Attached files
Exhibit 10.3
MAJESCO ENTERTAINMENT COMPANY
2017 EQUITY INCENTIVE PLAN
1.
|
PURPOSE OF PLAN
|
1.1 The purpose of this 2017 Equity Incentive Plan
(this “Plan”) of Majesco Entertainment Company, a
Delaware corporation (the “Corporation”), is to promote the success of the
Corporation and to increase stockholder value by providing an
additional means through the grant of awards to attract, motivate,
retain and reward selected employees and other eligible
persons.
2.
|
ELIGIBILITY
|
2.1 The Administrator (as such term is defined
in Section 3.1) may grant awards under this Plan only to those
persons that the Administrator determines to be Eligible Persons.
An “Eligible
Person” is any person who
is either: (a) an officer (whether or not a director) or
employee of the Corporation or one of its Subsidiaries; (b) a
director of the Corporation or one of its Subsidiaries; or
(c) an individual consultant who renders bona fide services
(other than services in connection with the offering or sale of
securities of the Corporation or one of its Subsidiaries in a
capital-raising transaction or as a market maker or promoter of
securities of the Corporation or one of its Subsidiaries) to the
Corporation or one of its Subsidiaries and who is selected to
participate in this Plan by the
Administrator; provided,
however, that a person who
is otherwise an Eligible Person under clause (c) above may
participate in this Plan only if such participation would not
adversely affect either the Corporation’s eligibility to use
Form S-8 to register under the Securities Act of 1933, as
amended (the “Securities
Act”), the offering and
sale of shares issuable under this Plan by the Corporation, or the
Corporation’s compliance with any other applicable
laws. An Eligible Person who has been granted an award
(a “participant”) may, if otherwise eligible, be granted
additional awards if the Administrator shall so determine. As used
herein, “Subsidiary” means any corporation or other entity a
majority of whose outstanding voting stock or voting power is
beneficially owned directly or indirectly by the Corporation; and
“Board” means the Board of Directors of the
Corporation.
3.
|
PLAN ADMINISTRATION
|
3.1 The
Administrator. This
Plan shall be administered by and all awards under this Plan shall
be authorized by the Administrator. The “Administrator”
means the Board or one or more committees appointed by the Board or
another committee (within its delegated authority) to administer
all or certain aspects of this Plan. Any such committee shall be
comprised solely of one or more directors or such number of
directors as may be required under applicable law. A committee may
delegate some or all of its authority to another committee so
constituted. The Board or a committee comprised solely of directors
may also delegate, to the extent permitted by Section 157 of the
Delaware General Corporation Law and any other applicable law, to
one or more officers of the Corporation, its powers under this Plan
(a) to Eligible Persons who will receive grants of awards
under this Plan, and (b) to determine the number of shares
subject to, and the other terms and conditions of, such awards. The
Board may delegate different levels of authority to different
committees with administrative and grant authority under this Plan.
Unless otherwise provided in the bylaws of the Corporation or the
applicable charter of any Administrator: (a) a majority of the
members of the acting Administrator shall constitute a quorum, and
(b) the affirmative vote of a majority of the members present
assuming the presence of a quorum or the unanimous written consent
of the members of the Administrator shall constitute due
authorization of an action by the acting
Administrator.
With respect to awards intended to satisfy the
requirements for performance-based compensation under
Section 162(m) of the Internal Revenue Code of 1986, as
amended (the “Code”), this Plan shall be administered by a
committee consisting solely of two or more outside directors (as
this requirement is applied under Section 162(m) of the
Code); provided,
however, that the failure
to satisfy such requirement shall not affect the validity of the
action of any committee otherwise duly authorized and acting in the
matter. Award grants, and transactions in or involving awards,
intended to be exempt under Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), must be duly and timely authorized by
the Board or a committee consisting solely of two or more
non-employee directors (as this requirement is applied under
Rule 16b-3 promulgated under the Exchange Act). To the extent
required by any applicable stock exchange, this Plan shall be
administered by a committee composed entirely of independent
directors (within the meaning of the applicable stock exchange).
Awards granted to non-employee directors shall not be subject to
the discretion of any officer or employee of the Corporation and
shall be administered exclusively by a committee consisting solely
of independent directors.
-1-
3.2 Powers of
the Administrator. Subject to the express provisions of
this Plan, the Administrator is authorized and empowered to do all
things necessary or desirable in connection with the authorization
of awards and the administration of this Plan (in the case of a
committee or delegation to one or more officers, within the
authority delegated to that committee or person(s)), including,
without limitation, the authority to:
(a)
determine eligibility and, from among those persons determined to
be eligible, the particular Eligible Persons who will receive
awards under this Plan;
(b)
grant awards to Eligible Persons, determine the price at which
securities will be offered or awarded and the number of securities
to be offered or awarded to any of such persons, determine the
other specific terms and conditions of such awards consistent with
the express limits of this Plan, establish the installments (if
any) in which such awards shall become exercisable or shall vest
(which may include, without limitation, performance and/or
time-based schedules), or determine that no delayed exercisability
or vesting is required, establish any applicable performance
targets, and establish the events of termination or reversion of
such awards;
(c)
approve the forms of award agreements (which need not be identical
either as to type of award or among participants);
(d)
construe and interpret this Plan and any agreements defining the
rights and obligations of the Corporation, its Subsidiaries, and
participants under this Plan, further define the terms used in this
Plan, and prescribe, amend and rescind rules and regulations
relating to the administration of this Plan or the awards granted
under this Plan;
(e)
cancel, modify, or waive the Corporation’s rights with
respect to, or modify, discontinue, suspend, or terminate any or
all outstanding awards, subject to any required consent under
Section 8.6.5;
(f)
accelerate or extend the vesting or exercisability or extend the
term of any or all such outstanding awards (in the case of options
or stock appreciation rights, within the maximum ten-year term of
such awards) in such circumstances as the Administrator may deem
appropriate (including, without limitation, in connection with a
termination of employment or services or other events of a personal
nature) subject to any required consent under
Section 8.6.5;
(g)
adjust the number of shares of Common Stock subject to any award,
adjust the price of any or all outstanding awards or otherwise
change previously imposed terms and conditions, in such
circumstances as the Administrator may deem appropriate, in each
case subject to compliance with applicable stock exchange
requirements, Sections 4 and 8.6 and the applicable
requirements of Code Section 162(m) and treasury regulations
thereunder with respect to awards that are intended to satisfy the
requirements for performance-based compensation under
Section 162(m), and provided that in no case (except due to an
adjustment contemplated by Section 7 or any repricing that may
be approved by stockholders) shall such an adjustment constitute a
repricing (by amendment, cancellation and re-grant, exchange or
other means) of the per share exercise or base price of any stock
option or stock appreciation right or other award granted under
this Plan, and further provided that any adjustment or change in
terms made pursuant to this Section 3.2(g) shall be made in a
manner that, in the good faith determination of the Administrator
will not likely result in the imposition of additional taxes or
interest under Section 409A of the Code;
(h)
determine the date of grant of an award, which may be a designated
date after but not before the date of the Administrator’s
action (unless otherwise designated by the Administrator, the date
of grant of an award shall be the date upon which the Administrator
took the action granting an award);
(i)
determine whether, and the extent to which, adjustments are
required pursuant to Section 7 hereof and authorize the
termination, conversion, substitution, acceleration or succession
of awards upon the occurrence of an event of the type described in
Section 7;
(j)
acquire or settle (subject to Sections 7 and 8.6) rights under
awards in cash, stock of equivalent value, or other consideration;
and
(k)
determine the Fair Market Value (as defined in Section 5.6) of
the Common Stock or awards under this Plan from time to time and/or
the manner in which such value will be determined.
