Exhibit 10.1
LITHIUM CORPORATION
2009 STOCK PLAN
1. Purpose.
The purpose of this plan (the "Plan") is to secure for Lithium Corporation
(the "Corporation") and its stockholders the benefits arising from capital stock
ownership by employees, officers and directors of, and consultants or advisors
to, the Corporation and its subsidiary corporations who are expected to
contribute to the Corporation's future growth and success. The Plan permits
grants of options to purchase shares of Common Stock, $0.001 par value per
share, of the Corporation ("Common Stock") and awards of shares of Common Stock
that are restricted as provided in Section 12 ("Restricted Shares"). Those
provisions of the Plan which make express reference to Section 422 of the
Internal Revenue Code of 1986, as amended or replaced from time to time (the
"Code"), shall apply only to Incentive Stock Options (as that term is defined in
the Plan).
2. Type of Options and Administration.
(a) Types of Options. Options granted pursuant to the Plan shall be
authorized by action of the Board of Directors of the Corporation (or a
Committee designated by the Board of Directors) and may be either incentive
stock options ("Incentive Stock Options") meeting the requirements of Section
422 of the Code or non-statutory options which are not intended to meet the
requirements of Section 422 of the Code.
(b) Administration. The Plan will be administered by the Board of Directors
of the Corporation, whose construction and interpretation of the terms and
provisions of the Plan shall be final and conclusive. The Board of Directors may
in its sole discretion grant Restricted Shares and options to purchase shares of
Common Stock and issue shares upon exercise of such options as provided in the
Plan. The Board shall have authority, subject to the express provisions of the
Plan, to construe the respective option and Restricted Share agreements and the
Plan, to prescribe, amend and rescind rules and regulations relating to the
Plan, to determine the terms and provisions of the respective option and
Restricted Share agreements, which need not be identical, and to make all other
determinations in the judgment of the Board of Directors necessary or desirable
for the administration of the Plan. The Board of Directors may correct any
defect or supply any omission or reconcile any inconsistency in the Plan or in
any option or Restricted Share agreement in the manner and to the extent it
shall deem expedient to carry the Plan into effect and it shall be the sole and
final judge of such expediency. No director or person acting pursuant to
authority delegated by the Board of Directors shall be liable for any action or
determination under the Plan made in good faith. The Board of Directors may, to
the full extent permitted by or consistent with applicable laws or regulations
(including, without limitation, applicable state law and Rule 16b-3 promulgated
under the Securities Exchange Act of 1934 (the "Exchange Act"), or any successor
rule ("Rule 16b-3")), delegate any or all of its powers under the Plan to a
committee (the "Committee") appointed by the Board of Directors, and if the
Committee is so appointed all references to the Board of Directors in the Plan
shall mean and relate to such Committee with respect to the powers so delegated.
Any director to whom an option or stock grant is awarded shall be ineligible to
vote upon his or her option or stock grant, but such option or stock grant may
be awarded any such director by a vote of the remainder of the directors, except
as limited below.
(c) Applicability of Rule 16b-3. Those provisions of the Plan which make
express reference to Rule 16b-3 shall apply to the Corporation only at such time
as the Corporation's Common Stock is registered under the Exchange Act, and then
only to such persons as are required to file reports under Section 16(a) of the
Exchange Act (a "Reporting Person").
(d) Compliance with Section 162(m) of the Code. Section 162(m) of the Code,
added by the Omnibus Budget Reconciliation Act of 1993, generally limits the tax
deductibility to publicly held companies of compensation in excess of $1,000,000
paid to certain "covered employees" ("Covered Employees"). It is the
Corporation's intention to preserve the deductibility of such compensation to
the extent it is reasonably practicable and to the extent it is consistent with
the Corporation's compensation objectives. For purposes of this Plan, Covered
Employees of the Corporation shall be those employees of the Corporation
described in Section 162(m)(3) of the Code.
(e) Special Provisions Applicable to Options Granted to Covered Employees.
In order for the full value of options granted to Covered Employees to be
deductible by the Corporation for federal income tax purposes, the Corporation
may intend for such options to be treated as "qualified performance based
compensation" as described in Treas. Reg. ss.1.162-27(e) (or any successor
regulation). In such case, options granted to Covered Employees shall be subject
to the following additional requirements:
(i) such options and rights shall be granted only by a committee
comprised solely of two or more "outside directors", within the meaning of
Treas. Reg. ss. 1.162.27(e)(3); and
(ii) the exercise price of such options shall in no event be less than
the Fair Market Value (as defined below) of the Common Stock as of the date of
grant of such options.
