Attached files
Exhibit 10.4
ENDRA
LIFE SCIENCES INC.
2016
OMNIBUS INCENTIVE PLAN
ENDRA
Life Sciences Inc. sets forth herein the terms of its 2016 Omnibus
Incentive Plan. The Plan amends and restates in its entirety the
Endra Inc. Second Amended and Restated 2013 Stock Incentive
Plan.
1.
PURPOSE
The
Plan is intended to enhance the ability of the Company and its
Affiliates to attract and retain highly qualified officers,
Non-employee Directors, employees, consultants and advisors, and to
motivate such individuals to serve the Company and its Affiliates
and to expend maximum effort to improve the business results and
earnings of the Company, by providing to such persons an
opportunity to acquire or increase a direct proprietary interest in
the operations and future success of the Company. To this end, the
Plan provides for the grant of stock options, stock appreciation
rights, restricted stock, restricted stock units, unrestricted
stock, other share-based awards and cash awards. Any of these
awards may, but need not, be made as performance incentives to
reward attainment of performance goals in accordance with the terms
hereof.
2.
DEFINITIONS
For
purposes of interpreting the Plan and related documents (including
Award Agreements), the following definitions shall
apply:
2.1. “Acquiror”
shall have the meaning set forth in Section 15.2.1.
2.2. “Affiliate”
means any company or other trade or business that
“controls,” is “controlled by” or is
“under common control with” the Company within the
meaning of Rule 405 of Regulation C under the Securities Act,
including any Subsidiary.
2.3. “Award”
means a grant under the
Plan of an Option, SAR, Restricted Stock, RSU, Other Share-based
Award or cash award.
2.4. “Award
Agreement” means a written agreement between the
Company and a Grantee, or notice from the Company or an Affiliate
to a Grantee that evidences and sets out the terms and conditions
of an Award.
2.5. “Board”
means the Board of Directors of the Company.
2.6. “Business
Combination” shall have the meaning set forth in
Section 15.2.2.
2.7. “Cause”
shall be defined as that term is defined in the Grantee’s
offer letter or other applicable employment agreement; or, if there
is no such definition, “Cause” means, as determined by
the Company in its sole discretion and unless otherwise provided in
the applicable Award Agreement: (i) the commission of any act
by a Grantee constituting financial dishonesty against the Company
or its Affiliates (which act would be chargeable as a crime under
applicable law); (ii) a Grantee’s engaging in any other
act of dishonesty, fraud, intentional misrepresentation, moral
turpitude, illegality or harassment that would: (a) materially
adversely affect the business or the reputation of the Company or
any of its Affiliates with their respective current or prospective
customers, suppliers, lenders or other third parties with whom such
entity does or might do business or (b) expose the Company or
any of its Affiliates to a risk of civil or criminal legal damages,
liabilities or penalties; (iii) the repeated failure by a
Grantee to follow the directives of the chief executive officer of
the Company or any of its Affiliates or the Board; or (iv) any
material misconduct, violation of the Company’s or
Affiliates’ policies, or willful and deliberate
non-performance of duty by the Grantee in connection with the
business affairs of the Company or its Affiliates. A Separation
from Service for Cause shall be deemed to include a determination
by the Company in its sole discretion following a
Participant’s Separation from Service that circumstances
existing prior to such Separation from Service would have entitled
the Company or an Affiliate to have terminated the
Participant’s service for Cause. All rights a Participant has
or may have under the Plan shall be suspended automatically during
the pendency of any investigation by the Company, or during any
negotiations between the Company and the Participant, regarding any
actual or alleged act or omission by the Participant of the type
described in the applicable definition of Cause.
2.8. “Change
in Control” shall have the meaning set forth in
Section 15.2.2.
2.9. “Code”
means the Internal Revenue Code of 1986.
2.10. “Committee”
means the Compensation Committee of the Board, or such other
committee as determined by the Board. The Compensation Committee of
the Board may designate a subcommittee of its members to serve as
the Committee (to the extent the Board has not designated another
person, committee or entity as the Committee). Following the
Initial Public Offering: (i) the Board shall cause the
Committee to satisfy the applicable requirements of any securities
exchange on which the Common Stock may then be listed;
(ii) for purposes of Awards to Covered Employees intended to
constitute Performance Awards, to the extent required by
Section 162(m), Committee means all of the members of the
Compensation Committee who are “outside directors”
within the meaning of Section 162(m); and (iii) for
purposes of Awards to Grantees who are subject to Section 16
of the Exchange Act, Committee means all of the members of the
Compensation Committee who are “non-employee directors”
within the meaning of Rule 16b-3 adopted under the Exchange
Act.
2.11. “Company”
means ENDRA Life Sciences Inc., a Delaware
corporation.
2.12. “Common
Stock” means the common stock of the
Company.
2.13. “Consultant”
means a consultant or advisor that provides bona fide services to
the Company or any Affiliate and who qualifies as a consultant or
advisor under Rule 701 of the Securities Act (during any period in
which the Company is not a public company subject to the reporting
requirements of the Exchange Act) or Form S-8 (during any
period in which the Company is a public company subject to the
reporting requirements of the Exchange Act).
2.14. “Covered
Employee” means a Grantee who is a “covered
employee” within the meaning of Section 162(m) as
qualified by Section 12.4.
2.15. “Disability”
shall be defined as that term is defined in the Grantee’s
offer letter or other applicable employment agreement; or, if there
is no such definition, “Disability” means, as
determined by the Company in its sole discretion and unless
otherwise provided in the applicable Award Agreement, the Grantee
is unable to perform each of the essential duties of such
Grantee’s position by reason of a medically determinable
physical or mental impairment which is potentially permanent in
character or which can be expected to last for a continuous period
of not less than 12 months; provided, however, that, with respect to rules
regarding expiration of an Incentive Stock Option following
termination of the Grantee’s employment,
“Disability” means “permanent and total
disability” as set forth in Code
Section 22(e)(3).
2.16. “Exchange
Act” means the Securities Exchange Act of
1934.
2.17. “Fair
Market Value” of a Share as of a particular date means
(i) if the Common Stock is listed on a national securities
exchange, the closing or last price of the Common Stock on the
composite tape or other comparable reporting system for the
applicable date, or if the applicable date is not a trading day,
the trading day immediately preceding the applicable date, or
(ii) if the Common Stock is not then listed on a national
securities exchange, or the value of the Common Stock is not
otherwise determinable, such value as determined by the
Board.
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2.18. “Family
Member” means a person who is a spouse, former spouse,
child, stepchild, grandchild, parent, stepparent, grandparent,
niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother, sister, brother-in-law or sister-in-law,
including adoptive relationships, of the applicable individual, any
person sharing the applicable individual’s household (other
than a tenant or employee), a trust in which any one or more of
these persons have more than 50% of the beneficial interest, a
foundation in which any one or more of these persons (or the
applicable individual) control the management of assets and
any other entity in which one or more of these persons (or the
applicable individual) own more than 50% of the voting
interests.
2.19. “Grant
Date” means the latest to occur of (i) the date
as of which the Board approves an Award, (ii) the date on
which the recipient of an Award first becomes eligible to receive
an Award under Section 6 or (iii) such other date as may
be specified by the Board in the Award Agreement.
2.20. “Grantee”
means a person who receives or holds an Award.
2.21. “Holder”
means, with respect to any Issued Shares, the person holding such
Issued Shares, including the initial Grantee or any Permitted
Transferee.
2.22. “Incentive
Stock Option” means an “incentive stock
option” within the meaning of Code
Section 422.
2.23. “Incumbent
Directors” shall have the meaning set forth in
Section 15.2.2.
2.24. “Initial
Public Offering” means the initial public offering of
Shares pursuant to a registration statement (other than a Form S-8
or successor forms) filed with, and declared effective by, the
SEC.
2.25. “Issued
Shares” means, collectively, all outstanding Shares
issued pursuant to Awards (including outstanding Shares of
Restricted Stock prior to or after vesting and Shares issued in
connection with the exercise of an Option or SAR).
2.26. “New
Shares” shall have the meaning set forth in
Section 15.1.
2.27. “Non-employee
Director” means a member of the Board or the board of
directors of an Affiliate, in each case who is not an officer or
employee of the Company or any Affiliate.
2.28. “Nonqualified
Stock Option” means an Option that is not an Incentive
Stock Option.