-2-
3.3 Binding
Determinations. Any
action taken by, or inaction of, the Corporation, any Subsidiary,
or the Administrator relating or pursuant to this Plan and within
its authority hereunder or under applicable law shall be within the
absolute discretion of that entity or body and shall be conclusive
and binding upon all persons. Neither the Board, the Administrator,
nor any Board committee, nor any member thereof or person acting at
the direction thereof, shall be liable for any act, omission,
interpretation, construction or determination made in good faith in
connection with this Plan (or any award made under this Plan), and
all such persons shall be entitled to indemnification and
reimbursement by the Corporation in respect of any claim, loss,
damage or expense (including, without limitation, legal fees)
arising or resulting therefrom to the fullest extent permitted by
law and/or under any directors and officers liability insurance
coverage that may be in effect from time to
time.
3.4 Reliance on
Experts. In making
any determination or in taking or not taking any action under this
Plan, the Administrator may obtain and may rely upon the advice of
experts, including professional advisors to the Corporation. The
Administrator shall not be liable for any such action or
determination taken or made or omitted in good faith based upon
such advice.
3.5 Delegation
of Non-Discretionary Functions. In addition to the ability to delegate
certain grant authority to officers of the Corporation as set forth
in Section 3.1, the Administrator may also delegate ministerial,
non-discretionary functions to individuals who are officers or
employees of the Corporation or any of its Subsidiaries or to third
parties.
4.
|
SHARES OF COMMON STOCK SUBJECT TO THE PLAN; SHARE
LIMIT
|
4.1 Shares
Available. Subject
to the provisions of Section 7.1, the capital stock available
for issuance under this Plan shall be shares of the
Corporation’s authorized but unissued Common
Stock. For purposes of this Plan,
“Common Stock” shall mean the common stock of the
Corporation and such other securities or property as may become the
subject of awards under this Plan, or may become subject to such
awards, pursuant to an adjustment made under
Section 7.1.
4.2 Share
Limit. The maximum
number of shares of Common Stock that may be delivered pursuant to
awards granted to Eligible Persons under this Plan may not exceed
3,450,000 shares of Common Stock (the “Share Limit”).
The
foregoing Share Limit is subject to adjustment as contemplated by
Section 4.3, Section 7.1, and
Section 8.10.
4.3 Awards
Settled in Cash, Reissue of Awards and Shares. The Administrator may adopt reasonable
counting procedures to ensure appropriate counting, avoid double
counting (as, for example, in the case of tandem or substitute
awards) and make adjustments in accordance with this
Section 4.3. Shares shall be counted against those reserved to
the extent such shares have been delivered and are no longer
subject to a substantial risk of forfeiture. Accordingly,
(i) to the extent that an award under the Plan, in whole or in
part, is canceled, expired, forfeited, settled in cash, settled by
delivery of fewer shares than the number of shares underlying the
award, or otherwise terminated without delivery of shares to the
participant, the shares retained by or returned to the Corporation
will not be deemed to have been delivered under the Plan and will
be deemed to remain or to become available under this Plan; and
(ii) shares that are withheld from such an award or separately
surrendered by the participant in payment of the exercise price or
taxes relating to such an award shall be deemed to constitute
shares not delivered and will be deemed to remain or to become
available under the Plan. The foregoing adjustments to the Share
Limit of this Plan are subject to any applicable limitations under
Section 162(m) of the Code with respect to awards intended as
performance-based compensation thereunder.
4.4 Reservation
of Shares; No Fractional Shares. The Corporation shall at all times
reserve a number of shares of Common Stock sufficient to cover the
Corporation’s obligations and contingent obligations to
deliver shares with respect to awards then outstanding under this
Plan (exclusive of any dividend equivalent obligations to the
extent the Corporation has the right to settle such rights in
cash). No fractional shares shall be delivered under this Plan. The
Administrator may pay cash in lieu of any fractional shares in
settlements of awards under this Plan.
-3-
5.
|
AWARDS
|
5.1 Type and
Form of Awards. The
Administrator shall determine the type or types of award(s) to be
made to each selected Eligible Person. Awards may be granted
singly, in combination or in tandem. Awards also may be made in
combination or in tandem with, in replacement of, as alternatives
to, or as the payment form for grants or rights under any other
employee or compensation plan of the Corporation or one of its
Subsidiaries. The types of awards that may be granted under this
Plan are:
5.1.1 Stock
Options. A stock
option is the grant of a right to purchase a specified number of
shares of Common Stock during a specified period as determined by
the Administrator. An option may be intended as an incentive stock
option within the meaning of Section 422 of the Code (an
“ISO”) or a nonqualified stock option (an option
not intended to be an ISO). The award agreement for an option will
indicate if the option is intended as an ISO; otherwise it will be
deemed to be a nonqualified stock option. The maximum term of each
option (ISO or nonqualified) shall be ten (10) years. The per
share exercise price for each option shall be not less than 100% of
the Fair Market Value of a share of Common Stock on the date of
grant of the option. When an option is exercised, the exercise
price for the shares to be purchased shall be paid in full in cash
or such other method permitted by the Administrator consistent with
Section 5.5.
5.1.2 Additional
Rules Applicable to ISOs. To the extent that the aggregate Fair
Market Value (determined at the time of grant of the applicable
option) of stock with respect to which ISOs first become
exercisable by a participant in any calendar year exceeds $100,000,
taking into account both Common Stock subject to ISOs under this
Plan and stock subject to ISOs under all other plans of the
Corporation or one of its Subsidiaries (or any parent or
predecessor corporation to the extent required by and within the
meaning of Section 422 of the Code and the regulations
promulgated thereunder), such options shall be treated as
nonqualified stock options. In reducing the number of options
treated as ISOs to meet the $100,000 limit, the most recently
granted options shall be reduced first. To the extent a reduction
of simultaneously granted options is necessary to meet the $100,000
limit, the Administrator may, in the manner and to the extent
permitted by law, designate which shares of Common Stock are to be
treated as shares acquired pursuant to the exercise of an ISO. ISOs
may only be granted to employees of the Corporation or one of its
subsidiaries (for this purpose, the term “subsidiary”
is used as defined in Section 424(f) of the Code, which
generally requires an unbroken chain of ownership of at least 50%
of the total combined voting power of all classes of stock of each
subsidiary in the chain beginning with the Corporation and ending
with the subsidiary in question). There shall be imposed in any
award agreement relating to ISOs such other terms and conditions as
from time to time are required in order that the option be an
“incentive stock option” as that term is defined in
Section 422 of the Code. No ISO may be granted to any person
who, at the time the option is granted, owns (or is deemed to own
under Section 424(d) of the Code) shares of outstanding Common
Stock possessing more than 10% of the total combined voting power
of all classes of stock of the Corporation, unless the exercise
price of such option is at least 110% of the Fair Market Value of
the stock subject to the option and such option by its terms is not
exercisable after the expiration of five years from the date such
option is granted.
