TEMECULA VALLEY BANCORP INC.
2004 STOCK INCENTIVE PLAN
1. Purpose of the Plan. The purpose of this Temecula Valley Bancorp Inc.
Stock Incentive Plan is to offer certain Employees, Directors and Consultants
the opportunity to acquire a proprietary interest in the Company. Through the
Plan, the Company and its subsidiaries seek to attract, motivate and retain
highly competent persons. The success of the Company and its affiliates is
dependent upon the efforts of these persons. The Plan provides for the grant of
Options to purchase common stock. An Option granted under the Plan may be a
Non-Statutory Stock Option or an Incentive Stock Option, as determined by the
Administrator.
2. Definitions. As used herein, the following definitions shall apply.
"2004 Plan" or "Plan" shall mean the Temecula Valley Bancorp Inc. 2004
Stock Incentive Plan, adopted as of March 24, 2004 by the Board of
Directors, and as may be amended and restated from time to time.
"Act" shall mean the Securities Act of 1933, as amended.
"Administrator" shall mean the Board or any one of the Committees.
"Affiliate" shall mean any parent or subsidiary (as defined in Sections
424(e) and (f) of the Code) of the Company.
"APB 25" shall mean Opinion 25 of the Accounting Principles Board, as
amended, and any successor thereof.
"Board" shall mean the Board of Directors of the Company.
"Cause" shall have the meaning given to it under the Participant's
employment agreement with the Company or Affiliate, or a policy of the
Company or an Affiliate. If the Participant does not have an employment
agreement or the employment agreement does not define this term, or if
the Company or an Affiliate does not have a policy that defines this
term, then Cause shall include malfeasance or gross misfeasance in the
performance of duties or conviction of illegal activity in connection
therewith or any conduct detrimental to the interests of the Company or
an Affiliate which results in termination of the Participant's service
with the Company or an Affiliate, as determined by the Administrator.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Committee" shall mean a committee appointed by the Board in accordance
with Section 3 below.
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"Common Stock" shall mean the common stock of the Company, no par
value.
"Company" shall mean Temecula Valley Bancorp Inc., a California
corporation.
"Consultant" shall mean any natural person who performs bona fide
Services for the Company or an Affiliate as a consultant or advisor,
excluding Employees and Non-Employee Directors and provided that the
Services are not in connection with the offer or sale of securities in
a capital raising transaction and do not directly or indirectly promote
or maintain a market for the Company securities.
"Date of Grant" shall mean the effective date as of which the
Administrator grants an Option to an Optionee.
"Director" shall mean a member of the Board.
"Disability" shall mean total and permanent disability as defined in
Section 22(e)(3) of the Code.
"Employee" shall mean any individual who is a common-law employee of
the Company or an Affiliate.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exercise Price" shall mean the exercise price of a share of Optioned
Stock.
"Fair Market Value" shall mean, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock exchange
or a national market system or an electronic bulletin board,
including without limitation, The Nasdaq National Market, The
Nasdaq SmallCap Market of The Nasdaq Stock Market or the
Over-the-Counter Bulletin Board, its Fair Market Value shall be
the closing sales price for such stock (or the closing
representative bid, if no sales were reported) as quoted on such
exchange or system for the last market trading day prior to the
time of determination, as reported in The Wall Street Journal or
such other source as the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean between the high bid and low asked
prices for the Common Stock quoted by such recognized securities
dealer on the last market trading day prior to the day of
determination; or
(iii) In the absence of an established market for the Common Stock,
its Fair Market Value shall be determined, in good faith, by the
Administrator.
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"FASB" shall mean the Financial Accounting Standards Board.
"Grantee" shall mean any person who is granted an Option.
"Immediate Family" means any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law or sister-in-law, and also
includes adoptive relationships.
"Incentive Stock Option" shall mean an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.
"Mature Shares" shall mean Shares that had been held by the Participant
for a meaningful period of time such as six months or such other period
of time that is consistent with FASB's interpretation of APB 25.
"Non-Employee Director" shall mean a non-employee member of the Board.
"Non-Statutory Stock Option" shall mean an Option not intended to
qualify as an Incentive Stock Option.
"Notice of Stock Option Grant" shall mean the notice delivered by the
Company to the Optionee evidencing the grant of an Option.