2.29. “Offered
Shares” shall have the meaning set forth in
Section 17.4.1.
2.30. “Offering”
shall have the meaning set forth in Section 17.5.
2.31. “Option”
means an option to purchase one or more Shares pursuant to the
Plan.
2.32. “Option
Price” means the exercise price for each Share subject
to an Option.
2.33. “Other
Share-based Awards” means Awards consisting of Share
units, or other Awards, valued in whole or in part by reference to,
or otherwise based on, Shares.
2.34. “Performance
Award” means an Award made subject to the attainment
of performance goals (as described in Section 12) over a performance period of at
least one year.
2.35. “Performance-Based
Compensation” means “performance-based
compensation” under Section 162(m).
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2.36. “Permitted
Transferee” means any of the following to whom a
Holder may transfer Issued Shares hereunder (as set forth in
Section 17.11.3): the Holder’s spouse,
children (natural or adopted), stepchildren or a trust for their
sole benefit of which the Holder is the settlor; provided, however, that any such trust does not
require or permit distribution of any Issued Shares during the term
of the Plan unless subject to its terms. Upon the death of the
Holder, the term Permitted Transferees shall also include such
deceased Holder’s estate, executors, administrators, personal
representatives, heirs, legatees and distributees, as the case may
be.
2.37. “Plan”
means this ENDRA Life Sciences Inc. 2016 Omnibus Incentive
Plan.
2.38. “Purchase
Price” means the purchase price for each Share
pursuant to a grant of Restricted Stock.
2.39. “Restatement
Effective Date” means November 14, 2016.
2.40. “Restricted
Period” shall have the meaning set forth in
Section 10.1.
2.41. “Restricted
Stock” means restricted Shares, awarded to a Grantee
pursuant to Section 10.
2.42. “Restricted
Stock Unit” or “RSU” means a bookkeeping
entry representing the equivalent of Shares, awarded to a Grantee
pursuant to Section 10.
2.43. “SAR
Exercise Price” means the per Share exercise price of
a SAR granted to a Grantee under Section 9.
2.44. “SEC”
means the United States Securities and Exchange
Commission.
2.45. “Section
162(m)” means Code Section 162(m).
2.46. “Section 409A”
means Code Section 409A.
2.47. “Securities
Act” means the Securities Act of 1933.
2.48. “Separation
from Service” means the termination of the applicable
Participant’s employment with, and performance of services
for, the Company and each Affiliate. Unless otherwise determined by
the Company in its sole discretion, if a Participant’s
employment or board service with the Company or an Affiliate
terminates but the Participant continues to provide services to the
Company or an Affiliate in a nonemployee director capacity or as an
employee, as applicable, such change in status shall not be deemed
a Separation from Service. A Participant employed by, or performing
services for, an Affiliate or a division of the Company or an
Affiliate shall not be deemed to incur a Separation from Service if
such Affiliate or division ceases to be an Affiliate or division of
the Company, as the case may be, and the Participant immediately
thereafter becomes an employee of (or service provider to), or
member of the board of directors of, the Company or an Affiliate or
a successor company or an affiliate or subsidiary thereof. Approved
temporary absences from employment because of illness, vacation or
leave of absence and transfers among the Company and its Affiliates
shall not be considered Separations from Service. Notwithstanding
the foregoing, with respect to any Award that constitutes
nonqualified deferred compensation under Section 409A,
“Separation from Service” shall mean a
“separation from service” as defined under Section
409A.
2.49. “Service
Provider” means an employee, officer, non-employee
member of the Board or Consultant of the Company or an
Affiliate.
2.50. “Share”
means a share of Common Stock.
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2.51. “Stock
Appreciation Right” or “SAR” means a right granted
to a Grantee pursuant to Section 9.
2.52. “Stockholders”
means the stockholders of the Company.
2.53. “Subsidiary”
means any “subsidiary corporation” of the Company
within the meaning of Code Section 424(f).
2.54. “Substitute
Award” means any Award granted in assumption of or in
substitution for an award of a company or business acquired by the
Company or an Affiliate or with which the Company or an Affiliate
combines.
2.55. “Ten
Percent Stockholder” means an individual who owns more
than 10% of the total combined voting power of all classes of
outstanding stock of the Company, its parent or any of its
Subsidiaries. In determining stock ownership, the attribution rules
of Code Section 424(d) shall be applied.
2.56. “Termination
Date” means the date that is 10 years after the
Restatement Effective Date, unless the Plan is earlier terminated
by the Board under Section 5.2.
2.57. “Transition
Period” means the period beginning with the
consummation of an Initial Public Offering and ending as of the
earlier of (i) the date of the first annual meeting of
Stockholders at which directors are to be elected that occurs after
the close of the third calendar year following the calendar year in
which the Initial Public Offering occurs and (ii) the
expiration of the “reliance period” under Treasury
Regulation Section 1.162-27(f)(2).
2.58. “Voting
Securities” shall have the meaning set forth in
Section 15.2.2.
3.
ADMINISTRATION
OF THE PLAN
3.1. General
The
Board shall have such powers and authorities related to the
administration of the Plan as are consistent with the
Company’s certificate of incorporation and bylaws and
applicable law. The Board shall have the power and authority to
delegate its responsibilities hereunder to the Committee, which
shall have full authority to act in accordance with its charter (as
in effect from time to time), and with respect to the power and
authority of the Board to act hereunder, all references to the
Board shall be deemed to include a reference to the Committee,
unless such power or authority is specifically reserved by the
Board. Except as specifically provided in Section 14 or as otherwise may be required by
applicable law, regulatory requirement or the certificate of
incorporation or the bylaws of the Company, the Board shall have
full power and authority to take all actions and to make all
determinations required or provided for under the Plan, any Award
or any Award Agreement, and shall have full power and authority to
take all such other actions and make all such other determinations
not inconsistent with the specific terms and provisions of the Plan
that the Board deems to be necessary or appropriate to the
administration of the Plan. Following the Initial Public Offering,
the Committee shall administer the Plan; provided, however, the
Board shall retain the right to exercise the authority of the
Committee to the extent consistent with applicable law and the
applicable requirements of any securities exchange on which the
Common Stock may then be listed. All actions, determinations and
decisions by the Board or the Committee under the Plan or any Award
Agreement, or with respect to any Award, shall be in the sole
discretion of the Board and shall be final, binding and conclusive
on all persons. Without limitation, the Board shall have full and
final power and authority, subject to the other terms and
conditions of the Plan, to:
(i) designate
Grantees;
(ii) determine
the type or types of Awards to be made to Grantees;
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(iii) determine
the number of Shares to be subject to an Award;
(iv) establish
the terms and conditions of each Award (including the Option Price
of any Option, the nature and duration of any restriction or
condition (or provision for lapse thereof) relating to the
vesting, exercise, transfer, or forfeiture of an Award or the
Shares subject thereto and any terms or conditions that may be
necessary to qualify Options as Incentive Stock
Options);
(v) prescribe
the form of each Award Agreement; and
(vi) amend,
modify or supplement the terms of any outstanding Award, including
the authority, in order to effectuate the purposes of the Plan, to
modify Awards to foreign nationals or individuals who are employed
outside the United States to recognize differences in local
law, tax policy or custom.
3.2. Separation
from Service for Cause; Clawbacks; Breach of Restrictive
Covenants
3.2.1. Separation
from Service for Cause
The
Company may annul an Award if the Grantee incurs a Separation from
Service for Cause.
3.2.2. Clawbacks
All
awards, amounts or benefits received or outstanding under the Plan
shall be subject to clawback, cancellation, recoupment, rescission,
payback, reduction or other similar action in accordance with the
terms of any Company clawback or similar policy or any applicable
law related to such actions, as may be in effect from time to time.
A Grantee’s acceptance of an Award shall be deemed to
constitute the Grantee’s acknowledgement of and consent to
the Company’s application, implementation and enforcement of
any applicable Company clawback or similar policy that may apply to
the Grantee, whether adopted prior to or following the Restatement
Effective Date, and any provision of applicable law relating to
clawback, cancellation, recoupment, rescission, payback or
reduction of compensation, and the Grantee’s agreement that
the Company may take such actions as may be necessary to effectuate
any such policy or applicable law, without further consideration or
action.
