UNANIMOUS
WRITTEN CONSENT OF DIRECTORS OF
KRONOS
ADVANCED TECHNOLOGIES, INC.
A
NEVADA CORPORATION,
IN
LIEU OF A SPECIAL MEETING
The
undersigned, being all of the members of the Board of Directors (the “Board”) of KRONOS
ADVANCED TECHNOLOGIES, INC., a Nevada corporation (the “Corporation”),
pursuant to the provisions of the Section 78.315 of the Nevada Revised Statutes,
hereby adopts the resolutions set forth below, to have the same force and effect
as if adopted at a formal meeting of the Corporation’s Directors, duly called
and held for the purpose of acting upon proposals to adopt such
resolutions.
RESOLVED, that the KRONOS
ADVANCED TECHNOLOGIES, INC. 2007 STOCK INCENTIVE PLAN (the “Plan”), a copy of
which is attached to and made a part of this Consent, is hereby approved to be
effective on the date of this Unanimous Consent; and it is further
RESOLVED, that the issuance of
the Corporation’s common stock pursuant to the terms of the Plan (the “Shares”) is hereby
confirmed, ratified and approved in all respects and that each officer of the
Corporation is hereby authorized, empowered and directed to instruct the
Corporation’s transfer agent to issue such shares of common stock in accordance
with the terms of the Plan; and it is further
RESOLVED, that the Board shall
cause a Registration Statement on Form S-8 pertaining to the Shares to be filed
with the Securities and Exchange Commission; and it is further
RESOLVED, that in addition to
and without limiting the foregoing, each officer of the Corporation be and
hereby is authorized to take, or cause to be taken, such further action, and to
execute and deliver, or cause to be delivered, for and in the name and on behalf
of the Corporation, all such instruments and documents as he may deem
appropriate in order to effect the purpose or intent of the foregoing
resolutions (as conclusively evidenced by the taking of such action or the
execution and delivery of such instruments, as the case may be) and all action
heretofore taken by such officer in connection with the subject of the
foregoing recitals and resolutions be, and it hereby is, approved, ratified and
confirmed in all respects as the act and deed of the Corporation.
IN WITNESS WHEREOF, the
undersigned have executed this Unanimous Written Consent this ____ day of June,
2007.
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DIRECTORS:
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Daniel
R. Dwight
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James
P. McDermott
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M.
J. Segal
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Richard
F.Tusing
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EXHIBIT
A
KRONOS
ADVANCED TECHNOLOGIES, INC.
2007
STOCK INCENTIVE PLAN
Establishment,
Purpose and Types of Awards
Kronos
Advanced Technologies, Inc., a Nevada
corporation (the “Company”), hereby
establishes the KRONOS ADVANCED
TECHNOLOGIES, INC. 2007 STOCK INCENTIVE PLAN (the “Plan”). The
purpose of the Plan is to promote the long-term growth and profitability of the
Company by (a) providing key people with incentives to improve shareholder
value and to contribute to the growth and financial success of the Company,
and (b) enabling the Company to attract, retain and reward the
best-available persons. The Plan permits the granting of stock
options (including incentive stock options qualifying under Code
Section 422 and nonqualified stock options), stock appreciation rights,
restricted or unrestricted share awards, phantom stock, deferred share units,
performance awards, other stock-based awards, or any combination of the
foregoing.
Under
this Plan, except where the context otherwise indicates, the following
definitions apply:
“Affiliate” means any entity, whether now or
hereafter existing, which controls, is controlled by, or is under common control
with, the Company (including, but not limited to, joint ventures, limited
liability companies, and partnerships). For this purpose, “control”
shall mean ownership of fifty percent (50%) or more of the total combined
voting power or value of all classes of stock or interests of the
entity.
“Applicable Law” means the legal requirements
relating to the administration of options and share-based plans under applicable
U.S. federal and state laws, the Code, any applicable stock exchange or
automated quotation system rules or regulations, and the applicable laws of any
other country or jurisdiction where Awards are granted, as such laws, rules,
regulations and requirements shall be in place from time to
time.
“Award” means any stock option, stock
appreciation right, stock award, phantom stock award, performance award or other
stock-based award.
“Board” means the Board of Directors of the
Company.
“Cause” for termination of a Participant’s
Continuous Service either has the meaning set forth in any employment-related
written agreement between the Participant and the Company, or means that the
Participant is terminated from employment or other service with the Company or
an Affiliate for any of the following reasons after receiving both a specific
written notice of the conduct that the Board considers “Cause” and a reasonable
opportunity to cure such conduct (if it is reasonably capable of being
cured): (i) the Participant’s willful failure to substantially perform his
or her duties and responsibilities to the Company or deliberate violation of a
material Company policy; (ii) the Participant’s commission of any material
act or acts of fraud, embezzlement, dishonesty or other willful
misconduct; (iii) the Participant’s material unauthorized use or disclosure
of any proprietary information or trade secrets of the Company or any other
party to whom the Participant owes an obligation of nondisclosure as a result of
his or her relationship with the Company; or (iv) Participant’s willful and
material breach of any of his or her obligations under any written agreement or
covenant with the Company. The Board shall in its discretion
determine whether or not a Participant is being terminated for
Cause. The foregoing definition does not in any way limit the
Company’s ability to terminate a Participant’s employment or consulting
relationship at any time, and the term “Company” will be interpreted herein to
include any Affiliate or successor thereto, if appropriate.
“Change in
Control” means: (i)
the acquisition (other than from the Company) by any Person, as defined in
this Section 2(f), of the beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act of fifty percent (50%) or
more of (A) the then outstanding shares of the securities of the Company;
or (B) the combined voting power of the then outstanding securities of the
Company entitled to vote generally in the election of Directors (the
“Company
Voting Stock”); (ii) the closing of a sale
or other conveyance of all or substantially all of the assets of the Company;
or (iii) the effective time of any merger, share exchange, consolidation,
or other business combination of the Company if immediately after such
transaction persons who hold a majority of the outstanding voting securities
entitled to vote generally in the election of directors of the surviving
entity (or the entity owning one hundred percent (100%) of such
surviving entity) are not persons who, immediately prior to such transaction,
held the Company Voting Stock. For purposes of this
Section 2(f), a “Person” means any individual, entity or
group within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
Act other than: employee benefit plans sponsored or maintained by the Company
and corporations controlled by the Company. Notwithstanding the
foregoing, a “Change in Control” shall not include the consummation of the
financing transaction as contemplated in the Funding Agreement and Secured
Convertible Promissory Note with Airworks Funding LLLP, Sands Brothers Venture
Capital LLC, and Critical Capital Growth Fund LP, as approved by the Board in
June 2007.
“Code” means the Internal Revenue Code of
1986, as amended, and any regulations promulgated
thereunder.
“Common Stock” means shares of common stock of the
Company, par value $0.01 per Share.
“Consultant” means any person, including an
advisor, who is engaged by the Company or any Affiliate to render services and
is compensated for such services.
“Continuous
Service” means the
absence of any interruption or termination of a Participant’s service as an
Employee, Director or Consultant. Continuous Service shall not be
considered interrupted in the case of: (i) sick leave; (ii) military
leave; (iii) any other leave of absence approved by the Committee, provided
that such leave is for a period of not more than ninety (90) days, unless
reemployment upon the expiration of such leave is guaranteed by contract or
statute, or unless provided otherwise pursuant to Company policy adopted from
time to time; (iv) changes in status from Director to advisory director or
emeritus status; or (iv) in the case of transfers between locations of the
Company or between the Company, its Affiliates or their respective
successors. Changes in status between a Participant’s service as an
Employee, Director and a Consultant will not constitute an interruption of
Continuous Service.
“Deferred Share
Units” means Awards
pursuant to Section 10 of the Plan.
