Attached files
file | filename |
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8-K - SONIC SOLUTIONS/CA/ | v198920_8k.htm |
EX-3.1 - SONIC SOLUTIONS/CA/ | v198920_ex3-1.htm |
EX-99.2 - SONIC SOLUTIONS/CA/ | v198920_ex99-2.htm |
EX-99.3 - SONIC SOLUTIONS/CA/ | v198920_ex99-3.htm |
EX-99.1 - SONIC SOLUTIONS/CA/ | v198920_ex99-1.htm |
Exhibit
10.1
SONIC
SOLUTIONS
2010
INDUCEMENT EQUITY COMPENSATION PLAN
October
2010
1. Purposes of the
Plan. The purposes of this Plan are to provide a material
inducement to an employee to enter into the employ of the Company and to promote
the success of the Company’s business. Awards granted hereunder are
granted not under a shareholder approved plan but rather pursuant to a NASDAQ
inducement grant exception.
2. Definitions. The
following definitions shall apply as used herein and in the individual Award
Agreements except as defined otherwise in an individual Award
Agreement. In the event a term is separately defined in an individual
Award Agreement, such definition shall supercede the definition contained in
this Section 2.
(a) “Administrator” means
the Board or the Compensation Committee.
(b) “Affiliate” and “Associate” shall have
the respective meanings ascribed to such terms in Rule 12b-2 promulgated
under the Exchange Act.
(c) “Applicable Laws”
means the legal requirements relating to the Plan and the Awards under
applicable provisions of federal securities laws, state corporate and securities
laws, the Code, the rules of any applicable stock exchange or national market
system, and the rules of any non-U.S. jurisdiction applicable to Awards granted
to residents therein.
(d) “Assumed” means that
pursuant to a Corporate Transaction either (i) the Award is expressly
affirmed by the Company or (ii) the contractual obligations represented by
the Award are expressly assumed (and not simply by operation of law) by the
successor entity or its Parent in connection with the Corporate Transaction with
appropriate adjustments to the number and type of securities of the successor
entity or its Parent subject to the Award and the exercise or purchase price
thereof which at least preserves the compensation element of the Award existing
at the time of the Corporate Transaction as determined in accordance with the
instruments evidencing the agreement to assume the Award.
(e) “Award” means the
grant of an Option, SAR, Restricted Stock, Restricted Stock Unit or other right
or benefit under the Plan.
(f)
“Award
Agreement” means the written agreement evidencing the grant of an Award
executed by the Company and the Grantee, including any amendments
thereto.
(g) “Board” means the
Board of Directors of the Company.
(h) “Cause” means, with
respect to the termination by the Company or a Related Entity of the Grantee’s
Continuous Service, that such termination is for “Cause” as such term (or word
of like import) is expressly defined in a then-effective written agreement
between the Grantee and the Company or such Related Entity, or in the absence of
such then-effective written agreement and definition, is based on, in the
determination of the Administrator, the
Grantee’s: (i) performance of any act or failure to perform any
act in bad faith and to the detriment of the Company or a Related Entity;
(ii) dishonesty, intentional misconduct or material breach of any agreement
with the Company or a Related Entity; or (iii) commission of a crime
involving dishonesty, breach of trust, or physical or emotional harm to any
person; provided, however, that with regard to any agreement that defines
“Cause” on the occurrence of or in connection with a Corporate Transaction or a
Change in Control, such definition of “Cause” shall not apply until a Corporate
Transaction or a Change in Control actually occurs.
(i)
“Change in
Control” means a change in
ownership or control of the Company effected through either of the following
transactions:
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(i) the
direct or indirect acquisition by any person or related group of persons (other
than an acquisition from or by the Company or by a Company-sponsored employee
benefit plan or by a person that directly or indirectly controls, is controlled
by, or is under common control with, the Company) of beneficial ownership
(within the meaning of Rule 13d-3 of the Exchange Act) of securities
possessing more than fifty percent (50%) of the total combined voting power of
the Company’s outstanding securities pursuant to a tender or exchange offer made
directly to the Company’s shareholders which a majority of the Continuing
Directors who are not Affiliates or Associates of the offeror do not recommend
such shareholders accept, or
(ii) a
change in the composition of the Board over a period of thirty-six (36) months
or less such that a majority of the Board members (rounded up to the next whole
number) ceases, by reason of one or more contested elections for Board
membership, to be comprised of individuals who are Continuing
Directors.
(j)
“Code” means
the Internal Revenue Code of 1986, as amended.
(k) “Common Stock” means
the common stock of the Company.
(l)
“Company”
means Sonic Solutions, a California corporation, or any
successor corporation that adopts the Plan in connection with a Corporate
Transaction.