"Option" shall mean a stock option granted pursuant to the Plan.
"Option Agreement" shall mean a written agreement that evidences an
Option in such form as the Administrator shall approve from time to
time.
"Optioned Stock" shall mean the Common Stock subject to an Option.
"Optionee" shall mean any person who receives an Option.
"Participant" shall mean an Optionee or a Grantee.
"Rule 16b-3" shall mean Rule 16b-3 promulgated under the Exchange Act
or any successor to Rule 16b-3.
"Service" shall mean the performance of services for the Company (or
any Affiliate) by an Employee, Director or Consultant, as determined by
the Administrator in its sole discretion. Service shall not be
considered interrupted in the case of: (i) a change of status (i.e.,
from Employee to Consultant, Non-Employee Director to Consultant, or
any other combination); (ii) transfers between locations of the Company
or between the Company and any Affiliate; or (iii) a leave of absence
approved by the Company or an Affiliate. A leave of absence approved by
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the Company or an Affiliate shall include sick leave, military leave,
or any other personal leave approved by an authorized representative of
the Company or an Affiliate.
"Service Provider" shall mean an Employee, Director or Consultant.
"Share" shall mean a share of Common Stock.
"Tax" or "Taxes" shall mean the federal, state, and local income,
employment and excise tax liabilities incurred by the Participant in
connection with his/her Options.
"10% Shareholder" shall mean the owner of stock (as determined under
Section 424(d) of the Code) possessing more than 10% of the total
combined voting power of all classes of stock of the Company (or any
Affiliate) on the Date of Grant, as applicable.
"Termination Date" shall mean the date on which a Participant's Service
terminates, as determined by the Administrator in its sole discretion.
3. Administration of the Plan.
(a) Except as otherwise provided for below, the Plan shall be
administered by (i) the Board or (ii) a Committee, which
Committee shall be constituted to satisfy applicable laws. To the
extent desirable to qualify transactions hereunder as exempt
under Rule 16b-3, the transactions contemplated hereunder shall
be structured to satisfy the requirements for exemption under
Rule 16b-3.
(b) Powers of the Administrator. Subject to the provisions of the
Plan and in the case of specific duties delegated by the
Administrator, and subject to the approval of relevant
authorities, including the approval, if required, of any stock
exchange or national market system upon which the Common Stock is
then listed, the Administrator shall have the authority, in its
sole discretion:
(i) to determine the Fair Market Value of the Common Stock;
(ii) to select the Service Providers to whom Options may, from
time to time, be granted under the Plan;
(iii) to determine whether and to what extent Options are granted
under the Plan;
(iv) to determine the number of Shares that pertain to each
Option;
(v) to approve the terms of the Option Agreements;
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(vi) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any Option. Such terms and
conditions may include, but are not limited to, the Exercise
Price, the status of an Option (Non-Statutory Stock Option
or Incentive Stock Option), the time or times when Options
may be exercised, any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation
regarding any Option or the Shares relating thereto, based
in each case on such factors as the Administrator, in its
sole discretion, shall determine;
(vii) to determine the method of payment of the Exercise Price;
(viii) with the prior approval of a majority of the Non-Employee
Directors of the Administrator, reduce the Exercise Price of
any Option to the then current Fair Market Value if the Fair
Market Value of the Optioned Stock has declined since the
Date of Grant of such Option;
(ix) to delegate to others responsibilities to assist in
administering the Plan;
(x) to construe and interpret the terms of the Plan, Option
Agreements and any other documents related to the Options;
and
(xi) to interpret and administer the terms of the Plan to comply
with all Tax rules and regulations.
(c) Effect of Administrator's Decision. All decisions,
determinations, and interpretations of the Administrator shall be
final and binding on all Participants and any other holders of
any Options. The Administrator's decisions and determinations
under the Plan need not be uniform and may be made selectively
among Participants whether or not such Participants are similarly
situated.
