
following summary is intended only as a general guide to the U.S. federal income
tax consequences under current law of participation in the 2006 Plan and does
not attempt to describe all possible federal or other tax consequences of such
participation or tax consequences based on particular circumstances.
Furthermore, the tax consequences are complex and subject to change, and a
taxpayer's particular situation may be such that some variation of the described
rules is applicable.
Incentive Stock Options. A participant recognizes no taxable income for
regular income tax purposes as a result of the grant or exercise of an incentive
stock option qualifying under Section 422 of the Code. Participants who neither
dispose of their shares within two years following the date the option was
granted nor within one year following the exercise of the option will normally
recognize a capital gain or loss equal to the difference, if any, between the
sale price and the purchase price of the shares. If a participant satisfies such
holding periods upon a sale of the shares, we will not be entitled to any
deduction for federal income tax purposes. If a participant disposes of shares
within two years after the date of grant or within one year after the date of
exercise (a "disqualifying disposition"), the difference between the fair market
value of the shares on the date of option exercise and the option exercise price
(not to exceed the gain realized on the sale if the disposition is a transaction
with respect to which a loss, if sustained, would be recognized) will be taxed
as ordinary income at the time of disposition. Any gain in excess of that amount
will be a capital gain. If a loss is recognized, there will be no ordinary
income, and such loss will be a capital loss. Any ordinary income recognized by
the participant upon the disqualifying disposition of the shares generally
should be deductible by us for federal income tax purposes, except to the extent
such deduction is limited by applicable provisions of the Code. The difference
between the option exercise price and the fair market value of the shares on the
exercise date of an incentive stock option is treated as an adjustment in
computing the participant's alternative minimum taxable income and may be
subject to an alternative minimum tax which is paid if such tax exceeds the
regular tax for the year. Special rules may apply with respect to certain
subsequent sales of the shares in a disqualifying disposition, certain basis
adjustments for purposes of computing the alternative minimum taxable income on
a subsequent sale of the shares and certain tax credits which may arise is
subject to alternative minimum tax.
7
Nonqualified Stock Options. Options not designated or qualifying as
incentive stock options will be nonqualified stock options having no special tax
status. A participant generally recognizes no taxable income as the result of
the grant of such an option if such options are granted with an exercise price
equal to their fair market value. Upon exercise of a nonqualified stock option,
the participant normally recognizes ordinary income in the amount of the
difference between the option exercise price and the fair market value of the
shares purchased. If the participant is an employee, such ordinary income
generally is subject to withholding of income and employment taxes. Upon the
sale of stock acquired by the exercise of a nonqualified stock option, any gain
or loss, based on the difference between the sale price and the fair market
value on the exercise date, will be taxed as capital gain or loss. No tax
deduction is available to us with respect to the grant of a nonqualified stock
option or the sale of the stock acquired pursuant to such grant. We generally
should be entitled to a deduction equal to the amount of ordinary income
recognized by the participant as a result of the exercise of a nonqualified
stock option, except to the extent such deduction is limited by applicable
provisions of the Code.
Restricted Stock. The receipt of restricted stock will not result in a
taxable event to the participant until the expiration of any repurchase rights
retained by the Company with respect to such stock, unless the participant makes
an election under Section 83(b) of the Code to be taxed as of the date of
purchase. If no repurchase rights are retained, or if a Section 83(b) election
is made, the participant will recognize ordinary income in an amount equal to
the excess of the fair market value of such shares on the date of purchase over
the purchase price paid for such shares. Even if the purchase price and the fair
market value of the shares are the same (in which case there would be no
ordinary income), a Section 83(b) election must be made to avoid deferral of the
date ordinary income is recognized. The election must be filed with the Internal
Revenue Service not later than 30 days after the date of transfer.
If no Section 83(b) election is made and repurchase rights are retained by
the Company, a taxable event will occur on each date the participant's ownership
rights vest (e.g., when the Company's repurchase rights expire) as to the number
of shares that vest on that date, and the holding period for capital gain
purposes will not commence until the date the shares vest. The participant will
recognize ordinary income on each date shares vest in an amount equal to the
excess of the fair market value of such shares on that date over the amount paid
for such shares. Any income recognized by a participant who is an employee will
be subject to income tax withholding by the Company out of the optionee's
current compensation. If such compensation is insufficient to cover the amount
to be withheld, the participant will be required to make a direct payment to the
Company for the balance of the tax withholding obligation. The Company is
entitled to a tax deduction in an amount equal to the ordinary income recognized
by the participant. The participant's basis in the shares will be equal to the
purchase price, if any, increased by the amount of ordinary income recognized.