5.1.3 Stock
Appreciation Rights. A stock appreciation right or
“SAR” is a right to receive a payment, in cash
and/or Common Stock, equal to the number of shares of Common Stock
being exercised multiplied by the excess of (i) the Fair Market
Value of a share of Common Stock on the date the SAR is exercised,
over (ii) the Fair Market Value of a share of Common Stock on the
date the SAR was granted as specified in the applicable award
agreement (the “base price”). The maximum term of a SAR shall be ten
(10) years.
5.1.4 Restricted
Shares.
(a)
Restrictions.
Restricted shares are shares of Common Stock subject to such
restrictions on transferability, risk of forfeiture and other
restrictions, if any, as the Administrator may impose, which
restrictions may lapse separately or in combination at such times,
under such circumstances (including based on achievement of
performance goals and/or future service requirements), in such
installments or otherwise, as the Administrator may determine at
the date of grant or thereafter. Except to the extent
restricted under the terms of this Plan and the applicable award
agreement relating to the restricted stock, a participant granted
restricted stock shall have all of the rights of a shareholder,
including the right to vote the restricted stock and the right to
receive dividends thereon (subject to any mandatory reinvestment or
other requirement imposed by the
Administrator).
(b)
Certificates for
Shares. Restricted shares
granted under this Plan may be evidenced in such manner as the
Administrator shall determine. If certificates representing
restricted stock are registered in the name of the participant, the
Administrator may require that such certificates bear an
appropriate legend referring to the terms, conditions and
restrictions applicable to such restricted stock, that the
Corporation retain physical possession of the certificates, and
that the participant deliver a stock power to the Corporation,
endorsed in blank, relating to the restricted stock. The
Administrator may require that restricted shares are held in escrow
until all restrictions lapse
(c)
Dividends and
Splits. As a condition to the
grant of an award of restricted stock, subject to applicable law,
the Administrator may require or permit a participant to elect that
any cash dividends paid on a share of restricted stock be
automatically reinvested in additional shares of restricted stock
or applied to the purchase of additional awards under this Plan.
Unless otherwise determined by the Administrator, stock distributed
in connection with a stock split or stock dividend, and other
property distributed as a dividend, shall be subject to
restrictions and a risk of forfeiture to the same extent as the
restricted stock with respect to which such stock or other property
has been distributed.
-4-
5.1.5 Restricted Share
Units.
(a)
Grant of
Restricted Share Units. A restricted share unit, or
“RSU”, represents the right to receive from the
Corporation on the respective scheduled vesting or payment date for
such RSU, one Common Share. An award of RSUs may be subject to the
attainment of specified performance goals or targets,
forfeitability provisions and such other terms and conditions as
the Administrator may determine, subject to the provisions of this
Plan. At the time an award of RSUs is made, the
Administrator shall establish a period of time during which the
restricted share units shall vest and the timing for settlement of
the RSU.
(b)
Dividend
Equivalent Accounts. Subject to
the terms and conditions of the Plan and the applicable award
agreement, as well as any procedures established by the
Administrator, prior to the expiration of the applicable vesting
period of an RSU, the Administrator may determine to pay dividend
equivalent rights with respect to RSUs, in which case, the
Corporation shall establish an account for the participant and
reflect in that account any securities, cash or other property
comprising any dividend or property distribution with respect to
the shares of Common Stock underlying each RSU. Each
amount or other property credited to any such account shall be
subject to the same vesting conditions as the RSU to which it
relates. The participant shall have the right to be paid
the amounts or other property credited to such account upon vesting
of the subject RSU.
(c)
Rights as a
Shareholder. Subject to the restrictions imposed under the
terms and conditions of this Plan and the applicable award
agreement, each participant receiving RSUs shall have no rights as
a shareholder with respect to such RSUs until such time as shares
of Common Stock are issued to the participant. No shares
of Common Stock shall be issued at the time a RSU is granted, and
the Company will not be required to set aside a fund for the
payment of any such award. Except as otherwise
provided in the applicable award agreement, shares of Common Stock
issuable under an RSU shall be treated as issued on the first date
that the holder of the RSU is no longer subject to a substantial
risk of forfeiture as determined for purposes of Section 409A of
the Code, and the holder shall be the owner of such shares of
Common Stock on such date. An award agreement may
provide that issuance of shares of Common Stock under an RSU may be
deferred beyond the first date that the RSU is no longer subject to
a substantial risk of forfeiture, provided that such deferral is
structured in a manner that is intended to comply with the
requirements of Section 409A of the Code.
5.1.6 Cash
Awards. The
Administrator may, from time to time, subject to the provisions of
the Plan and such other terms and conditions as it may determine,
grant cash bonuses (including without limitation, discretionary
awards, awards based on objective or subjective performance
criteria, awards subject to other vesting criteria or awards
granted consistent with Section 5.2 below). Cash awards
shall be awarded in such amount and at such times during the term
of the Plan as the Administrator shall
determine.
5.1.7 ther
Awards. The other
types of awards that may be granted under this Plan include:
(a) stock bonuses, performance stock, performance units,
dividend equivalents, or similar rights to purchase or acquire
shares, whether at a fixed or variable price or ratio related to
the Common Stock (subject to the requirements of Section 5.1.1
and in compliance with applicable laws), upon the passage of time,
the occurrence of one or more events, or the satisfaction of
performance criteria or other conditions, or any combination
thereof; or (b) any similar securities with a value derived
from the value of or related to the Common Stock and/or returns
thereon.
-5-
5.2 Section 162(m)
Performance-Based Awards. Without limiting the generality of the
foregoing, any of the types of awards listed in Sections 5.1.4
through 5.1.7 above may be, and options and SARs granted with an
exercise or base price not less than the Fair Market Value of a
share of Common Stock at the date of grant
(“Qualifying
Options” and
“Qualifying
SARs,” respectively)
typically will be, granted as awards intended to satisfy the
requirements for “performance-based compensation”
within the meaning of Section 162(m) of the Code
(“Performance-Based
Awards”). The grant,
vesting, exercisability or payment of Performance-Based Awards may
depend (or, in the case of Qualifying Options or Qualifying SARs,
may also depend) on the degree of achievement of one or more
performance goals relative to a pre-established targeted level or
levels using the Business Criteria provided for below for the
Corporation on a consolidated basis or for one or more of the
Corporation’s subsidiaries, segments, divisions or business
units, or any combination of the foregoing. Such criteria may be
evaluated on an absolute basis or relative to prior periods,
industry peers, or stock market indices. Any Qualifying Option or
Qualifying SAR shall be subject to the requirements of
Section 5.2.1 and 5.2.3 in order for such award to satisfy the
requirements for “performance-based compensation” under
Section 162(m) of the Code. Any other Performance-Based Award
shall be subject to all of the following provisions of this
Section 5.2.
5.2.1 Class;
Administrator. The
eligible class of persons for Performance-Based Awards under this
Section 5.2 shall be officers and employees of the Corporation
or one of its Subsidiaries. The Administrator approving
Performance-Based Awards or making any certification required
pursuant to Section 5.2.4 must be constituted as provided in
Section 3.1 for awards that are intended as performance-based
compensation under Section 162(m) of the
Code.