(m) “Compensation
Committee” means the Compensation Committee of the Board.
(n) “Consultant” means any
person (other than an Employee or a Director, solely with respect to rendering
services in such person’s capacity as a Director) who is engaged by the Company
or any Related Entity to render consulting or advisory services to the Company
or such Related Entity.
(o) “Continuing Directors”
means members of the Board who either (i) have been Board members
continuously for a period of at least thirty-six (36) months or (ii) have
been Board members for less than thirty-six (36) months and were elected or
nominated for election as Board members by at least a majority of the Board
members described in clause (i) who were still in office at the time such
election or nomination was approved by the Board.
(p) “Continuous Service”
means that the provision of services to the Company or a Related Entity in any
capacity of Employee, Director or Consultant is not interrupted or
terminated. In jurisdictions requiring notice in advance of an
effective termination as an Employee, Director or Consultant, Continuous Service
shall be deemed terminated upon the actual cessation of providing services to
the Company or a Related Entity notwithstanding any required notice period that
must be fulfilled before a termination as an Employee, Director or Consultant
can be effective under Applicable Laws. A Grantee’s Continuous
Service shall be deemed to have terminated either upon an actual termination of
Continuous Service or upon the entity for which the Grantee provides services
ceasing to be a Related Entity. Continuous Service shall not be
considered interrupted in the case of (i) any approved leave of absence,
(ii) transfers among the Company, any Related Entity, or any successor, in
any capacity of Employee, Director or Consultant, or (iii) any change in
status as long as the individual remains in the service of the Company or a
Related Entity in any capacity of Employee, Director or Consultant (except as
otherwise provided in the Award Agreement). Notwithstanding the
foregoing, except as otherwise determined by the Administrator, in the event of
any spin-off of a Related Entity, service as an Employee, Director or Consultant
for such Related Entity following such spin-off shall be deemed to be Continuous
Service for purposes of the Plan and any Award under the Plan. An
approved leave of absence shall include sick leave, military leave, or any other
authorized personal leave.
(q) “Corporate
Transaction” means any of the following transactions, provided, however,
that the Administrator shall determine under parts (iv) and (v) whether multiple
transactions are related, and its determination shall be final, binding and
conclusive:
(i) a
merger or consolidation in which the Company is not the surviving entity, except
for a transaction the principal purpose of which is to change the state in which
the Company is incorporated;
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(ii)
the sale, transfer or other disposition of all or
substantially all of the assets of the Company;
(iii) the
complete liquidation or dissolution of the Company;
(iv) any
reverse merger or series of related transactions culminating in a reverse merger
(including, but not limited to, a tender offer followed by a reverse merger) in
which the Company is the surviving entity but (A) the shares of Common
Stock outstanding immediately prior to such merger are converted or exchanged by
virtue of the merger into other property, whether in the form of securities,
cash or otherwise, or (B) in which securities possessing more than forty
percent (40%) of the total combined voting power of the Company’s outstanding
securities are transferred to a person or persons different from those who held
such securities immediately prior to such merger or the initial transaction
culminating in such merger, but excluding any such
transaction or series of related transactions that the Administrator determines
shall not be a Corporate Transaction; or
(v) acquisition
in a single or series of related transactions by any person or related group of
persons (other than the Company or by a Company-sponsored employee benefit plan)
of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange
Act) of securities possessing more than fifty percent (50%) of the total
combined voting power of the Company’s outstanding securities but excluding any
such transaction or series of related transactions that the Administrator
determines shall not be a Corporate Transaction.
(r)
“Director” means a
member of the Board or the board of directors of any Related
Entity.
(s) “Disability” means as
defined under the long-term disability policy of the Company or the Related
Entity to which the Grantee provides services regardless of whether the Grantee
is covered by such policy. If the Company or the Related Entity to
which the Grantee provides service does not have a long-term disability plan in
place, “Disability” means that a Grantee is unable to carry out the
responsibilities and functions of the position held by the Grantee by reason of
any medically determinable physical or mental impairment for a period of not
less than ninety (90) consecutive days. A Grantee will not be
considered to have incurred a Disability unless he or she furnishes proof of
such impairment sufficient to satisfy the Administrator in its
discretion.
(t)
“Employee” means any
person, including an Officer or Director, who is in the employ of the Company or
any Related Entity, subject to the control and direction of the Company or any
Related Entity as to both the work to be performed and the manner and method of
performance. The payment of a director’s fee by the Company or a
Related Entity shall not be sufficient to constitute “employment” by the
Company.
(u) “Exchange Act” means
the Securities Exchange Act of 1934, as amended.