3.2.3. Breach
of Restrictive Covenants
Except
as otherwise provided by the Committee, notwithstanding any
provision of the Plan to the contrary, if a Participant breaches a
non-competition, non-solicitation, non-disclosure,
non-disparagement or other restrictive covenant set forth in an
Award Agreement or any other agreement between the Participant and
the Company or an Affiliate, whether during the Participant’s
service or after the Participant’s Separation from Service,
in addition to any other penalties or restrictions that may apply
under any such agreement, state law or otherwise, the Participant
shall forfeit or pay to the Company the following:
(a) any
and all outstanding Awards granted to the Participant, including
Awards that have become vested or exercisable;
(b) any
shares held by the Participant in connection with the Plan that
were acquired by the Participant after the Participant’s
Separation from Service and within the 12-month period immediately
before the Participant’s Separation from
Service;
(c) the
profit realized by the Participant from the exercise of any Options
or SARs that the Participant exercised after the
Participant’s Separation from Service or within the 12-month
period immediately before the Participant’s Separation from
Service, which profit is the difference between the Option Price of
the Option or SAR Exercise Price of the SAR and the Fair Market
Value of any shares or cash acquired by the Participant upon
exercise of such Option or SAR; and
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(d) the
profit realized by the Participant from the sale, or other
disposition for consideration, of any shares received by the
Participant in connection with the Plan after the
Participant’s Separation from Service and within the 12-month
period immediately before the Participant’s Separation from
Service and where such sale or disposition occurs in such similar
time period.
3.3. Deferral
Arrangement
The
Board may permit or require the deferral of any Award payment into
a deferred compensation arrangement, subject to such rules and
procedures as it may establish and in accordance with
Section 409A, which may include provisions for the payment or
crediting of interest or dividend equivalents, including converting
such credits into deferred Share units.
3.4. No
Liability
No
member of the Board or of the Committee shall be liable for any
action or determination made in good faith with respect to the
Plan, any Award or Award Agreement.
3.5. Book
Entry
Notwithstanding any
other provision of the Plan to the contrary, the Company may elect
to satisfy any requirement under the Plan for the delivery of stock
certificates through the use of book entry.
4.
STOCK
SUBJECT TO THE PLAN
4.1. Authorized
Number of Shares
Subject
to adjustment under Section 15, the aggregate number of
Shares that may be initially issued pursuant to the Plan shall
equal 18% of the total
number of Shares outstanding immediately following the completion
of the Initial Public Offering (assuming for this purpose the
issuance of all Shares issuable under the Company’s equity
compensation plans, the conversion into Common Stock of all
outstanding securities that are convertible by their terms into
Common Stock and the exercise of all options and warrants
exercisable for Shares and including Shares and warrants issued to
the underwriters for such Initial Public Offering upon exercise of
their over-allotment option, if any) ([_________] Shares). A
maximum of 3,000,000 Shares shall be available for issuance under
Incentive Stock Options under the Plan; provided for avoidance of
doubt such number shall be automatically adjusted in connection
with any stock split that takes place after the Restatement
Effective Date. Shares issued under the Plan may consist in whole
or in part of authorized but unissued Shares, treasury Shares or
Shares purchased on the open market or otherwise.
4.2. Share
Counting
Any
Award settled in cash shall not be counted as issued Shares for any
purpose under the Plan. If any Award expires, or is terminated,
surrendered or forfeited, in whole or in part, the unissued Shares
covered by such Award shall again be available for the grant of
Awards. If Shares issued pursuant to the Plan are repurchased by,
or are surrendered or forfeited to the Company at no more than
cost, such Shares shall again be available for the grant of Awards.
If Shares issuable upon exercise, vesting or settlement of an
Award, or Shares owned by a Grantee (which are not subject to any
pledge or other security interest), are surrendered or tendered to
the Company in payment of the Option Price or Purchase Price of an
Award or any taxes required to be withheld in respect of an Award,
in each case, in accordance with the terms and conditions of the
Plan and any applicable Award Agreement, such surrendered or
tendered Shares shall again be available for the grant of Awards.
Substitute Awards shall not be counted against the number of Shares
available for the grant of Awards.
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4.3. Individual
Award Limits
The
maximum value of Awards granted during any calendar year to any
Non-employee Director, taken together with any cash fees paid to
such Non-employee Director during the calendar year and the value
of awards granted to the Non-employee Director under any other
equity compensation plan of the Company or an Affiliate during the
calendar year, shall not exceed the following in total value
(calculating the value of any Awards or other equity compensation
plan awards based on the grant date fair value for financial
reporting purposes): $300,000 for each Non-employee Director;
provided, however, that awards granted to Non-employee Directors
upon their initial election to the Board or the board of directors
of an Affiliate shall not be counted towards the limit under this
Section 4.3.1.
4.3.2. Section
162(m) Limits
No
later than the end of the Transition Period, the maximum number of
Shares for each type of Other Share-based Award, and the maximum
amount of cash for any cash-based Award, intended to qualify as
Performance-Based Compensation granted to any Grantee in any
specified period shall be established by the Company and approved
by the Stockholders.
5.
EFFECTIVE
DATE; AMENDMENT AND TERMINATION
5.1. Effective
Date
The
Plan is effective as of the Restatement Effective
Date.
The
Board may, at any time and from time to time, amend, suspend or
terminate the Plan as to any Awards which have not been made. An
amendment shall be contingent on approval of the Stockholders to
the extent stated by the Board, required by applicable law or
required by applicable securities exchange listing requirements. No
Awards shall be made after the Termination Date. The applicable
terms of the Plan, and any terms and conditions applicable to
Awards granted prior to the Termination Date, shall survive the
termination of the Plan and continue to apply to such Awards. No
amendment, suspension or termination of the Plan shall, without the
consent of the Grantee, materially impair rights or obligations
under any Award theretofore awarded.
6.1. Service
Providers
Subject
to this Section 6, Awards may be made to any Service
Provider as the Board may determine and designate from time to
time.
6.2. Successive
Awards
An
eligible person may receive more than one Award, subject to such
restrictions as are provided herein.
6.3. Stand-Alone,
Additional, Tandem, and Substitute Awards
Awards
may be granted either alone or in addition to, in tandem with, or
in substitution or exchange for, any other Award or any award
granted under another plan of the Company, any Affiliate or any
business entity to be acquired by the Company or an Affiliate, or
any other right of a Grantee to receive payment from the Company or
any Affiliate. Such additional, tandem or substitute or exchange
Awards may be granted at any time. If an Award is granted in
substitution or exchange for another award, the Board shall have
the right to require the surrender of such other award in
consideration for the grant of the new Award. Subject to the
requirements of applicable law, the Board may make Awards in
substitution or exchange for any other award under another plan of
the Company, any Affiliate or any business entity to be acquired by
the Company or an Affiliate. In addition, Awards may be granted in
lieu of cash compensation, including in lieu of cash amounts
payable under other plans of the Company or any Affiliate, in which
the value of Shares subject to the Award is equivalent in value to
the cash compensation (for example, RSUs or Restricted
Stock).
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7.
AWARD
AGREEMENT
The
grant of any Award may be contingent upon the Grantee executing an
appropriate Award Agreement, in such form or forms as the Board
shall from time to time determine. Without limiting the foregoing,
an Award Agreement may be provided in the form of a notice which
provides that acceptance of the Award constitutes acceptance of all
terms of the Plan and the notice. Award Agreements granted from
time to time or at the same time need not contain similar
provisions but shall be consistent with the terms of the Plan. Each
Award Agreement evidencing an Award of Options shall specify
whether such Options are intended to be Nonqualified Stock Options
or Incentive Stock Options, and in the absence of such
specification such options shall be deemed Nonqualified Stock
Options.
8.
TERMS
AND CONDITIONS OF OPTIONS
8.1. Option
Price
The
Option Price of each Option shall be fixed by the Board and stated
in the related Award Agreement. The Option Price of each Option
intended to be an Incentive Stock Option (except those that
constitute Substitute Awards) shall be at least the Fair
Market Value on the Grant Date; provided, however, that in the event that a
Grantee is a Ten Percent Stockholder as of the Grant Date, the
Option Price of an Option granted to such Grantee that is intended
to be an Incentive Stock Option shall be not less than 110 percent
of the Fair Market Value on the Grant Date. In no case shall the
Option Price of any Option be less than the par value of a
Share.