“Director” means a member of the Board, or a
member of the board of directors of an Affiliate.
“Disabled” means a condition under which a
Participant:
is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than
twelve (12) months, or
is,
by reason of any medically determinable physical or mental impairment which can
be expected to result in death or can be expected to last for a continuous
period of not less than twelve (12) months, received income replacement
benefits for a period of not less than three (3) months under an accident
or health plan covering Employees of the Company.
“Eligible Person” means any Consultant, Director or
Employee.
“Employee” means any person whom the Company or
any Affiliate classifies as an employee (including an officer) for
employment tax purposes. The payment by the Company of a director’s
fee to a Director shall not be sufficient to constitute “employment” of such
Director by the Company.
“Exchange Act” means the Securities Exchange Act of
1934, as amended.
“Fair Market
Value” means, with
respect to a share of the Common Stock for any purpose on a particular date, the
value determined by the Administrator in good faith. However, if the
Common Stock is registered under Section 12(b) or 12(g) of the Exchange
Act, and listed for trading on a national exchange or market, “Fair Market
Value” means, as applicable, (i) either the closing price or the average of
the high and low sale price on the relevant date, as determined in the
Administrator’s discretion, quoted on the American Stock Exchange; (ii) the
last sale price on the relevant date quoted on the Nasdaq SmallCap
Market; (iii) the closing high bid on the relevant date quoted on the
Nasdaq OTC Bulletin Board Service or by the National Quotation Bureau,
Inc. or a comparable service as determined in the Administrator’s
discretion; or (iv) if the Common Stock is not quoted by any of the above,
the average of the closing bid and asked prices on the relevant date furnished
by a professional market maker for the Common Stock, or by such other source,
selected by the Administrator. If no public trading of the Common
Stock occurs on the relevant date, then Fair Market Value shall be determined as
of the next preceding date on which trading of the Common Stock does
occur. For all purposes under this Plan, the term “relevant date” as
used in this Section 2(q) shall mean either the date as of which Fair
Market Value is to be determined or the next preceding date on which public
trading of the Common Stock occurs, as determined in the Administrator’s
discretion.
“Grant Agreement” means a written document
memorializing the terms and conditions of an Award granted pursuant to the Plan
and shall incorporate the terms of the Plan. The Committee shall
determine the form or forms of documents to be used, and may change them from
time to time for any reason.
“Grant Date” has the meaning set forth in
Section 16 of the Plan.
“ISO” means an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code,
as designated in the applicable Award Agreement.
“Involuntary
Termination” means
termination of a Participant’s Continuous Service under the following
circumstances occurring on or after a Change in Control: (i) termination
without Cause by the Company or an Affiliate or successor thereto, as
appropriate; or (ii) voluntary termination by the Participant within
sixty (60) days following (A) a material reduction in the
Participant’s job responsibilities, provided that neither a mere change in title
alone nor reassignment to a substantially similar position shall constitute a
material reduction in job responsibilities; (B) an involuntary relocation
of the Participant’s work site to a facility or location more than
fifty (50) miles from the Participant’s principal work site at the time of
the Change in Control; or (C) a material reduction in Participant’s total
compensation other than as part of an reduction by the same percentage amount in
the compensation of all other similarly-situated Employees, Directors or
Consultants.
“Nonqualified
Option” means an Option
not intended to qualify as an ISO, as designated in the applicable Award
Agreement.
“Option” means any stock option granted
pursuant to Section 7 of the Plan.
“Participant” means any holder of one or more
Awards, or the Shares issuable or issued upon exercise of such Awards, under the
Plan.
“Performance
Awards” means
Performance Units and Performance Compensation Awards granted pursuant to
Section 13 of the Plan.
“Performance Compensation
Awards” means Awards
granted pursuant to Section 13(b) of the Plan.
“Performance
Unit” means Awards
granted pursuant to Section 13(a) of the Plan which may be paid in cash, in
Shares, or such combination of cash and Shares as the Committee in its sole
discretion shall determine.
“Person” means any natural person,
association, trust, business trust, cooperative, corporation, general
partnership, joint venture, joint-stock company, limited partnership, limited
liability company, real estate investment trust, regulatory body, governmental
agency or instrumentality, unincorporated organization or organizational
entity.
“Phantom Stock” means Awards pursuant to
Section 11 of the Plan.
“Reporting
Person” means an
officer, Director, or greater than ten percent (10%) shareholder of the
Company within the meaning of Rule 16a-2 under the Exchange Act, who is required
to file reports pursuant to Rule 16a-3 under the Exchange
Act.
“Restricted
Shares” means Shares
subject to restrictions imposed pursuant to Section 9 of the
Plan.
“Restricted Share
Units” means Awards
pursuant to Section 9 of the Plan.
“Rule 16b-3” means Rule 16b-3 promulgated under
the Exchange Act, as amended from time to time, or any successor
provision.
“SAR” or “Share Appreciation
Right” means Awards
granted pursuant to Section 8 of the Plan.
“Securities Act” means the Securities Act of 1933, as
amended.
“Share” means a share of Common Stock, as
adjusted in accordance with Section 15 of the Plan.
“Ten Percent
Holder” means a person
who owns stock representing more than ten percent (10%) of the combined
voting power of all classes of stock of the Company or any
Affiliate.
“Unrestricted
Shares” means Shares
awarded pursuant to Section 9 of the Plan.
Administration of the
Plan. The
Plan shall be administered by the Board or by such committee or committees as
may be appointed by the Board from time to time (the Board, committee or
committees hereinafter referred to as the “Administrator”).
Powers of the
Administrator. The Administrator shall
have all the powers vested in it by the terms of the Plan, such powers to
include authority, in its sole and absolute discretion, to grant Awards under
the Plan, prescribe Grant Agreements evidencing such Awards and establish
programs for granting Awards.
The
Administrator shall have full power and authority to take all other actions
necessary to carry out the purpose and intent of the Plan, including, but not
limited to, the authority to: (i) determine the eligible persons to whom,
and the time or times at which Awards shall be granted; (ii) determine the
types of Awards to be granted; (iii) determine the number of shares to be
covered by or used for reference purposes for each Award; (iv) impose such
terms, limitations, restrictions and conditions upon any such Award as the
Administrator shall deem appropriate; (v) modify, amend, extend or renew
outstanding Awards, or accept the surrender of outstanding Awards and substitute
new Awards (provided however, that, except as provided in Section 7(d)
of the Plan, any modification that would materially adversely affect any
outstanding Award shall not be made without the consent of the
holder); (vi) accelerate or otherwise change the time in which an Award may
be exercised or becomes payable and to waive or accelerate the lapse, in whole
or in part, of any restriction or condition with respect to such Award,
including, but not limited to, any restriction or condition with respect to the
vesting or exercisability of an Award following termination of any grantee’s
employment or other relationship with the Company; and (vii) establish
objectives and conditions, if any, for earning Awards and determining whether
Awards will be paid after the end of a performance period.
The
Administrator shall have full power and authority, in its sole and absolute
discretion, to administer and interpret the Plan and to adopt and interpret such
rules, regulations, agreements, guidelines and instruments for the
administration of the Plan and for the conduct of its business as the
Administrator deems necessary or advisable.
Non-Uniform
Determinations. The Administrator’s
determinations under the Plan (including without limitation, determinations
of the persons to receive Awards, the form, amount and timing of such Awards,
the terms and provisions of such Awards and the Grant Agreements evidencing such
Awards) need not be uniform and may be made by the Administrator selectively
among persons who receive, or are eligible to receive, Awards under the Plan,
whether or not such persons are similarly situated. The
Administrator’s prior exercise of its discretionary authority shall not obligate
it to exercise its authority in a like fashion thereafter.