(v) “Fair Market Value”
means, as of any date, the value of Common Stock determined as
follows:
(i) If
the Common Stock is listed on one or more established stock exchanges or
national market systems, including without limitation The Nasdaq Global Select
Market, The NASDAQ Global Market, or The NASDAQ Capital Market of The NASDAQ
Stock Market, LLC, its Fair Market Value shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on the
principal exchange or system on which the Common Stock is listed (as determined
by the Administrator) on the date of determination (or, if no closing sales
price or closing bid was reported on that date, as applicable, on the last
trading date such closing sales price or closing bid was reported), as reported
in The Wall Street Journal or such other source as the Administrator deems
reliable;
(ii) If
the Common Stock is regularly quoted on an automated quotation system (including
the OTC Bulletin Board) or by a recognized securities dealer, its Fair Market
Value shall be the closing sales price for such stock as quoted on such system
or by such securities dealer on the date of determination, but if selling prices
are not reported, the Fair Market Value of a share of Common Stock shall be the
mean between the high bid and low asked prices for the Common Stock on the date
of determination (or, if no such prices were reported on that date, on the last
date such prices were reported), as reported in The Wall Street Journal or such
other source as the Administrator deems reliable; or
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(iii)
In the absence of an
established market for the Common Stock of the type described in (i) and (ii),
above, the Fair Market Value thereof shall be determined by the Administrator in
good faith.
(w) “Grantee” means an
Employee who receives an Award under the Plan.
(x)
“Non-Qualified Stock
Option” means an Option not intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code.
(y) “Officer” means a
person who is an officer of the Company or a Related Entity within the meaning
of Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder.
(z)
“Option” means an
option to purchase Shares pursuant to an Award Agreement granted under the
Plan.
(aa) “Parent” means a
“parent corporation”, whether now or hereafter existing, as defined in
Section 424(e) of the Code.
(bb)
“Plan” means this 2010
Inducement Equity Compensation Plan.
(cc) “Related Entity” means
any Parent or Subsidiary of the Company and any business, corporation,
partnership, limited liability company or other entity in which the Company or a
Parent or a Subsidiary of the Company holds a substantial ownership interest,
directly or indirectly.
(dd)
“Replaced” means that
pursuant to a Corporate Transaction the Award is replaced with a comparable
stock award or a cash incentive program of the Company, the successor entity (if
applicable) or Parent of either of them which preserves the compensation element
of such Award existing at the time of the Corporate Transaction and provides for
subsequent payout in accordance with the same (or a more favorable) vesting
schedule applicable to such Award. The determination of Award
comparability shall be made by the Administrator and its determination shall be
final, binding and conclusive.
(ee) “Restricted Stock”
means Shares issued under the Plan to the Grantee for such consideration, if
any, and subject to such restrictions on transfer, rights of first refusal,
repurchase provisions, forfeiture provisions, and other terms and conditions as
established by the Administrator.
(ff)
“Restricted
Stock Units” means an Award which may be earned in whole or in part upon
the passage of time or the attainment of performance criteria established by the
Administrator and which may be settled for cash, Shares or other securities or a
combination of cash, Shares or other securities as established by the
Administrator.
(gg) “Rule 16b-3”
means Rule 16b-3 promulgated under the Exchange Act or any successor
thereto.
(hh) “SAR” means a stock
appreciation right entitling the Grantee to Shares or cash compensation, as
established by the Administrator, measured by appreciation in the value of
Common Stock.
(ii) “Share” means a share
of the Common Stock.
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(jj) “Subsidiary” means a
“subsidiary corporation”, whether now or hereafter existing, as defined in
Section 424(f) of the Code.
3. Stock Subject to the
Plan.
(a) Subject
to the provisions of Section 10, below, the maximum aggregate number of
Shares which may be issued pursuant to all Awards is 1,000,000
Shares. Notwithstanding the foregoing, any Shares issued in
connection with Awards other than Options and SARs shall be counted against the
limit set forth herein as two (2) Shares for every one (1) Share issued in
connection with such Award (and shall be counted as two (2) Shares for every one
(1) Share returned or deemed not to have been issued from the Plan pursuant to
Section 3(b) below in connection with Awards other than Options and
SARs). The Shares to be issued pursuant to Awards may be authorized,
but unissued, or reacquired Common Stock.
(b) Any
Shares covered by an Award (or portion of an Award) which is forfeited, canceled
or expires (whether voluntarily or involuntarily) shall be deemed not to have
been issued for purposes of determining the maximum aggregate number of Shares
which may be issued under the Plan. Shares that actually have been
issued under the Plan pursuant to an Award shall not be returned to the Plan and
shall not become available for future issuance under the Plan, except that if
unvested Shares are forfeited, or repurchased by the Company at the lower of
their original purchase price or their Fair Market Value at the time of
repurchase, such Shares shall become available for future grant under the
Plan.