5.2.2 Performance
Goals. The specific
performance goals for Performance-Based Awards (other than
Qualifying Options and Qualifying SARs) shall be, on an absolute or
relative basis, established based on such business criteria as
selected by the Administrator in its sole discretion
(“Business
Criteria”), including the
following: (1) earnings per share, (2) cash flow (which means cash
and cash equivalents derived from either (i) net cash flow from
operations or (ii) net cash flow from operations, financing and
investing activities), (3) total stockholder return, (4) price per
share of Common Stock, (5) gross revenue, (6) revenue growth, (7)
operating income (before or after taxes), (8) net earnings (before
or after interest, taxes, depreciation and/or amortization), (9)
return on equity, (10) capital employed, or on assets or on net
investment, (11) cost containment or reduction, (12) cash cost per
ounce of production, (13) operating margin, (14) debt reduction,
(15) resource amounts, (16) production or production growth, (17)
resource replacement or resource growth, (18) successful completion
of financings, or (19) any combination of the
foregoing. To qualify awards as performance-based under
Section 162(m), the applicable Business Criterion (or Business
Criteria, as the case may be) and specific performance goal or
goals (“targets”) must be established and approved by
the Administrator during the first 90 days of the performance
period (and, in the case of performance periods of less than one
year, in no event after 25% or more of the performance period has
elapsed) and while performance relating to such target(s) remains
substantially uncertain within the meaning of Section 162(m)
of the Code. Performance targets shall be adjusted to mitigate the
unbudgeted impact of material, unusual or nonrecurring gains and
losses, accounting changes or other extraordinary events not
foreseen at the time the targets were set unless the Administrator
provides otherwise at the time of establishing the targets;
provided that the Administrator may not make any adjustment to the
extent it would adversely affect the qualification of any
compensation payable under such performance targets as
“performance-based compensation” under
Section 162(m) of Code. The applicable performance measurement
period may not be less than 3 months nor more than
10 years.
5.2.3 Form of
Payment. Grants or awards
intended to qualify under this Section 5.2 may be paid in cash
or shares of Common Stock or any combination
thereof.
5.2.4 Certification
of Payment. Before
any Performance-Based Award under this Section 5.2 (other than
Qualifying Options and Qualifying SARs) is paid and to the extent
required to qualify the award as performance-based compensation
within the meaning of Section 162(m) of the Code, the
Administrator must certify in writing that the performance
target(s) and any other material terms of the Performance-Based
Award were in fact timely satisfied.
5.2.5 Reservation
of Discretion. The Administrator will have the
discretion to determine the restrictions or other limitations of
the individual awards granted under this Section 5.2 including
the authority to reduce awards, payouts or vesting or to pay no
awards, in its sole discretion, if the Administrator preserves such
authority at the time of grant by language to this effect in its
authorizing resolutions or otherwise.
-6-
5.2.6 Expiration
of Grant Authority. As required pursuant to
Section 162(m) of the Code and the regulations promulgated
thereunder, the Administrator’s authority to grant new awards
that are intended to qualify as performance-based compensation
within the meaning of Section 162(m) of the Code (other than
Qualifying Options and Qualifying SARs) shall terminate upon the
first meeting of the Corporation’s stockholders that occurs
in the fifth year following the year in which the
Corporation’s stockholders first approve this Plan (the
“162(m) Term”).
5.2.7 Compensation
Limitations. The maximum aggregate number of shares
of Common Stock that may be issued to any Eligible Person during
the term of this Plan pursuant to Qualifying Options and Qualifying
SARs may not exceed the Share Limit. The maximum
aggregate number of shares of Common Stock that may be issued to
any Eligible Person pursuant to Performance-Based Awards granted
during the 162(m) Term (other than cash awards granted pursuant to
Section 5.1.6 and Qualifying Options or Qualifying SARs) may not
exceed the Share Limit. The maximum amount that may be
paid to any Eligible Person pursuant to Performance-Based Awards
granted pursuant to Sections 5.1.6 (cash awards) during the 162(m)
Term may not exceed $1,000,000.
5.3 Award
Agreements. Each
award shall be evidenced by a written or electronic award agreement
in the form approved by the Administrator and, if required by the
Administrator, executed by the recipient of the award. The
Administrator may authorize any officer of the Corporation (other
than the particular award recipient) to execute any or all award
agreements on behalf of the Corporation (electronically or
otherwise). The award agreement shall set forth the material terms
and conditions of the award as established by the Administrator
consistent with the express limitations of this
Plan.
5.4 Deferrals
and Settlements. Payment of awards may be in the form
of cash, Common Stock, other awards or combinations thereof as the
Administrator shall determine, and with such restrictions as it may
impose. The Administrator may also require or permit participants
to elect to defer the issuance of shares of Common Stock or the
settlement of awards in cash under such rules and procedures as it
may establish under this Plan. The Administrator may also provide
that deferred settlements include the payment or crediting of
interest or other earnings on the deferral amounts, or the payment
or crediting of dividend equivalents where the deferred amounts are
denominated in shares. All mandatory or elective
deferrals of the issuance of shares of Common Stock or the
settlement of cash awards shall be structured in a manner that is
intended to comply with the requirements of Section 409A of the
Code.
5.5 Consideration
for Common Stock or Awards. The purchase price for any award
granted under this Plan or the Common Stock to be delivered
pursuant to an award, as applicable, may be paid by means of any
lawful consideration as determined by the Administrator and subject
to compliance with applicable laws, including, without limitation,
one or a combination of the following methods:
●
services rendered
by the recipient of such award;
●
cash,
check payable to the order of the Corporation, or electronic funds
transfer;
●
notice
and third party payment in such manner as may be authorized by the
Administrator;
●
the
delivery of previously owned shares of Common Stock that are fully
vested and unencumbered;
●
by a
reduction in the number of shares otherwise deliverable pursuant to
the award; or
●
subject to such
procedures as the Administrator may adopt, pursuant to a
“cashless exercise” with a third party who provides
financing for the purposes of (or who otherwise facilitates) the
purchase or exercise of awards.
In
the event that the Administrator allows a participant to exercise
an award by delivering shares of Common Stock previously owned by
such participant and unless otherwise expressly provided by the
Administrator, any shares delivered which were initially acquired
by the participant from the Corporation (upon exercise of a stock
option or otherwise) must have been owned by the participant at
least six months as of the date of delivery (or such other period
as may be required by the Administrator in order to avoid adverse
accounting treatment). Shares of Common Stock used to satisfy the
exercise price of an option shall be valued at their Fair Market
Value on the date of exercise. The Corporation will not be
obligated to deliver any shares unless and until it receives full
payment of the exercise or purchase price therefor and any related
withholding obligations under Section 8.5 and any other
conditions to exercise or purchase, as established from time to
time by the Administrator, have been satisfied. Unless otherwise
expressly provided in the applicable award agreement, the
Administrator may at any time eliminate or limit a
participant’s ability to pay the purchase or exercise price
of any award by any method other than cash payment to the
Corporation.
-7-
5.6 Definition
of Fair Market Value. For purposes of this Plan
“Fair
Market Value” shall mean,
unless otherwise determined or provided by the Administrator in the
circumstances, the closing price for a share of Common Stock on the
trading day immediately before the grant date, as furnished by the
NASDAQ Stock Market or other principal stock exchange on which the
Common Stock is then listed for the date in question, or if the
Common Stock is no longer listed on a principal stock exchange,
then by the Over-the-Counter Bulletin Board or OTC Markets. If the
Common Stock is no longer listed on the NASDAQ Capital Market or
listed on a principal stock exchange or is no longer actively
traded on the Over-the-Counter Bulletin Board or OTC Markets as of
the applicable date, the Fair Market Value of the Common Stock
shall be the value as reasonably determined by the Administrator
for purposes of the award in the circumstances.