(d) Liability. No member of the Administrator shall be personally
liable by reason of any mistake of judgment made in good faith
while acting in such capacity if he or she was acting within
her/his authority as a member of the Administrator at the time of
the mistake, and the Company shall indemnify and hold harmless
each member of the Administrator and each other employee, officer
or director of the Company to whom any duty or power relating to
the administration or interpretation of the Plan may be allocated
or delegated, against any cost or expense (including counsel
fees) or liability (including any sum paid in settlement of a
claim) arising out of any act or omission to act in connection
with the Plan unless arising out of such person's own fraud or
bad faith. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such
persons may be entitled under the Company's Articles of
Incorporation or Bylaws, as a matter of law, or otherwise, or any
power the Company may have to indemnify them or hold them
harmless. The Board shall make the determination if any such
person shall be entitled to indemnification and such decision by
the Board shall be made in good faith, final and binding.
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4. Stock Subject To The Plan.
(a) Basic Limitation. The total number of Options under the Plan may
not exceed 2,250,000, subject to the adjustments provided for in
Section 8 of the Plan.
(b) Additional Shares. In the event that any outstanding Option
expires or is canceled or otherwise terminated, the Shares that
pertain to the unexercised Option shall again be available for
the purposes of the Plan.
5. Eligibility. The persons eligible to participate in the Plan shall be
limited to Employees, Directors and Consultants who have the potential to impact
the long-term success of the Company and/or its Affiliates and who have been
selected by the Administrator to participate in the Plan.
6. Option Terms. Each Option shall be evidenced by an Option Agreement, in
the form approved by the Administrator and may contain such provisions as the
Administrator deems appropriate; provided, however, that each Option Agreement
shall comply with the terms specified below and shall be subject to all of the
other provisions of the Plan. Each Option Agreement evidencing an Incentive
Stock Option shall be subject to the following applicable provisions (except
ISOs if in conflict with Section 7) as well as Section 7 below.
(a) Exercise Price.
(i) The Exercise Price of an Incentive Stock Option shall be
determined by the Administrator but shall not be less than
100% of the Fair Market Value of a Share on the Date of
Grant of such Option, and the exercise price of a
Non-Statutory Stock Option shall not be less than 85% of the
Fair Market Value of a Share on the Date of Grant of such
Option.
(ii) The consideration to be paid for the Shares to be issued
upon exercise of an Option, including the method of payment,
shall be determined by the Administrator and may consist
entirely of (A) cash, (B) check, (C) Mature Shares, or (D)
any combination of the foregoing methods of payment. The
Administrator may also permit Optionees, either on a
selective or aggregate basis, to simultaneously exercise
Options and sell the shares of Common Stock thereby
acquired, pursuant to a brokerage or similar arrangement,
approved in advance by the Administrator, and use the
proceeds from such sale as payment of part or all of the
exercise price of such shares. Notwithstanding the
foregoing, a method of payment may not be used if it causes
the Company to: (x) recognize compensation expense for
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financial reporting purposes; (y) violate Section 402 of the
Sarbanes-Oxley Act of 2002 or any regulations adopted
pursuant thereto; or (z) violate Regulation O, promulgated
by the Board of Governors of the Federal Reserve System, as
determined by the Administrator in its sole discretion.
(b) Vesting. Any Option granted hereunder shall be exercisable and
shall vest at such times and under such conditions as determined
by the Administrator and set forth in the Option Agreement, but
in any event all Options granted to an Optionee who is not an
officer, Director or Consultant of the Company shall vest at a
rate of at least 20% per year over five years from the Date of
Grant of the Option subject to reasonable conditions such as
continued employment. An Option may not be exercised for a
fraction of a Share and the Optionee shall receive cash in lieu
thereof equal to the Fair Market Value of such fraction on the
date of exercise.
(c) Term of Options. No Option shall have a term in excess of 10
years measured from the Date of Grant of such Option.
(d) Procedure for Exercise. An Option shall be deemed to be exercised
when written notice of such exercise has been given to the
Administrator in accordance with the terms of the Option
Agreement by the person entitled to exercise the Option and full
payment of the applicable Exercise Price for the Share being
exercised has been received by the Administrator. Full payment
may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under Section
(a)(iii) above in this Section. In the event of a cashless
exercise, the broker shall not be deemed to be an agent of the
Administrator.
(e) Effect of Termination of Service.
(i) Termination of Service. Upon termination of an Optionee's
Service, other than due to death, Disability, or Cause, the
Optionee may exercise his/her Option, but only on or prior
to the date that is three months following the Optionee's
Termination Date, and only to the extent that the Optionee
was entitled to exercise such Option on the Termination Date
(but in no event later than the expiration of the term of
such Option, as set forth in the Notice of Stock Option
Grant to the Option Agreement). If, on the Termination Date,
the Optionee is not entitled to exercise the Optionee's
entire Option, the Shares covered by the unexercisable
portion of the Option shall immediately revert to the Plan.