4. Administration of the
Plan.
(a) Plan
Administrator.
(i) Administration with Respect
to Officers. With respect to grants of Awards to Employees who
are also Officers or Directors of the Company, the Plan shall be administered by
the Board or the Compensation Committee, which Compensation Committee shall be
constituted in such a manner as to satisfy the Applicable Laws and to permit
such grants and related transactions under the Plan to be exempt from
Section 16(b) of the Exchange Act in accordance with
Rule 16b-3.
(ii) Administration With Respect
to Other Employees. With respect to grants of Awards to
Employees who are neither Directors nor Officers of the Company, the Plan shall
be administered by the Board or the Compensation Committee, which Compensation
Committee shall be constituted in such a manner as to satisfy the Applicable
Laws.
(iii) Administration
Errors. In the event an Award is granted in a manner
inconsistent with the provisions of this subsection (a), such Award shall
be presumptively valid as of its grant date to the extent permitted by the
Applicable Laws.
(b) Powers of the
Administrator. Subject to Applicable Laws and the provisions
of the Plan (including any other powers given to the Administrator hereunder),
and except as otherwise provided by the Board, the Administrator shall have the
authority, in its discretion:
(i) subject
to Section 5 of the Plan, to select the Employees to whom Awards may be granted
from time to time hereunder;
(ii)
to determine whether and to what extent Awards are granted
hereunder;
(iii) to
determine the number of Shares or the amount of other consideration to be
covered by each Award granted hereunder;
(iv) to
approve forms of Award Agreements for use under the Plan;
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(v) to
determine the terms and conditions of any Award granted hereunder;
(vi)
to amend the terms of any outstanding Award granted under the Plan, including as
provided in Section 10 below, provided that (A) any amendment that would
adversely affect the Grantee’s rights under an outstanding Award shall not be
made without the Grantee’s written consent, (B) the reduction of the base
appreciation amount of any SAR awarded under the Plan shall be subject to
shareholder approval, (C) the modification of the exercise price of any Option
awarded under the Plan shall be subject to shareholder approval, and
(D) canceling an Option or SAR at a time when its exercise price or base
appreciation amount (as applicable) exceeds the Fair Market Value of the
underlying Shares, in exchange for another Option, SAR, Restricted Stock, or
other Award or cash shall be subject to shareholder approval, unless the
cancellation and exchange occurs in connection with a Corporate
Transaction. Notwithstanding the foregoing, canceling an Option
(other than an Option granted to an Officer or Director) or SAR in exchange for
another Option, SAR, Restricted Stock, or other Award with an exercise price,
purchase price or base appreciation amount (as applicable) that is equal to or
greater than the exercise price or base appreciation amount (as applicable) of
the original Option or SAR shall not be subject to shareholder
approval;
(vii)
to construe and interpret the terms of the Plan and Awards,
including without limitation, any notice of award or Award Agreement, granted
pursuant to the Plan;
(viii)
to grant Awards to Employees employed outside the United States on such
terms and conditions different from those specified in the Plan as may, in the
judgment of the Administrator, be necessary or desirable to further the purpose
of the Plan; and
(ix) to
take such other action, not inconsistent with the terms of the Plan, as the
Administrator deems appropriate.
The
express grant in the Plan of any specific power to the Administrator shall not
be construed as limiting any power or authority of the Administrator; provided
that the Administrator may not exercise any right or power reserved to the
Board. Any decision made, or action taken, by the Administrator or in
connection with the administration of this Plan shall be final, conclusive and
binding on all persons having an interest in the Plan.
(c) Indemnification. In
addition to such other rights of indemnification as they may have as members of
the Board or as Officers or Employees of the Company or a Related Entity,
members of the Board and any Officers or Employees of the Company or a Related
Entity to whom authority to act for the Board, the Administrator or the Company
is delegated shall be defended and indemnified by the Company to the extent
permitted by law on an after-tax basis against all reasonable expenses,
including attorneys’ fees, actually and necessarily incurred in connection with
the defense of any claim, investigation, action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan, or any Award granted hereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by the Company) or paid
by them in satisfaction of a judgment in any such claim, investigation, action,
suit or proceeding, except in relation to matters as to which it shall be
adjudged in such claim, investigation, action, suit or proceeding that such
person is liable for gross negligence, bad faith or intentional misconduct;
provided, however, that within thirty (30) days after the institution of such
claim, investigation, action, suit or proceeding, such person shall offer to the
Company, in writing, the opportunity at the Company’s expense to defend the
same.