Limited
Liability. To
the maximum extent permitted by law, no member of the Administrator shall be
liable for any action taken or decision made in good faith relating to the Plan
or any Award thereunder.
Indemnification. To the maximum extent
permitted by law and by the Company’s charter and by-laws, the members of the
Administrator shall be indemnified by the Company in respect of all their
activities under the Plan.
Effect of Administrator’s
Decision. The
Administrator shall have the discretion to interpret or construe ambiguous,
unclear, or implied (but omitted) terms in any fashion it deems to be
appropriate in its sole discretion, and to make any findings of fact needed in
the administration of the Plan or Grant Agreements. All actions taken
and decisions and determinations made by the Administrator on all matters
relating to the Plan pursuant to the powers vested in it hereunder shall be in
the Administrator’s sole and absolute discretion and shall be conclusive and
binding on all parties concerned, including the Company, its stockholders, any
participants in the Plan and any other Employee, Consultant, or Director of the
Company, and their respective successors in interest. The validity of
any such interpretation, construction, decision or finding of fact shall not be
given de novo review if challenged in court, by arbitration, or in any other
forum, and shall be upheld unless clearly made in bad faith or materially
affected by fraud.
Shares
Available for the Plan; Maximum Awards
(a) Number of Shares
Issuable. The total number of shares of Common Stock initially
authorized to be issued under the Plan shall be 100,000,000. No more
than 100,000,000 shares of Common Stock may be issued under the Plan as
Incentive Stock Options. The foregoing share limits shall be subject
to adjustment in accordance with Section 15(b). The shares to be
offered under the Plan shall be authorized and unissued Common Stock, or issued
Common Stock that shall have been reacquired by the Company.
(b) Shares Subject to Terminated
Awards. Common Stock covered by any unexercised portions of
terminated or forfeited Options (including canceled Options) granted under the
Plan, Common Stock underlying any other Award that is terminated, forfeited or
otherwise surrendered by the Participant without actual issuance of the shares
may again be subject to new Awards under the Plan. Shares of Common
Stock surrendered to or withheld by the Company in payment or satisfaction of
the exercise price of an Option or tax withholding obligation with respect to an
Award shall be available for the grant of new Awards under the
Plan. In the event of the exercise of Stock Appreciation Rights,
whether or not granted in tandem with Options, only the number of shares of
Common Stock actually issued in payment of such Stock Appreciation Rights shall
be charged against the number of shares of Common Stock available for the grant
of Awards hereunder.
Participation
in the Plan shall be open to all Employees, Consultants, advisors, sales
representatives, officers and Directors of, and other individuals providing bona
fide services to or for, the Company, or of any Affiliate of the Company, as may
be selected by the Administrator from time to time. The Administrator
may also grant Awards to individuals in connection with hiring, retention or
otherwise, prior to the date the individual first performs services for the
Company or an Affiliate provided that such Awards shall not become vested or
exercisable prior to the date the individual first commences performance of such
services. A Participant who has been granted an Award may be granted
an additional Award or Awards if the Administrator shall so determine, if such
person is otherwise an Eligible Person and if otherwise in accordance with the
terms of the Plan. Notwithstanding the foregoing, nothing in this Plan shall
prevent or limit the Company’s authority and ability to grant Common Stock in
the form of stock options, restricted stock, stock units or any other applicable
award to any Employee, Consultant, Director or other individual providing
services to or for the Company or any Affiliate that is not subject to and is
outside of the terms of this Plan.
General. The Administrator, in
its sole discretion, establishes the terms of all Awards granted under the
Plan. Awards may be granted individually or in tandem with other
types of Awards. All Awards are subject to the terms and conditions
provided in the Grant Agreement. The Administrator may permit or
require a recipient of an Award to defer such individual’s receipt of the
payment of cash or the delivery of Common Stock that would otherwise be due to
such individual by virtue of the exercise of, payment of, or lapse or waiver of
restrictions respecting, any Award. If any such payment deferral is
required or permitted, the Administrator shall, in its sole discretion,
establish rules and procedures for such payment deferrals.
Replacement
Awards. Subject to Applicable
Laws (including any associated Shareholder approval requirements), the
Administrator may, in its sole discretion and upon such terms as it deems
appropriate, require as a condition of the grant of an Award to a Participant
that the Participant surrender for cancellation some or all of the Awards that
have previously been granted to the Participant under this Plan or
otherwise. An Award that is conditioned upon such surrender may or
may not be the same type of Award, may cover the same (or a lesser or
greater) number of Shares as such surrendered Award, may have other terms that
are determined without regard to the terms or conditions of such surrendered
Award, and may contain any other terms that the Administrator deems
appropriate. In the case of Options and SARs, these other terms may
not involve an exercise price that is lower than the exercise price of the
surrendered Option or SARs unless the Company’s shareholders approve the grant
itself or the program under which the grant is made pursuant to the
Plan.
Types;
Documentation. The Administrator may in
its discretion grant ISOs to any Employee and Nonqualified Options to any
Eligible Person, and shall evidence any such grants in a Grant Agreement that is
delivered to the Participant. Each Option shall be designated in the
Grant Agreement as an ISO or a Nonqualified Option, and the same Grant Agreement
may grant both types of Options, provided, however, that Awards of ISOs shall be
limited to Employees of the Company or of any current or hereafter existing
“parent corporation” or “subsidiary corporation”, as defined in Code Sections
424(e) and (f), respectively, of the Company. At the sole
discretion of the Administrator, any Option may be exercisable, in whole or in
part, immediately upon the grant thereof, or only after the occurrence of a
specified event, or only in installments, which installments may
vary. Options granted under the Plan may contain such terms and
provisions not inconsistent with the Plan that the Administrator shall deem
advisable in its sole and absolute discretion.
ISO $100,000
Limitation. To the extent that the
aggregate Fair Market Value of Shares with respect to which Options designated
as ISOs first become exercisable by a Participant in any calendar
year (under this Plan and any other plan of the Company or any Affiliate)
exceeds $100,000, such excess Options shall be treated as Nonqualified
Options. For purposes of determining whether the $100,000 limit is
exceeded, the Fair Market Value of the Shares subject to an ISO shall be
determined as of the Grant Date. In reducing the number of Options
treated as ISOs to meet the $100,000 limit, the most recently granted Options
shall be reduced first. In the event that Section 422 of the
Code is amended to alter the limitation set forth therein, the limitation of
this Section 7(b) shall be automatically adjusted
accordingly.
Term of Options. Each Grant Agreement
shall specify a term at the end of which the Option automatically expires,
subject to earlier termination provisions contained in Section 7(e) hereof;
provided, that, the term of any Option may not exceed ten (10) years from the
Grant Date. In the case of an ISO granted to an Employee who is a Ten
Percent Holder on the Grant Date, the term of the ISO shall not exceed
five (5) years from the Grant Date.
Exercise Price. The exercise price of an
Option shall be determined by the Administrator in its discretion and shall be
set forth in the Grant Agreement, subject to the following special
rules:
ISOs. If
an ISO is granted to an Employee who on the Grant Date is a Ten Percent Holder,
the per Share exercise price shall not be less than one hundred ten
percent (110%) of the Fair Market Value per Share on such Grant
Date. If an ISO is granted to any other Employee, the per Share
exercise price shall not be less than one hundred percent (100%) of the
Fair Market Value per Share on the Grant Date.
Nonqualified
Options. The per Share exercise price for the Shares to be
issued pursuant to the exercise of a Nonqualified Option shall not be less than
one hundred percent (100%) of the Fair Market Value per Share on the Grant
Date.