8.2. Vesting
Subject
to Section 8.3, each Option shall become
exercisable at such times and under such conditions (including
performance requirements) as stated in the Award
Agreement.
Each
Option shall terminate, and all rights to purchase Shares
thereunder shall cease, upon the expiration of the Option term
stated in the Award Agreement not to exceed 10 years from the Grant Date, or
under such circumstances and on such date prior thereto as is set
forth in the Plan or as may be fixed by the Board and stated in the
related Award Agreement; provided, however, that in the event that the
Grantee is a Ten Percent Stockholder, an Option granted to such
Grantee that is intended to be an Incentive Stock Option at the
Grant Date shall not be exercisable after the expiration of five
years from its Grant Date.
8.4. Limitations
on Exercise of Option
Notwithstanding any
other provision of the Plan, in no event may any Option be
exercised, in whole or in part, (i) prior to the date the Plan
is approved by the Stockholders as provided herein or
(ii) after the occurrence of an event which results in
termination of the Option.
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8.5. Method
of Exercise
An
Option that is exercisable may be exercised by the Grantee’s
delivery of a notice of exercise to the Company, setting forth the
number of Shares with respect to which the Option is to be
exercised, accompanied by full payment for the Shares. To be
effective, notice of exercise must be made in accordance with
procedures established by the Company from time to
time.
8.6. Rights
of Holders of Options
Unless
otherwise provided in the applicable Award Agreement, an individual
holding or exercising an Option shall have none of the rights of a
Stockholder (for example, the right to receive cash or dividend
payments or distributions attributable to the subject Shares or to
direct the voting of the subject Shares) until the Shares
covered thereby are fully paid and issued to him. Except as
provided in Section 15 or the related Award Agreement, no
adjustment shall be made for dividends, distributions or other
rights for which the record date is prior to the date of such
issuance.
8.7. Delivery
of Stock Certificates
Promptly after the
exercise of an Option by a Grantee and the payment in full of the
Option Price, such Grantee shall be entitled to the issuance of a
stock certificate or certificates evidencing his or her ownership
of the Shares subject to the Option.
8.8. Limitations
on Incentive Stock Options
An
Option shall constitute an Incentive Stock Option only (i) if
the Grantee of such Option is an employee of the Company or any
Subsidiary of the Company; (ii) to the extent specifically
provided in the related Award Agreement; and (iii) to the
extent that the aggregate Fair Market Value (determined at the time
the Option is granted) of the Shares with respect to which all
Incentive Stock Options held by such Grantee become exercisable for
the first time during any calendar year (under the Plan and all
other plans of the Grantee’s employer and its
Affiliates) does not exceed $100,000. This limitation shall be
applied by taking Options into account in the order in which they
were granted. No Option shall be treated as an Incentive Stock
Option unless the Plan has been approved by the Stockholders in a
manner intended to comply with the stockholder approval
requirements of Code Section 422(b)(i); provided that any Option intended to be
an Incentive Stock Option shall not fail to be effective solely on
account of a failure to obtain such approval, but rather such
Option shall be treated as a Nonqualified Stock Option unless and
until such approval is obtained.
8.9. Early
Exercise
An
Option may, but need not, include a provision whereby the Grantee
may elect at any time before the Grantee’s Separation from
Service to exercise the Option as to any part or all of the Shares
subject to the Option prior to the full vesting of the Option. Any
unvested Shares so purchased may be subject to a repurchase option
in favor of the Company or to any other restriction the Board
determines to be appropriate.
9.1. Right
to Payment
A SAR
shall confer on the Grantee a right to receive, upon exercise
thereof, the excess of (i) the Fair Market Value on the date
of exercise over (ii) the SAR Exercise Price. The Award
Agreement for a SAR shall specify the SAR Exercise Price. SARs may
be granted alone or in conjunction with all or part of an Option or
at any subsequent time during the term of such Option or in
conjunction with all or part of any other Award.
10
9.2. Other
Terms
The
Board shall determine at the Grant Date or thereafter, the time or
times at which and the circumstances under which a SAR may be
exercised in whole or in part (including based on achievement of
performance goals and/or future service requirements), the time or
times at which SARs shall cease to be or become exercisable
following Separation from Service or upon other conditions, the
method of exercise, whether or not a SAR shall be in tandem or in
combination with any other Award and any other terms and conditions
of any SAR.
9.3. Term
of SARs
The
term of a SAR granted under the Plan shall be determined by the
Board; provided,
however, that such term
shall not exceed 10 years.
9.4. Payment
of SAR Amount
Upon
exercise of a SAR, a Grantee shall be entitled to receive payment
from the Company (in cash or Shares, as set forth in the Award
Agreement) in an amount determined by
multiplying:
(i) the
difference between the Fair Market Value on the date of exercise
over the SAR Exercise Price; by
(ii) the
number of Shares with respect to which the SAR is
exercised.
At the
time of grant, the Board may establish a period of time (a
“Restricted
Period”) and any additional restrictions
including the satisfaction of corporate or individual performance
objectives applicable to an Award of Restricted Stock or RSUs. Each
Award of Restricted Stock or RSUs may be subject to a different
Restricted Period and additional restrictions. Neither Restricted
Stock nor RSUs may be sold, transferred, assigned, pledged or
otherwise encumbered or disposed of during the Restricted Period or
prior to the satisfaction of any other applicable
restrictions.
10.2. Restricted
Stock Certificates
The
Company shall issue Shares, in the name of each Grantee to whom
Restricted Stock has been granted, stock certificates or other
evidence of ownership representing the total number of Shares of
Restricted Stock granted to the Grantee, as soon as reasonably
practicable after the Grant Date. The Board may provide in an Award
Agreement that either (i) the Secretary of the Company shall
hold such certificates for the Grantee’s benefit until such
time as the Restricted Stock is forfeited to the Company or the
restrictions lapse or (ii) such certificates shall be
delivered to the Grantee; provided, however, that such certificates shall
bear a legend or legends that comply with the applicable securities
laws and regulations and make appropriate reference to the
restrictions imposed under the Plan and the Award
Agreement.
10.3. Rights
of Holders of Restricted Stock
Unless
otherwise provided in the applicable Award Agreement, holders of
Restricted Stock shall have rights as Stockholders, including
voting and dividend rights.
11
10.4. Rights
of Holders of RSUs
10.4.1. Settlement
of RSUs
RSUs
may be settled in cash or Shares, as set forth in the Award
Agreement. The Award Agreement shall also set forth whether the
RSUs shall be settled (i) within the time period specified in
Section 409A for
short term deferrals or (ii) otherwise within the requirements
of Section 409A, in which case the Award Agreement shall
specify upon which events such RSUs shall be settled.
10.4.2. Voting
and Dividend Rights
Unless
otherwise provided in the applicable Award Agreement, holders of
RSUs shall not have rights as Stockholders, including voting or
dividend or dividend equivalents rights.
10.4.3. Creditor’s
Rights
A
holder of RSUs shall have no rights other than those of a general
creditor of the Company. RSUs represent an unfunded and unsecured
obligation of the Company, subject to the terms and conditions of
the applicable Award Agreement.
10.5. Purchase
of Restricted Stock
The
Grantee shall be required, to the extent required by applicable
law, to purchase the Restricted Stock from the Company at a
Purchase Price equal to the greater of (i) the aggregate par
value of the Shares represented by such Restricted Stock or
(ii) the Purchase Price, if any, specified in the related
Award Agreement. If specified in the Award Agreement, the Purchase
Price may be deemed paid by services already rendered. The Purchase
Price shall be payable in a form described in Section 11 or, if so determined by the Board,
in consideration for past services rendered.
10.6. Delivery
of Shares
Upon
the expiration or termination of any Restricted Period and the
satisfaction of any other conditions prescribed by the Board, the
restrictions applicable to Shares of Restricted Stock or RSUs
settled in Shares shall lapse, and, unless otherwise provided in
the applicable Award Agreement, a stock certificate for such Shares
shall be delivered, free of all such restrictions, to the Grantee
or the Grantee’s beneficiary or estate, as the case may
be.
11.1. General
Rule
Payment
of the Option Price for the Shares purchased pursuant to the
exercise of an Option or the Purchase Price for Restricted Stock
shall be made in cash or in cash equivalents acceptable to the
Company, except as provided in this Section 11.
