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Exhibit 10.2
ENCORE CLEAN ENERGY, INC.
2003 STOCK INCENTIVE PLAN
(as amended by the Board of Directors on August 24, 2005
and approved by the Stockholders on October 5, 2005
ARTICLE 1. THE PLAN
1.1 Title
This plan is entitled the "2003 Stock Incentive Plan" (the "Plan") of Encore
Clean Energy, Inc., a Nevada corporation (the "Company").
1.2 Purpose
The purpose of the Plan is to enhance the long-term stockholder value of the
Company by offering opportunities to directors, officers, employees and eligible
consultants of the Company and any Related Company, as defined below, to acquire
and maintain stock ownership in the Company in order to give these persons the
opportunity to participate in the Company's growth and success, and to encourage
them to remain in the service of the Company or a Related Company.
ARTICLE 2. DEFINITIONS
2.1 Definitions
The following terms will have the following meanings in the Plan:
"Award" means any Option or Stock Award.
"Board" means the Board of Directors of the Company.
"Cause," unless otherwise defined in the instrument evidencing the award or in
an employment or services agreement between the Company or a Related Company and
a Participant, means a material breach of the employment or services agreement,
dishonesty, fraud, misconduct, unauthorized use or disclosure of confidential
information or trade secrets, or conviction or confession of a crime punishable
by law (except minor violations), in each case as determined by the Plan
Administrator, and its determination shall be conclusive and binding.
"Code" means the Internal Revenue Code of 1986, as amended from time to time.
"Common Stock" means the common stock, par value $0.001 per share, of the
Company.
"Consultant Participant" means a Participant who is defined as a Consultant
Participant in Article 5.
"Corporate Transaction," unless otherwise defined in the instrument evidencing
the Award or in a written employment or services agreement between the Company
or a Related Company and a Participant, means consummation of either:
(a) a merger or consolidation of the Company with or into any other
corporation, entity or person or
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ARTICLE 2. DEFINITIONS - continued
(b) a sale, lease, exchange or other transfer in one transaction or a
series of related transactions of all or substantially all the
Company's outstanding securities or all or substantially all the
Company's assets; provided, however, that a Corporate Transaction
shall not include a Related Party Transaction.
"Disability," unless otherwise defined by the Plan Administrator, means a mental
or physical impairment of the Participant that is expected to result in death or
that has lasted or is expected to last for a continuous period of 12 months or
more and that causes the Participant to be unable, in the opinion of the
Company, to perform his or her duties for the Company or a Related Company and
to be engaged in any substantial gainful activity.
"Employment Termination Date" means, with respect to a Participant, the first
day upon which the Participant no longer has an employment or service
relationship with the Company or any Related Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means the per share value of the Common Stock determined as
follows (a) if the Common Stock is listed on an established stock exchange or
exchanges or the NASDAQ National Market, the closing price per share on the last
trading day immediately preceding such date on the principal exchange on which
it is traded or as reported by NASDAQ; (b) if the Common Stock is not then
listed on an exchange or the NASDAQ National Market, but is quoted on the NASDAQ
Small Cap Market, the NASDAQ electronic bulletin board or the National Quotation
Bureau pink sheets, the average of the closing bid and asked prices per share
for the Common Stock as quoted by NASDAQ or the National Quotation Bureau, as
the case may be, on the last trading day immediately preceding such date; or (c)
if there is no such reported market for the Common Stock for the date in
question, then an amount determined in good faith by the Plan Administrator.
"Grant Date" means the date on which the Plan Administrator completes the
corporate action relating to the grant of an Award or such later date specified
by the Plan Administrator, and on which all conditions precedent to the grant
have been satisfied, provided that conditions to the exercisability or vesting
of Awards shall not defer the Grant Date.
"Incentive Stock Option" means an Option granted with the intention, as
reflected in the instrument evidencing the Option, that it qualify as an
"incentive stock option" as that term is defined in Section 422 of the Code.
"Nonqualified Stock Option" means an Option other than an Incentive Stock
Option.
"Option" means the right to purchase Common Stock granted under Article 7.
"Option Expiration Date" has the meaning set forth in Article 7.6.
"Option Term" has the meaning set forth in Article 7.3.
"Participant" means the person to whom an Award is granted and who meets the
eligibility requirements imposed by Article 5, including Consultant
Participants, as defined in Article 5.
"Plan Administrator" has the meaning set forth in Article 3.1.
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ARTICLE 2. DEFINITIONS - continued
"Related Company" means any entity that, directly or indirectly, is in control
of or is controlled by the Company.