5.7 Transfer
Restrictions.
5.7.1 Limitations
on Exercise and Transfer. Unless otherwise expressly provided in
(or pursuant to) this Section 5.7, by applicable law and by
the award agreement, as the same may be amended, (a) all
awards are non-transferable and shall not be subject in any manner
to sale, transfer, anticipation, alienation, assignment, pledge,
encumbrance or charge; (b) awards shall be exercised only by
the participant; and (c) amounts payable or shares issuable
pursuant to any award shall be delivered only to (or for the
account of) the participant.
5.7.2 Exceptions. The
Administrator may permit awards to be exercised by and paid to, or
otherwise transferred to, other persons or entities pursuant to
such conditions and procedures, including limitations on subsequent
transfers, as the Administrator may, in its sole discretion,
establish in writing (provided that any such transfers of ISOs
shall be limited to the extent permitted under the federal tax laws
governing ISOs). Any permitted transfer shall be subject to
compliance with applicable federal and state securities
laws.
5.7.3 Further
Exceptions to Limits on Transfer. The exercise and transfer restrictions
in Section 5.7.1 shall not apply to:
(a)
transfers to the Corporation,
(b) the
designation of a beneficiary to receive benefits in the event of
the participant’s death or, if the participant has died,
transfers to or exercise by the participant’s beneficiary,
or, in the absence of a validly designated beneficiary, transfers
by will or the laws of descent and
distribution,
(c)
subject to any applicable limitations on ISOs, transfers to a
family member (or former family member) pursuant to a domestic
relations order if approved or ratified by the
Administrator,
(d)
subject to any applicable limitations on ISOs, if the participant
has suffered a disability, permitted transfers or exercises on
behalf of the participant by his or her legal representative,
or
(e) the
authorization by the Administrator of “cashless
exercise” procedures with third parties who provide financing
for the purpose of (or who otherwise facilitate) the exercise of
awards consistent with applicable laws and the express
authorization of the
Administrator.
5.8 International
Awards. One or more
awards may be granted to Eligible Persons who provide services to
the Corporation or one of its Subsidiaries outside of the United
States. Any awards granted to such persons may, if deemed necessary
or advisable by the Administrator, be granted pursuant to the terms
and conditions of any applicable sub-plans, if any, appended to
this Plan and approved by the Administrator.
5.9 Vesting. Subject
to Section 5.1.2 hereof, awards shall vest at such time or
times and subject to such terms and conditions as shall be
determined by the Administrator at the time of
grant; provided,
however, that in the absence of
any award vesting periods designated by the Administrator at the
time of grant in the applicable award agreement, awards shall vest
as to one-third of the total number of shares subject to the award
on each of the first, second and third anniversaries of the date of
grant.
-8-
6.
|
EFFECT OF TERMINATION OF SERVICE ON AWARDS
|
6.1 Termination of
Employment.
6.1.1 The Administrator shall establish the
effect of a termination of employment or service on the rights and
benefits under each award under this Plan and in so doing may make
distinctions based upon, inter alia, the cause of termination and
type of award. If the participant is not an employee of the
Corporation or one of its Subsidiaries and provides other services
to the Corporation or one of its Subsidiaries, the Administrator
shall be the sole judge for purposes of this Plan (unless a
contract or the award agreement otherwise provides) of whether the
participant continues to render services to the Corporation or one
of its Subsidiaries and the date, if any, upon which such services
shall be deemed to have terminated.
6.1.2 For awards of stock options or SARs,
unless the award agreement provides otherwise, the exercise period
of such options or SARs shall expire: (1) three months
after the last day that the participant is employed by or provides
services to the Corporation or a Subsidiary (provided; however,
that in the event of the participant’s death during this
period, those persons entitled to exercise the option or SAR
pursuant to the laws of descent and distribution shall have one
year following the date of death within which to exercise such
option or SAR); (2) in the case of a participant whose
termination of employment is due to death or disability (as defined
in the applicable award agreement), 12 months after the last
day that the participant is employed by or provides services to the
Corporation or a Subsidiary; and (3) immediately upon a
participant’s termination for “cause”. The
Administrator will, in its absolute discretion, determine the
effect of all matters and questions relating to a termination of
employment, including, but not by way of limitation, the question
of whether a leave of absence constitutes a termination of
employment and whether a participant’s termination is for
“cause.”
If not defined in the applicable award agreement,
“Cause” shall mean:
(i) conviction
of a felony or a crime involving fraud or moral turpitude;
or
(ii) theft,
material act of dishonesty or fraud, intentional falsification of
any employment or Company records, or commission of any criminal
act which impairs participant’s ability to perform
appropriate employment duties for the Corporation; or
(iii) intentional
or reckless conduct or gross negligence materially harmful to the
Company or the successor to the Corporation after a Change in
Control , including violation of a non-competition or
confidentiality agreement; or
(iv) willful
failure to follow lawful instructions of the person or body to
which participant reports; or
(v) gross
negligence or willful misconduct in the performance of
participant’s assigned duties. Cause
shall not include mere unsatisfactory performance in
the achievement of participant’s job
objectives.
6.1.3 For awards of restricted shares,
unless the award agreement provides otherwise, restricted shares
that are subject to restrictions at the time that a participant
whose employment or service is terminated shall be forfeited and
reacquired by the Corporation; provided
that, the Administrator
may provide, by rule or regulation or in any award agreement, or
may determine in any individual case, that restrictions or
forfeiture conditions relating to restricted shares shall be waived
in whole or in part in the event of terminations resulting from
specified causes, and the Administrator may in other cases waive in
whole or in part the forfeiture of restricted
shares. Similar rules shall apply in respect of
RSUs.
6.2 Events Not
Deemed Terminations of Service. Unless the express policy of the
Corporation or one of its Subsidiaries, or the Administrator,
otherwise provides, the employment relationship shall not be
considered terminated in the case of (a) sick leave,
(b) military leave, or (c) any other leave of absence
authorized by the Corporation or one of its Subsidiaries, or the
Administrator; provided that unless reemployment upon the
expiration of such leave is guaranteed by contract or law, such
leave is for a period of not more than 3 months. In the case
of any employee of the Corporation or one of its Subsidiaries on an
approved leave of absence, continued vesting of the award while on
leave from the employ of the Corporation or one of its Subsidiaries
may be suspended until the employee returns to service, unless the
Administrator otherwise provides or applicable law otherwise
requires. In no event shall an award be exercised after the
expiration of the term set forth in the award
agreement.
6.3
Effect of
Change of Subsidiary Status. For purposes of this Plan and any
award, if an entity ceases to be a Subsidiary of the Corporation, a
termination of employment or service shall be deemed to have
occurred with respect to each Eligible Person in respect of such
Subsidiary who does not continue as an Eligible Person in respect
of another entity within the Corporation or another Subsidiary that
continues as such after giving effect to the transaction or other
event giving rise to the change in status.