11.2. Surrender
of Shares
To the
extent the Award Agreement so provides, payment of the Option Price
for Shares purchased pursuant to the exercise of an Option or the
Purchase Price for Restricted Stock may be made all or in part
through the tender to the Company of Shares, which Shares shall be
valued, for purposes of determining the extent to which the Option
Price or Purchase Price for Restricted Stock has been paid thereby,
at their Fair Market Value on the date of exercise or surrender.
Notwithstanding the foregoing, in the case of an Incentive Stock
Option, the right to make payment in the form of already-owned
Shares may be authorized only at the time of grant.
12
11.3. Cashless
Exercise
With
respect to an Option only (and not with respect to Restricted
Stock) following the Initial Public Offering, to the extent
permitted by law and to the extent the Award Agreement so provides,
payment of the Option Price may be made all or in part by delivery
(on a form acceptable to the Company) of an irrevocable
direction to a licensed securities broker acceptable to the Company
to sell Shares and to deliver all or part of the sales proceeds to
the Company in payment of the Option Price and any withholding
taxes described in Section 17.3.
11.4. Other
Forms of Payment
To the
extent the Award Agreement so provides, payment of the Option Price
or the Purchase Price for Restricted Stock may be made in any other
form that is consistent with applicable laws, regulations and
rules, including the Company’s withholding of Shares
otherwise due to the exercising Grantee.
12.1. Performance
Conditions
The
right of a Grantee to exercise or receive a grant or settlement of
any Award, and the timing thereof, may be subject to such
performance conditions as may be specified by the Board. The Board
may use such business criteria and other measures of performance as
it may deem appropriate in establishing any performance conditions,
and may reduce the amounts payable under any Award subject to
performance conditions, except as limited under Section 12.2 in the case of Performance-Based
Compensation.
If and
to the extent that the Board determines that a Performance Award to
be granted to a Grantee who is designated by the Board as likely to
be a Covered Employee should qualify as Performance-Based
Compensation, the grant, exercise and/or settlement of such
Performance Award shall be contingent upon achievement of
pre-established performance goals and other terms set forth in this
Section 12.2. Notwithstanding anything herein to
the contrary, the Board may provide for Performance Awards to
Covered Employees that are not intended qualify as
Performance-Based Compensation.
12.2.1. Performance
Goals Generally
The
performance goals for Performance Awards shall consist of one or
more business criteria and a targeted level or levels of
performance with respect to each of such criteria, as specified by
the Board consistent with this Section 12.2. Following the end of the
Transition Period, performance goals shall be objective and shall
otherwise meet the requirements of Section 162(m), including
the requirement that the level or levels of performance targeted by
the Board result in the achievement of performance goals being
“substantially uncertain.” The Board may determine that
Performance Awards shall be granted, exercised and/or settled upon
achievement of any one performance goal or that two or more of the
performance goals must be achieved as a condition to grant,
exercise and/or settlement of the Performance Awards. Performance
goals may be established on a Company-wide basis, or with respect
to one or more business units, divisions, Affiliates or business
segments, as applicable. Performance goals may be absolute or
relative (to the performance of one or more comparable companies or
indices). Measurement of performance goals may exclude the impact
of charges for restructuring, discontinued operations and other
extraordinary, unusual or non-recurring items, and the cumulative
effects of tax or accounting changes (each as defined by generally
accepted accounting principles and as identified in the
Company’s financial statements or other SEC filings).
Performance goals may differ for Performance Awards granted to any
one Grantee or to different Grantees.
13
12.2.2. Business
Criteria
One or
more of the following business criteria for the Company, on a
consolidated basis, and/or specified Affiliates or business units
of the Company (except with respect to the total stockholder return
and earnings per share criteria), shall be used exclusively by the
Board in establishing performance goals for Performance Awards:
(i) cash flow; (ii) earnings per share, as adjusted for
any stock split, stock dividend or other recapitalization;
(iii) earnings measures; (iv) return on equity;
(v) total stockholder return; (vi) share price
performance, as adjusted for any stock split, stock dividend or
other recapitalization; (vii) return on capital;
(viii) revenue; (ix) income; (x) profit margin;
(xi) return on operating revenue; (xii) brand recognition
or acceptance; (xiii) customer satisfaction;
(xiv) productivity; (xv) expense targets;
(xvi) market share; (xvii) cost control measures;
(xviii) balance sheet metrics; (xix) strategic
initiatives; (xx) implementation, completion or attainment of
measurable objectives with respect to recruitment or retention of
personnel or employee satisfaction; or (xxi) any other
business criteria established by the Board; provided, however, that such business criteria
shall include any derivations of business criteria listed above
(e.g., income shall include
pre-tax income, net income and operating income).
12.2.3. Timing
for Establishing Performance Goals
Following the
Transition Period, performance goals shall be established not later
than 90 days after the beginning of any performance period
applicable to Performance Awards, or at such other date as may be
required or permitted for Performance-Based
Compensation.
12.2.4. Settlement
of Performance Awards; Other Terms
Settlement of
Performance Awards may be in cash, Shares, other Awards or other
property. The Board may reduce the amount of a settlement otherwise
to be made in connection with such Performance Awards.
12.3. Written
Determinations
All
determinations by the Board as to the establishment of performance
goals, the amount of any Performance Award pool or potential
individual Performance Awards and the achievement of performance
goals relating to Performance Awards, shall be made in writing in
the case of any Award intended to qualify as Performance-Based
Compensation to the extent required by Section 162(m). To the
extent permitted by Section 162(m), the Board may delegate any
responsibility relating to Performance Awards.
The
provisions of this Section 12.4 are applicable following the
Transition Period. The validity and exercisability of any and all
Awards that are intended to qualify as Performance-Based
Compensation granted after the Transition Period are contingent
upon approval of the Plan by the Stockholders in a manner intended
to comply with the stockholder approval requirements of
Section 162(m). It is the intent of the Company that
Performance Awards under Section 12.2 granted to persons who are
designated by the Board as likely to be Covered Employees within
the meaning of Section 162(m) shall, if so designated by the
Board, qualify as Performance-Based Compensation. Accordingly, the
terms of Section 12.2, including the definitions of
Covered Employee and other terms used therein, shall be interpreted
in a manner consistent with Section 162(m). The foregoing
notwithstanding, because the Board cannot determine with certainty
whether a given Grantee will be a Covered Employee with respect to
a fiscal year that has not yet been completed, the term Covered
Employee as used herein shall mean only a person designated by the
Board, at the time of grant of Performance Awards, as likely to be
a Covered Employee with respect to that fiscal year. If any
provision of the Plan or any agreement relating to such Performance
Awards does not comply or is inconsistent with the requirements of
Section 162(m), such provision shall be construed or deemed
amended to the extent necessary to conform to such
requirements.
14
13.1. Grant
of Other Share-based Awards
Other
Share-based Awards may be granted either alone or in addition to or
in conjunction with other Awards. Other Share-based Awards may be
granted in lieu of other cash or other compensation to which a
Service Provider is entitled from the Company or may be used in the
settlement of amounts payable in Shares under any other
compensation plan or arrangement of the Company, including any
other Company incentive compensation plan. The Board shall
determine the persons to whom and the time or times at which such
Awards will be made, the number of Shares to be granted pursuant to
such Awards, and all other terms and conditions of such Awards.
Unless the Board determines otherwise, any such Award shall be
confirmed by an Award Agreement, which shall contain such
provisions as the Board determines to be necessary or appropriate
to carry out the intent of the Plan with respect to such
Award.
13.2. Terms
of Other Share-based Awards
Any
Common Stock subject to Awards made under this Section 13 may not be sold, assigned,
transferred, pledged or otherwise encumbered prior to the date on
which the Shares are issued, or, if later, the date on which any
applicable restriction, performance or deferral period
lapses.