"Related Party Transaction" means (a) a merger or consolidation of the Company
in which the holders of shares of Common Stock immediately prior to the merger
hold at least a majority of the shares of Common Stock in the Successor
Corporation immediately after the merger; (b) a sale, lease, exchange or other
transaction in one transaction or a series of related transactions of all or
substantially all the Company's assets to a wholly-owned subsidiary corporation;
(c) a mere reincorporation of the Company; or (d) a transaction undertaken for
the sole purpose of creating a holding company that will be owned in
substantially the same proportion by the persons who held the Company's
securities immediately before such transaction.
"Retirement," unless otherwise defined by the Plan Administrator from time to
time for purposes of the Plan, means retirement on or after the individual's
normal retirement date under the Company's 401(k) plan or other similar
successor plan applicable to salaried employees, or in the absence of such plan
means after the individual is over 59 and one-half years old or is over 55 and
has at least ten years of service with the Company
"Securities Act" means the Securities Act of 1933, as amended.
"Stock Award" means an Award of shares of Common Stock or units denominated in
Common Stock granted under Article 9, the rights of ownership of which may be
subject to restrictions prescribed by the Plan Administrator.
"Successor Corporation" has the meaning set forth in Article 12.3.1.
"Vesting Commencement Date" means the Grant Date or such other date selected by
the Plan Administrator as the date from which the Option begins to vest for
purposes of Article 7.4.
ARTICLE 3. ADMINISTRATION
3.1 Plan Administrator
The Plan shall be administered by the Board or a committee appointed by, and
consisting of two or more members of, the Board (the "Plan Administrator"). If
and so long as the Common Stock is registered under Section 12(b) or 12(g) of
the Exchange Act, the Board shall consider in selecting the members of any
committee acting as Plan Administrator, with respect to any persons subject or
likely to become subject to Section 16 of the Exchange Act, the provisions
regarding (a) "outside directors" as contemplated by Section 162(m) of the Code
and (b) "non-employee directors" as contemplated by Rule 16b-3 under the
Exchange Act. Committee members shall serve for such term as the Board may
determine, subject to removal by the Board at any time. At any time when no
committee has been appointed to administer the Plan, then the Board will be the
Plan Administrator.
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ARTICLE 3. ADMINISTRATION - continued
3.2 Administration and Interpretation by Plan Administrator
Except for the terms and conditions explicitly set forth in the Plan, the Plan
Administrator shall have exclusive authority, in its discretion, to determine
all matters relating to Awards under the Plan, including the selection of
individuals to be granted Awards, the type of Awards, the number of shares of
Common Stock subject to an Award, all terms, conditions, restrictions and
limitations, if any, of an Award and the terms of any instrument that evidences
the Award. The Plan Administrator shall also have exclusive authority to
interpret the Plan and the terms of any instrument evidencing the Award and may
from time to time adopt and change rules and regulations of general application
for the Plan's administration. The Plan Administrator's interpretation of the
Plan and its rules and regulations, and all actions taken and determinations
made by the Plan Administrator pursuant to the Plan, shall be conclusive and
binding on all parties involved or affected.
The Plan Administrator may delegate administrative duties to such of the
Company's officers as it so determines. The Plan Administrator may delegate
authority to the Chief Executive Officer of the Company to grant Awards to those
eligible for such Awards who are not executive officers, subject to limitations
as may be imposed by the Committee.
ARTICLE 4. STOCK SUBJECT TO THE PLAN
4.1 Authorized Number of Shares
Subject to adjustment from time to time as provided in Article 12.1, the number
of shares of Common Stock available for issuance under the Plan shall be FOUR
MILLION (4,000,000) shares.
Shares issued under the Plan shall be drawn from authorized and unissued shares
or shares now held or subsequently acquired by the Company as treasury shares.
4.2 Reuse of Shares
Any shares of Common Stock that have been made subject to an Award that cease to
be subject to the Award (other than by reason of exercise or settlement of the
Award to the extent it is exercised for or settled in shares) shall again be
available for issuance in connection with future grants of Awards under the
Plan. In the event shares issued under the Plan are reacquired by the Company
pursuant to any forfeiture provision or right of repurchase, such shares shall
again be available for the purposes of the Plan; provided, however, that the
maximum number of shares that may be issued upon the exercise of Incentive Stock
Options shall equal the share number stated in Article 4.1, subject to
adjustment from time to time as provided in Article 12.1; and provided, further,
that for purposes of Article 4.3, any such shares shall be counted in accordance
with the requirements of Section 162(m) of the Code.