5. Eligibility. Awards
may only be granted to Employees so long as the following requirements are met:
(a) the Employee was not previously an Employee or Director of the Company or
the Employee is returning to the employment of the Company following a bonafide
period of non-employment or non-service to the Company and (b) the grant of an
Award under the Plan is a material inducement to the Employee's decision to
enter into the employment of the Company. Notwithstanding the foregoing, an
Employee may be granted an Award in connection with a merger, acquisition or
similar transaction, to the extent permitted by the Nasdaq rules governing
stockholder approval of inducement equity compensation plans.
6
6. Terms and Conditions of
Awards.
(a) Types of Awards. The
Administrator is authorized under the Plan to award any type of arrangement to
an Employee that is not inconsistent with the provisions of the Plan and that by
its terms involves or might involve the issuance of (i) Shares,
(ii) cash or (iii) an Option, a SAR, or similar right with a fixed or
variable price related to the Fair Market Value of the Shares and with an
exercise or conversion privilege related to the passage of time, the occurrence
of one or more events, or the satisfaction of performance criteria or other
conditions. Such awards include, without limitation, Options, SARs,
sales or bonuses of Restricted Stock or Restricted Stock Units, and an Award may
consist of one such security or benefit, or two (2) or more of them in any
combination or alternative.
(b) Designation of
Award. Each Award shall be designated in the Award
Agreement.
(c) Conditions of
Award. Subject to the terms of the Plan, the Administrator
shall determine the provisions, terms, and conditions of each Award including,
but not limited to, the Award vesting schedule, repurchase provisions, rights of
first refusal, forfeiture provisions, form of payment (cash, Shares, or other
consideration) upon settlement of the Award, payment contingencies, and
satisfaction of any performance criteria. The performance criteria
established by the Administrator may be based on any one of, or combination of,
the following: (i) increase in share price, (ii) earnings per share, (iii) total
shareholder return, (iv) operating margin, (v) gross margin, (vi) return on
equity, (vii) return on assets, (viii) return on investment, (ix) operating
income, (x) net operating income, (xi) pre-tax profit, (xii) cash flow, (xiii)
revenue, (xiv) expenses, (xv) earnings before interest, taxes and depreciation,
(xvi) economic value added, (xvii) market share and (xviii) other measures of
performance selected by the Administrator. The performance criteria
may be applicable to the Company, Related Entities and/or any individual
business units of the Company or any Related Entity. Partial
achievement of the specified criteria may result in a payment or vesting
corresponding to the degree of achievement as specified in the Award
Agreement.
(d) Acquisitions and Other
Transactions. The Administrator may issue Awards under the
Plan in settlement, assumption or substitution for, outstanding awards or
obligations to grant future awards in connection with the Company or a Related
Entity acquiring another entity, an interest in another entity or an additional
interest in a Related Entity whether by merger, stock purchase, asset purchase
or other form of transaction.
(e) Deferral of Award
Payment. The Administrator may establish one or more programs
under the Plan to permit selected Grantees the opportunity to elect to defer
receipt of consideration upon exercise of an Award, satisfaction of performance
criteria, or other event that absent the election would entitle the Grantee to
payment or receipt of Shares or other consideration under an
Award. The Administrator may establish the election procedures, the
timing of such elections, the mechanisms for payments of, and accrual of
interest or other earnings, if any, on amounts, Shares or other consideration so
deferred, and such other terms, conditions, rules and procedures that the
Administrator deems advisable for the administration of any such deferral
program. If the vesting or receipt of Shares under an Award is
deferred to a later date, any amount (whether denominated in Shares or cash)
paid in addition to the original number of Shares subject to such Award will not
be treated as an increase in the number of Shares subject to the Award if the
additional amount is based either on a reasonable rate of interest or on one or
more predetermined actual investments such that the amount payable by the
Company at the later date will be based on the actual rate of return of a
specific investment (including any decrease as well as any increase in the value
of an investment).
(f)
Separate
Programs. The Administrator may establish one or more separate
programs under the Plan for the purpose of issuing particular forms of Awards to
one or more classes of Grantees on such terms and conditions as determined by
the Administrator from time to time.
(g) Early
Exercise. The Award Agreement may, but need not, include a
provision whereby the Grantee may elect at any time while an Employee, Director
or Consultant to exercise any part or all of the Award prior to full vesting of
the Award. Any unvested Shares received pursuant to such exercise may
be subject to a repurchase right in favor of the Company or a Related Entity or
to any other restriction the Administrator determines to be
appropriate.