14.1. General
The
Company shall not be required to sell or issue any Shares under any
Award if the sale or issuance of such Shares would constitute a
violation by the Grantee, any other individual exercising an Option
or the Company of any provision of any law or regulation of any
governmental authority, including any federal or state securities
laws or regulations. If at any time the Board determines that the
listing, registration or qualification of any Shares subject to an
Award upon any securities exchange or under any governmental
regulatory body is necessary or desirable as a condition of, or in
connection with, the issuance or purchase of Shares hereunder, no
Shares may be issued or sold to the Grantee or any other individual
exercising an Option pursuant to such Award unless such listing,
registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the
Company, and any delay caused thereby shall in no way affect the
date of termination of the Award. Specifically, in connection with
the Securities Act, upon the exercise of any Option or the delivery
of any Shares underlying an Award, unless a registration statement
under such Act is in effect with respect to the Shares covered by
such Award, the Company shall not be required to sell or issue such
Shares unless the Board has received evidence satisfactory to it
that the Grantee or any other individual exercising an Option may
acquire such Shares pursuant to an exemption from registration
under the Securities Act. The Company may, but shall in no event be
obligated to, register any securities covered hereby pursuant to
the Securities Act. The Company shall not be obligated to take any
affirmative action in order to cause the exercise of an Option or
the issuance of Shares pursuant to the Plan to comply with any law
or regulation of any governmental authority. As to any jurisdiction
that expressly imposes the requirement that an Option shall not be
exercisable until the Shares covered by such Option are registered
or are exempt from registration, the exercise of such Option (under
circumstances in which the laws of such jurisdiction apply) shall
be deemed conditioned upon the effectiveness of such registration
or the availability of such an exemption. The Committee may require
the Participant to sign such additional documentation, make such
representations and furnish such information as it may consider
appropriate in connection with the grant of Awards or issuance or
delivery of Shares in compliance with applicable laws, rules and
regulations.
15
14.2. Rule
16b-3
During
any time when the Company has a class of equity security registered
under Section 12 of the Exchange Act, it is the intent of the
Company that Awards and the exercise of Options will qualify for
the exemption provided by Rule 16b-3 under the Exchange Act. To the
extent that any provision of the Plan or action by the Board or
Committee does not comply with the requirements of Rule 16b-3, it
shall be deemed inoperative to the extent permitted by law and
deemed advisable by the Board, and shall not affect the validity of
the Plan. In the event that Rule 16b-3 is revised or replaced, the
Board may modify the Plan in any respect necessary to satisfy the
requirements of, or to take advantage of any features of, the
revised exemption or its replacement.
Subject
to any required action by the Stockholders, in the event of any
change in the Common Stock effected without receipt of
consideration by the Company, whether through merger,
consolidation, reorganization, reincorporation, recapitalization,
reclassification, stock dividend, stock split, reverse stock split,
split-up, split-off, spin-off, combination of shares, exchange of
shares or similar change in the capital structure of the Company,
or in the event of payment of a dividend or distribution to the
Stockholders in a form other than Shares (excepting normal cash
dividends) that has a material effect on the Fair Market Value,
appropriate and proportionate adjustments shall be made in the
number and class of shares subject to the Plan and to any
outstanding Awards, and in the Option Price, SAR Exercise Price or
Purchase Price per Share of any outstanding Awards in order to
prevent dilution or enlargement of Grantees’ rights under the
Plan. For purposes of the foregoing, conversion of any convertible
securities of the Company shall not be treated as “effected
without receipt of consideration by the Company.” If a
majority of the Shares which are of the same class as the Shares
that are subject to outstanding Awards are exchanged for, converted
into, or otherwise become (whether or not pursuant to a Change in
Control) shares of another corporation (the “New Shares”), the Board may
unilaterally amend the outstanding Awards to provide that such
Awards are for New Shares. In the event of any such amendment, the
number of Shares subject to, and the Option Price, SAR Exercise
Price or Purchase Price per Share of, the outstanding Awards shall
be adjusted in a fair and equitable manner. Any fractional share
resulting from an adjustment pursuant to this Section 15.1 shall be rounded down to the
nearest whole number and the Option Price, SAR Exercise Price or
Purchase Price per share shall be rounded up to the nearest whole
cent. In no event may the exercise price of any Award be decreased
to an amount less than the par value, if any, of the stock subject
to the Award. The Board may also make such adjustments in the terms
of any Award to reflect, or related to, such changes in the capital
structure of the Company or distributions as it deems appropriate.
Adjustments determined by the Board pursuant to this Section 15.1 shall be made in accordance with
Section 409A to the extent applicable.
15.2. Change
in Control
Subject
to the requirements and limitations of Section 409A if
applicable, the Board may provide for any one or more of the
following in connection with a Change in Control, which such
actions need not be the same for all Grantees:
(a) Accelerated Vesting. The Board may
provide in any Award Agreement, or in the event of a Change in
Control may take such actions as it deems appropriate to provide,
for the acceleration of the exercisability, vesting and/or
settlement in connection with such Change in Control of each or any
outstanding Award or portion thereof and Shares acquired pursuant
thereto upon such terms and conditions, including a Grantee’s
Separation from Service prior to, upon, or following such Change in
Control, to such extent as determined by the Board.
16
(b) Assumption,
Continuation or Substitution. In the event of a Change in
Control, the surviving, continuing, successor or purchasing
corporation or other business entity or parent thereof, as the case
may be (the “Acquiror”), may, without the consent of
any Grantee, either assume or continue the Company’s rights
and obligations under each or any Award or portion thereof
outstanding immediately prior to the Change in Control or
substitute for each or any such outstanding Award or portion
thereof a substantially equivalent award with respect to the
Acquiror’s stock, as applicable. For purposes of this
Section 15.2.1, an
Award denominated in Shares shall be deemed assumed if, following
the Change in Control, the Award confers the right to receive,
subject to the terms and conditions of the Plan and the applicable
Award Agreement, for each Share subject to the Award immediately
prior to the Change in Control, the consideration (whether stock,
cash, other securities or property or a combination thereof) to
which a Stockholder on the effective date of the Change in Control
was entitled; provided,
however, that if such
consideration is not solely common stock of the Acquiror, the Board
may, with the consent of the Acquiror, provide for the
consideration to be received upon the exercise or settlement of the
Award, for each Share subject to the Award, to consist solely of
common stock of the Acquiror equal in Fair Market Value to the per
Share consideration received by Stockholders pursuant to the Change
in Control. If any portion of such consideration may be received by
Stockholders pursuant to the Change in Control on a contingent or
delayed basis, the Board may determine such Fair Market Value as of
the time of the Change in Control on the basis of the Board’s
estimate of the present value of the probable future payment of
such consideration. Any Award or portion thereof which is neither
assumed or continued by the Acquiror in connection with the Change
in Control nor exercised or settled as of the time of consummation
of the Change in Control shall terminate and cease to be
outstanding effective as of the time of consummation of the Change
in Control.
(c) Cash-Out of Awards. The Board may,
without the consent of any Grantee, determine that, upon the
occurrence of a Change in Control, each or any Award or a portion
thereof outstanding immediately prior to the Change in Control and
not previously exercised or settled shall be canceled in exchange
for a payment with respect to each vested Share (and each unvested
Share, if so determined by the Board) subject to such canceled
Award in (i) cash, (ii) stock of the Company or of a
corporation or other business entity a party to the Change in
Control or (iii) other property which, in any such case, shall
be in an amount having a Fair Market Value equal to the Fair Market
Value of the consideration to be paid per Share in the Change in
Control, reduced by the exercise or purchase price per Share, if
any, under such Award. If any portion of such consideration may be
received by Stockholders pursuant to the Change in Control on a
contingent or delayed basis, the Board may determine such Fair
Market Value as of the time of the Change in Control on the basis
of the Board’s estimate of the present value of the probable
future payment of such consideration. In the event such
determination is made by the Board, the amount of such payment
(reduced by applicable withholding taxes, if any) shall be paid to
Grantees in respect of the vested portions of their canceled Awards
as soon as practicable following the date of the Change in Control
and in respect of the unvested portions of their canceled Awards in
accordance with the vesting schedules applicable to such Awards.
For avoidance of doubt, if the amount determined pursuant to this
Section 15.2.1(c) for an Option or SAR is zero
or less, the affected Option or SAR may be cancelled without any
payment therefore.