4.3 Limitations
(a) Subject to adjustment from time to time as provided in Article 12.1, not
more than an aggregate of FOUR MILLION (4,000,000) shares of Common Stock
shall be available for issuance pursuant to grants of Stock Awards under
the Plan.
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ARTICLE 5. ELIGIBILITY
An Award may be granted to any officer, director or employee of the Company or a
Related Company that the Plan Administrator from time to time selects. An Award
may also be granted to any consultant, agent, advisor or independent contractor
who provides services to the Company or any Related Company (a "Consultant
Participant"), so long as such Consultant Participant (a) is a natural person or
an alter ego entity of the natural person providing the services; (b) renders
bona fide services that are not in connection with the offer and sale of the
Company's securities in a capital-raising transaction; and (c) does not directly
or indirectly promote or maintain a market for the Company's securities.
ARTICLE 6. AWARDS
6.1 Form and Grant of Awards
The Plan Administrator shall have the authority, in its sole discretion, to
determine the type or types of Awards to be granted under the Plan. Awards may
be granted singly or in combination.
6.2 Settlement of Awards
The Company may settle Awards through the delivery of shares of Common Stock,
the granting of replacement Awards or any combination thereof as the Plan
Administrator shall determine. Any Award settlement, including payment
deferrals, may be subject to such conditions, restrictions and contingencies as
the Plan Administrator shall determine. The Plan Administrator may permit or
require the deferral of any Award payment, subject to such rules and procedures
as it may establish, which may include provisions for the payment or crediting
of interest, or dividend equivalents, including converting such credits into
deferred stock equivalents.
ARTICLE 7. AWARDS OF OPTIONS
7.1 Grant of Options
The Plan Administrator shall have the authority, in its sole discretion, to
grant Options as Incentive Stock Options or as Nonqualified Stock Options, which
shall be appropriately designated.
7.2 Option Exercise Price
The exercise price for shares purchased under an Option shall be as determined
by the Plan Administrator, provided that:
(a) the exercise price for Options granted to Participants other than Consultant
Participants shall not be less than the minimum exercise price required by
Article 8.3 with respect to Incentive Stock Options and shall not be less than
85% of Fair Market Value of the Common Stock on the Grant Date with respect to
Nonqualified Stock Options;
(b) the exercise price for Options granted to Consultant Participants shall not
be less than 85% of Fair Market Value of the Common Stock on the Grant Date.
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ARTICLE 7. AWARDS OF OPTIONS - continued
7.3 Term of Options
Subject to earlier termination in accordance with the terms of the Plan and the
instrument evidencing the Option, the maximum term of an Option (the "Option
Term") shall be for a term of up to ten years from the Grant Date as established
for that Option by the Plan Administrator or, if not so established, shall be
ten years from the Grant Date.
7.4 Exercise of Options
The Plan Administrator shall establish and set forth in each instrument that
evidences an Option the time at which, or the installments in which, the Option
shall vest and become exercisable, any of which provisions may be waived or
modified by the Plan Administrator at any time.
The Plan Administrator, in its sole discretion, may adjust the vesting schedule
of an Option held by a Participant who works less than "full-time" as that term
is defined by the Plan Administrator or who takes a Company-approved leave of
absence.
To the extent an Option has vested and become exercisable, the Option may be
exercised in whole or from time to time in part by delivery to the Company of a
written stock option exercise agreement or notice, in a form and in accordance
with procedures established by the Plan Administrator, setting forth the number
of shares with respect to which the Option is being exercised, the restrictions
imposed on the shares purchased under such exercise agreement, if any, and such
representations and agreements as may be required by the Plan Administrator,
accompanied by payment in full as described in Article 7.5. An Option may be
exercised only for whole shares and may not be exercised for less than a
reasonable number of shares at any one time, as determined by the Plan
Administrator.
7.5 Payment of Exercise Price
The exercise price for shares purchased under an Option shall be paid in full to
the Company by delivery of consideration equal to the product of the Option
exercise price and the number of shares purchased. Such consideration must be
paid before the Company will issue the shares being purchased and must be in a
form or a combination of forms acceptable to the Plan Administrator for that
purchase, which forms may include:
(a) cash;
(b) check;
(c) tendering (either actually or, if the Common Stock is registered under
Section 12(b) or 12(g) of the Exchange Act, by attestation) shares of
Common Stock already owned by the Participant for at least six months (or
any shorter period necessary to avoid a charge to the Company's earnings
for financial reporting purposes) that on the day prior to the exercise
date have a Fair Market Value equal to the aggregate exercise price of the
shares being purchased under the Option; or
(d) if the Common Stock is registered under Section 12(b) or 12(g) of the
Exchange Act, delivery of a properly executed exercise notice, together
with irrevocable instructions to a brokerage firm designated by the Company
to deliver promptly to the Company the aggregate amount of sale or loan
proceeds to pay the Option exercise price and any withholding tax
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ARTICLE 7. AWARDS OF OPTIONS - continued
obligations that may arise in connection with the exercise, all in
accordance with the regulations of the Federal Reserve Board.