(f) Section 409A of the Code. The Board of Directors may only grant those
awards that either comply with the applicable requirements of Section 409A of
the Code, or do not result in the deferral of compensation within the meaning of
Section 409A of the Code.
3. Eligibility.
(a) General. Options and Restricted Shares may be granted to persons who
are, at the time of grant, in a Business Relationship (as defined below) with
the Corporation; provided, that Incentive Stock Options may only be granted to
individuals who are employees of the Corporation (within the meaning of Section
3401(c) of the Code). A person who has been granted an option or Restricted
Shares may, if he or she is otherwise eligible, be granted additional options or
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Restricted Shares if the Board of Directors shall so determine. For purposes of
the Plan, "Business Relationship" means that a person is serving the
Corporation, its parent, if applicable, or any of its subsidiaries, if
applicable, in the capacity of an employee, officer, director, advisor or
consultant.
(b) Grant of Options to Reporting Persons. From and after the registration
of the Common Stock of the Corporation under the Exchange Act, the selection of
a director or an officer who is a Reporting Person (as the terms "director" and
"officer" are defined for purposes of Rule 16b-3) as a recipient of an option or
Restricted Shares, the timing of the option or Restricted Share grant, the
exercise price of the option and the number of Restricted Shares or shares
subject to the option shall be determined either (i) by the Board of Directors,
or (ii) by a committee consisting of two or more "Non-Employee Directors" having
full authority to act in the matter. For the purposes of the Plan, a director
shall be deemed to be a "Non-Employee Director" only if such person qualifies as
a "Non-Employee Director" within the meaning of Rule 16b-3, as such term is
interpreted from time to time.
4. Stock Subject to Plan.
The stock subject to options granted under the Plan or grants of Restricted
Shares shall be shares of authorized but unissued or reacquired Common Stock.
Subject to adjustment as provided in Section 16 below, the maximum number of
shares of Common Stock of the Corporation ("Shares") which may be issued and
sold under the Plan is six million and fifty-five thousand (6,055,000) Shares.
If any Restricted Shares shall be reacquired by the Corporation, forfeited or an
option granted under the Plan shall expire, terminate or is canceled for any
reason without having been exercised in full, the forfeited Restricted Shares or
unpurchased Shares subject to such option shall again be available for
subsequent option or Restricted Share grants under the Plan. Subject to
adjustment in accordance with Section 16:
(a) No more than an aggregate of 3,027,500 Shares may be issued under
Incentive Stock Options or non-statutory stock options during the term of
the Plan;
(b) No more than an aggregate of 3,027,500 Shares may be issued in the
form of Restricted Shares during the term of the Plan; and
(c) The maximum number of Shares with respect to which options may be
granted to any one person during any fiscal year of the Corporation may not
exceed 5% of the Corporation's issued and outstanding shares at the time of
grant.
These limits shall be applied and construed consistently with Section
162(m) of the Code.
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5. Forms of Option and Restricted Share Agreements.
As a condition to the grant of Restricted Shares or an option under the
Plan, each recipient of Restricted Shares or an option shall execute an option
or Restricted Share or Stock Option agreement in such form not inconsistent with
the Plan as may be approved by the Board of Directors. Such Option or Restricted
Share agreements may differ among recipients.
6. Purchase Price.
(a) General. The purchase price per Share deliverable upon the exercise of
an option shall be determined by the Board of Directors at the time of grant of
such option; provided, however, that the exercise price of an option shall not
be less than 100% of the Fair Market Value (as hereinafter defined) of a Share,
at the time of grant of such option, or not less than 110% of such Fair Market
Value in the case of an Incentive Stock Option described in Section 11(b). "Fair
Market Value" of a Share as of a specified date for the purposes of the Plan
shall mean the closing price of a Share on the principal securities exchange on
which such Shares are traded on the day immediately preceding the date as of
which Fair Market Value is being determined, or on the next preceding date on
which such Shares are traded if no shares were traded on such immediately
preceding day, or if the Shares are not traded on a securities exchange, Fair
Market Value shall be deemed to be the average of the high bid and low asked
prices of the Shares in the over-the-counter market on the day immediately
preceding the date as of which Fair Market Value is being determined or on the
next preceding date on which such high bid and low asked prices were recorded.