Termination of Continuous
Service. The
Administrator may establish and set forth in the applicable Grant Agreement the
terms and conditions on which an Option shall remain exercisable, if at all,
following termination of a Participant’s Continuous Service. The
Administrator may waive or modify these provisions at any time. To
the extent that a Participant is not entitled to exercise an Option at the date
of his or her termination of Continuous Service, or if the Participant (or
other person entitled to exercise the Option) does not exercise the Option to
the extent so entitled within the time specified in the Grant Agreement or
below (as applicable), the Option shall terminate and the Shares underlying
the unexercised portion of the Option shall revert to the Plan and become
available for future Awards. In no event may any Option be exercised
after the expiration of the Option term as set forth in the Grant
Agreement.
The
following provisions shall apply to the extent a Grant Agreement does not
specify the terms and conditions upon which an Option shall terminate when there
is a termination of a Participant’s Continuous Service:
Termination other than Upon
Disability or Death or for Cause. In the event of termination
of a Participant’s Continuous Service (other than as a result of
Participant’s death, disability, retirement or termination for Cause), the
Participant shall have the right to exercise an Option at any time within
ninety (90) days following such termination to the extent the Participant
was entitled to exercise such Option at the date of such
termination.
Disability. In
the event of termination of a Participant’s Continuous Service as a result of
his or her being Disabled, the Participant shall have the right to exercise an
Option at any time within one year following such termination to the extent the
Participant was entitled to exercise such Option at the date of such
termination.
Retirement. In
the event of termination of a Participant’s Continuous Service as a result of
Participant’s retirement, the Participant shall have the right to exercise the
Option at any time within one (1) year following such termination to the extent
the Participant was entitled to exercise such Option at the date of such
termination.
Death. In
the event of the death of a Participant during the period of Continuous Service
since the Grant Date of an Option, or within thirty (30) days following
termination of the Participant’s Continuous Service, the Option may be
exercised, at any time within one (1) year following the date of the
Participant’s death, by the Participant’s estate or by a person who acquired the
right to exercise the Option by bequest or inheritance, but only to the extent
the right to exercise the Option had vested at the date of death or, if earlier,
the date the Participant’s Continuous Service terminated.
Cause. If
the Administrator determines that a Participant’s Continuous Service terminated
due to Cause, the Participant shall immediately forfeit the right to exercise
any Option, and it shall be considered immediately null and void.
Reverse Vesting. The Administrator in its
sole and absolute discretion may allow a Participant to exercise unvested
Options, in which case the Shares then issued shall be Restricted Shares having
analogous vesting restrictions to the unvested Options.
Buyout
Provisions. The Administrator may at
any time offer to buy out an Option, in exchange for a payment in cash or
Shares, based on such terms and conditions as the Administrator shall establish
and communicate to the Participant at the time that such offer is
made. In addition, but subject to any shareholder approval
requirement of applicable law, if the Fair Market Value for Shares subject to an
Option is more than thirty three percent (33%) below their exercise price
for more than thirty (30) consecutive business days, the Administrator may
unilaterally terminate and cancel the Option either (i) by paying the
Participant, in cash or Shares, an amount not less than the Black-Scholes value
of the vested portion of the Option, or (ii) subject to the approval of the
shareholders of the Company, by irrevocably committing to grant a new Option, on
a designated date more than six (6) months after such termination and
cancellation of such Option (but only if the Participant’s Continuous
Service has not terminated prior to such designated date), on substantially the
same terms as the cancelled Option, provided that the per Share exercise price
for the new Option shall equal the per Share Fair Market Value of a Share on the
date the new grant occurs.
Stock
Appreciation Rights
Stock Appreciation
Rights. The
Administrator may from time to time grant to eligible participants Awards of
Stock Appreciation Rights (“SARs”). A SAR entitles the
grantee to receive, subject to the provisions of the Plan and the Grant
Agreement, a payment having an aggregate value equal to the product of (i)
the excess of (A) the Fair Market Value on the exercise date of one (1)
share of Common Stock over (B) the base price per Share specified in the
Grant Agreement, times (ii) the number of shares specified by the SAR, or
portion thereof, which is exercised. Payment by the Company of the
amount receivable upon any exercise of a SAR may be made by the delivery of
Common Stock or cash, or any combination of Common Stock and cash, as determined
in the sole discretion of the Administrator. If upon settlement of
the exercise of a SAR a grantee is to receive a portion of such payment in
Shares of Common Stock, the number of shares shall be determined by dividing
such portion by the Fair Market Value of a share of Common Stock on the exercise
date. No fractional shares shall be used for such payment and the
Administrator shall determine whether cash shall be given in lieu of such
fractional shares or whether such fractional shares shall be
eliminated.
Termination of Employment or
Consulting Relationship. The Administrator shall
establish and set forth in the applicable Grant Agreement the terms and
conditions on which a SAR shall remain exercisable, if at all, following
termination of a Participant’s Continuous Service. The provisions of
Section 7(e) above shall apply to the extent a Grant Agreement does not
specify the terms and conditions upon which a SAR shall terminate when there is
a termination of a Participant’s Continuous Service.
Buy-out. The Administrator has
the same discretion to buy-out SARs as it has to take such actions pursuant to
Section 7(g) above with respect to Options.
Restricted
Shares and Restricted Share Units; Unrestricted Shares
Grants. The Administrator may in
its discretion grant restricted shares (“Restricted
Shares”) to any Eligible
Person and shall evidence such grant in a Grant Agreement that is delivered to
the Participant and that sets forth the number of Restricted Shares, the
purchase price for such Restricted Shares (if any), and the terms upon
which the Restricted Shares may become vested. In addition, the
Company may in its discretion grant the right to receive Shares after certain
vesting requirements are met (“Restricted
Share Units”) to any
Eligible Person and shall evidence such grant in a Grant Agreement that is
delivered to the Participant which sets forth the number of Shares (or
formula, that may be based on future performance or conditions, for determining
the number of Shares) that the Participant shall be entitled to receive upon
vesting and the terms upon which the Shares subject to a Restricted Share Unit
may become vested. The Administrator may condition any Award of
Restricted Shares or Restricted Share Units to a Participant on receiving from
the Participant such further assurances and documents as the Administrator may
require to enforce the restrictions. In addition, the Committee may
grant Awards hereunder in the form of unrestricted shares (“Unrestricted
Shares”), which shall
vest in full upon the date of grant or such other date as the Committee may
determine or which the Committee may issue pursuant to any program under which
one or more Eligible Persons (selected by the Committee in its discretion)
elect to receive Unrestricted Shares in lieu of cash bonuses that would
otherwise be paid.
Vesting and
Forfeiture. The Administrator shall
set forth in a Grant Agreement granting Restricted Shares or Restricted Share
Units, the terms and conditions under which the Participant’s interest in the
Restricted Shares or the Shares subject to Restricted Share Units will become
vested and non-forfeitable. Except as set forth in the applicable
Grant Agreement or the Administrator otherwise determines, upon termination of a
Participant’s Continuous Service for any other reason, the Participant shall
forfeit his or her Restricted Shares and Restricted Share Units; provided that
if a Participant purchases the Restricted Shares and forfeits them for any
reason, the Company shall return the purchase price to the Participant only if
and to the extent set forth in a Grant Agreement.
Issuance of Restricted
Shares Prior to Vesting. The Company shall issue
stock certificates that evidence Restricted Shares pending the lapse of
applicable restrictions, and that bear a legend making appropriate reference to
such restrictions. Except as set forth in the applicable Grant
Agreement or the Administrator otherwise determines, the Company or a third
party that the Company designates shall hold such Restricted Shares and any
dividends that accrue with respect to Restricted Shares pursuant to
Section 9(e) below.