Unless
other provided in the applicable Award Agreement, a
“Change in
Control” means the consummation of any of the
following events following the Restatement Effective
Date:
(a) the acquisition,
other than from the Company, by any individual, entity or group
(within the meaning of Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act), other than the Company
or any subsidiary, affiliate (within the meaning of Rule 144
promulgated under the Securities Act) or employee benefit plan of
the Company, of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of more than 50% of the
combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of directors
(the “Voting
Securities”); or
17
(b) a reorganization,
merger, consolidation or recapitalization of the Company (a
“Business
Combination”), other than a Business Combination in
which more than 50% of the combined voting power of the outstanding
voting securities of the surviving or resulting entity immediately
following the Business Combination is held by the persons who,
immediately prior to the Business Combination, were the holders of
the Voting Securities; or
(c) a complete
liquidation or dissolution of the Company, or a sale of all or
substantially all of the assets of the Company; or
(d) during any period
of 24 consecutive months, the Incumbent Directors cease to
constitute a majority of the Board ; “Incumbent Directors” means
individuals who were members of the Board at the beginning of such
period or individuals whose election or nomination for election to
the Board by the Stockholders was approved by a vote of at least a
majority of the then Incumbent Directors (but excluding any
individual whose initial election or nomination is in connection
with an actual or threatened proxy contest relating to the election
of directors).
Notwithstanding the
foregoing, if it is determined that an Award is subject to the
requirements of Section 409A and payable upon a Change in
Control, the Company will not be deemed to have undergone a Change
in Control for purposes of the Plan unless the Company is deemed to
have undergone a “change in control event” pursuant to
the definition of such term in Section 409A.
15.3. Adjustments
Adjustments under
this Section 15 related to Shares or other securities
of the Company shall be made by the Board. No fractional Shares or
other securities shall be issued pursuant to any such adjustment,
and any fractions resulting from any such adjustment shall be
eliminated in each case by rounding downward to the nearest whole
Share.
16.
NO
LIMITATIONS ON COMPANY
The
making of Awards shall not affect or limit in any way the right or
power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or
to merge, consolidate, dissolve or liquidate, or to sell or
transfer all or any part of its business or assets.
17.
TERMS
APPLICABLE GENERALLY TO AWARDS GRANTED UNDER THE PLAN
17.1. Disclaimer
of Rights
No
provision in the Plan or in any Award Agreement shall be construed
to confer upon any individual the right to remain in the employ or
service of the Company or any Affiliate, or to interfere in any way
with any contractual or other right or authority of the Company or
any Affiliate either to increase or decrease the compensation or
other payments to any individual at any time, or to terminate any
employment or other relationship between any individual and the
Company or any Affiliate. In addition, notwithstanding anything
contained in the Plan to the contrary, unless otherwise provided in
the applicable Award Agreement, no Award granted under the Plan
shall be affected by any change of duties or position of the
Grantee, so long as such Grantee continues to be a Service
Provider. The obligation of the Company to pay any benefits
pursuant to the Plan shall be interpreted as a contractual
obligation to pay only those amounts described herein, in the
manner and under the conditions prescribed herein. The Plan shall
in no way be interpreted to require the Company to transfer any
amounts to a third party trustee or otherwise hold any amounts in
trust or escrow for payment to any Grantee or beneficiary under the
terms of the Plan.
18
17.2. Nonexclusivity
of the Plan
Neither
the adoption of the Plan nor the submission of the Plan to the
Stockholders for approval shall be construed as creating any
limitations upon the right or authority of the Board or its
delegate to adopt such other compensation arrangements as the Board
or its delegate determines desirable.
The
Company or an Affiliate, as the case may be, shall have the right
to deduct from payments of any kind otherwise due to a Grantee any
federal, state or local taxes of any kind required by law to be
withheld (i) with respect to the vesting of or other lapse of
restrictions applicable to an Award, (ii) upon the issuance of
any Shares upon the exercise of an Option or SAR or
(iii) otherwise due in connection with an Award. At the time
of such vesting, lapse or exercise, the Grantee shall pay to the
Company or the Affiliate, as the case may be, any amount that the
Company or the Affiliate may reasonably determine to be necessary
to satisfy such withholding obligation. Subject to the prior
approval of the Board, the Grantee may elect to satisfy such
obligations, in whole or in part, (i) by causing the Company
or the Affiliate to withhold the minimum required number of Shares
otherwise issuable to the Grantee as may be necessary to satisfy
such withholding obligation or (ii) by delivering to the
Company or the Affiliate Shares already owned by the Grantee. The
Shares so delivered or withheld shall have an aggregate Fair Market
Value equal to such withholding obligations. The Fair Market Value
of the Shares used to satisfy such withholding obligation shall be
determined by the Company or the Affiliate as of the date that the
amount of tax to be withheld is to be determined. A Grantee who has
made an election pursuant to this Section 17.3 may satisfy his or her withholding
obligation only with Shares that are not subject to any repurchase,
forfeiture, unfulfilled vesting or other similar
requirements.
Unless
otherwise provided in the applicable Award Agreement,
stockholders’ agreement or other agreement to which a Holder
is a party, at any time prior to registration by the Company of its
Common Stock under Section 12 of the Exchange Act, in the
event that the Holder desires at any time to sell or otherwise
transfer all or any part of such Holder’s Issued Shares (to
the extent vested), the Holder first shall give written notice to
the Company of the Holder’s intention to make such transfer.
Such notice shall state the number of Issued Shares which the
Holder proposes to sell (the “Offered Shares”), the price and
the terms at which the proposed sale is to be made and the name and
address of the proposed transferee. At any time within 30 days
after the receipt of such notice by the Company, the Company or its
assigns may elect to purchase all or any portion of the Offered
Shares at the price and on the terms offered by the proposed
transferee and specified in the notice. The Company or its assigns
shall exercise this right by mailing or delivering written notice
to the Holder within the foregoing 30-day period. If the Company or
its assigns elect to exercise its purchase rights under this
Section 17.4.1, the closing for such purchase
shall, in any event, take place within 45 days after the receipt by
the Company of the initial notice from the Holder. In the event
that the Company or its assigns do not elect to exercise such
purchase right, or in the event that the Company or its assigns do
not pay the full purchase price within such 45-day period, the
Holder may, within 60 days thereafter, sell the Offered Shares to
the proposed transferee at the same price and on the same terms as
specified in the Holder’s notice. Any Issued Shares purchased
by such proposed transferee shall continue to be subject to the
terms of the Plan. Any Issued Shares not sold to the proposed
transferee shall remain subject to the Plan.
17.4.2. Right
of Repurchase
Unless
otherwise provided in the applicable Award Agreement,
stockholders’ agreement or other agreement to which a Grantee
is a party, at any time prior to registration by the Company of its
Common Stock under Section 12 of the Exchange Act, in the case
of any Grantee whose Separation from Service is for Cause, or where
the Grantee has, in the Board's reasonable determination, taken any
action prior to or following his Separation from Service which
would have constituted grounds for Cause, the Company shall have
the right, exercisable at any time and from time to time
thereafter, to repurchase from the Grantee (or any successor in
interest by purchase, gift or other mode of transfer) any Shares
issued to such Grantee under the Plan for the purchase price paid
by the Grantee for such Shares (or the Fair Market Value of such
Common Stock at the time of repurchase, if lower).
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Unless
otherwise provided in the applicable Award Agreement,
stockholders’ agreement or other agreement to which a Grantee
is a party, in
connection with any underwritten public offering of its Common
Stock (“Offering”) and upon request of the
Company or the underwriters managing the Offering, Grantees shall
not be permitted to sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise directly or indirectly
dispose of any Shares delivered under the Plan (other than those
Shares included in the Offering) without the prior written consent
of the Company or such underwriters, as the case may be, for such
period of time from the effective date of the registration
statement with respect to such Offering as may be requested by the
Company or such managing underwriters and to execute an agreement
reflecting the foregoing as may be requested by the underwriters in
connection with such Offering.
17.6. Other
Provisions; Legends
Each
Award Agreement may contain such other terms and conditions not
inconsistent with the Plan as may be determined by the Board. Any
stock certificates for any Shares issued under the Plan shall be
subject to such stop-transfer orders and other restrictions as the
Company in its sole discretion may deem advisable under the rules,
regulations and other requirements of the SEC, any securities
exchange on which the Common Stock may then be listed and any
applicable federal or state securities law, and the Company in its
sole discretion may cause a legend or legends to be placed on such
certificates to make appropriate reference to such
restrictions.
17.7. Severability
If any
provision of the Plan or any Award Agreement shall be determined to
be illegal or unenforceable by any court of law in any
jurisdiction, the remaining provisions hereof and thereof shall be
severable and enforceable in accordance with their terms, and all
provisions shall remain enforceable in any other
jurisdiction.