In no case shall Fair Market Value be determined with regard to restrictions
other than restrictions which, by their terms, will never lapse. The Board of
Directors may also permit optionees, either on a selective or aggregate basis,
to simultaneously exercise options and sell the Shares thereby acquired,
pursuant to a brokerage or similar arrangement, approved in advance by the Board
of Directors, and to use the proceeds from such sale as payment of the purchase
price of such shares.
(b) Payment of Purchase Price. Options granted under the Plan may provide
for the payment of the exercise price by delivery of cash or a check to the
order of the Corporation in an amount equal to the exercise price of such
options, or, to the extent provided in the applicable option agreement, (i) by
delivery to the Corporation of Shares having a Fair Market Value on the date of
exercise equal in amount to the exercise price of the options being exercised,
(ii) through any cashless exercise feature that may be included in the option
agreement covering a particular option grant, (iii) by any other means which the
Board of Directors determines are consistent with the purpose of the Plan and
with applicable laws and regulations (including, without limitation, the
provisions of Rule 16b-3 and Regulation T promulgated by the Federal Reserve
Board) or (iv) by any combination of such methods of payment.
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7. Option Period.
Subject to earlier termination as provided in the Plan, each option and all
rights thereunder shall expire on such date as determined by the Board of
Directors and set forth in the applicable option agreement, provided, that such
date shall not be later than (10) ten years after the date on which the option
is granted.
8. Exercise of Options.
Each option granted under the Plan shall be exercisable either in full or
in installments at such time or times and during such period as shall be set
forth in the option agreement evidencing such option, subject to the provisions
of the Plan. No option granted to a Reporting Person for purposes of the
Exchange Act, however, shall be exercisable during the first six months after
the date of grant. Subject to the requirements in the immediately preceding
sentence, if an option is not at the time of grant immediately exercisable, the
Board of Directors may (i) in the agreement evidencing such option, provide for
the acceleration of the exercise date or dates of the subject option upon the
occurrence of specified events, and/or (ii) at any time prior to the complete
termination of an option, accelerate the exercise date or dates of such option,
unless it would cause an option that otherwise qualified as an Incentive Stock
Option to lose Incentive Stock Option treatment by application of Section
422(d)(1) of the Code and Section 11(c) of the Plan.
9. Non-transferability of Options.
No option granted under this Plan shall be assignable or otherwise
transferable by the optionee except by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined in
the Code or Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or the rules thereunder. An option may be exercised during
the lifetime of the optionee only by the optionee. In the event an optionee dies
during his employment by the Corporation or any of its subsidiaries, or during
the three-month period following the date of termination of such employment, his
option shall thereafter be exercisable, during the period specified to the full
extent to which such option was exercisable by the optionee at the time of his
death during the periods set forth in Section 10 or 11(d). If any optionee
should attempt to dispose of or encumber his or her options, other than in
accordance with the applicable terms of this Plan or the applicable option
agreement, his or her interest in such options shall terminate.
10. Effect of Termination of Employment or Other Relationship.
Except as provided in Section 11(d) with respect to Incentive Stock
Options, and subject to the provisions of the Plan and the applicable option
agreement, an optionee may exercise an option (but only to the extent such
option was exercisable at the time of termination of the optionee's employment
or other relationship with the Corporation) at any time within three (3) months
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following the termination of the optionee's employment or other relationship
with the Corporation or within one (1) year if such termination was due to the
death or disability of the optionee, but, except in the case of the optionee's
death, in no event later than the expiration date of the Option. If the
termination of the optionee's employment is for cause or is otherwise
attributable to a breach by the optionee of an employment or confidentiality or
non-disclosure agreement, the option shall expire immediately upon such
termination. The Board of Directors shall have the power to determine what
constitutes a termination for cause or a breach of an employment or
confidentiality or non-disclosure agreement, whether an optionee has been
terminated for cause or has breached such an agreement, and the date upon which
such termination for cause or breach occurs. Any such determinations shall be
final and conclusive and binding upon the optionee.
11. Incentive Stock Options.
Options granted under the Plan which are intended to be Incentive Stock
Options shall be subject to the following additional terms and conditions:
(a) Express Designation. All Incentive Stock Options granted under the Plan
shall, at the time of grant, be specifically designated as such in the option
agreement covering such Incentive Stock Options.