If, after termination of Service, the Optionee does not
exercise his/her Option within the time specified herein,
the Option shall terminate, and the Optioned Stock shall
immediately revert to the Plan.
(ii) Disability of Optionee. In the event of termination of an
Optionee's Service due to his/her Disability, the Optionee
may exercise his/her Option, but only on or prior to the
date that is twelve months following the Termination Date,
and only to the extent that the Optionee was entitled to
exercise such Option on the Termination Date (but in no
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event later than the expiration date of the term of his/her
Option, as set forth in the Notice of Stock Option Grant to
the Option Agreement). To the extent the Optionee is not
entitled to exercise the Option on the Termination Date, the
Shares covered by the unexercisable portion of the Option
shall immediately revert to the Plan. If, after Termination
of Service due to Disability, the Optionee does not exercise
the Option to the extent so entitled within the time
specified herein, the Option shall terminate, and the
Optioned Stock shall immediately revert to the Plan.
(iii) Death of Optionee. In the event that an Optionee should die
while in Service, the Optionee's Option may be exercised by
the Optionee's estate or by a person who has acquired the
right to exercise the Option by bequest or inheritance, but
only on or prior to the date that is twelve months following
the date of death, and only to the extent that the Optionee
was entitled to exercise the Option at the date of death
(but in no event later than the expiration date of the term
of his/her Option, as set forth in the Notice of Stock
Option Grant to the Option Agreement). If, at the time of
death, the Optionee was not entitled to exercise his/her
entire Option, the Shares covered by the unexercisable
portion of the Option shall immediately revert to the Plan.
If after death, the Optionee's estate or a person who
acquires the right to exercise the Option by bequest or
inheritance does not exercise the Option within the time
specified herein, the Option shall terminate, and the
Optioned Stock shall immediately revert to the Plan.
(iv) Cause. In the event of termination of an Optionee's Service
due to Cause, the Optionee's Options shall terminate on the
Termination Date.
(v) To the extent that the Company does not violate Section 402
of the Sarbanes-Oxley Act of 2002 or any regulations adopted
pursuant thereto or Regulation O, promulgated by the Board
of Governors of the Federal Reserve System (as determined by
the Administrator in its sole discretion), the Administrator
shall have complete discretion, exercisable either at the
time an Option is granted or at any time while the Option
remains outstanding, to:
(A) extend the period of time for which the Option is to
remain exercisable following the Optionee's cessation
of Service from the limited exercise period otherwise
in effect for that Option to such greater period of
time as the Administrator shall deem appropriate, but
in no event beyond the expiration of the Option term;
and/or
(B) permit the Option to be exercised, during the
applicable post-Service exercise period, not only with
respect to the number of vested Shares for which such
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Option is exercisable at the time of the Optionee's
cessation of Service but also with respect to one or
more additional installments in which the Optionee
would have vested had the Optionee continued in
Service.
(f) Shareholder Rights. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive
dividends or any other rights as a shareholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of
the Option. The Company shall issue (or cause to be issued) such
certificate promptly upon exercise of the Option. No adjustment
will be made for a dividend or other right for which the record
date is prior to the date the stock certificate is issued, except
as provided in Section 8 below.
(g) Non-transferability of Options. Options may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner
other than by will, by the laws of descent and distribution, by
instrument to an inter vivos or testamentary trust in which
Options are to be passed to beneficiaries upon the death of the
trustor (settler) or by gift to Immediate Family. Notwithstanding
the immediately preceding sentence, Incentive Stock Option
transfers may be limited by the Administrator in order to comply
with the Code and shall be further limited, if necessary, so that
neither the transfer of an Option other than an Incentive Stock
Option to such Immediate Family, nor the ability of a Optionee to
make such a transfer shall have adverse consequences to the
Company or the Optionee by reason of Section 162(m) of the Code.
(h) 10% Shareholder. If any Grantee to whom an Option is granted is a
10% Shareholder on the Date of Grant, then the Exercise Price
shall not be less than 110% of the Fair Market Value of a Share
on the Date of Grant of such Option.