7.6 Post-Termination Exercises
The Plan Administrator shall establish and set forth in each instrument that
evidences an Option whether the Option shall continue to be exercisable, and the
terms and conditions of such exercise, if the Participant ceases to be employed
by, or to provide services to, the Company or a Related Company, which
provisions may be waived or modified by the Plan Administrator at any time. If
not so established in the instrument evidencing the Option, the Option shall be
exercisable according to the following terms and conditions, which may be waived
or modified by the Plan Administrator at any time:
(a) Except as otherwise set forth in this Article 7.6, any portion of an Option
that is not vested and exercisable on the Employment Termination Date shall
expire on such date.
(b) Any portion of an Option that is vested and exercisable on the Employment
Termination Date shall expire on the earliest to occur of
(i) if the Participant's Employment Termination Date occurs for reasons
other than Cause, Retirement, Disability or death, the day which is
three months after such Employment Termination Date;
(ii) if the Participant's Employment Termination Date occurs by reason of
Retirement, Disability or death, the one-year anniversary of such
Employment Termination Date; and
(iii)the last day of the Option Term (the "Option Expiration Date").
Notwithstanding the foregoing, if the Participant dies after his or
her Employment Termination Date but while an Option is otherwise
exercisable, the portion of the Option that is vested and exercisable
on such Employment Termination Date shall expire upon the earlier to
occur of (y) the Option Expiration Date and (z) the one-year
anniversary of the date of death, unless the Plan Administrator
determines otherwise.
Also notwithstanding the foregoing, in case of termination of the
Participant's employment or service relationship for Cause, all
Options granted to that Participant shall automatically expire upon
first notification to the Participant of such termination, unless the
Plan Administrator determines otherwise. If a Participant's employment
or service relationship with the Company is suspended pending an
investigation of whether the Participant shall be terminated for
Cause, all the Participant's rights under any Option shall likewise be
suspended during the period of investigation. If any facts that would
constitute termination for Cause are discovered after the
Participant's relationship with the Company or a Related Company has
ended, any Option then held by the Participant may be immediately
terminated by the Plan Administrator, in its sole discretion.
(c) A Participant's transfer of employment or service relationship between or
among the Company and any Related Company, or a change in status from an
employee to a consultant, agent, advisor or independent contractor or a
change in status from a consultant, agent, advisor or independent
contractor to an employee, shall not be considered a termination of
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ARTICLE 7. AWARDS OF OPTIONS - continued
employment or service relationship for purposes of this Article 7. Unless
the Plan Administrator determines otherwise, a termination of employment or
service relationship shall be deemed to occur if a Participant's employment
or service relationship is with an entity that has ceased to be a Related
Company.
(d) The effect of a Company-approved leave of absence on the application of
this Article 7 shall be determined by the Plan Administrator, in its sole
discretion.
(e) If a Participant's employment or service relationship with the Company or a
Related Company terminates by reason of Disability or death, the Option
shall become fully vested and exercisable for all the shares subject to the
Option. Such Option shall remain exercisable for the time period set forth
in this Article 7.6.
ARTICLE 8. INCENTIVE STOCK OPTION LIMITATIONS
Notwithstanding any other provisions of the Plan, and to the extent required by
Section 422 of the Code, Incentive Stock Options shall be subject to the
following additional terms and conditions:
8.1 Dollar Limitation
To the extent the aggregate Fair Market Value (determined as of the Grant Date)
of Common Stock with respect to which Incentive Stock Options are exercisable
for the first time during any calendar year (under the Plan and all other stock
option plans of the Company) exceeds $100,000, such portion in excess of
$100,000 shall be treated as a Nonqualified Stock Option. In the event the
Participant holds two or more such Options that become exercisable for the first
time in the same calendar year, such limitation shall be applied on the basis of
the order in which such Options are granted.
8.2 Eligible Employees
Individuals who are not employees of the Company or one of its parent
corporations or subsidiary corporations may not be granted Incentive Stock
Options.