(b) 10% Stockholder. If any employee to whom an Incentive Stock Option is
to be granted under the Plan is, at the time of the grant of such option, the
owner of stock possessing more than 10% of the total combined voting power of
all classes of stock of the Corporation (after taking into account the
attribution of stock ownership rules of Section 424(d) of the Code), then the
following special provisions shall be applicable to the Incentive Stock Option
granted to such individual:
(i) The purchase price per share of the Common Stock subject to such
Incentive Stock Option shall not be less than 110% of the Fair Market Value
of one share of Common Stock at the time of grant; and
(ii) the option exercise period shall not exceed five years from the
date of grant.
(c) Dollar Limitation. For so long as the Code shall so provide, options
granted to any employee under the Plan (and any other incentive stock option
plans of the Corporation) which are intended to constitute Incentive Stock
Options shall not constitute Incentive Stock Options to the extent that such
options, in the aggregate, become exercisable for the first time in any one
calendar year for shares of Common Stock with an aggregate Fair Market Value, as
of the respective date or dates of grant, of more than $100,000 (or such other
limitations as the Code may provide).
(d) Termination of Employment, Death or Disability. No Incentive Stock
Option may be exercised unless, at the time of such exercise, the optionee is,
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and has been continuously since the date of grant of his or her option, employed
by the Corporation, except that, unless otherwise specified in the applicable
option agreement:
(i) an Incentive Stock Option may be exercised within the period of
three months after the date the optionee ceases to be an employee of the
Corporation (or within such lesser period as may be specified in the
applicable option agreement), provided, that the agreement with respect to
such option may designate a longer exercise period and that the exercise
after such three-month period shall be treated as the exercise of a
non-statutory option under the Plan;
(ii) if the optionee dies while in the employ of the Corporation, or
within three months after the optionee ceases to be such an employee, the
Incentive Stock Option may be exercised by the person to whom it is
transferred by will or the laws of descent and distribution within the
period of one year after the date of death (or within such lesser period as
may be specified in the applicable option agreement); and
(iii) if the optionee becomes disabled (within the meaning of Section
22(e)(3) of the Code or any successor provisions thereto) while in the
employ of the Corporation, the Incentive Stock Option may be exercised
within the period of one year after the date the optionee ceases to be such
an employee because of such disability (or within such lesser period as may
be specified in the applicable option agreement).
For all purposes of the Plan and any option granted hereunder, "employment"
shall be defined in accordance with the provisions of Section 1.421-1(h) of the
Income Tax Regulations (or any successor regulations). Notwithstanding the
foregoing provisions no Incentive Stock Option may be exercised after its
expiration date.
12. Restricted Shares.
(a) Awards. The Board of Directors may from time to time in its discretion
award Restricted Shares to persons having a Business Relationship with the
Corporation and may determine the number of Restricted Shares awarded and the
terms and conditions of, and the amount of payment, if any, to be made by such
persons. Each award of Restricted Shares will be evidenced by a written
agreement executed on behalf of the Corporation and containing terms and
conditions not inconsistent with the Plan as the Board of Directors shall
determine to be appropriate in its sole discretion.
(b) Restricted Period; Lapse of Restrictions. At the time an award of
Restricted Shares is made, the Board of Directors shall establish a period of
time (the "Restricted Period") applicable to such award which shall not be more
than ten years. Each award of Restricted Shares may have a different Restricted
Period. In lieu of establishing a Restricted Period, the Board of Directors may
establish restrictions based only on the achievement of specified performance
measures or a time release schedule. At the time an award is made, the Board of
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Directors may, in its discretion, prescribe conditions for the incremental lapse
of restrictions during the Restricted Period and for the lapse or termination of
restrictions upon the occurrence of other conditions in addition to or other
than the expiration of the Restricted Period with respect to all or any portion
of the Restricted Shares. Such conditions may include, without limitation, the
death or disability of the participant to whom Restricted Shares are awarded,
retirement of the participant pursuant to normal or early retirement under any
retirement plan of the Corporation or termination by the Corporation of the
participant's employment other than for cause, or the occurrence of a change in
control of the Corporation. Such conditions may also include performance
measures, which, in the case of any such award of Restricted Shares to a
participant who is a "covered employee" within the meaning of Section 162(m) of
the Code, shall be based on one or more of the following criteria: earnings per
share, market value per share, return on invested capital, return on operating
assets and return on equity. The Board of Directors may also, in its discretion,
shorten or terminate the Restricted Period or waive any conditions for the lapse
or termination of restrictions with respect to all or any portion of the
Restricted Shares at any time after the date the award is made.