8
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
We intend to use the 2006 Plan to grant equity compensation to our
directors, officers, employees and service providers for their respective
services to us. Presently, we have no agreements or arrangements obligating us
to provide further equity compensation to any directors, officers, employees or
service providers and we have not taken any action regarding any future grants
of equity compensation to such parties.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
Please read all of the sections of this information statement carefully.
We are subject to the informational requirements of the Securities Exchange Act
of 1934, as amended, and in accordance therewith file periodic reports, current
reports, proxy and information statements and other information with the
Securities and Exchange Commission (the "SEC"). The periodic reports, current
reports, proxy and information statements and other information filed by us with
the SEC may be inspected without charge at the public reference section of the
SEC at 100 F Street, N.E., Washington, D.C. 20549. Copies of this material also
may be obtained from the SEC at prescribed rates. Please call the SEC toll free
at 1-800-SEC-0330 for information about its public reference section. You may
also read our periodic reports, current reports, proxy and information
statements and other information filed by us with the SEC at the SEC's website
at http://www.sec.gov.
STOCKHOLDERS SHARING AN ADDRESS
We will deliver only one copy of this information statement to multiple
stockholders sharing an address unless we have received contrary instructions
from one or more of such stockholders. We undertake to deliver promptly, upon
written or oral request, a separate copy of this information statement to a
stockholder at a shared address to which a single copy of this information
statement was delivered. A stockholder can notify us that the stockholder wishes
to receive a separate copy of this information statement by contacting us in
writing at 16-7, Samjung-dong, Ojung-gu, Bucheon, Kyonggi-Do, Korea, or by
telephone at 82-32-676-6283.
By Order of the Board of Directors
/s/ Eun Young Lee
-----------------------------------
Eun Young Lee
Secretary
Bucheon, Kyonggi-Do Korea
April 28, 2006
9
APPENDIX A
EUGENE SCIENCE, INC.
2006 STOCK INCENTIVE PLAN
This 2006 STOCK INCENTIVE PLAN (the "Plan") is hereby established by
Eugene Science, Inc., a Delaware corporation (the "Company"), and adopted by its
Board of Directors as of February 27, 2006 (the "Effective Date").
ARTICLE 1.
PURPOSES OF THE PLAN
1.1 Purposes. The purposes of the Plan are (a) to enhance the ability
of the Company and its Affiliated Companies to attract and retain the services
of officers, qualified employees and directors of the Company, and other service
providers, upon whose judgment, initiative and efforts the successful conduct
and development of the Company's businesses largely depends, and (b) to provide
additional incentives to such persons to devote their utmost effort and skill to
the advancement and betterment of the Company, by providing them an opportunity
to participate in the ownership of the Company and thereby have an interest in
the success and increased value of the Company that coincides with the financial
interests of the Company's stockholders.
ARTICLE 2.
DEFINITIONS
For purposes of this Plan, the following terms shall have the meanings
indicated:
2.1 Acquiring Entity. "Acquiring Entity" means the corporation or
other entity that (i) on consummation of a merger or consolidation in which the
Company is a party, will be the owner of at least a majority of the outstanding
shares of the Surviving Entity in such merger or consolidation, or (ii) on
consummation of a sale of all or substantially all of the Company's assets will
become or be the owner of such assets or of the securities or other ownership
interests representing at least a majority of the voting power of any
corporation or other entity that becomes the owner of such assets.
2.2 Administrator. "Administrator" means the Board or, if the
Board delegates responsibility for any matter to the Committee, the term
Administrator shall mean the Committee.
2.3 Affiliated Company. "Affiliated Company" means any "parent
corporation" or "subsidiary corporation" of the Company, whether now existing or
hereafter created or acquired, as those terms are defined in Sections 424(e) and
424(f) of the Code, respectively.