7. Incentive Stock Options. The terms specified below shall be applicable
to all Incentive Stock Options, and these terms shall, as to such Incentive
Stock Options, supercede any conflicting terms in Section 6 above. Options which
are specifically designated as Non-Statutory Stock Options when issued under the
Plan shall not be subject to the terms of this Section.
(a) Eligibility. Incentive Stock Options may only be granted to
Employees.
(b) Exercise Price. The Exercise Price of an Incentive Stock Option
shall not be less than 100% of the Fair Market Value of a Share
on the Date of Grant of such Option, except as otherwise provided
for in Subsection (d) below.
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(c) Dollar Limitation. In the case of an Incentive Stock Option, the
aggregate Fair Market Value of the Optioned Stock (determined as
of the Date of Grant of each Option) with respect to Options
granted to any Employee under the Plan (or any other option plan
of the Company or any Affiliate) that may for the first time
become exercisable as Incentive Stock Options during any one
calendar year shall not exceed the sum of $100,000. To the extent
the Employee holds two or more such Options which become
exercisable for the first time in the same calendar year, the
foregoing limitation on the exercisability of such Options as
Incentive Stock Options shall be applied on the basis of the
order in which such Options are granted. Any Options in excess of
such limitation shall automatically be treated as Non-Statutory
Stock Options.
(d) Option Term for 10% Shareholder. The Option term of an Incentive
Stock Option granted to a 10% Shareholder shall not exceed five
years measured from the Date of Grant of such Option.
(e) Change in Status. In the event of an Optionee's change of status
from Employee to Consultant or to Non-Employee Director, an
Incentive Stock Option held by the Optionee shall cease to be
treated as an Incentive Stock Option and shall be treated for tax
purposes as a Non-Statutory Stock Option three months and one day
following such change of status.
(f) Approved Leave of Absence. If an Optionee is on an approved leave
of absence, and the Optionee's reemployment upon expiration of
such leave is not guaranteed by statute or contract, including
Company policies, then on the 91st day of such leave any
Incentive Stock Option held by the Optionee shall cease to be
treated as an Incentive Stock Option and shall be treated for tax
purposes as a Non-Statutory Stock Option.
8. Adjustments
(a) Recapitalization, Etc. If the outstanding Common Stock is
hereafter increased or decreased, or changed into or exchanged
for a different number or kind of shares or other securities of
the Company or of another corporation, by reason of a
recapitalization, reclassification, reorganization, merger,
consolidation, share exchange or other business combination in
which the Company is the surviving parent corporation, stock
split-up, combination of shares or dividend or other distribution
payable in capital stock or rights to acquire capital stock,
appropriate adjustment shall be made by the Administrator in the
number and kind of shares for which Options may be granted under
the Plan. In addition, the Administrator shall make appropriate
adjustment in the number and kind of shares as to which
outstanding and unexercised Options shall be exercisable, to the
end that the proportionate interest of the holder of the Option
shall, to the extent practicable, be maintained as before the
occurrence of the event. The adjustment in outstanding Options
shall be made without change in the total price applicable to the
unexercised portion of the Option but with a corresponding
adjustment in the exercise price per share.
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(b) Reorganization. Upon a Reorganization (as hereinafter defined):
(i) If there is no plan or agreement with respect to the
Reorganization ("Reorganization Agreement"), or if the
Reorganization Agreement does not specifically provide for
the adjustment, change, conversion, or exchange of the
outstanding and unexercised Options for cash or other
property or securities of another corporation, then any
outstanding and unexercised Options shall terminate as of a
future date to be fixed by the Administrator; or
(ii) If there is a Reorganization Agreement, and the
Reorganization Agreement specifically provides for the
adjustment, change, conversion or exchange of the
outstanding and unexercised Options for cash or other
property or securities of another corporation, then the
Administrator shall adjust the shares under the outstanding
and unexercised Options, and shall adjust the shares
remaining under the Plan which are then available for the
issuance of Options under the Plan if the Reorganization
Agreement makes specific provisions therefor, in a manner
not inconsistent with the provisions of the Reorganization
Agreement for the adjustment, change, conversion, or
exchange of the Options and shares.