(c) Rights of Holder; Limitations Thereon. Upon an award of Restricted
Shares, a stock certificate representing the number of Restricted Shares awarded
to the participant shall be registered in the participant's name and, at the
discretion of the Board of Directors, will be either delivered to the
participant with an appropriate legend or held in custody by the Corporation or
a bank for the participant's account. The participant shall generally have the
rights and privileges of a stockholder as to such Restricted Shares, including
the right to vote such Restricted Shares, except that the following restrictions
shall apply: (i) with respect to each Restricted Share, the participant shall
not be entitled to delivery of an unlegended certificate until the expiration
nor termination of the Restricted Period, and the satisfaction of any other
conditions prescribed by the Board of Directors, relating to such Restricted
Share; (ii) with respect to each Restricted Share, such share may not be sold,
transferred, assigned, pledged, or otherwise encumbered or disposed of until the
expiration of the Restricted Period, and the satisfaction of any other
conditions prescribed by the Board of Directors, relating to such Restricted
Share (except, subject to the provisions of the participant's stock restriction
agreement, by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Code or Title I of ERISA or
the rules promulgated thereunder) and (iii) all of the Restricted Shares as to
which restrictions have not at the time lapsed shall be forfeited and all rights
of the participant to such Restricted Shares shall terminate without further
obligation on the part of the Corporation unless the participant has remained in
a Business Relationship with the Corporation or any of its subsidiaries until
the expiration or termination of the Restricted Period and the satisfaction of
any other conditions prescribed by the Board of Directors applicable to such
Restricted Shares. Upon the forfeiture of any Restricted Shares, such forfeited
shares shall be transferred to the Corporation without further action by the
participant. At the discretion of the Board of Directors, cash and stock
dividends with respect to the Restricted Shares may be either currently paid or
withheld by the Corporation for the participant's account, and interest may be
paid on the amount of cash dividends withheld at a rate and subject to such
terms as determined by the Board of Directors. The participant shall have the
same rights and privileges, and be subject to the same restrictions, with
respect to any shares received pursuant to Section 16 hereof.
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(d) Delivery of Unrestricted Shares. Upon the expiration or termination of
the Restricted Period and the satisfaction of any other conditions prescribed by
the Board of Directors, the restrictions applicable to the Restricted Shares
shall lapse and a stock certificate for the number of Restricted Shares with
respect to which the restrictions have lapsed shall be delivered, free of all
such restrictions, except any that may be imposed by law including without
limitation securities laws, to the participant or the participant's beneficiary
or estate, as the case may be. The Corporation shall not be required to deliver
any fractional share of Common Stock but will pay, in lieu thereof, the fair
market value (determined as of the date the restrictions lapse) of such
fractional share to the participant or the participant's beneficiary or estate,
as the case may be.
13. Additional Provisions.
(a) Additional Provisions. The Board of Directors may, in its sole
discretion, include additional provisions in option or Restricted Stock
agreements covering options or Restricted Stock granted under the Plan,
including without limitation, restrictions on transfer, repurchase rights,
rights of first refusal, commitments to pay cash bonuses, to make, arrange for
or guaranty loans or to transfer other property to optionees upon exercise of
options, or such other provisions as shall be determined by the Board of
Directors; provided, that such additional provisions shall not be inconsistent
with any other term or condition of the Plan and such additional provisions
shall not cause any Incentive Stock Option granted under the Plan to fail to
qualify as an Incentive Stock Option within the meaning of Section 422 of the
Code or result in the imposition of an additional tax under Section 409A of the
Code.
(b) Acceleration, Extension, Etc. The Board of Directors may, in its sole
discretion, (i) accelerate the date or dates on which all or any particular
option or options granted under the Plan may be exercised or (ii) extend the
dates during which all, or any particular, option or options granted under the
Plan may be exercised if it would not cause any Incentive Stock Option granted
under the Plan to fail to qualify as an Incentive Stock Option within the
meaning of Section 422 of the Code or result in the imposition of an additional
tax under Section 409A of the Code.