8.3 Exercise Price
The exercise price of an Incentive Stock Option shall be at least 100% of the
Fair Market Value of the Common Stock on the Grant Date, and in the case of an
Incentive Stock Option granted to a Participant who owns more than 10% of the
total combined voting power of all classes of the stock of the Company or of its
parent or subsidiary corporations (a "Ten Percent Stockholder"), shall not be
less than 110% of the Fair Market Value of the Common Stock on the Grant Date
and the option term may not be more than five years from the date of grant. The
determination of more than 10% ownership shall be made in accordance with
Section 422 of the Code.
8.4 Exercisability
An Option designated as an Incentive Stock Option shall cease to qualify for
favorable tax treatment as an Incentive Stock Option to the extent it is
exercised (if permitted by the terms of the Option) (a) more than three months
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ARTICLE 8. INCENTIVE STOCK OPTION LIMITATIONS - continued
after the Employment Termination Date if termination was for reasons other than
death or disability, (b) more than one year after the Employment Termination
Date if termination was by reason of disability, or (c) after the Participant
has been on leave of absence for more than 90 days, unless the Participant's
reemployment rights are guaranteed by statute or contract.
8.5 Taxation of Incentive Stock Options
In order to obtain certain tax benefits afforded to Incentive Stock Options
under Section 422 of the Code, the Participant must hold the shares acquired
upon the exercise of an Incentive Stock Option for two years after the Grant
Date and one year after the date of exercise.
A Participant may be subject to the alternative minimum tax at the time of
exercise of an Incentive Stock Option. The Participant shall give the Company
prompt notice of any disposition of shares acquired on the exercise of an
Incentive Stock Option prior to the expiration of such holding periods.
8.6 Code Definitions
For the purposes of this Article 8, "parent corporation," "subsidiary
corporation" and "disability" shall have the meanings attributed to those terms
for purposes of Section 422 of the Code.
ARTICLE 9. STOCK AWARDS
9.1 Grant of Stock Awards
The Plan Administrator is authorized to make Awards of Common Stock or Awards
denominated in units of Common Stock on such terms and conditions and subject to
such repurchase or forfeiture restrictions, if any (which may be based on
achievement of performance goals), as the Plan Administrator shall determine, in
its sole discretion, which terms, conditions and restrictions shall be set forth
in the instrument evidencing the Award. The terms, conditions and restrictions
that the Plan Administrator shall have the power to determine shall include,
without limitation:
(a) the value of the shares of common stock to be issued pursuant to the Stock
Award by the Plan Administrator to a Participant, provided that value of
the shares of Common Stock used in the determination of any Stock Award
granted shall not be less than 85% of Fair Market Value of the Common Stock
on the Grant Date;
(b) the price to be paid by the Participant or the amount and nature of
services to be provided by the Participant to the Company in consideration
of the Stock Award, including the value of any services provided;
(c) the manner in which shares subject to Stock Awards are held during the
periods they are subject to restrictions; and
(d) the circumstances under which repurchase or forfeiture of the Stock Award
shall occur by reason of termination of the Participant's employment or
service relationship.
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ARTICLE 9. STOCK AWARDS - continued
9.2 Issuance of Stock Awards
Stock Awards that may be granted by the Plan Administrator including the
following types of Stock Awards, without limitation:
(a) Restricted Stock Awards, whereby the Company sells shares of Common Stock
to a Participant that is subject to restrictions;
(b) Compensation Stock Awards, whereby the Company issues shares of Common
Stock to a Participant as compensation for services provided or to be
provided by the Participant pursuant to an employment or consultant
agreement;
(c) Bonus Stock Awards, whereby the Company issues shares of Common Stock in
consideration for services rendered to the Company by a Participant and
subject to any terms, conditions or restrictions as may be prescribed in
respect to such shares by the Plan Administrator; including, without
limitation, such conditions as may be required in order for such awards to
qualify as qualified performance-based compensation under Section 162(m) of
the Code.
The value of the shares of Common Stock used in the determination of any Stock
Award granted by the Plan Administrator to a Participant shall not be less than
85% of Fair Market Value of the Common Stock on the Grant Date.
9.3 Issuance of Shares
Upon the satisfaction of any terms, conditions and restrictions prescribed in
respect to a Stock Award, or upon the Participant's release from any terms,
conditions and restrictions of a Stock Award, as determined by the Plan
Administrator, the Company shall release, as soon as practicable, to the
Participant or, in the case of the Participant's death, to the personal
representative of the Participant's estate or as the appropriate court directs,
the appropriate number of shares of Common Stock.