-9-
7.
|
ADJUSTMENTS;
ACCELERATION
|
7.1 Adjustments. Upon
or in contemplation of any of the following events described in
this Section 7.1,: any reclassification, recapitalization,
stock split (including a stock split in the form of a stock
dividend) or reverse stock split (“stock split”); any merger, arrangement, combination,
consolidation, or other reorganization; any spin-off, split-up, or
similar extraordinary dividend distribution in respect of the
Common Stock (whether in the form of securities or property); any
exchange of Common Stock or other securities of the Corporation, or
any similar, unusual or extraordinary corporate transaction in
respect of the Common Stock; then the Administrator shall in such
manner, to such extent and at such time as it deems
appropriate and equitable in the circumstances (but subject to
compliance with applicable laws and stock exchange requirements)
proportionately adjust any or all of (1) the number and type
of shares of Common Stock (or other securities) that thereafter may
be made the subject of awards (including the number of shares
provided for in this Plan), (2) the number, amount and type of
shares of Common Stock (or other securities or property) subject to
any or all outstanding awards, (3) the grant, purchase, or
exercise price (which term includes the base price of any SAR or
similar right) of any or all outstanding awards, (4) the
securities, cash or other property deliverable upon exercise or
payment of any outstanding awards, and (5) the 162(m)
compensation limitations set forth in Section 5.2.7 and (subject to
Section 8.8.3(a)) the performance standards applicable to any
outstanding awards (provided that no adjustment shall be allowed to
the extent inconsistent with the requirements of Code
section 162(m)). Any adjustment made pursuant to this Section
7.1 shall be made in a manner that, in the good faith determination
of the Administrator, will not likely result in the imposition of
additional taxes or interest under Section 409A of the
Code. With respect to any award of an ISO, the
Administrator may make such an adjustment that causes the option to
cease to qualify as an ISO without the consent of the affected
participant.
7.2 Change in
Control. Upon a
Change in Control, each then-outstanding option and SAR shall
automatically become fully vested, all restricted shares then
outstanding shall automatically fully vest free of restrictions,
and each other award granted under this Plan that is then
outstanding shall automatically become vested and payable to the
holder of such award unless the
Administrator has made appropriate provision for the substitution,
assumption, exchange or other continuation of the award pursuant to
the Change in Control. Notwithstanding the foregoing,
the Administrator, in its sole and absolute discretion, may choose
(in an award agreement or otherwise) to provide for full or partial
accelerated vesting of any award upon a Change In Control (or upon
any other event or other circumstance related to the Change in
Control, such as an involuntary termination of employment occurring
after such Change in Control, as the Administrator may determine),
irrespective of whether such any such award has been substituted,
assumed, exchanged or otherwise continued pursuant to the Change in
Control.
For purposes of this Plan,
“Change in
Control” shall be deemed
to have occurred if:
(i) a
tender offer (or series of related offers) shall be made and
consummated for the ownership of 50% or more of the outstanding
voting securities of the Corporation, unless as a result of such
tender offer more than 50% of the outstanding voting securities of
the surviving or resulting corporation shall be owned in the
aggregate by the stockholders of the Corporation (as of the time
immediately prior to the commencement of such offer), any employee
benefit plan of the Corporation or its Subsidiaries, and their
affiliates;
(ii) the
Corporation shall be merged or consolidated with another entity,
unless as a result of such merger or consolidation more than 50% of
the outstanding voting securities of the surviving or resulting
entity shall be owned in the aggregate by the stockholders of the
Corporation (as of the time immediately prior to such transaction),
any employee benefit plan of the Corporation or its Subsidiaries,
and their affiliates;
(iii) the
Corporation shall sell substantially all of its assets to another
entity that is not wholly owned by the Corporation, unless as a
result of such sale more than 50% of such assets shall be owned in
the aggregate by the stockholders of the Corporation (as of the
time immediately prior to such transaction), any employee benefit
plan of the Corporation or its Subsidiaries and their affiliates;
or
(iv) a
Person (as defined below) shall acquire 50% or more of the
outstanding voting securities of the Corporation (whether directly,
indirectly, beneficially or of record), unless as a result of such
acquisition more than 50% of the outstanding voting securities of
the surviving or resulting corporation shall be owned in the
aggregate by the stockholders of the Corporation (as of the time
immediately prior to the first acquisition of such securities by
such Person), any employee benefit plan of the Corporation or its
Subsidiaries, and their affiliates.
-10-
For purposes of this Section 5(c), ownership of
voting securities shall take into account and shall include
ownership as determined by applying the provisions of Rule
13d-3(d)(I)(i) (as in effect on the date hereof) under the Exchange
Act. In addition, for such purposes,
“Person” shall have the meaning given in Section
3(a)(9) of the Exchange Act, as modified and used in Sections 13(d)
and 14(d) thereof; provided, however,
that a Person shall not include (A) the Company or any of its
Subsidiaries; (B) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any of its
Subsidiaries; (C) an underwriter temporarily holding securities
pursuant to an offering of such securities; or (D) a corporation
owned, directly or indirectly, by the stockholders of the Company
in substantially the same proportion as their ownership of stock of
the Company.
Notwithstanding
the foregoing, (1) the Administrator may waive the requirement
described in paragraph (iv) above that a Person must acquire
more than 50% of the outstanding voting securities of the
Corporation for a Change in Control to have occurred if the
Administrator determines that the percentage acquired by a person
is significant (as determined by the Administrator in its
discretion) and that waiving such condition is appropriate in light
of all facts and circumstances, and (2) no compensation that has
been deferred for purposes of Section 409A of the Code shall be
payable as a result of a Change in Control unless the Change in
Control qualifies as a change in ownership or effective control of
the Corporation within the meaning of Section 409A of the
Code.
7.3 Early
Termination of Awards. Any award that has been accelerated
as required or permitted by Section 7.2 upon a Change in
Control (or would have been so accelerated but for Section 7.4
or 7.5) shall terminate upon such event, subject to any provision
that has been expressly made by the Administrator, through a plan
of reorganization or otherwise, for the survival, substitution,
assumption, exchange or other continuation of such award and
provided that, in the case of options and SARs that will not
survive, be substituted for, assumed, exchanged, or otherwise
continued in the transaction, the holder of such award shall be
given reasonable advance notice of the impending termination and a
reasonable opportunity to exercise his or her outstanding options
and SARs in accordance with their terms before the termination of
such awards (except that in no case shall more than ten days’
notice of accelerated vesting and the impending termination be
required and any acceleration may be made contingent upon the
actual occurrence of the event).
The
Administrator may make provision for payment in cash or property
(or both) in respect of awards terminated pursuant to this section
as a result of the Change in Control and may adopt such valuation
methodologies for outstanding awards as it deems reasonable and, in
the case of options, SARs or similar rights, and without limiting
other methodologies, may base such settlement solely upon the
excess if any of the per share amount payable upon or in respect of
such event over the exercise or base price of the
award.
7.4 Other
Acceleration Rules. Any acceleration of awards pursuant
to this Section 7 shall comply with applicable legal and stock
exchange requirements and, if necessary to accomplish the purposes
of the acceleration or if the circumstances require, may be deemed
by the Administrator to occur a limited period of time not greater
than 30 days before the event. Without limiting the generality
of the foregoing, the Administrator may deem an acceleration to
occur immediately prior to the applicable event and/or reinstate
the original terms of an award if an event giving rise to the
acceleration does not occur. Notwithstanding any other provision of
the Plan to the contrary, the Administrator may override the
provisions of Section 7.2, 7.3, and/or 7.5 by express
provision in the award agreement or otherwise. The portion of any
ISO accelerated pursuant to Section 7.2 or any other action
permitted hereunder shall remain exercisable as an ISO only to the
extent the applicable $100,000 limitation on ISOs is not exceeded.