14. General Restrictions.
(a) Investment Representations. The Corporation may require any person to
whom Restricted Shares or an option is granted, as a condition of receiving such
Restricted Shares or exercising such option, to give written assurances in
substance and form satisfactory to the Corporation to the effect that such
person is acquiring the Restricted Shares or Common Stock subject to the option
for his or her own account for investment and not with any present intention of
selling or otherwise distributing the same, and to such other effects as the
Corporation deems necessary or appropriate in order to comply with federal and
applicable state securities laws, or with covenants or representations made by
the Corporation in connection with any public offering of its Common Stock.
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(b) Compliance with Securities Law. Each option and grant of Restricted
Shares shall be subject to the requirement that if, at any time, counsel to the
Corporation shall determine that the listing, registration or qualification of
the Restricted Shares or shares subject to such option upon any securities
exchange or under any state or federal law, or the consent or approval of any
governmental or regulatory body, or that the disclosure of non-public
information or the satisfaction of any other condition is necessary as a
condition of, or in connection with the issuance or purchase of shares
thereunder, such Restricted Shares shall not be granted and such option may not
be exercised, in whole or in part, unless such listing, registration,
qualification, consent or approval, or satisfaction of such condition shall have
been effected or obtained on conditions acceptable to the Board of Directors.
Nothing herein shall be deemed to require the Corporation to apply for or to
obtain such listing, registration or qualification, or to satisfy such
condition.
15. Rights as a Stockholder.
The holder of an option shall have no rights as a stockholder with respect
to any shares covered by the option (including, without limitation, any rights
to receive dividends or non-cash distributions with respect to such shares)
until the date of issue of a stock certificate to him or her for such shares. No
adjustment shall be made for dividends or other rights for which the record date
is prior to the date such stock certificate is issued.
16. Adjustment Provisions for Recapitalization, Reorganizations and Related
Transactions.
(a) Recapitalization and Related Transactions. If, through or as a result
of any recapitalization, reclassification, stock dividend, stock split, reverse
stock split or other similar transaction, (i) the outstanding shares of Common
Stock are increased, decreased or exchanged for a different number or kind of
shares or other securities of the Corporation, or (ii) additional shares or new
or different shares or other non-cash assets are distributed with respect to
such shares of Common Stock or other securities, an appropriate and
proportionate adjustment shall be made in (x) the maximum number and kind of
shares reserved for issuance under the Plan, (y) the number and kind of
Restricted Shares granted and shares or other securities subject to any then
outstanding options under the Plan, and (z) the exercise price for each share
subject to any then outstanding options under the Plan, without changing the
aggregate purchase price as to which such options remain exercisable.
Notwithstanding the foregoing, no adjustment shall be made pursuant to this
Section 16 if such adjustment (i) would cause the Plan to fail to comply with
Section 422 of the Code or with Rule 16b-3 or (ii) would be considered as the
adoption of a new plan requiring stockholder approval.
(b) Reorganization, Merger and Related Transactions. If the Corporation
shall be the surviving corporation in any reorganization, merger or
consolidation of the Corporation with one or more other corporations, any then
outstanding Restricted Shares or option granted pursuant to the Plan shall
pertain to and apply to the securities to which a holder of the number of shares
of Common Stock subject to such Restricted Shares or options would have been
entitled immediately following such reorganization, merger, or consolidation,
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with a corresponding proportionate adjustment of the purchase price as to which
such options may be exercised so that the aggregate purchase price as to which
such options may be exercised shall be the same as the aggregate purchase price
as to which such options may be exercised for the shares remaining subject to
the options immediately prior to such reorganization, merger, or consolidation.
(c) Board Authority to Make Adjustments. Any adjustments made under this
Section 16 will be made by the Board of Directors, whose determination as to
what adjustments, if any, will be made and the extent thereof will be final,
binding and conclusive. No fractional shares will be issued under the Plan on
account of any such adjustments.