2.4 Board. "Board" means the Board of Directors of the Company.
2.5 Change in Control. "Change in Control" means:
(a) The acquisition, directly or indirectly, in one
transaction or a series of related transactions, by any person or group (within
the meaning of Section 13(d)(3) of the Exchange Act) of the beneficial ownership
of securities of the Company possessing more than fifty percent (50%) of the
total combined voting power of all outstanding securities of the Company;
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(b) A merger or consolidation in which the Company is not the
Surviving Entity, except for a transaction in which the Persons who, immediately
prior to such merger or consolidation, were the holders of the outstanding
voting securities of the Company, as a result of their ownership thereof, become
the holders (in the aggregate) of securities possessing more than fifty percent
(50%) of the total combined voting power of all outstanding voting securities of
the Surviving Entity or the Acquiring Entity (as the case may be) in such merger
or consolidation immediately after consummation thereof;
(c) A reverse merger in which the Company is the Surviving
Entity, but in which the holders of the Company's outstanding voting securities
immediately prior to such merger will hold, in the aggregate, immediately after
consummation of such merger, securities possessing less than fifty percent (50%)
of the total combined voting power of all outstanding voting securities of the
Company or its Acquiring Entity, if any, in such merger;
(d) The sale, transfer or other disposition (in one
transaction or a series of related transactions) of all or substantially all of
the assets of the Company, except for a transaction in which the Company will
receive, in exchange for the sale of such assets, securities possessing more
than fifty percent (50%) of the total combined voting power of all outstanding
voting securities of the Acquiring Entity in such transaction(s); or
(e) The approval by the stockholders of the Company of a plan
or proposal for the liquidation or dissolution of the Company.
2.6 Code. "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
2.7 Committee. "Committee" means a committee of two or more
members of the Board appointed to administer the Plan, as set forth in Section
7.1 hereof.
2.8 Common Stock. "Common Stock" means the Common Stock of the
Company, $0.0001 par value, subject to adjustment pursuant to Section 4.2
hereof.
2.9 Covered Employee. "Covered Employee" means the chief executive
officer of the Company (or the individual acting in such capacity) and the four
(4) other individuals that are the highest compensated officers of the Company
for the relevant taxable year for whom total compensation is required to be
reported to stockholders under the Exchange Act.
2.10 Disability. "Disability" means permanent and total disability as
defined in Section 22(e)(3) of the Code. The Administrator's determination of a
Disability or the absence thereof shall be conclusive and binding on all
interested parties.
2.11 Effective Date. "Effective Date" means the date on which the
Plan is adopted by the Board, as set forth on the first page hereof.
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2.12 Exchange Act. "Exchange Act" means the Securities Exchange Act
of 1934, as amended.
2.13 Exercise Price. "Exercise Price" means the purchase price per
share of Common Stock payable upon exercise of an Option.
2.14 Fair Market Value. "Fair Market Value" on any given date means
the value of one share of Common Stock, determined as follows:
(a) If the Common Stock is then listed or admitted to trading
on a Nasdaq market system or a stock exchange which reports closing sale prices,
the Fair Market Value shall be the closing sale price on the date of valuation
on such Nasdaq market system or principal stock exchange on which the Common
Stock is then listed or admitted to trading, or, if no closing sale price is
quoted on such day, then the Fair Market Value shall be the closing sale price
of the Common Stock on such Nasdaq market system or such exchange on the next
preceding day for which a closing sale price is reported.
(b) If the Common Stock is not then listed or admitted to
trading on a Nasdaq market system or a stock exchange which reports closing sale
prices, the Fair Market Value shall be the average of the closing bid and asked
prices of the Common Stock in the over-the-counter market on the date of
valuation.
(c) If neither (a) nor (b) is applicable as of the date of
valuation, then the Fair Market Value shall be determined by the Administrator
in good faith using any reasonable method of evaluation, which determination
shall be conclusive and binding on all interested parties.
2.15 Incentive Option. "Incentive Option" means any Option
designated and qualified as an "incentive stock option" as defined in Section
422 of the Code.
2.16 NASD Dealer. "NASD Dealer" means a broker-dealer that is a
member of the National Association of Securities Dealers, Inc.
2.17 Non-Employee Director. "Non-employee Director" shall mean a
director of the Company who is neither an employee nor an executive officer of
the Company.