7
(h) Term of
Award. The term of each Award shall be the term stated in the
Award Agreement. Notwithstanding the foregoing, the specified term of
any Award shall not include any period for which the Grantee has elected to
defer the receipt of the Shares or cash issuable pursuant to the
Award.
(i)
Transferability of
Awards. Awards shall be transferable (i) by will and by
the laws of descent and distribution and (ii) during the lifetime of the
Grantee, to the extent and in the manner authorized by the
Administrator. Notwithstanding the foregoing, the Grantee may
designate one or more beneficiaries of the Grantee’s Award in the event of the
Grantee’s death on a beneficiary designation form provided by the
Administrator.
(j)
Vesting of Restricted Stock
and Restricted Stock Units. Awards of Restricted Stock and
Restricted Stock Units issued under the Plan shall vest and be released from the
risk of forfeiture over a period of no less than three (3) years measured from
the date of issuance of the Award. Notwithstanding the foregoing,
Awards of Restricted Stock and Restricted Stock Units subject to
performance-based vesting may vest and be released from the risk of forfeiture
over a period of no less than one (1) year measured from the date of issuance of
the Award.
(k) Time of Granting
Awards. The date of grant of an Award shall for all purposes
be the date on which the Administrator makes the determination to grant such
Award, or such other date as is determined by the Administrator.
7. Award Exercise or Purchase
Price, Consideration and Taxes.
(a) Exercise or Purchase
Price. The exercise or purchase price, if any, for an Award
shall be as follows:
(i) In
the case of a Non-Qualified Stock Option, the per Share exercise price shall be
not less than one hundred percent (100%) of the Fair Market Value per Share on
the date of grant.
(ii) In
the case of SARs, the base appreciation amount shall be not less than one
hundred percent (100%) of the Fair Market Value per Share on the date of
grant.
(iii) In
the case of other Awards, such price as is determined by the
Administrator.
(iv) Notwithstanding
the foregoing provisions of this Section 7(a) in the case of an Award issued
pursuant to Section 6(d), above, the exercise or purchase price for the
Award shall be determined in accordance with the provisions of the relevant
instrument evidencing the agreement to issue such Award.
(b) Consideration. Subject
to Applicable Laws, the consideration to be paid for the Shares to be issued
upon exercise or purchase of an Award including the method of payment, shall be
determined by the Administrator. In addition to any other types of
consideration the Administrator may determine, the Administrator is authorized
to accept as consideration for Shares issued under the Plan the
following:
(i) cash;
(ii)
check;
(iii) surrender
of Shares or delivery of a properly executed form of attestation of ownership of
Shares as the Administrator may require which have a Fair Market Value on the
date of surrender or attestation equal to the aggregate exercise price of the
Shares as to which said Award shall be exercised;
8
(iv) with
respect to Options, payment through a broker-dealer sale and remittance
procedure pursuant to which the Grantee (A) shall provide written
instructions to a Company designated brokerage firm to effect the immediate sale
of some or all of the purchased Shares and remit to the Company sufficient funds
to cover the aggregate exercise price payable for the purchased Shares and
(B) shall provide written directives to the Company to deliver the
certificates for the purchased Shares directly to such brokerage firm in order
to complete the sale transaction;
(v) with
respect to Options, payment through a “net exercise” such that, without the
payment of any funds, the Grantee may exercise the Option and receive the net
number of Shares equal to (i) the number of Shares as to which the Option
is being exercised, multiplied by (ii) a fraction, the numerator of which
is the Fair Market Value per Share (on such date as is determined by the
Administrator) less the Exercise Price per Share, and the denominator of which
is such Fair Market Value per Share (the number of net Shares to be received
shall be rounded down to the nearest whole number of Shares); or
(vi) any
combination of the foregoing methods of payment.
The
Administrator may at any time or from time to time, by adoption of or by
amendment to the standard forms of Award Agreement described in
Section 4(b)(iv), or by other means, grant Awards which do not permit all
of the foregoing forms of consideration to be used in payment for the Shares or
which otherwise restrict one or more forms of consideration.
(c) Taxes. No
Shares shall be delivered under the Plan to any Grantee or other person until
such Grantee or other person has made arrangements acceptable to the
Administrator for the satisfaction of any non-U.S., federal, state, or local
income and employment tax withholding obligations. Upon exercise or
vesting of an Award the Company shall withhold or collect from Grantee an amount
sufficient to satisfy such tax obligations, including, but not limited too, by
surrender of the whole number of Shares covered by the Award sufficient to
satisfy the minimum applicable tax withholding obligations incident to the
exercise or vesting of an Award (reduced to the lowest whole number of Shares if
such number of Shares withheld would result in withholding a fractional Share
with any remaining tax withholding settled in cash).