17. Merger, Consolidation, Asset Sale, Liquidation, Etc.
(a) General. In the event of a consolidation or merger in which the
Corporation is not the surviving corporation, or sale of all or substantially
all of the assets of the Corporation in which outstanding shares of Common Stock
are exchanged for securities, cash or other property of any other corporation or
business entity or in the event of a liquidation of the Corporation
(collectively, a "Corporate Transaction"), the Board of Directors of the
Corporation, or the board of directors of any corporation assuming the
obligations of the Corporation, may, in its discretion, take any one or more of
the following actions, as to outstanding options: (i) provide that such
Restricted Shares or options shall be assumed, or equivalent Restricted Shares
or options shall be substituted, by the acquiring or succeeding corporation (or
an affiliate thereof), provided that any such options substituted for Incentive
Stock Options shall meet the requirements of Section 424(a) of the Code, (ii)
upon written notice, provide that all unexercised options and Restricted Shares
will terminate immediately prior to the consummation of such transaction unless
such options are exercised by the optionee within a specified period following
the date of such notice, (iii) in the event of a Corporate Transaction under the
terms of which holders of the Common Stock of the Corporation will receive upon
consummation thereof a cash payment for each share surrendered in the Corporate
Transaction (the "Transaction Price"), make or provide for a cash payment to the
optionees equal to the difference between (A) the Transaction Price times the
number of shares of Common Stock subject to such outstanding options (to the
extent then exercisable at prices not in excess of the Transaction Price) and
(B) the aggregate exercise price of all such outstanding options in exchange for
the termination of such options, and (iv) provide that all restrictions on
Restricted Shares shall lapse in full or in part and all or any outstanding
options shall become exercisable in full or in part immediately prior to such
event.
(b) Substitute Restricted Shares or Options. The Corporation may grant
Restricted Shares or options under the Plan in substitution for Restricted
Shares or options held by persons in a Business Relationship with another
corporation who enter into a Business Relationship with the Corporation, or a
subsidiary of the Corporation, as the result of a merger or consolidation of the
employing corporation with the Corporation or a subsidiary of the Corporation,
or as a result of the acquisition by the Corporation, or one of its
subsidiaries, of property or stock of the other corporation. The Corporation may
direct that substitute Restricted Shares or options be granted on such terms and
conditions as the Board of Directors considers appropriate in the circumstances.
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18. No Special Employment Rights.
Nothing contained in the Plan or in any Restricted Share or option
agreement shall confer upon any holder of Restricted Shares or optionee any
right with respect to the continuation of his or her employment by, or other
Business Relationship with, the Corporation or interfere in any way with the
right of the Corporation at any time to terminate such employment or Business
Relationship or to increase or decrease the compensation of the optionee.
19. Other Employee Benefits.
Except as to plans which by their terms include such amounts as
compensation, the amount of any compensation deemed to be received by an
employee as a result of the grant of Restricted Shares or lapse of restrictions
thereon, the exercise of an option or the sale of shares received upon such
exercise will not constitute compensation with respect to which any other
employee benefits of such employee are determined, including, without
limitation, benefits under any bonus, pension, profit-sharing, life insurance or
salary continuation plan, except as otherwise specifically determined by the
Board of Directors.
20. Amendment of the Plan.
(a) The Board of Directors may at any time, and from time to time, modify
or amend the Plan in any respect, except that if at any time the approval of the
stockholders of the Corporation is required under Section 422 of the Code or any
successor provision with respect to Incentive Stock Options, or the legal
requirements relating to the administration of equity compensation plans, if
any, under applicable provisions of federal securities laws, applicable state
corporate and securities laws, the Code, the rules of any applicable stock
exchange or national market system or quotation system on which the Common Stock
is listed or quoted, and the applicable laws and rules of any foreign country or
jurisdiction where awards are, or will be, granted under the Plan.
(b) The termination or any modification or amendment of the Plan shall not,
without the consent of an optionee or holder of Restricted Shares, affect his or
her rights under an option or grant of Restricted Shares previously granted to
him or her. With the consent of the optionee or holder of Restricted Shares
affected, the Board of Directors may amend outstanding option or Restricted
Share agreements in a manner not inconsistent with the Plan. The Board of
Directors shall have the right to amend or modify the terms and provisions of
the Plan and of any outstanding Incentive Stock Options granted under the Plan
to the extent necessary to qualify any or all such options for such favorable
federal income tax treatment (including deferral of taxation upon exercise) as
may be afforded incentive stock options under Section 422 of the Code.
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21. Withholding.