2.18 Nonqualified Option. "Nonqualified Option" means any Option
that is not an Incentive Option. To the extent that any Option designated as an
Incentive Option fails in whole or in part to qualify as an Incentive Option,
including, without limitation, for failure to meet the limitations applicable to
a 10% Stockholder or because it exceeds the annual limit provided for in Section
5.6 below, it shall to that extent constitute a Nonqualified Option.
2.19 Option. "Option" means any option to purchase Common Stock
granted pursuant to the Plan.
2.20 Option Agreement. "Option Agreement" means the written
agreement entered into between the Company and the Optionee with respect to an
Option granted under the Plan.
2.21 Optionee. "Optionee" means a Participant who holds an Option.
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2.22 Participant. "Participant" means a Person who holds an Option
or Restricted Stock under the Plan.
2.23 Person. "Person" means any natural person, any corporation,
limited liability company, general or limited partnership, trust, estate or
unincorporated association or other entity.
2.24 Purchase Price. "Purchase Price" means the purchase price per
share of Restricted Stock.
2.25 Restricted Stock. "Restricted Stock" means shares of Common
Stock issued pursuant to Section 6 hereof, subject to any restrictions and
conditions as are established pursuant to such Section 6.
2.26 Service Provider. "Service Provider" means a consultant or
other person or entity the Administrator authorizes to become a Participant in
the Plan and who provides services to (i) the Company, (ii) an Affiliated
Company, or (iii) any other business venture designated by the Administrator in
which the Company or an Affiliated Company has a significant ownership interest.
2.27 Stock Purchase Agreement. "Stock Purchase Agreement" means the
written agreement entered into between the Company and a Participant with
respect to the purchase of Restricted Stock under the Plan.
2.28 Substitute Options. "Substitute Options" means options to
purchase Common Stock to be issued by the Successor Entity or Acquiring Entity
(as the case may be) in a Change of Control transaction, on terms approved by
the Administrator, in exchange for the cancellation or surrender, on
consummation of the Change in Control, of Options granted under this Plan and
held by employees of the Company or any Subsidiary.
2.29 Substitute Restricted Stock. "Substitute Restricted Stock"
means restricted stock to be issued by the Successor Entity or Acquiring Entity
(as the case may be) in a Change of Control transaction, on terms approved by
the Administrator, in exchange for the cancellation or surrender, on
consummation of the Change in Control, of Restricted Stock issued this Plan and
held by employees of the Company or any Subsidiary.
2.30 10% Stockholder. "10% Stockholder" means a Person who, as of a
relevant date, owns or is deemed to own (by reason of the attribution rules
applicable under Section 424(d) of the Code) stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company or of an
Affiliated Company.
ARTICLE 3.
ELIGIBILITY
3.1 Incentive Options. Only employees of the Company or of an
Affiliated Company (including officers of the Company and members of the Board
if they are employees of the Company or of an Affiliated Company) are eligible
to receive Incentive Options under the Plan.
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3.2 Nonqualified Options and Restricted Stock. Employees of the Company
or of an Affiliated Company, officers of the Company, members of the Board
(whether or not employed by the Company or an Affiliated Company), and Service
Providers are eligible to receive Nonqualified Options or acquire Restricted
Stock under the Plan.
3.3 Section 162(m) Limitation. Subject to the provisions of Section
4.2, no employee of the Company or of an Affiliated Company shall be eligible to
be granted Options covering more than 4,000,000 shares of Common Stock during
any calendar year.
3.4 Restrictions. Notwithstanding Sections 3.1 and 3.2 above or any
other provision of this Plan to the contrary, no director or officer of the
Company or any Affiliated Company shall be eligible to receive an Option or
acquire Restricted Stock, or any right to receive the same, pursuant to this
Plan unless and until this Plan has been approved by a majority of the shares
present and entitled to vote at a meeting of the Company's stockholders.
ARTICLE 4.
PLAN SHARES
4.1 Shares Subject to the Plan. A total of 4,000,000 shares of Common
Stock may be issued under the Plan, subject to adjustment as to the number and
kind of shares pursuant to Section 4.2 hereof. For purposes of this limitation,
in the event that (a) all or any portion of any Option or Restricted Stock
granted or offered under the Plan can no longer under any circumstances be
exercised or purchased, or (b) any shares of Common Stock are reacquired by the
Company which were initially the subject of an Option Agreement or Stock
Purchase Agreement, the shares of Common Stock allocable to the unexercised
portion of such Option or such Stock Purchase Agreement, or the shares so
reacquired, shall again be available for grant or issuance under the Plan.