To the extent exceeded, the accelerated portion of the option shall
be exercisable as a nonqualified stock option under the
Code.
7.5 Possible
Rescission of Acceleration. If the vesting of an award has been
accelerated expressly in anticipation of an event and the
Administrator later determines that the event will not occur, the
Administrator may rescind the effect of the acceleration as to any
then outstanding and unexercised or otherwise unvested
awards; provided,
that, in the case of any
compensation that has been deferred for purposes of Section 409A of
the Code, the Administrator determines that such
rescission will not likely result in the imposition of additional
tax or interest under Code Section 409A.
-11-
8.
|
OTHER PROVISIONS
|
8.1 Compliance
with Laws. This
Plan, the granting and vesting of awards under this Plan, the
offer, issuance and delivery of shares of Common Stock, the
acceptance of promissory notes and/or the payment of money under
this Plan or under awards are subject to compliance with all
applicable federal and state laws, rules and regulations (including
but not limited to state and federal securities law, federal margin
requirements) and to such approvals by any applicable stock
exchange listing, regulatory or governmental authority as may, in
the opinion of counsel for the Corporation, be necessary or
advisable in connection therewith. The person acquiring any
securities under this Plan will, if requested by the Corporation or
one of its Subsidiaries, provide such assurances and
representations to the Corporation or one of its Subsidiaries as
the Administrator may deem necessary or desirable to assure
compliance with all applicable legal and accounting
requirements.
8.2 Future
Awards/Other Rights. No person shall have any claim or
rights to be granted an award (or additional awards, as the case
may be) under this Plan, subject to any express contractual rights
(set forth in a document other than this Plan) to the
contrary.
8.3 No
Employment/Service Contract. Nothing contained in this Plan (or in
any other documents under this Plan or in any award) shall confer
upon any Eligible Person or other participant any right to continue
in the employ or other service of the Corporation or one of its
Subsidiaries, constitute any contract or agreement of employment or
other service or affect an employee’s status as an employee
at will, nor shall interfere in any way with the right of the
Corporation or one of its Subsidiaries to change a person’s
compensation or other benefits, or to terminate his or her
employment or other service, with or without
cause. Nothing in this Section 8.3, however, is
intended to adversely affect any express independent right of such
person under a separate employment or service contract other than
an award agreement.
8.4 Plan Not
Funded. Awards
payable under this Plan shall be payable in shares or from the
general assets of the Corporation, and no special or separate
reserve, fund or deposit shall be made to assure payment of such
awards. No participant, beneficiary or other person shall have any
right, title or interest in any fund or in any specific asset
(including shares of Common Stock, except as expressly otherwise
provided) of the Corporation or one of its Subsidiaries by reason
of any award hereunder. Neither the provisions of this Plan (or of
any related documents), nor the creation or adoption of this Plan,
nor any action taken pursuant to the provisions of this Plan shall
create, or be construed to create, a trust of any kind or a
fiduciary relationship between the Corporation or one of its
Subsidiaries and any participant, beneficiary or other person. To
the extent that a participant, beneficiary or other person acquires
a right to receive payment pursuant to any award hereunder, such
right shall be no greater than the right of any unsecured general
creditor of the Corporation.
8.5 Tax
Withholding. Upon
any exercise, vesting, or payment of any award, the Corporation or
one of its Subsidiaries shall have the right at its option
to:
(a)
require the participant (or the participant’s personal
representative or beneficiary, as the case may be) to pay or
provide for payment of at least the minimum amount of any taxes
which the Corporation or one of its Subsidiaries may be required to
withhold with respect to such award event or payment;
or
(b)
deduct from any amount otherwise payable in cash to the participant
(or the participant’s personal representative or beneficiary,
as the case may be) the minimum amount of any taxes which the
Corporation or one of its Subsidiaries may be required to withhold
with respect to such cash payment.
In
any case where a tax is required to be withheld in connection with
the delivery of shares of Common Stock under this Plan, the
Administrator may in its sole discretion (subject to
Section 8.1) grant (either at the time of the award or
thereafter) to the participant the right to elect, pursuant to such
rules and subject to such conditions as the Administrator may
establish, to have the Corporation reduce the number of shares to
be delivered by (or otherwise reacquire) the appropriate number of
shares, valued in a consistent manner at their Fair Market Value or
at the sales price in accordance with authorized procedures for
cashless exercises, necessary to satisfy the minimum applicable
withholding obligation on exercise, vesting or payment. In no event
shall the shares withheld exceed the minimum whole number of shares
required for tax withholding under applicable law.
-12-
8.6 Effective Date, Termination
and Suspension, Amendments.
8.6.1 Effective
Date and Termination. This Plan was approved by the Board
and became effective on [ ]. Unless earlier terminated
by the Board, this Plan shall terminate at the close of business on
[ ], 2026. After the termination of this Plan either upon such
stated expiration date or its earlier termination by the Board, no
additional awards may be granted under this Plan, but previously
granted awards (and the authority of the Administrator with respect
thereto, including the authority to amend such awards) shall remain
outstanding in accordance with their applicable terms and
conditions and the terms and conditions of this
Plan.
8.6.2 Board
Authorization. The
Board may, at any time, terminate or, from time to time, amend,
modify or suspend this Plan, in whole or in part. No awards may be
granted during any period that the Board suspends this
Plan.
8.6.3 Stockholder
Approval. To the
extent then required by applicable law or any applicable stock
exchange or required under Sections 162, 422 or 424 of the
Code to preserve the intended tax consequences of this Plan, or
deemed necessary or advisable by the Board, this Plan and any
amendment to this Plan shall be subject to stockholder
approval.
8.6.4 Amendments
to Awards. Without
limiting any other express authority of the Administrator under
(but subject to) the express limits of this Plan, the Administrator
by agreement or resolution may waive conditions of or limitations
on awards to participants that the Administrator in the prior
exercise of its discretion has imposed, without the consent of a
participant, and (subject to the requirements of Sections 3.2
and 8.6.5) may make other changes to the terms and conditions of
awards. Any amendment or other action that would constitute a
repricing of an award is subject to the limitations set forth in
Section 3.2(g).
8.6.5 Limitations
on Amendments to Plan and Awards. No amendment, suspension or
termination of this Plan or change of or affecting any outstanding
award shall, without written consent of the participant, affect in
any manner materially adverse to the participant any rights or
benefits of the participant or obligations of the Corporation under
any award granted under this Plan prior to the effective date of
such change. Changes, settlements and other actions contemplated by
Section 7 shall not be deemed to constitute changes or
amendments for purposes of this
Section 8.6.
8.7 Privileges
of Stock Ownership. Except as otherwise expressly
authorized by the Administrator or this Plan, a participant shall
not be entitled to any privilege of stock ownership as to any
shares of Common Stock not actually delivered to and held of record
by the participant. No adjustment will be made for dividends or
other rights as a stockholder for which a record date is prior to
such date of delivery.
8.8 Governing Law; Construction;
Severability.
8.8.1 Choice of
Law. This Plan, the
awards, all documents evidencing awards and all other related
documents shall be governed by, and construed in accordance with
the laws of the State of Delaware
8.8.2 Severability. If
a court of competent jurisdiction holds any provision invalid and
unenforceable, the remaining provisions of this Plan shall continue
in effect.