(a) The Corporation shall have the right to deduct from payments of any
kind otherwise due to the optionee or holder of Restricted Shares any federal,
state or local taxes of any kind required by law to be withheld with respect to
any shares issued upon exercise of options or lapse of restrictions on
Restricted Shares under the Plan. Subject to the prior approval of the
Corporation, which may be withheld by the Corporation in its sole discretion,
the optionee or holder of Restricted Shares may elect to satisfy such
obligations, in whole or in part, (i) by causing the Corporation to withhold
shares of Common Stock otherwise issuable pursuant to the exercise of an option
or lapse of restrictions on Restricted Shares or (ii) by delivering to the
Corporation shares of Common Stock already owned by the optionee or holder of
Restricted Shares. The shares so delivered or withheld shall have a Fair Market
Value equal to such withholding obligation as of the date that the amount of tax
to be withheld is to be determined. An optionee who has made an election
pursuant to this Section 21(a) may satisfy his or her withholding obligation
only with shares of Common Stock which are not subject to any repurchase,
forfeiture, unfulfilled vesting or other similar requirements.
(b) The acceptance of shares of Common Stock upon exercise of an Incentive
Stock Option shall constitute an agreement by the optionee (i) to notify the
Corporation if any or all of such shares are disposed of by the optionee within
two years from the date the option was granted or within one year from the date
the shares were transferred to the optionee pursuant to the exercise of the
option, and (ii) if required by law, to remit to the Corporation, at the time of
and in the case of any such disposition, an amount sufficient to satisfy the
Corporation's federal, state and local withholding tax obligations with respect
to such disposition, whether or not, as to both (i) and (ii), the optionee is in
the employ of the Corporation at the time of such disposition.
(c) Notwithstanding the foregoing, in the case of a Reporting Person whose
options have been granted in accordance with the provisions of Section 3(b)
herein, no election to use shares for the payment of withholding taxes shall be
effective unless made in compliance with any applicable requirements of Rule
16b-3.
22. Section 162(m) of the Code. The Board of Directors, in its sole discretion,
may require that one or more agreements contain provisions which provide that,
in the event Section 162(m) of the Code, or any successor provision relating to
excessive employee remuneration, would operate to disallow a deduction by the
Corporation for all or part of any payment of an award under the Plan, a
grantee's receipt of the portion that would not be deductible by the Corporation
shall be deferred to either the earliest date at which the Board reasonably
anticipates that the grantee's remuneration either does not exceed the limit set
forth in Section 162(m) of the Code or is not subject to Section 162(m) of Code,
or the calendar year in which the grantee separates from service. This Section
22 shall be applied and construed consistently with Section 409A of the Code and
the regulations (and guidance) thereunder.
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23. Effective Date and Duration of the Plan.
(a) Effective Date. The Plan shall become effective when adopted by the
Board of Directors, but no Incentive Stock Option granted under the Plan shall
become exercisable unless and until the Plan shall have been approved by the
Corporation's stockholders. If such stockholder approval is not obtained within
twelve (12) months after the date of the Board's adoption of the Plan, no
options previously granted under the Plan shall be deemed to be Incentive Stock
Options and no Incentive Stock Options shall be granted thereafter. Amendments
to the Plan not requiring stockholder approval shall become effective when
adopted by the Board of Directors; amendments requiring stockholder approval (as
provided in Section 20) shall become effective when adopted by the Board of
Directors, but no Incentive Stock Option granted after the date of such
amendment shall become exercisable (to the extent that such amendment to the
Plan was required to enable the Corporation to grant such Incentive Stock Option
to a particular optionee) unless and until such amendment shall have been
approved by the Corporation's stockholders. If such stockholder approval is not
obtained within twelve (12) months of the Board's adoption of such amendment,
any Incentive Stock Options granted on or after the date of such amendment shall
terminate to the extent that such amendment to the Plan was required to enable
the Corporation to grant such option to a particular optionee. Subject to this
limitation, options may be granted under the Plan at any time after the
effective date and before the date fixed for termination of the Plan.
(b) Termination. Unless sooner terminated in accordance with Section 17,
the Plan shall terminate upon the earlier of (i) the close of business on the
day next preceding the tenth anniversary of the date of its adoption by the
Board of Directors, or (ii) the date on which all shares available for issuance
under the Plan shall have been issued pursuant to the exercise or cancellation
of Restricted Shares or options granted under the Plan. If the date of
termination is determined under (i) above, then Restricted Shares or options
outstanding on such date shall continue to have force and effect in accordance
with the provisions of the instruments evidencing such Restricted Shares or
options.
24. Governing Law.
The provisions of this Plan shall be governed and construed in accordance
with the laws of the State of Nevada without regard to the principles of
conflicts of laws.
Adopted by the Board of Directors on ____________, 2009
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