4.2 Changes in Capital Structure. In the event that the outstanding
shares of Common Stock are hereafter increased or decreased or changed into or
exchanged for a different number or kind of shares or other securities of the
Company by reason of a recapitalization, stock split, reverse stock split,
combination of shares, reclassification, stock dividend, or other similar change
in the capital structure of the Company, then appropriate adjustments shall be
made by the Administrator to the aggregate number and kind of shares issuable
thereafter under this Plan, the number and kind of shares and the price per
share subject to outstanding Option Agreements and Stock Purchase Agreements and
the limit on the number of shares under Section 3.3 above, all in order to
preserve, as nearly as practical, but not to increase, the benefits to
Participants.
ARTICLE 5.
OPTIONS
5.1 Option Agreement. Each Option granted pursuant to this Plan shall
be evidenced by an Option Agreement that shall specify the number of shares
subject thereto, the Exercise Price per share, and whether the Option is an
Incentive Option or Nonqualified Option. As soon as is practical following the
grant of an Option, an Option Agreement shall be duly executed and delivered by
or on behalf of the Company to the Optionee to whom such Option was granted.
Each Option Agreement shall be in such form and contain such additional terms
and conditions, not inconsistent with the provisions of this Plan, as the
Administrator shall, from time to time, deem desirable, including, without
limitation, the imposition of any rights of first refusal and resale obligations
upon any shares of Common Stock acquired pursuant to an Option Agreement. Each
Option Agreement may be different from each other Option Agreement.
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5.2 Exercise Price. The Exercise Price per share of Common Stock
covered by each Option shall be determined by the Administrator, subject to the
following: (a) the Exercise Price of an Incentive Option and any Nonqualified
Option granted to an individual providing services in or residing in the United
States shall not be less than 100% of Fair Market Value on the date that Option
is granted, and (b) notwithstanding the foregoing, if the Person to whom an
Incentive Option is granted is a 10% Stockholder on the date of grant, the
Exercise Price shall not be less than 110% of Fair Market Value on the date the
Option is granted. However, an Option may be granted with an exercise price
lower than that set forth in the preceding sentence if such Option is granted
pursuant to an assumption or substitution for another option in a manner
satisfying the provisions of Section 424 of the Code.
5.3 Payment of Exercise Price. Payment of the Exercise Price shall be
made upon exercise of an Option and may be made, in the discretion of the
Administrator, subject to any legal restrictions, by: (a) cash; (b) check; (c)
the surrender of shares of Common Stock acquired pursuant to the exercise of an
Option (provided that shares acquired pursuant to the exercise of options
granted by the Company must have been held by the Optionee for the requisite
period necessary to avoid a charge to the Company's earnings for financial
reporting purposes), which surrendered shares shall be valued at Fair Market
Value as of the date of such exercise; (d) the cancellation of indebtedness of
the Company to the Optionee; (e) the waiver of compensation due or accrued to
the Optionee for services rendered; (f) a "same day sale" commitment from the
Optionee and an NASD Dealer whereby the Optionee 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; (g) a
"margin" commitment from the Optionee and an NASD Dealer whereby the Optionee
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 to the Company; or (g) any combination of the foregoing methods of
payment or any other consideration or method of payment as shall be permitted by
applicable law.
5.4 Term and Termination of Options. The term and provisions for
termination of each Option shall be as fixed by the Administrator, but no Option
may be exercisable more than ten (10) years after the date it is granted. An
Incentive Option granted to a person who is a 10% Stockholder on the date of
grant shall not be exercisable more than one (1) year after the date it is
granted.
5.5 Vesting and Exercise of Options. Each Option shall vest and become
exercisable in one or more installments at such time or times and subject to
such conditions, including without limitation the achievement of specified
performance goals or objectives, as shall be determined by the Administrator.
5.6 Annual Limit on Incentive Options. To the extent required for
"incentive stock option" treatment under Section 422 of the Code, the aggregate
Fair Market Value (determined as of the time of grant) of the Common Stock, with
respect to which Incentive Options granted under this Plan and any other plan of
the Company or any Affiliated Company become exercisable for the first time by
an Optionee during any calendar year, shall not exceed $100,000.