8.8.3 Plan
Construction.
(a) Rule 16b-3. It
is the intent of the Corporation that the awards and transactions
permitted by awards be interpreted in a manner that, in the case of
participants who are or may be subject to Section 16 of the
Exchange Act, qualify, to the maximum extent compatible with the
express terms of the award, for exemption from matching liability
under Rule 16b-3 promulgated under the Exchange Act.
Notwithstanding the foregoing, the Corporation shall have no
liability to any participant for Section 16 consequences of
awards or events under awards if an award or event does not so
qualify.
(b) Section 162(m). Awards
under Sections 5.1.4 through 5.1.7 to persons described in
Section 5.2 that are either granted or become vested,
exercisable or payable based on attainment of one or more
performance goals related to the Business Criteria, as well as
Qualifying Options and Qualifying SARs granted to persons described
in Section 5.2, that are approved by a committee composed
solely of two or more outside directors (as this requirement is
applied under Section 162(m) of the Code) shall be deemed to
be intended as performance-based compensation within the meaning of
Section 162(m) of the Code unless such committee provides
otherwise at the time of grant of the award. It is the further
intent of the Corporation that (to the extent the Corporation or
one of its Subsidiaries or awards under this Plan may be or become
subject to limitations on deductibility under Section 162(m)
of the Code) any such awards and any other Performance-Based Awards
under Section 5.2 that are granted to or held by a person
subject to Section 162(m) will qualify as performance-based
compensation or otherwise be exempt from deductibility limitations
under Section 162(m).
-13-
(c) Code
Section 409A Compliance. The Board intends that, except as may
be otherwise determined by the Administrator, any awards under the
Plan are either exempt from or satisfy the requirements of
Section 409A of the Code and related regulations and Treasury
pronouncements (“Section 409A”)
to avoid the imposition of any taxes, including additional income
or penalty taxes, thereunder. If the Administrator determines that
an award, award agreement, acceleration, adjustment to the terms of
an award, payment, distribution, deferral election, transaction or
any other action or arrangement contemplated by the provisions of
the Plan would, if undertaken, cause a participant’s award to
become subject to Section 409A, unless the Administrator
expressly determines otherwise, such award, award agreement,
payment, acceleration, adjustment, distribution, deferral election,
transaction or other action or arrangement shall not be undertaken
and the related provisions of the Plan and/or award agreement will
be deemed modified or, if necessary, rescinded in order to comply
with the requirements of Section 409A to the extent determined
by the Administrator without the content or notice to the
participant. Notwithstanding the foregoing, neither the Company nor
the Administrator shall have any obligation to take any action to
prevent the assessment of any excise tax or penalty on any
participant under Section 409A and neither the Company nor the
Administrator will have any liability to any participant for such
tax or penalty.
(d) No Guarantee of Favorable Tax
Treatment. Although
the Company intends that awards under the Plan will be exempt from,
or will comply with, the requirements of Section 409A of the
Code, the Company does not warrant that any award under the Plan
will qualify for favorable tax treatment under Section 409A of
the Code or any other provision of federal, state, local or foreign
law. The Company shall not be liable to any participant for any
tax, interest or penalties the participant might owe as a result of
the grant, holding, vesting, exercise or payment of any award under
the Plan
8.9 Captions. Captions
and headings are given to the sections and subsections of this Plan
solely as a convenience to facilitate reference. Such headings
shall not be deemed in any way material or relevant to the
construction or interpretation of this Plan or any provision
thereof.
8.10 Stock-Based
Awards in Substitution for Stock Options or Awards Granted by Other
Corporation. Awards
may be granted to Eligible Persons in substitution for or in
connection with an assumption of employee stock options, SARs,
restricted stock or other stock-based awards granted by other
entities to persons who are or who will become Eligible Persons in
respect of the Corporation or one of its Subsidiaries, in
connection with a distribution, arrangement, business combination,
merger or other reorganization by or with the granting entity or an
affiliated entity, or the acquisition by the Corporation or one of
its Subsidiaries, directly or indirectly, of all or a substantial
part of the stock or assets of the employing entity. The awards so
granted need not comply with other specific terms of this Plan,
provided the awards reflect only adjustments giving effect to the
assumption or substitution consistent with the conversion
applicable to the Common Stock in the transaction and any change in
the issuer of the security. Any shares that are delivered and any
awards that are granted by, or become obligations of, the
Corporation, as a result of the assumption by the Corporation of,
or in substitution for, outstanding awards previously granted by an
acquired company (or previously granted by a predecessor employer
(or direct or indirect parent thereof) in the case of persons that
become employed by the Corporation or one of its Subsidiaries in
connection with a business or asset acquisition or similar
transaction) shall not be counted against the Share Limit or other
limits on the number of shares available for issuance under this
Plan, except as may otherwise be provided by the Administrator at
the time of such assumption or substitution or as may be required
to comply with the requirements of any applicable stock
exchange.
8.11 Non-Exclusivity
of Plan. Nothing in
this Plan shall limit or be deemed to limit the authority of the
Board or the Administrator to grant awards or authorize any other
compensation, with or without reference to the Common Stock, under
any other plan or authority.
8.12 No
Corporate Action Restriction. The existence of this Plan, the award
agreements and the awards granted hereunder shall not limit, affect
or restrict in any way the right or power of the Board or the
stockholders of the Corporation to make or authorize: (a) any
adjustment, recapitalization, reorganization or other change in the
capital structure or business of the Corporation or any Subsidiary,
(b) any merger, arrangement, business combination,
amalgamation, consolidation or change in the ownership of the
Corporation or any Subsidiary, (c) any issue of bonds,
debentures, capital, preferred or prior preference stock ahead of
or affecting the capital stock (or the rights thereof) of the
Corporation or any Subsidiary, (d) any dissolution or
liquidation of the Corporation or any Subsidiary, (e) any sale
or transfer of all or any part of the assets or business of the
Corporation or any Subsidiary, or (f) any other corporate act
or proceeding by the Corporation or any Subsidiary. No participant,
beneficiary or any other person shall have any claim under any
award or award agreement against any member of the Board or the
Administrator, or the Corporation or any employees, officers or
agents of the Corporation or any Subsidiary, as a result of any
such action.
8.13 Other
Corporation Benefit and Compensation Programs. Payments and other benefits received
by a participant under an award made pursuant to this Plan shall
not be deemed a part of a participant’s compensation for
purposes of the determination of benefits under any other employee
welfare or benefit plans or arrangements, if any, provided by the
Corporation or any Subsidiary, except where the Administrator
expressly otherwise provides or authorizes in writing or except as
otherwise specifically set forth in the terms and conditions of
such other employee welfare or benefit plan or arrangement. Awards
under this Plan may be made in addition to, in combination with, as
alternatives to or in payment of grants, awards or commitments
under any other plans or arrangements of the Corporation or its
Subsidiaries.
8.14 Prohibition
on Repricing. Subject to Section 4, the
Administrator shall not, without the approval of the stockholders
of the Corporation (i) reduce the exercise price, or cancel and
reissue options so as to in effect reduce the exercise price or
(ii) change the manner of determining the exercise price so that
the exercise price is less than the fair market value per share of
Common Stock.
As adopted by the Board of Directors of Majesco Entertainment
Company on [ ], 2016.
-14-