(c) Reorganization Defined. The term "Reorganization" as used in this
Section 8 means any reorganization, merger, consolidation, share
exchange or other business combination pursuant to which the
Company is not the surviving parent corporation after the
effective date of the Reorganization, or any sale or lease of all
or substantially all of the assets of the Company. Nothing herein
shall require the Company to adopt a Reorganization Agreement, or
to make provision for the adjustment, change, conversion, or
exchange of any Options or the shares subject thereto, in any
Reorganization Agreement that it does adopt.
(d) Notice to Optionees. The Administrator shall provide to each
Optionee then holding an outstanding and unexercised Option not
less than 30 calendar days' advanced written notice of any date
fixed by the Administrator pursuant to this Section 8 and of the
terms of any Reorganization Agreement providing for the
adjustment, change, conversion, or exchange of outstanding and
unexercised Options. Except as the Administrator may otherwise
provide, each Optionee shall have the right during that period to
exercise his or her Option only to the extent that the Option was
exercisable on the date the notice was provided to the Optionee.
(e) Adjustment Must Conform. Any adjustment to any outstanding ISO
pursuant to this Section 8, if made by reason of a transaction
described in Section 424(a) of the Code, shall be made so as to
conform to the requirements of that Section and the regulations
thereunder. If any other transaction described in Section 424(a)
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of the Code affects the Common Stock subject to any unexercised
ISO theretofore granted under the Plan ("old option"), the Board
or the board of directors of any surviving or acquiring
corporation may take such action as it deems appropriate, in
conformity with the requirements of that Code Section and the
regulations thereunder, to substitute a new option for the old
option, in order to make the new option, as nearly as may be
practicable, equivalent to the old option, or to assume the old
option.
(f) No Modification. No modification, extension, renewal, or other
change in any Option granted under the Plan may be made, after
the grant of the Option, without the Optionee's consent, unless
it is permitted by the provisions of the Plan and the option
agreement. In the case of an ISO, Optionees are hereby advised
that certain changes may disqualify the ISO from being considered
as such under Section 422 of the Code, or constitute a
modification, extension, or renewal of the ISO under Section
424(h) of the Code.
(g) Good Faith of the Administrator. All adjustments and
determinations under this Section 8 shall be made by the
Administrator in good faith in its sole discretion.
(h) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator
shall notify each Participant as soon as practicable prior to the
effective date of such proposed transaction. In such event, the
Administrator, in its discretion, may provide for a Participant
to fully vest in his/her Option. To the extent it has not been
previously exercised, an Option will terminate upon dissolution
or liquidation of the Company.
9. Cancellation and Regrant of Options. The Administrator shall have the
authority to effect, at any time and from time to time, with the consent of the
affected Optionee, the cancellation of any or all outstanding Options and to
grant in substitution new Options covering the same or a different number of
Shares but with an Exercise Price per Share based on the Fair Market Value per
Share on the new Date of Grant of the Option. For purposes of Section 4 hereof,
Shares underlying any Option cancelled by the Company in such exchange shall be
available for issuance under the Plan; furthermore, except with respect to a
Participant subject to Section 162(m) of the Code, a grant of any Option to a
Participant pursuant to such exchange shall be disregarded for purposes of
determining whether such Participant has exceeded any limitations hereunder
limiting the amount of any type of Option or aggregate amount of Options that
may be granted to a Participant (except to the extent the number of Shares
underlying such Options exceeds the number of Shares underlying the
Participant's cancelled Options).
10. Information to Holders of Options. The Company shall provide to each
Optionee, on an annual basis, the information required by Section 260.140.46,
Title 10 of the California Code of Regulations and any successor law or
regulation.
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11. Tax Withholding.
(a) For corporate purposes, the Company's obligation to deliver
Shares upon the exercise of Options under the Plan shall be
subject to the satisfaction of all applicable federal, state and
local income and employment tax withholding requirements.
(b) To the extent permitted under Section 402 of the Sarbanes-Oxley
Act of 2002 and the regulations adopted pursuant thereto, the
Administrator may, in its discretion, provide any or all holders
of Non-Statutory Stock Options with the right to use previously
vested Shares in satisfaction of all or part of the Taxes
incurred by such holders in connection with the exercise of their
Non-Statutory Stock Options, provided, however, that this form of
payment shall be limited to the withholding amount calculated
using the minimum statutory rates. Such right may be provided to
any such holder as follows: The election to have the Company
withhold, from the Shares otherwise issuable upon the exercise of
such Non-Statutory Stock Option, a portion of those Shares with
an aggregate Fair Market Value equal to the Taxes calculated
using the minimum statutory withholding rates interpreted in
accordance with APB 25 and FASB Interpretation No. 44.