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5.7 Nontransferability of Options. Except as otherwise provided by the
Administrator in an Option Agreement and as permissible under applicable law, no
Option shall be assignable or transferable except by will or the laws of descent
and distribution, and during the life of the Optionee shall be exercisable only
by such Optionee.
5.8 No Rights as Stockholder Prior to Exercise. An Optionee or
permitted transferee of an Option shall have no rights or privileges as a
stockholder with respect to any shares covered by an Option until such Option
has been duly exercised and certificates representing shares purchased upon such
exercise have been issued to such person.
5.9 Unvested Shares. The Administrator shall have the discretion to
grant Options which are exercisable for unvested shares of Common Stock. Should
the Optionee cease being an employee, an officer or a director of the Company
while owning such unvested shares, the Company shall have the right to
repurchase, at the exercise price paid per share, any or all of those unvested
shares. The terms upon which such repurchase right shall be exercisable
(including the period and procedure for exercise and the appropriate vesting
schedule for the purchased shares) shall be established by the Administrator and
set forth in the document evidencing such repurchase right.
ARTICLE 6.
RESTRICTED STOCK
6.1 Issuance and Sale of Restricted Stock. The Administrator shall have
the right to issue, at a Purchase Price determined by the Administrator
(provided, however, that the Purchase Price applicable to shares of Common Stock
sold and issued to any Covered Employee shall not be less than Fair Market Value
of such Shares at the time of their issuance), shares of Common Stock subject to
such terms, restrictions and conditions as the Administrator may determine at
the time of grant ("Restricted Stock"). Such conditions may include, but are not
limited to, continued employment or the achievement of specified performance
goals or objectives.
6.2 Restricted Stock Purchase Agreements. A Participant shall have no
rights with respect to the shares of Restricted Stock covered by a Stock
Purchase Agreement until the Participant has paid the full Purchase Price to the
Company in the manner set forth in Section 6.3 hereof and has executed and
delivered to the Company the Stock Purchase Agreement. Each Stock Purchase
Agreement shall be in such form, and shall set forth the Purchase Price and such
other terms, conditions and restrictions of the Restricted Stock, not
inconsistent with the provisions of this Plan, as the Administrator shall, from
time to time, deem desirable. Each Stock Purchase Agreement may be different
from each other Stock Purchase Agreement.
6.3 Payment of Purchase Price. Subject to any legal restrictions,
payment of the Purchase Price may be made, in the discretion of the
Administrator, by: (a) cash; (b) check; (c) the surrender of shares of Common
Stock owned by the Participant that have been held by the Participant for the
requisite period necessary to avoid a charge to the Company's earnings for
financial reporting purposes, which surrendered shares shall be valued at Fair
Market Value as of the date of such acceptance; (d) the cancellation of
indebtedness owed by the Company to the Participant; (e) the waiver of
compensation due or accrued to the Participant for services rendered; or (f) any
combination of the foregoing methods of payment or any other consideration or
method of payment as shall be permitted by applicable corporate law.
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6.4 Rights as a Stockholder. Upon complying with the provisions of
Section 6.2 hereof, a Participant shall have the rights of a stockholder with
respect to the Restricted Stock purchased pursuant to a Stock Purchase
Agreement, including voting and dividend rights, subject to the terms,
restrictions and conditions as are set forth in such Stock Purchase Agreement.
Unless the Administrator shall determine otherwise, certificates evidencing
shares of Restricted Stock shall remain in the possession of the Company until
such shares have vested in accordance with the terms of the Stock Purchase
Agreement.
6.5 Restrictions. Shares of Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided in the Stock Purchase Agreement. In the event of
termination of a Participant's employment, service as a director of the Company
or Service Provider status for any reason whatsoever (including death or
disability), the Stock Purchase Agreement may provide, in the discretion of the
Administrator, that the Company shall have the right, exercisable at the
discretion of the Administrator, to repurchase, at the original Purchase Price,
any shares of Restricted Stock which have not vested as of the date of
termination.
6.6 Vesting of Restricted Stock. Subject to Section 6.5 above, the
Stock Purchase Agreement shall specify the date or dates, or the performance
goals or objectives which must be achieved, and any other conditions on which
the Restricted Stock may vest.