Issuance of Shares upon
Vesting. As
soon as practicable after vesting of a Participant’s Restricted Shares (or
Shares underlying Restricted Share Units) and the Participant’s satisfaction of
applicable tax withholding requirements, the Company shall release to the
Participant, free from the vesting restrictions, one (1) Share for each
vested Restricted Share (or issue one (1) Share free of the vesting
restriction for each vested Restricted Share Unit), unless a Grant Agreement
provides otherwise. No fractional shares shall be distributed but
shall be rounded up to the next full share at the election of the
Administrator. Notwithstanding the foregoing, if the Administrator
determines that an issuance of Shares at the time of vesting is not a
“permissible distribution event” within the meaning of Section 409A of the
Code, then the issuance of the Shares will be automatically deferred until the
earliest date on which issuance of the Shares in unrestricted form will
constitute a permissible distribution event pursuant to
paragraphs (i), (ii), (iii), (v) or (iv) of
Section 409A(a)(2)(A) of the Code.
Dividends Payable on
Vesting. Whenever Shares are
released to a Participant or duly-authorized transferee pursuant to
Section 9(d) above as a result of the vesting of Restricted Shares or the
Shares underlying Restricted Share Units are issued to a Participant pursuant to
Section 9(d) above, such Participant or duly-authorized transferee shall
also be entitled to receive (unless otherwise provided in the Grant
Agreement), with respect to each Share released or issued, an amount equal to
any cash dividends (plus, in the discretion of the Administrator, simple
interest at a rate as the Administrator may determine) and a number of Shares
equal to any stock dividends, which were declared and paid to the holders of
Shares between the Grant Date and the date such Share is released from the
vesting restrictions in the case of Restricted Shares or issued in the case of
Restricted Share Units.
Section 83(b)
Elections. A
Participant may make an election under Section 83(b) of the Code (the
“Section 83(b)
Election”) with respect
to Restricted Shares. If a Participant who has received Restricted
Share Units provides the Administrator with written notice of his or her
intention to make Section 83(b) Election with respect to the Shares subject
to such Restricted Share Units, the Administrator may in its discretion convert
the Participant’s Restricted Share Units into Restricted Shares, on a
one-for-one basis, in full satisfaction of the Participant’s Restricted Share
Unit Award. The Participant may then make a Section 83(b)
Election with respect to those Restricted Shares.
Shares
with respect to which a Participant makes a Section 83(b) Election shall
not be eligible for deferral pursuant to Section 10 below.
Deferral
Elections. At
any time within the thirty (30) day period (or other shorter or longer
period that the Administrator selects) in which a Participant who is a member of
a select group of management or highly compensated employees (within the
meaning of the Code) receives an Award of either Restricted Shares or Restricted
Share Units, the Administrator may permit the Participant to irrevocably elect,
on a form provided by and acceptable to the Administrator, to defer the receipt
of all or a percentage of the Shares that would otherwise be transferred to the
Participant upon the vesting of such Award. If the Participant makes
this election, the Shares subject to the election, and any associated dividends
and interest, shall be credited to an account established pursuant to
Section 10 hereof on the date such Shares would otherwise have been
released or issued to the Participant pursuant to Section 9(d)
above.
The
Administrator may grant Awards hereunder in the form of unrestricted
shares (“Unrestricted
Shares”), which shall vest in full upon the date of grant or such other
date as the Administrator may determine or which the Administrator may issue
pursuant to any program under which one or more Eligible Persons (selected
by the Administrator in its discretion) elect to receive Unrestricted Shares in
lieu of cash bonuses that would otherwise be paid.
Elections to
Defer. The
Administrator may permit any Eligible Person who is a Director, Consultant or
member of a select group of management or highly compensated
employees (within the meaning of the Code) to irrevocably elect, on a form
provided by and acceptable to the Administrator (the “Election
Form”), to forego the
receipt of cash or other compensation (including the Shares deliverable
pursuant to any Award other than Restricted Shares for which a
Section 83(b) Election has been made), and in lieu thereof to have the
Company credit to an internal Plan account (the “Account”) a number of deferred share
units (“Deferred
Share Units”) having a
Fair Market Value equal to the Shares and other compensation
deferred. These credits will be made at the end of each calendar
quarter (or other period that the Administrator establishes prospectively)
during which compensation is deferred. Unless, within five (5)
business days after the Company receives an Election Form, the Company sends the
Participant a written notice explaining why it is invalid, each Election Form
shall take effect on the first day of the next calendar year (or on the
first day of the next calendar month in the case of an initial election by a
Participant who is first eligible to defer hereunder) after its delivery to the
Company, subject to Section 9(g) regarding deferral of Restricted Shares
and Restricted Share Units and to Section 13(e) regarding deferral of
Performance Awards. Notwithstanding the foregoing sentence: (i)
Election Forms shall be ineffective with respect to any compensation that a
Participant earns before the date on which the Company receives the Election
Form, and (ii) the Administrator may unilaterally make awards in the form
of Deferred Share Units, regardless of whether or not the Participant foregoes
other compensation.
Vesting. Unless a Grant Agreement
expressly provides otherwise, each Participant shall be one hundred
percent (100%) vested at all times in any Shares subject to Deferred Share
Units.
Issuances of
Shares. The
Company shall provide a Participant with one (1) Share for each Deferred
Share Unit in five (5) substantially equal annual installments that are
issued before the last day of each of the five (5) calendar years that end
after the date on which the Participant’s Continuous Service terminates, unless
- -
the
Participant has properly elected a different form of distribution, on a form
approved by the Administrator, that permits the Participant to select any
combination of a lump sum and annual installments that are completed within
ten (10) years following termination of the Participant’s Continuous
Service, and
the
Company received the Participant’s distribution election form at the time the
Participant elects to defer the receipt of cash or other compensation pursuant
to Section 10(a), provided that (subject to any prospective changes
that the Administrator communicates in writing to a Participant), the
Participant may change such election through any subsequent election
that (i) is delivered to the Administrator at least one (1) year
before the date on which distributions are otherwise scheduled to commence
pursuant to the Participant’s election, and (ii) defers the commencement of
distributions by at least five (5) years from the originally scheduled
commencement date.
Fractional
shares shall not be issued and shall be rounded up to the next full share at the
election of the Administrator.
Crediting of
Dividends. Whenever Shares are
issued to a Participant pursuant to Section 10(c) above, such Participant
shall also be entitled to receive, with respect to each Share issued, a cash
amount equal to any cash dividends (plus simple interest at a rate of five
percent (5%) per annum, or such other reasonable rate as the Administrator
may determine in a Grant Agreement), and a number of Shares equal to any stock
dividends which were declared and paid to the holders of Shares between the
Grant Date and the date such Share is issued.
Emergency
Withdrawals. In the event a
Participant suffers an unforeseeable emergency within the contemplation of this
Section 10 and Section 409A of the Code, the Participant may apply to
the Company for an immediate distribution of all or a portion of the
Participant’s Deferred Share Units. The unforeseeable emergency must
result from a sudden and unexpected illness or accident of the Participant, the
Participant’s spouse, or a dependent (within the meaning of
Section 152(a) of the Code) of the Participant, casualty loss of the
Participant’s property, or other similar extraordinary and unforeseeable
conditions beyond the control of the Participant. Examples of
purposes which are not considered unforeseeable emergencies
include post-secondary school expenses or the desire to purchase a
residence. In no event will a distribution be made to the extent the
unforeseeable emergency could be relieved through reimbursement or compensation
by insurance or otherwise, or by liquidation of the Participant’s nonessential
assets to the extent such liquidation would not itself cause a severe financial
hardship. The amount of any distribution hereunder shall be limited
to the amount necessary to relieve the Participant’s unforeseeable emergency
plus amounts necessary to pay taxes reasonably anticipated as a result of the
distribution. The Administrator shall determine whether a Participant
has a qualifying unforeseeable emergency and the amount which qualifies for
distribution, if any. The Administrator may require evidence of the
purpose and amount of the need, and may establish such application or other
procedures as it deems appropriate.
