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 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.
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"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 700,000, 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 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.
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(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, even if the date of exercise within such extended period is
past the expiration date set forth in the Option Agreement, and
only to the extent that the Optionee was entitled to exercise
such Option on the Termination Date (but in no event later than
ten years after the date the Option was granted). 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, even if the date of
exercise within such extended period is past the expiration date
set forth in the Option Agreement, and only to the extent that
the Optionee was entitled to exercise such Option on the
Termination Date (but in no event later than ten years after the
date the Option was granted). 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.
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(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, even if the date of exercise within such extended period
is past the expiration date set forth in the Option Agreement,
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 ten
years after the date the Option was granted). 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 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.
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(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) 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.
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(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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