9.4 Waiver of Restrictions
Notwithstanding any other provisions of the Plan, the Plan Administrator may, in
its sole discretion, waive the repurchase or forfeiture period and any other
terms, conditions or restrictions on any Stock Award under such circumstances
and subject to such terms and conditions as the Plan Administrator shall deem
appropriate; provided, however, that the Plan Administrator may not adjust
performance goals for any Stock Award intended to be exempt under Section 162(m)
of the Code for the year in which the Stock Award is settled in such a manner as
would increase the amount of compensation otherwise payable to a Participant.
ARTICLE 10. WITHHOLDING
10.1 General
The Company may require the Participant to pay to the Company the amount of any
taxes that the Company is required by applicable federal, state, local or
foreign law to withhold with respect to the grant, vesting or exercise of an
Award. The Company shall not be required to issue any shares Common Stock under
the Plan until such obligations are satisfied.
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ARTICLE 10. WITHHOLDING - continued
10.2 Payment of Withholding Obligations in Cash or Shares
The Plan Administrator may permit or require a Participant to satisfy all or
part of his or her tax withholding obligations by (a) paying cash to the
Company, (b) having the Company withhold from any cash amounts otherwise due or
to become due from the Company to the Participant, (c) having the Company
withhold a portion of any shares of Common Stock that would otherwise be issued
to the Participant having a value equal to the tax withholding obligations (up
to the employer's minimum required tax withholding rate), or (d) surrendering
any shares of Common Stock that the Participant previously acquired having a
value equal to the tax withholding obligations (up to the employer's minimum
required tax withholding rate to the extent the Participant has held the
surrendered shares for less than six months).
ARTICLE 11. ASSIGNABILITY
Neither an Award nor any interest therein may be assigned, pledged or
transferred by the Participant or made subject to attachment or similar
proceedings other than by will or by the applicable laws of descent and
distribution, and, during the Participant's lifetime, such Awards may be
exercised only by the Participant. Notwithstanding the foregoing, and to the
extent permitted by Section 422 of the Code, the Plan Administrator, in its sole
discretion, may permit a Participant to assign or transfer an Award or may
permit a Participant to designate a beneficiary who may exercise the Award or
receive payment under the Award after the Participant's death; provided,
however, that any Award so assigned or transferred shall be subject to all the
terms and conditions of the Plan and those contained in the instrument
evidencing the Award.
ARTICLE 12. ADJUSTMENTS
12.1 Adjustment of Shares
In the event, at any time or from time to time, a stock dividend, stock split,
spin-off, combination or exchange of shares, recapitalization, merger,
consolidation, distribution to stockholders other than a normal cash dividend,
or other change in the Company's corporate or capital structure, including,
without limitation, a Related Party Transaction, results in (a) the outstanding
shares of Common Stock, or any securities exchanged therefor or received in
their place, being exchanged for a different number or kind of securities of the
Company or of any other corporation or (b) new, different or additional
securities of the Company or of any other corporation being received by the
holders of shares of Common Stock of the Company, then the Plan Administrator
shall make proportional adjustments in (i) the maximum number and kind of
securities subject to the Plan and issuable as Incentive Stock Options as set
forth in Article 4 and the maximum number an d kind of securities that may be
made subject to Stock Awards and to Awards to any individual as set forth in
Article 4.3, and (ii) the number and kind of securities that are subject to any
outstanding Award and the per share price of such securities, without any change
in the aggregate price to be paid therefor. The determination by the Plan
Administrator as to the terms of any of the foregoing adjustments shall be
conclusive and binding. Notwithstanding the foregoing, a dissolution or
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ARTICLE 12. ADJUSTMENTS - continued
liquidation of the Company or a Corporate Transaction shall not be governed by
this Article 12.1 but shall be governed by Articles 12.2 and 12.3, respectively.
12.2 Dissolution or Liquidation
To the extent not previously exercised or settled, and unless otherwise
determined by the Plan Administrator in its sole discretion, Options and Stock
Awards denominated in units shall terminate immediately prior to the dissolution
or liquidation of the Company. To the extent a forfeiture provision or
repurchase right applicable to an Award has not been waived by the Plan
Administrator, the Award shall be forfeited immediately prior to the
consummation of the dissolution or liquidation.