Unsecured Rights to Deferred
Compensation. A Participant’s right to
Deferred Share Units shall at all times constitute an unsecured promise of the
Company to pay benefits as they come due. The right of the
Participant or the Participant’s duly-authorized transferee to receive benefits
hereunder shall be solely an unsecured claim against the general assets of the
Company. Neither the Participant nor the Participant’s
duly-authorized transferee shall have any claim against or rights in any
specific assets, shares, or other funds of the Company.
The
Administrator may from time to time grant Awards to eligible participants
denominate in stock-equivalent units (“Phantom Stock”) in
such amounts and on such terms and conditions as it shall
determine. Phantom Stock units granted to a participant shall be
credited to a bookkeeping reserve account solely for accounting purposes and
shall not require a segregation of any of the Company’s assets. An
Award of Phantom Stock may be settled in Common Stock, in cash, or in a
combination of Common Stock and cash, as determined in the sole discretion of
the Administrator. Except as otherwise provided in the applicable
Grant Agreement, the grantee shall not have the rights of a stockholder with
respect to any Shares of Common Stock represented by a Phantom Stock unit solely
as a result of the grant of a Phantom Stock unit to the grantee.
The
Administrator may from time to time grant other stock-based awards to eligible
participants in such amounts, on such terms and conditions, and for such
consideration, including no consideration or such minimum consideration as may
be required by law, as it shall determine. Other stock-based awards
may be denominated in cash, in Common Stock or other securities, in
stock-equivalent units, in stock appreciation units, in securities or debentures
convertible into Common Stock, or in any combination of the foregoing and may be
paid in Common Stock or other securities, in cash, or in a combination of Common
Stock or other securities and cash, all as determined in the sole discretion of
the Administrator.
Performance
Units. Subject to the
limitations set forth in paragraph (c) hereof, the Administrator may in its
discretion grant Performance Units to any Eligible Person and shall evidence
such grant in a Grant Agreement that is delivered to the Participant which sets
forth the terms and conditions of the Award. A Performance Unit is an
Award which is based on the achievement of specific goals with respect to the
Company or any Affiliate or individual performance of the Participant, or a
combination thereof, over a specified period of time.
Performance Compensation
Awards. Subject to the
limitations set forth in paragraph (c) hereof, the Administrator may, at
the time of grant of a Performance Unit, designate such Award as a “Performance
Compensation Award” in
order that such Award constitutes “qualified performance-based compensation”
under Code Section 162(m), in which event the Administrator shall have the
power to grant such Performance Compensation Award upon terms and conditions
that qualify it as “qualified performance-based compensation” within the meaning
of Code Section 162(m). With respect to each such Performance
Compensation Award, the Administrator shall establish, in writing within the
time required under Code Section 162(m), a “Performance
Period”, “Performance
Measure(s)”, and
“Performance
Formula(e)” (each
such term being hereinafter defined). Once established for a
Performance Period, the Performance Measure(s) and Performance Formula(e) shall
not be amended or otherwise modified to the extent such amendment or
modification would cause the compensation payable pursuant to the Award to fail
to constitute qualified performance-based compensation under Code
Section 162(m).
A
Participant shall be eligible to receive payment in respect of a Performance
Compensation Award only to the extent that the Performance Measure(s) for such
Award is achieved and the Performance Formula(e) as applied against such
Performance Measure(s) determines that all or some portion of such Participant’s
Award has been earned for the Performance Period. As soon as
practicable after the close of each Performance Period, the Administrator shall
review and certify in writing whether, and to what extent, the Performance
Measure(s) for the Performance Period have been achieved and, if so, determine
and certify in writing the amount of the Performance Compensation Award to be
paid to the Participant and, in so doing, may use negative discretion to
decrease, but not increase, the amount of the Award otherwise payable to the
Participant based upon such performance.
Limitations on
Awards. The
maximum Performance Unit Award and the maximum Performance Compensation Award
that any one (1) Participant may receive for any one (1) Performance
Period shall be determined from time to time by the
Administrator. The Administrator shall have the discretion to provide
in any Grant Agreement that any amounts earned in excess of any such limitations
will either be credited as Deferred Share Units, or as deferred cash
compensation under a separate plan of the Company (provided in the latter
case that such deferred compensation either bears a reasonable rate of interest
or has a value based on one (1) or more predetermined actual
investments). Any amounts for which payment to the Participant is
deferred pursuant to the preceding sentence shall be paid to the Participant in
a future year or years not earlier than, and only to the extent that, the
Participant is either not receiving compensation in excess of any such limits
for a Performance Period, or is not subject to the restrictions set forth under
Section 162(b) of the Code.
Definitions.
“Performance Formula”
means, for a Performance Period, one (1) or more objective formulas or
standards established by the Administrator for purposes of determining whether
or the extent to which an Award has been earned based on the level of
performance attained or to be attained with respect to one or more Performance
Measure(s). Performance Formulae may vary from Performance Period to
Performance Period and from Participant to Participant and may be established on
a stand-alone basis, in tandem or in the alternative.
“Performance Measure”
means one (1) or more of the following selected by the Administrator to
measure Company, Affiliate, and/or business unit performance for a Performance
Period, whether in absolute or relative terms (including, without
limitation, terms relative to a peer group or index): basic, diluted, or
adjusted earnings per share; sales or revenue; earnings before interest, taxes,
and other adjustments (in total or on a per share basis); basic or adjusted
net income; returns on equity, assets, capital, revenue or similar measure;
economic value added; working capital; total shareholder return; and product
development, product market share, research, licensing, litigation, human
resources, information services, mergers, acquisitions, sales of assets of
Affiliates or business units. Each such measure shall be, to the
extent applicable, determined in accordance with generally accepted accounting
principles as consistently applied by the Company (or such other standard
applied by the Administrator) and, if so determined by the Administrator, and in
the case of a Performance Compensation Award, to the extent permitted under Code
Section 162(m), adjusted to omit the effects of extraordinary items, gain
or loss on the disposal of a business segment, unusual or infrequently occurring
events and transactions and cumulative effects of changes in accounting
principles.
Performance
Measures may vary from Performance Period to Performance Period and from
Participant to Participant, and may be established on a stand-alone basis, in
tandem or in the alternative.
“Performance Period”
means one (1) or more periods of time (of not less than one (1)
fiscal year of the Company), as the Administrator may designate, over which the
attainment of one (1) or more Performance Measure(s) will be measured for
the purpose of determining a Participant’s rights in respect of an
Award.
Deferral
Elections. At
any time prior to the date that is at least six (6) months before the close
of a Performance Period (or shorter or longer period that the Administrator
selects) with respect to an Award of either Performance Units or Performance
Compensation, the Administrator may permit a Participant who is a member of a
select group of management or highly compensated employees (within the
meaning of the Code) to irrevocably elect, on a form provided by and acceptable
to the Administrator, to defer the receipt of all or a percentage of the cash or
Shares that would otherwise be transferred to the Participant upon the vesting
of such Award. If the Participant makes this election, the cash or
Shares subject to the election, and any associated interest and dividends, shall
be credited to an account established pursuant to Section 10 hereof on the
date such cash or Shares would otherwise have been released or issued to the
Participant pursuant to Section 13(a) or Section 13(b)
above.