12. Effective Date and Term of the Plan. The Plan was adopted by the Board
on March 24, 2004, and shall become effective on the date of its approval by the
Company's shareholders. Unless sooner terminated by the Administrator, the Plan
shall continue until March 24, 2014. When the Plan terminates, no Options shall
be granted under the Plan thereafter. The termination of the Plan shall not
affect any Option previously granted under the Plan.
13. Time of Granting Options. The Date of Grant of an Option shall, for
all purposes, be the date on which the Administrator makes the determination to
grant such Option, or such other date as determined by the Administrator;
provided, however, that any Option granted prior to the date on which the Plan
is approved by the Company's shareholders shall be subject to the shareholders'
approval of the Plan. Notice of the determination shall be given to each Service
Provider to whom an Option is so granted within a reasonable period of time
after the date of such grant.
14. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend,
alter, suspend, or discontinue the Plan, but no amendment,
alteration, suspension, or discontinuation shall be made which
would impair the rights of any Participant under any grant
theretofore made without his/her consent. In addition, to the
extent necessary and desirable to comply with Section 422 of the
Code (or any other applicable law or regulation, including the
requirements of any stock exchange or national market system upon
which the Common Stock is then listed), the Company shall obtain
shareholder approval of any Plan amendment in such a manner and
to such a degree as required.
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(b) Effect of Amendment and Termination. Any such amendment or
termination of the Plan shall not affect Options already granted,
and such Options shall remain in full force and effect as if this
Plan had not been amended or terminated, unless mutually agreed
otherwise between the Participant and the Board, which agreement
must be in writing and signed by the Participant and the Company.
15. Regulatory Approvals.
(a) The implementation of the Plan, the granting of any Options and
the issuance of any Shares upon the exercise of any granted
Options shall be subject to the Company's procurement of all
approvals and permits required by regulatory authorities having
jurisdiction over the Plan, the Options granted under it, and the
Shares issued pursuant to it.
(b) No Shares or other assets shall be issued or delivered under the
Plan unless and until there shall have been compliance with all
applicable requirements of federal and state securities laws,
including the filing and effectiveness of the Form S-8
registration statement (if required) and under state law (if
required) for the Shares issuable under the Plan.
(c) The receipt of Shares upon the exercise of an Option shall be
conditioned upon the Optionee (or any other person who exercises
the Option on his or her behalf as permitted by this Plan)
providing to the Administrator a written representation that, at
the time of such exercise, it is the intent of that person(s) to
acquire the shares for investment only and not with a view toward
distribution. The certificate for unregistered shares issued for
investment shall be restricted by the Company as to transfer
unless the Company receives an opinion of counsel satisfactory to
the Company to the effect that the restriction is not necessary
under then pertaining law. The providing of the representation
and the restrictions on transfer shall not, however, be required
upon any person's receipt of Shares under the Plan if, at the
time of grant of the Option relating to receipt or upon receipt,
whichever is the appropriate measure under applicable federal or
state securities laws, the Optioned Stock is: (i) covered by an
effective and current registration statement under the Securities
Act of 1933, as amended; and (ii) either qualified or exempt from
qualification under applicable state securities laws.
16. No Employment/Service Rights. Nothing in the Plan shall confer upon
the Participant 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 Affiliate employing or retaining such person) or of the
Participant, which rights are hereby expressly reserved by each, to terminate
such person's Service at any time for any reason, with or without cause.
17. Governing Law. This Plan shall be governed by California law, applied
without regard to conflict of law principles.
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18. Non-Exclusivity of the Plan. Nothing contained in the Plan is intended
to amend, modify or rescind any previously approved compensation plans, programs
or options entered into by the Company. This Plan shall be construed to be in
addition to and independent of any and all other arrangements. Neither the
adoption of the Plan by the Board nor the submission of the Plan to the
shareholders of the Company for approval shall be construed as creating any
limitations on the power or authority of the Board to adopt, with or without
shareholder approval, such additional or other compensation arrangements as the
Board may from time to time deem desirable.
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