ARTICLE 7.
ADMINISTRATION OF THE PLAN
7.1 Administrator. Authority to control and manage the operation and
administration of the Plan shall be vested in the Board, which may delegate such
responsibilities in whole or in part to a committee consisting of two (2) or
more members of the Board who are Non-Employee Directors of the Company (the
"Committee"). Members of the Committee may be appointed from time to time by,
and shall serve at the pleasure of, the Board. The Board may limit the
composition of the Committee to those persons necessary to comply with the
requirements of Section 162(m) of the Code and Section 16 of the Exchange Act.
As used herein, the term "Administrator" means the Board or, with respect to any
matter as to which responsibility has been delegated to the Committee, the term
Administrator shall mean the Committee.
7.2 Powers of the Administrator. In addition to any other powers or
authority conferred upon the Administrator elsewhere in the Plan or by law, the
Administrator shall have full power and authority: (a) to determine the Persons
to whom, and the time or times at which, Incentive Options or Nonqualified
Options or rights to purchase Restricted Stock shall be granted, the number of
shares to be represented by each Option and the number of shares of Restricted
Stock to be offered, and the consideration to be received by the Company upon
the exercise of such Options or sale of such Restricted Stock; (b) to interpret
the Plan; (c) to create, amend or rescind rules and regulations relating to the
Plan; (d) to determine the terms, conditions and restrictions contained in, and
the form of, Option Agreements and Stock Purchase Agreements; (e) to determine
the identity or capacity of any Persons who may be entitled to exercise a
Participant's rights under any Option or Stock Purchase Agreement under the
Plan; (f) to correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any Option Agreement or Stock Purchase
Agreement; (g) to accelerate the vesting of any Option or release or waive any
repurchase rights of the Company with respect to or restrictions on Restricted
Stock; (h) to extend the exercise date of any Option or acceptance date of any
Restricted Stock; (i) to provide for rights of first refusal and/or repurchase
rights; (j) to amend outstanding Option Agreements and Stock Purchase Agreements
to provide for, among other things, any change or modification which the
Administrator could have included in the original Agreement or in furtherance of
the powers provided for herein; and (k) to make all other determinations
necessary or advisable for the administration of the Plan, but only to the
extent not contrary to the express provisions of the Plan. Any action, decision,
interpretation or determination made in good faith by the Administrator in the
exercise of its authority conferred upon it under the Plan shall be final and
binding on the Company and all Participants.
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7.3 Limitation on Liability. No employee of the Company or member of
the Board or Committee shall be subject to any liability with respect to duties
under the Plan unless that Person acts fraudulently or in bad faith. To the
extent permitted by law, the Company shall indemnify each member of the Board or
Committee, and any employee of the Company with duties under the Plan, who was
or is a party, or is threatened to be made a party, to any threatened, pending
or completed proceeding, whether civil, criminal, administrative or
investigative, by reason of such Person's conduct in the performance of duties
under the Plan.
ARTICLE 8.
CHANGE IN CONTROL
8.1 Change in Control. In order to preserve a Participant's rights in
the event of a Change in Control of the Company:
(a) The Administrator shall have the discretion to provide in
each Option Agreement or Stock Purchase Agreement the terms and conditions that
relate to (i) vesting of such Option or Restricted Stock in the event of a
Change in Control, and (ii) assumption of such Options or Stock Purchase
Agreements or the issuance of comparable securities under an incentive program
in the event of a Change in Control. The aforementioned terms and conditions may
vary in each Option Agreement and Stock Purchase Agreement.
(b) If the terms of an outstanding Option Agreement provide
for accelerated vesting in the event of a Change in Control, or to the extent
that an Option is vested and not yet exercised, the Administrator in its
discretion may provide, in connection with the Change in Control transaction,
for the purchase or exchange of each Option for an amount of cash or other
property having a value equal to the difference (or "spread") between: (x) the
value of the cash or other property that the Participant would have received
pursuant to the Change in Control transaction in exchange for the shares
issuable upon exercise of the Option had the Option been exercised immediately
prior to the Change in Control, and (y) the Exercise Price of the Option.