12.3 Corporate Transaction
Options
(a) In the event of a Corporate Transaction, except as otherwise provided in
the instrument evidencing an Option (or in a written employment or services
agreement between a Participant and the Company or Related Company) and
except as provided in subsection (b) below, each outstanding Option shall
be assumed or an equivalent option or right substituted by the surviving
corporation, the successor corporation or its parent corporation, as
applicable (the "Successor Corporation").
(b) If, in connection with a Corporate Transaction, the Successor Corporation
refuses to assume or substitute for an Option, then each such outstanding
Option shall become fully vested and exercisable with respect to 100% of
the unvested portion of the Option. In such case, the Plan Administrator
shall notify the Participant in writing or electronically that the unvested
portion of the Option specified above shall be fully vested and exercisable
for a specified time period. At the expiration of the time period, the
Option shall terminate, provided that the Corporate Transaction has
occurred.
(c) For the purposes of this Article 12.3, the Option shall be considered
assumed or substituted for if following the Corporate Transaction the option or
right confers the right to purchase or receive, for each share of Common Stock
subject to the Option immediately prior to the Corporate Transaction, the
consideration (whether stock, cash, or other securities or property) received in
the Corporate Transaction by holders of Common Stock for each share held on the
effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding shares); provided, however, that if such consideration received
in the Corporate Transaction is not solely common stock of the Successor
Corporation, the Plan Administrator may, with the consent of the Successor
Corporation, provide for the consideration to be received upon the exercise of
the Option, for each share of Common Stock subject thereto, to be solely common
stock of the Successor Corporation substantially equal in fair market value to
the per share consideration received by holders of Common Stock in the Corporate
Transaction. The determination of such substantial equality of value of
consideration shall be made by the Plan Administrator and its determination
shall be conclusive and binding.
(d) All Options shall terminate and cease to remain outstanding immediately
following the Corporate Transaction, except to the extent assumed by the
Successor Corporation.
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ARTICLE 12. ADJUSTMENTS - continued
12.4 Further Adjustment of Awards
Subject to Articles 12.2 and 12.3, the Plan Administrator shall have the
discretion, exercisable at any time before a sale, merger, consolidation,
reorganization, liquidation or change of control of the Company, as defined by
the Plan Administrator, to take such further action as it determines to be
necessary or advisable, and fair and equitable to the Participants, with respect
to Awards. Such authorized action may include (but shall not be limited to)
establishing, amending or waiving the type, terms, conditions or duration of, or
restrictions on, Awards so as to provide for earlier, later, extended or
additional time for exercise, lifting restrictions and other modifications, and
the Plan Administrator may take such actions with respect to all Participants,
to certain categories of Participants or only to individual Participants. The
Plan Administrator may take such action before or after granting Awards to which
the action relates and before or after any public announcement with respect to
such sale, merger, consolidation, reorganization, liquidation or change of
control that is the reason for such action.
12.5 Limitations
The grant of Awards shall in no way affect the Company's right to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.
12.6 Fractional Shares
In the event of any adjustment in the number of shares covered by any Award,
each such Award shall cover only the number of full shares resulting from such
adjustment.
ARTICLE 13. AMENDMENT AND TERMINATION
13.1 Amendment or Termination of Plan
The Board may suspend, amend or terminate the Plan or any portion of the Plan at
any time and in such respects as it shall deem advisable; provided, however,
that to the extent required for compliance with Section 422 of the Code or any
applicable law or regulation, stockholder approval shall be required for any
amendment that would (a) increase the total number of shares available for
issuance under the Plan, (b) modify the class of employees eligible to receive
Options, or (c) otherwise require stockholder approval under any applicable law
or regulation. Any amendment made to the Plan that would constitute a
"modification" to Incentive Stock Options outstanding on the date of such
amendment shall not, without the consent of the Participant, be applicable to
such outstanding Incentive Stock Options but shall have prospective effect only.
13.2 Term of Plan
Unless sooner terminated as provided herein, the Plan shall terminate ten years
after the earlier of the Plan's adoption by the Board and approval by the
stockholders.
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ARTICLE 13. AMENDMENT AND TERMINATION - continued
13.3 Consent of Participant
The suspension, amendment or termination of the Plan or a portion thereof or the
amendment of an outstanding Award shall not, without the Participant's consent,
materially adversely affect any rights under any Award theretofore granted to
the Participant under the Plan. Any change or adjustment to an outstanding
Incentive Stock Option shall not, without the consent of the Participant, be
made in a manner so as to constitute a "modification" that would cause such
Incentive Stock Option to fail to continue to qualify as an Incentive Stock
Option. Notwithstanding the foregoing, any adjustments made pursuant to Article
12 shall not be subject to these restrictions.