General. As a condition to the
issuance or distribution of Shares pursuant to the Plan, the
Participant (or in the case of the Participant’s death, the person who
succeeds to the Participant’s rights) shall make such arrangements as the
Company may require for the satisfaction of any applicable federal, state, local
or foreign withholding tax obligations that may arise in connection with the
Award and the issuance of Shares. The Company shall not be required
to issue any Shares until such obligations are satisfied. If the
Administrator allows the withholding or surrender of Shares to satisfy a
Participant’s tax withholding obligations, the Administrator shall not allow
Shares to be withheld in an amount that exceeds the minimum statutory
withholding rates for federal and state tax purposes, including payroll
taxes.
Default Rule for
Employees. In
the absence of any other arrangement, an Employee shall be deemed to have
directed the Company to withhold or collect from his or her cash compensation an
amount sufficient to satisfy such tax obligations from the next payroll payment
otherwise payable after the date of the exercise of an
Award.
Special Rules. In the case of a
Participant other than an Employee (or in the case of an Employee where the
next payroll payment is not sufficient to satisfy such tax obligations, with
respect to any remaining tax obligations), in the absence of any other
arrangement and to the extent permitted under Applicable Law, the Participant
shall be deemed to have elected to have the Company withhold from the Shares or
cash to be issued pursuant to an Award that number of Shares having a Fair
Market Value determined as of the applicable Tax Date (as defined below) or
cash equal to the amount required to be withheld. For purposes of
this Section 14, the Fair Market Value of the Shares to be withheld shall
be determined on the date that the amount of tax to be withheld is to be
determined under the Applicable Law (the “Tax
Date”).
Surrender of
Shares. If
permitted by the Administrator, in its discretion, a Participant may satisfy the
minimum applicable tax withholding and employment tax obligations associated
with an Award by surrendering Shares to the Company (including Shares that
would otherwise be issued pursuant to the Award) that have a Fair Market Value
determined as of the applicable Tax Date equal to the amount required to be
withheld. In the case of Shares previously acquired from the Company
that are surrendered under this Section 14, such Shares must have been
owned by the Participant for more than six months on the date of
surrender (or such longer period of time the Company may in its discretion
require).
Income Taxes and Deferred
Compensation. Participants are solely
responsible and liable for the satisfaction of all taxes and penalties that may
arise in connection with Awards (including any taxes arising under
Section 409A of the Code), and the Company shall not have any obligation to
indemnify or otherwise hold any Participant harmless from any or all of such
taxes. The Administrator shall have the discretion to organize any
deferral program, to require deferral election forms, and to grant or to
unilaterally modify any Award in a manner that (i) conforms with the
requirements of Section 409A of the Code with respect to compensation that
is deferred and that vests after December 31, 2004, (ii) that voids any
Participant election to the extent it would violate Section 409A of the
Code, and (iii) for any distribution election that would violate
Section 409A of the Code, to make distributions pursuant to the Award at
the earliest to occur of a distribution event that is allowable under
Section 409A of the Code or any distribution event that is both allowable
under Section 409A of the Code and is elected by the Participant, subject
to any valid second election to defer, provided that the Administrator permits
second elections to defer in accordance with
Section 409A(a)(4)(C). The Administrator shall have the sole
discretion to interpret the requirements of the Code, including
Section 409A, for purposes of the Plan and all Awards.
Loans. The Company or its
Affiliate may make or guarantee loans to grantees to assist grantees in
exercising Awards and satisfying any withholding tax
obligations.
Transfers,
Adjustments and Change in Control Transactions
Transferability. Except as otherwise
determined by the Administrator, and in any event in the case of an ISO or a
Stock Appreciation Right granted with respect to an ISO, no Award granted under
the Plan shall be transferable by a grantee otherwise than by will or the laws
of descent and distribution. Unless otherwise determined by the
Administrator in accord with the provisions of the immediately preceding
sentence, an Award may be exercised during the lifetime of the grantee, only by
the grantee or, during the period the grantee is under a legal disability, by
the grantee’s guardian or legal representative.
Adjustments for Corporate
Transactions and Other Events.
Stock Dividend, Stock Split
and Reverse Stock Split. In the event of a stock dividend of,
or stock split or reverse stock split affecting, the Common Stock, (A) the
maximum number of shares of such Common Stock as to which Awards may be granted
under this Plan and the maximum number of shares with respect to which Awards
may be granted during any one (1) fiscal year of the Company to any
individual, as provided in Section 4 of the Plan, and (B) the number
of shares covered by and the exercise price and other terms of outstanding
Awards, shall, without further action of the Board, be adjusted to reflect such
event unless the Board determines, at the time it approves such stock dividend,
stock split or reverse stock split, that no such adjustment shall be
made. The Administrator may make adjustments, in its discretion, to
address the treatment of fractional shares and fractional cents that arise with
respect to outstanding Awards as a result of the stock dividend, stock split or
reverse stock split.
Non-Change in Control
Transactions. Except with respect to the transactions set
forth in Section 15(b)(i), in the event of any change affecting the Common
Stock, the Company or its capitalization, by reason of a spin-off, split-up,
dividend, recapitalization, merger, consolidation or share exchange, other than
any such change that is part of a transaction resulting in a Change in Control
of the Company, the Administrator, in its discretion and without the consent of
the holders of the Awards, shall make (A) appropriate adjustments to the
maximum number and kind of shares reserved for issuance or with respect to which
Awards may be granted under the Plan, in the aggregate and with respect to any
individual during any one fiscal year of the Company, as provided in
Section 4 of the Plan; and (B) any adjustments in outstanding Awards,
including but not limited to modifying the number, kind and price of securities
subject to Awards.
Change in Control
Transactions. In the event of any transaction resulting in a
Change in Control of the Company, outstanding Options and SARs under this Plan
will terminate upon the effective time of such Change in Control unless
provision is made in connection with the transaction for the continuation or
assumption of such Awards by, or for the substitution of the equivalent awards
of, the surviving or successor entity or a parent thereof. In the
event of such termination, the holders of Options and SARs under the Plan will
be permitted, for a period of at least twenty (20) days prior to the
effective time of the Change in Control, to exercise all portions of such Awards
that are then exercisable or which become exercisable upon or prior to the
effective time of the Change in Control; provided, however, that any such
exercise of any portion of such an Award which becomes exercisable as a result
of such Change in Control shall be deemed to occur immediately prior to the
effective time of such Change in Control.
Pooling of Interests
Transactions. In connection with any business combination
authorized by the Board, the Administrator, in its sole discretion and without
the consent of the holders of the Awards, may make any modifications to any
Awards, including but not limited to cancellation, forfeiture, surrender or
other termination of the Awards, in whole or in part, regardless of the vested
status of the Award, but solely to the extent necessary to facilitate the
compliance of such transaction with requirements for treatment as a pooling of
interests transaction for accounting purposes under generally accepted
accounting principles.
Unusual or Nonrecurring
Events. The Administrator is authorized to make, in its
discretion and without the consent of holders of Awards, adjustments in the
terms and conditions of, and the criteria included in, Awards in recognition of
unusual or nonrecurring events affecting the Company, or the financial
statements of the Company or any Affiliate, or of changes in applicable laws,
regulations, or accounting principles, whenever the Administrator determines
that such adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan.
Substitution of Awards in
Mergers and Acquisitions. Awards may be granted
under the Plan from time to time in substitution for awards held by employees,
officers, consultants or directors of entities who become or are about to become
employees, officers, consultants or directors of the Company or an Affiliate as
the result of a merger or consolidation of the employing entity with the Company
or an Affiliate, or the acquisition by the Company or an Affiliate of the assets
or stock of the employing entity. The terms and conditions of any
substitute Awards so granted may vary from the terms and conditions set forth
herein to the extent that the Administrator deems appropriate at the time of
grant to conform the substitute Awards to the provisions of the awards for which
they are substituted.