17.8. Governing
Law
The
Plan shall be governed by and construed in accordance with the
internal laws of the State of Delaware without regard to the
principles of conflicts of law thereof or principles of conflicts
of laws of any other jurisdiction that could cause the application
of the laws of any jurisdiction other than the State of Delaware.
For purposes of resolving any dispute that arises directly or
indirectly in connection with the Plan, each Participant, by virtue
of receiving an Award, shall be deemed to have submitted to and
consented to the exclusive jurisdiction of the State of Michigan
and to have agreed that any related litigation shall be conducted
solely in the courts of Washtenaw County, Michigan or the federal
courts for the United States for the Eastern District of Michigan,
where the Plan is made and/or to be performed, and no other
courts.
17.9. Section 409A
The
Plan is intended to comply with Section 409A to the extent
subject thereto, and, accordingly, to the maximum extent permitted,
the Plan shall be interpreted and administered to be in compliance
therewith. Any payments described in the Plan that are due within
the “short-term deferral period” as defined in
Section 409A shall not be treated as deferred compensation
unless applicable laws require otherwise. Notwithstanding anything
to the contrary in the Plan, to the extent required to avoid
accelerated taxation and tax penalties under Section 409A,
amounts that would otherwise be payable and benefits that would
otherwise be provided pursuant to the Plan during the six-month
period immediately following the Grantee’s Separation from
Service shall instead be paid on the first payroll date after the
six-month anniversary of the Grantee’s Separation from
Service (or the Grantee’s death, if earlier). Notwithstanding
the foregoing, neither the Company nor the Committee shall have any
obligation to take any action to prevent the assessment of any
excise tax or penalty on any Grantee under Section 409A and
neither the Company nor the Board shall have any liability to any
Grantee for such tax or penalty.
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17.10. Separation
from Service
The
Board shall determine the effect of a Separation from Service upon
Awards, and such effect shall be set forth in the applicable Award
Agreement. Without limiting the foregoing, the Board may provide in
the Award Agreements at the time of grant, or any time thereafter
with the consent of the Grantee, the actions that will be taken
upon the occurrence of a Separation from Service, including
accelerated vesting or termination, depending upon the
circumstances surrounding the Separation from Service.
17.11. Transferability
of Awards and Issued Shares
17.11.1. Transfers
in General
Except
as provided in Section 17.11.2, no Award shall be assignable or
transferable by the Grantee to whom it is granted, other than by
will or the laws of descent and distribution, and, during the
lifetime of the Grantee, only the Grantee personally (or the
Grantee’s personal representative) may exercise rights under
the Plan.
If
authorized in the applicable Award Agreement, a Grantee may
transfer, not for value, all or part of an Award (other than
Incentive Stock Options) to any Family Member. For the purpose of
this Section 17.11.2, a “not for value”
transfer is a transfer which is (i) a gift, (ii) a
transfer under a domestic relations order in settlement of marital
property rights or (iii) a transfer to an entity in which more
than 50% of the voting interests are owned by Family Members (or
the Grantee) in exchange for an interest in that entity. Following
a transfer under this Section 17.11.2, any such Award shall continue
to be subject to the same terms and conditions as were applicable
immediately prior to transfer. Subsequent transfers of transferred
Awards are prohibited except to Family Members of the original
Grantee in accordance with this Section 17.11.2 or by will or the laws of
descent and distribution.
No
Issued Shares shall be sold, assigned, transferred, pledged,
hypothecated, given away or in any other manner disposed of or
encumbered, whether voluntarily or by operation of law, unless
(i) such transfer is in compliance with the terms of the
applicable Award, all applicable securities laws, and with the
terms and conditions of the Plan (including Sections 17.4 and 17.5 and this Section 17.11.3), (ii) such transfer does
not cause the Company to become subject to the reporting
requirements of the Exchange Act, and (iii) the transferee
consents in writing to be bound by the terms and conditions of the
Plan (including Sections
17.4 and 17.5 and this Section 17.11.3). In connection with any
proposed transfer, the Board may require the transferor to provide
at the transferor’s own expense an opinion of counsel to the
transferor, satisfactory to the Board, that such transfer is in
compliance with all foreign, federal and state securities laws. Any
attempted disposition of Issued Shares not in accordance with the
terms and conditions of this Section 17.11.3 shall be null and void, and the
Company shall not reflect on its records any change in record
ownership of any Issued Shares as a result of any such disposition,
shall otherwise refuse to recognize any such disposition and shall
not in any way give effect to any such disposition of Issued
Shares. Subject to the foregoing general provisions, and unless
otherwise provided in the applicable Award Agreement, Issued Shares
may be transferred pursuant to the following specific terms and
conditions:
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(a) Transfers to Permitted Transferees. The
Holder may sell, assign, transfer or give away any or all of the
Issued Shares to Permitted Transferees; provided, however, that following such
sale, assignment or other transfer, such Issued Shares shall
continue to be subject to the terms of the Plan (including
Sections 17.4 and 17.5 and this Section 17.11.3) and such Permitted
Transferee(s) shall, as a condition to any such transfer,
deliver a written acknowledgment to that effect to the
Company.
(b) Transfers upon Death. Upon the death of
the Holder, any Issued Shares then held by the Holder at the time
of such death and any Issued Shares acquired thereafter by the
Holder’s legal representative shall be subject to the terms
and conditions of the Plan, and the Holder’s estate,
executors, administrators, personal representatives, heirs,
legatees and distributees shall be obligated to convey such Issued
Shares to the Company or its assigns under the terms contemplated
hereby.
17.12. Dividends
and Dividend Equivalent Rights
If
specified in the Award Agreement, the recipient of an Award may be
entitled to receive, currently or on a deferred basis, dividends or
dividend equivalents with respect to the Common Stock or other
securities covered by an Award. The terms and conditions of a
dividend equivalent right may be set forth in the Award Agreement.
Dividend equivalents credited to a Grantee may be paid currently or
may be deemed to be reinvested in additional Shares or other
securities of the Company at a price per unit equal to the Fair
Market Value on the date that such dividend was paid to
Stockholders.
17.13. Data
Protection
A
Participant’s acceptance of an Award shall be deemed to
constitute the Participant’s acknowledgement of and consent
to the collection and processing of personal data relating to the
Participant so that the Company and the Affiliates can fulfill
their obligations and exercise their rights under the Plan and
generally administer and manage the Plan. This data shall include
data about participation in the Plan and Shares offered or
received, purchased or sold under the Plan and other appropriate
financial and other data (such as the date on which the Awards were
granted) about the Participant and the Participant’s
participation in the Plan.
17.14. Plan
Construction
In the
Plan, unless otherwise stated, the following uses apply:
(i) references to a statute or law refer to the statute or law
and any amendments and any successor statutes or laws, and to all
valid and binding governmental regulations, court decisions and
other regulatory and judicial authority issued or rendered
thereunder, as amended, or their successors, as in effect at the
relevant time; (ii) in computing periods from a specified date
to a later specified date, the words “from” and
“commencing on” (and the like) mean “from and
including,” and the words “to,”
“until” and “ending on” (and the like) mean
“to and including”; (iii) indications of time of
day shall be based upon the time applicable to the location of the
principal headquarters of the Company; (iv) the words
“include,” “includes” and
“including” (and the like) mean “include, without
limitation,” “includes, without limitation” and
“including, without limitation” (and the like),
respectively; (v) all references to articles and sections are
to articles and sections in the Plan; (vi) all words used
shall be construed to be of such gender or number as the
circumstances and context require; (vii) the captions and
headings of articles and sections have been inserted solely for
convenience of reference and shall not be considered a part of the
Plan, nor shall any of them affect the meaning or interpretation of
the Plan or any of its provisions; (viii) any reference to an
agreement, plan, policy, form, document or set of documents, and
the rights and obligations of the parties under any such agreement,
plan, policy, form, document or set of documents, shall mean such
agreement, plan, policy, form, document or set of documents as
amended from time to time, and any and all modifications,
extensions, renewals, substitutions or replacements thereof; and
(ix) all accounting terms not specifically defined shall be
construed in accordance with GAAP.
Adopted
by the Board: _________________________, 2016
Approved
by the Stockholders: _________________________, 2016
Scheduled
Termination Date: _________________________, 2026
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