(d) “Net Exercise”
Matters. For purposes of the Plan, if Shares subject to Awards
are surrendered in payment of the exercise price as provided in Section 7(b)
above or in payment of tax obligations, as provided in Section 7(c) above, those
Shares will be deemed issued pursuant to the Plan.
8. Exercise of
Award.
(a) Procedure for Exercise;
Rights as a Shareholder.
(i) Any
Award granted hereunder shall be exercisable at such times and under such
conditions as determined by the Administrator under the terms of the Plan and
specified in the Award Agreement.
(ii)
An Award shall be
deemed to be exercised when written notice of such exercise has been given to
the Company in accordance with the terms of the Award by the person entitled to
exercise the Award and full payment for the Shares with respect to which the
Award is exercised, including, to the extent selected, use of the broker-dealer
sale and remittance procedure to pay the purchase price as provided in
Section 7(b)(iv).
(b) Exercise of Award Following
Termination of Continuous Service.
(i) An
Award may not be exercised after the termination date of such Award set forth in
the Award Agreement and may be exercised following the termination of a
Grantee’s Continuous Service only to the extent provided in the Award
Agreement.
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(ii) Where
the Award Agreement permits a Grantee to exercise an Award following the
termination of the Grantee’s Continuous Service for a specified period, the
Award shall terminate to the extent not exercised on the last day of the
specified period or the last day of the original term of the Award, whichever
occurs first.
9. Conditions Upon Issuance of
Shares.
(a) If
at any time the Administrator determines that the delivery of Shares pursuant to
the exercise, vesting or any other provision of an Award is or may be unlawful
under Applicable Laws, the vesting or right to exercise an Award or to otherwise
receive Shares pursuant to the terms of an Award shall be suspended until the
Administrator determines that such delivery is lawful and shall be further
subject to the approval of counsel for the Company with respect to such
compliance. The Company shall have no obligation to effect any
registration or qualification of the Shares under federal or state
laws.
(b) As
a condition to the exercise of an Award, the Company may require the person
exercising such Award to represent and warrant at the time of any such exercise
that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for
the Company, such a representation is required by any Applicable
Laws.
10. Adjustments Upon Changes in
Capitalization. Subject to any required action by the
shareholders of the Company, the number of Shares covered by each outstanding
Award, and the number of Shares which have been authorized for issuance under
the Plan but as to which no Awards have yet been granted or which have been
returned to the Plan, the exercise or purchase price of each such outstanding
Award, as well as any other terms that the Administrator determines require
adjustment shall be proportionately adjusted for (i) any increase or
decrease in the number of issued Shares resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Shares, or
similar transaction affecting the Shares, (ii) any other increase or
decrease in the number of issued Shares effected without receipt of
consideration by the Company, or (iii) any other transaction with respect
to Common Stock including a corporate merger, consolidation, acquisition of
property or stock, separation (including a spin-off or other distribution of
stock or property), reorganization, liquidation (whether partial or complete) or
any similar transaction; provided, however that conversion of any convertible
securities of the Company shall not be deemed to have been “effected without
receipt of consideration.” In the event of any distribution of cash
or other assets to shareholders other than a normal cash dividend, the
Administrator shall also make such adjustments as provided in this Section 10 or
substitute, exchange or grant Awards to effect such adjustments (collectively
“adjustments”). Any such adjustments to outstanding Awards will be
effected in a manner that precludes the enlargement of rights and benefits under
such Awards. In connection with the foregoing adjustments, the
Administrator may, in its discretion, prohibit the exercise of Awards or other
issuance of Shares, cash or other consideration pursuant to Awards during
certain periods of time. Such adjustment shall be made by the
Administrator and its determination shall be final, binding and
conclusive. Except as the Administrator determines and as provided in
Section 4(b)(vi) above, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason hereof shall be made with respect to, the
number or price of Shares subject to an Award.
11. Corporate Transactions and
Changes in Control.
(a) Termination of Award to
Extent Not Assumed in Corporate Transaction. Effective upon
the consummation of a Corporate Transaction, all outstanding Awards under the
Plan shall terminate. However, all such Awards shall not terminate to
the extent they are Assumed in connection with the Corporate
Transaction.
(b) Acceleration of Award Upon
Corporate Transaction or Change in Control.