Time
of Granting of Awards
The date
of grant (“Grant
Date”) of an Award shall be the date on which the Administrator makes the
determination granting such Award or such other date as is determined by the
Administrator, provided that in the case of an ISO, the Grant Date shall be the
later of the date on which the Administrator makes the determination granting
such ISO or the date of commencement of the Participant’s employment
relationship with the Company.
Modification
of Awards and Substitution of Options
Modification, Extension and
Renewal of Awards. Within the limitations
of the Plan, the Administrator may modify an Award to accelerate the rate at
which an Option or SAR may be exercised (including without limitation
permitting an Option or SAR to be exercised in full without regard to the
installment or vesting provisions of the applicable Grant Agreement or whether
the Option or SAR is at the time exercisable, to the extent it has not
previously been exercised), to accelerate the vesting of any Award, to extend or
renew outstanding Awards, or to accept the cancellation of outstanding Awards to
the extent not previously exercised either for the granting of new Awards or for
other consideration in substitution or replacement
thereof. Notwithstanding the foregoing provision, no modification of
an outstanding Award shall materially and adversely affect such Participant’s
rights thereunder, unless either the Participant provides written consent or
there is an express Plan provision permitting the Administrator to act
unilaterally to make the modification.
Substitution of
Options. Notwithstanding any
inconsistent provisions or limits under the Plan, in the event the Company or an
Affiliate acquires (whether by purchase, merger or otherwise) all or
substantially all of outstanding capital stock or assets of another corporation
or in the event of any reorganization or other transaction qualifying under
Section 424 of the Code, the Administrator may, in accordance with the
provisions of that Section, substitute Options for options under the plan of the
acquired company provided (i) the excess of the aggregate fair market value
of the shares subject to an option immediately after the substitution over the
aggregate option price of such shares is not more than the similar excess
immediately before such substitution and (ii) the new option does not give
persons additional benefits, including any extension of the exercise
period.
The Plan
shall continue in effect for a term of ten (10) years from its effective
date as determined under Section 22 below, unless the Plan is sooner
terminated under Section 19 below.
Amendment
and Termination of the Plan
Authority to Amend or
Terminate. Subject to Applicable
Laws, the Board may from time to time amend, alter, suspend, discontinue or
terminate the Plan.
Effect of Amendment or
Termination. No amendment,
suspension, or termination of the Plan shall materially and adversely affect
Awards already granted unless either it relates to an adjustment pursuant to
Section 15 above, or it is otherwise mutually agreed between the
Participant and the Administrator, which agreement must be in writing and signed
by the Participant and the Company. Notwithstanding the foregoing,
the Administrator may amend the Plan to eliminate provisions which are no longer
necessary as a result of changes in tax or securities laws or regulations, or in
the interpretation thereof.
Conditions
Upon Issuance of Shares
Notwithstanding
any other provision of the Plan or any agreement entered into by the Company
pursuant to the Plan, the Company shall not be obligated, and shall have no
liability for failure, to issue or deliver any Shares under the Plan unless such
issuance or delivery would comply with Applicable Law, with such compliance
determined by the Company in consultation with its legal counsel.
The
Company, during the term of this Plan, will at all times reserve and keep
available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.
Effective Date; Termination
Date. This
Plan shall become effective on the date of its approval by the Board; provided
that this Plan shall be submitted to the Company’s shareholders for approval,
and if not approved by the shareholders in accordance with Applicable
Laws (as determined by the Administrator in its discretion) within
one (1) year from the date of approval by the Board, this Plan and any
Awards shall be null, void and of no force and effect. Awards granted
under this Plan before approval of this Plan by the shareholders shall be
granted subject to such approval, and no Shares shall be distributed before such
approval. No Award shall be granted under the Plan after the close of
business on the day immediately preceding the tenth (10th) anniversary of the effective date
of the Plan, or if earlier, the tenth (10th) anniversary of the date this Plan
is approved by the shareholders. Subject to other applicable
provisions of the Plan, all Awards made under the Plan prior to such termination
of the Plan shall remain in effect until such Awards have been satisfied or
terminated in accordance with the Plan and the terms of such
Awards.
The
validity, construction and effect of the Plan, of Grant Agreements entered into
pursuant to the Plan, and of any rules, regulations, determinations or decisions
made by the Administrator relating to the Plan or such Grant Agreements, and the
rights of any and all persons having or claiming to have any interest therein or
thereunder, shall be determined exclusively in accordance with applicable
federal laws and the laws of the State of Nevada, without regard to its conflict
of laws principles.
Other
Applicable Laws And Regulations
U.S. Securities
Laws. This
Plan, the grant of Awards, and the exercise of Options and SARs under this Plan,
and the obligation of the Company to sell or deliver any of its
securities (including, without limitation, Options, Restricted Shares,
Restricted Share Units, Deferred Share Units and Shares) under this Plan shall
be subject to all Applicable Law. In the event that the Shares are
not registered under the Securities Act, or any applicable state securities laws
prior to the delivery of such Shares, the Company may require, as a condition to
the issuance thereof, that the persons to whom Shares are to be issued represent
and warrant in writing to the Company that such Shares are being acquired by him
or her for investment for his or her own account and not with a view to, for
resale in connection with, or with an intent of participating directly or
indirectly in, any distribution of such Shares within the meaning of the
Securities Act, and a legend to that effect may be placed on the certificates
representing the Shares.
Other
Jurisdictions. To facilitate the making
of any grant of an Award under this Plan, the Administrator may provide for such
special terms for Awards to Participants who are foreign nationals or who are
employed by the Company or any Affiliate outside of the United States of America
as the Administrator may consider necessary or appropriate to accommodate
differences in local law, tax policy or custom. The Company may adopt
rules and procedures relating to the operation and administration of this Plan
to accommodate the specific requirements of local laws and procedures of
particular countries. Without limiting the foregoing, the Company is
specifically authorized to adopt rules and procedures regarding the conversion
of local currency, taxes, withholding procedures and handling of stock
certificates which vary with the customs and requirements of particular
countries. The Company may adopt sub-plans and establish escrow
accounts and trusts as may be appropriate or applicable to particular locations
and countries.
Neither a
Participant nor any transferee of a Participant shall have any rights as a
shareholder of the Company with respect to any Shares underlying any Award until
the date of issuance of a share certificate to a Participant or a transferee of
a Participant for such Shares in accordance with the Company’s governing
instruments and Applicable Law. Prior to the issuance of Shares
pursuant to an Award, a Participant shall not have the right to vote or to
receive dividends or any other rights as a shareholder with respect to the
Shares underlying the Award, notwithstanding its exercise in the case of Options
and SARs. No adjustment will be made for a dividend or other right
that is determined based on a record date prior to the date the stock
certificate is issued, except as otherwise specifically provided for in this
Plan.
Nothing
in the Plan or in any Grant Agreement thereunder shall confer any right on an
individual to continue in the service of the Company or shall interfere in any
way with the right of the Company to terminate such service at any time with or
without cause or notice and whether or not such termination results in (i)
the failure of any Award to vest; (ii) the forfeiture of any unvested or
vested portion of any Award; and/or (iii) any other adverse effect on the
individual’s interests under the Plan.
Neither
the Plan nor any Award shall create or be construed to create a trust or
separate fund of any kind or a fiduciary relationship between the Company and a
grantee or any other person. To the extent that any grantee or other
person acquires a right to receive payments from the Company pursuant to an
Award, such right shall be no greater than the right of any unsecured general
creditor of the Company.
Compliance
with Section 409A of The Code
The
Company intends that all Options granted under the Plan not be considered to
provide for the deferral of compensation under Section 409A of the Code and
that any other Award that does provide for such deferral of compensation shall
comply with the requirements of Section 409A of the Code and, accordingly,
this Plan shall be so administered and construed. Further, the Company may
modify the Plan and any Award to the extent necessary to fulfill this
intent.
* * * *
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