ARTICLE 14. GENERAL
14.1 Evidence of Awards
Awards granted under the Plan shall be evidenced by a written instrument that
shall contain such terms, conditions, limitations and restrictions as the Plan
Administrator shall deem advisable and that are not inconsistent with the Plan.
14.2 No Individual Rights
Nothing in the Plan or any Award granted under the Plan shall be deemed to
constitute an employment contract or confer or be deemed to confer on any
Participant any right to continue in the employ of, or to continue any other
relationship with, the Company or any Related Company or limit in any way the
right of the Company or any Related Company to terminate a Participant's
employment or other relationship at any time, with or without Cause.
14.3 Issuance of Shares
Notwithstanding any other provision of the Plan, the Company shall have no
obligation to issue or deliver any shares of Common Stock under the Plan or make
any other distribution of benefits under the Plan unless, in the opinion of the
Company's counsel, such issuance, delivery or distribution would comply with all
applicable laws (including, without limitation, the requirements of the
Securities Act), and the applicable requirements of any securities exchange or
similar entity.
The Company shall be under no obligation to any Participant to register for
offering or resale or to qualify for exemption under the Securities Act, or to
register or qualify under state securities laws, any shares of Common Stock,
security or interest in a security paid or issued under, or created by, the
Plan, or to continue in effect any such registrations or qualifications if made.
The Company may issue certificates for shares with such legends and subject to
such restrictions on transfer and stop-transfer instructions as counsel for the
Company deems necessary or desirable for compliance by the Company with federal
and state securities laws.
To the extent the Plan or any instrument evidencing an Award provides for
issuance of stock certificates to reflect the issuance of shares of Common
Stock, the issuance may be effected on a noncertificated basis, to the extent
not prohibited by applicable law or the applicable rules of any stock exchange.
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ARTICLE 14. GENERAL - continued
14.4 No Rights as a Stockholder
No Option or Stock Award denominated in units shall entitle the Participant to
any cash dividend, voting or other right of a stockholder unless and until the
date of issuance under the Plan of the shares that are the subject of such
Award.
14.5 Compliance With Laws and Regulations
Notwithstanding anything in the Plan to the contrary, the Plan Administrator, in
its sole discretion, may bifurcate the Plan so as to restrict, limit or
condition the use of any provision of the Plan to Participants who are officers
or directors subject to Section 16 of the Exchange Act without so restricting,
limiting or conditioning the Plan with respect to other Participants.
Additionally, in interpreting and applying the provisions of the Plan, any
Option granted as an Incentive Stock Option pursuant to the Plan shall, to the
extent permitted by law, be construed as an "incentive stock option" within the
meaning of Section 422 of the Code.
14.6 Participants in Other Countries
The Plan Administrator shall have the authority to adopt such modifications,
procedures and subplans as may be necessary or desirable to comply with
provisions of the laws of other countries in which the Company or any Related
Company may operate to assure the viability of the benefits from Awards granted
to Participants employed in such countries and to meet the objectives of the
Plan.
14.7 No Trust or Fund
The Plan is intended to constitute an "unfunded" plan. Nothing contained herein
shall require the Company to segregate any monies or other property, or shares
of Common Stock, or to create any trusts, or to make any special deposits for
any immediate or deferred amounts payable to any Participant, and no Participant
shall have any rights that are greater than those of a general unsecured
creditor of the Company.
14.8 Severability
If any provision of the Plan or any Award is determined to be invalid, illegal
or unenforceable in any jurisdiction, or as to any person, or would disqualify
the Plan or any Award under any law deemed applicable by the Plan Administrator,
such provision shall be construed or deemed amended to conform to applicable
laws, or, if it cannot be so construed or deemed amended without, in the Plan
Administrator's determination, materially altering the intent of the Plan or the
Award, such provision shall be stricken as to such jurisdiction, person or
Award, and the remainder of the Plan and any such Award shall remain in full
force and effect.
14.9 Choice of Law
The Plan and all determinations made and actions taken pursuant hereto, to the
extent not otherwise governed by the laws of the United States, shall be
governed by the laws of the State of Nevada without giving effect to principles
of conflicts of law.
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ARTICLE 15. EFFECTIVE DATE
The effective date is the date on which the Plan is adopted by the Board. If the
stockholders of the Company do not approve the Plan within 12 months after the
Board's adoption of the Plan, any Incentive Stock Options granted under the Plan
will be treated as Nonqualified Stock Options.
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