(i) Corporate
Transaction. Except as provided otherwise in an individual
Award Agreement, in the event of a Corporate Transaction, for the portion of
each Award that is neither Assumed nor Replaced, such portion of the Award shall
automatically become fully vested and exercisable and be released from any
repurchase or forfeiture rights (other than repurchase rights exercisable at
Fair Market Value) for all of the Shares at the time represented by such portion
of the Award, immediately prior to the specified effective date of such
Corporate Transaction, provided that the Grantee’s Continuous Service has not
terminated prior to such date. The portion of the Award that is not
Assumed shall terminate under subsection (a) of this Section 11 to the extent
not exercised prior to the consummation of such Corporate
Transaction.
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(ii)
Change in
Control. Except as provided otherwise in an individual Award
Agreement, in the event of a Change in Control (other than a Change in Control
which also is a Corporate Transaction), each Award which is at the time
outstanding under the Plan automatically shall become fully vested and
exercisable and be released from any repurchase or forfeiture rights (other than
repurchase rights exercisable at Fair Market Value), immediately prior to the
specified effective date of such Change in Control, for all of the Shares at the
time represented by such Award, provided that the Grantee’s Continuous Service
has not terminated prior to such date.
12. Effective Date and Term of
Plan. The Plan shall become effective upon its adoption by the
Board. It shall continue in effect for a term of ten (10) years
unless sooner terminated.
13. Amendment, Suspension or
Termination of the Plan.
(a) The
Board may at any time amend, suspend or terminate the Plan;
(b) No
Award may be granted during any suspension of the Plan or after termination of
the Plan.
(c) No
suspension or termination of the Plan (including termination of the Plan under
Section 12, above) shall adversely affect any rights under Awards already
granted to a Grantee.
14. Reservation of
Shares.
(a) The
Company, during the term of the Plan, will at all times reserve and keep
available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.
(b) The
inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company’s counsel to be necessary
to the lawful issuance and sale of any Shares hereunder, shall relieve the
Company of any liability in respect of the failure to issue or sell such Shares
as to which such requisite authority shall not have been obtained.
15. No Effect on Terms of
Employment Relationship. The Plan shall not confer upon any
Grantee any right with respect to the Grantee’s Continuous Service, nor shall it
interfere in any way with his or her right or the right of the Company or any
Related Entity to terminate the Grantee’s Continuous Service at any time, with
or without Cause, and with or without notice. The ability of the
Company or any Related Entity to terminate the employment of a Grantee who is
employed at will is in no way affected by its determination that the Grantee’s
Continuous Service has been terminated for Cause for the purposes of this
Plan.
16. No Effect on Retirement and
Other Benefit Plans. Except as specifically provided in a
retirement or other benefit plan of the Company or a Related Entity, Awards
shall not be deemed compensation for purposes of computing benefits or
contributions under any retirement plan of the Company or a Related Entity, and
shall not affect any benefits under any other benefit plan of any kind or any
benefit plan subsequently instituted under which the availability or amount of
benefits is related to level of compensation. The Plan is not a
“Retirement Plan” or “Welfare Plan” under the Employee Retirement Income
Security Act of 1974, as amended.
17. Unfunded
Obligation. Grantees shall have the status of general
unsecured creditors of the Company. Any amounts payable to Grantees
pursuant to the Plan shall be unfunded and unsecured obligations for all
purposes, including, without limitation, Title I of the Employee Retirement
Income Security Act of 1974, as amended. Neither the Company nor any
Related Entity shall be required to segregate any monies from its general funds,
or to create any trusts, or establish any special accounts with respect to such
obligations. The Company shall retain at all times beneficial
ownership of any investments, including trust investments, which the Company may
make to fulfill its payment obligations hereunder. Any investments or
the creation or maintenance of any trust or any Grantee account shall not create
or constitute a trust or fiduciary relationship between the Administrator, the
Company or any Related Entity and a Grantee, or otherwise create any vested or
beneficial interest in any Grantee or the Grantee’s creditors in any assets of
the Company or a Related Entity. The Grantees shall have no claim against the
Company or any Related Entity for any changes in the value of any assets that
may be invested or reinvested by the Company with respect to the
Plan.
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18. Construction. Captions
and titles contained herein are for convenience only and shall not affect the
meaning or interpretation of any provision of the Plan. Except when
otherwise indicated by the context, the singular shall include the plural and
the plural shall include the singular. Use of the term “or” is not
intended to be exclusive, unless the context clearly requires
otherwise.
19. Nonexclusivity of the
Plan. Neither the adoption of the Plan by the Board, the
submission of the Plan to the shareholders of the Company for approval, nor any
provision of the Plan will be construed as creating any limitations on the power
of the Board to adopt such additional compensation arrangements as it may deem
desirable, including, without limitation, the granting of Awards otherwise than
under the Plan, and such arrangements may be either generally applicable or
applicable only in specific cases.
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