(c) Notwithstanding any provision to the contrary that may be
contained in this Plan or in any Option Agreement for Options granted under this
Plan, all outstanding Options that have not been exercised or deemed exercised
at or before the consummation of a Change of Control transaction shall terminate
and cease to be exercisable upon consummation of such Change in Control except
to the extent that the Options are assumed by the Surviving or Acquiring Entity
pursuant to the terms of the Change in Control transaction.
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(d) If the Company enters into a definitive agreement that
provides for the consummation of a Change in Control of the Company, the
Administrator shall cause written notice of such proposed Change in Control
transaction to be given to Participants not less than fifteen (15) days prior to
the anticipated effective date of the proposed Change in Control transaction;
provided, however, that any delay in giving or any failure to give such notice
shall not affect the validity of nor shall it entitle any Participant to obtain
a delay or postponement in the consummation of the Change in Control
transaction.
ARTICLE 9.
AMENDMENT AND TERMINATION OF THE PLAN
9.1 Amendments. The Board may from time to time alter, amend, suspend
or terminate the Plan in such respects as the Board may deem advisable. No such
alteration, amendment, suspension or termination shall be made which shall
substantially affect or impair the rights of any Participant under an
outstanding Option Agreement or Stock Purchase Agreement without such
Participant's consent. The Board may alter or amend the Plan to comply with
requirements under the Code relating to Incentive Options or other types of
options which give Optionees more favorable tax treatment than that applicable
to Options granted under this Plan as of the date of its adoption. Upon any such
alteration or amendment, any outstanding Option granted hereunder may, if the
Administrator so determines and if permitted by applicable law, be subject to
the more favorable tax treatment afforded to an Optionee pursuant to such terms
and conditions.
9.2 Plan Termination. Unless the Plan shall theretofore have been
terminated, the Plan shall terminate on the tenth (10th) anniversary of the
Effective Date and no Options or Restricted Stock may be granted under the Plan
thereafter, but Option Agreements and Stock Purchase Agreements then outstanding
shall continue in full force and effect in accordance with their respective
terms.
ARTICLE 10.
TAX WITHHOLDING
10.1 Withholding. The Company shall have the power to withhold, or
require a Participant to remit to the Company, an amount sufficient to satisfy
any applicable Federal, state, and local tax withholding requirements with
respect to any Options exercised or Restricted Stock issued under the Plan. To
the extent permissible under applicable tax, securities and other laws, the
Administrator may, in its sole discretion and upon such terms and conditions as
it may deem appropriate, permit a Participant to satisfy his or her obligation
to pay any such tax, in whole or in part, up to an amount determined on the
basis of the highest marginal tax rate applicable to such Participant, by (a)
directing the Company to apply shares of Common Stock to which the Participant
is entitled as a result of the exercise of an Option or as a result of the
purchase of or lapse of restrictions on Restricted Stock or (b) delivering to
the Company shares of Common Stock owned by the Participant. The shares of
Common Stock so applied or delivered in satisfaction of the Participant's tax
withholding obligation shall be valued at their Fair Market Value as of the date
of measurement of the amount of income subject to withholding.
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ARTICLE 11.
MISCELLANEOUS
11.1 Benefits Not Alienable. Except as otherwise provided above in this
Plan, benefits under the Plan may not be assigned or alienated, whether
voluntarily or involuntarily. Any unauthorized attempt at assignment, transfer,
pledge or other disposition shall be without effect.
11.2 No Enlargement of Employee Rights. This Plan is strictly a
voluntary undertaking on the part of the Company and shall not be deemed to
constitute a contract between the Company and any Participant or to be
consideration for, or an inducement to, or a condition of, the employment of any
Participant. Nothing contained in the Plan shall be deemed to give to any
Participant a right to be retained as an employee of the Company or any
Affiliated Company or to interfere with the right of the Company or any
Affiliated Company to discharge any Participant at any time.
11.3 Application of Funds. The proceeds received by the Company from
the sale of Common Stock pursuant to Option Agreements and Stock Purchase
Agreements, except as may otherwise be provided herein, will be used for general
corporate purposes.
11.4 Annual Reports. While any Option remains outstanding, the Company
will furnish to each Participant that is the holder of an Option, or any
permitted assignee thereof, who does not otherwise receive such materials,
copies of all reports, proxy statements and other communications that the
Company distributes generally to its stockholders.
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