EXHIBIT 10.1
VIPER MOTORCYCLE COMPANY 2004 STOCK PLAN
Adopted by the Board of Directors on: FEBRUARY 23, 2004
Approved by the Shareholders on: MARCH 8, 2004
Termination Date of Plan: FEBRUARY 22, 2014
TABLE OF CONTENTS
SECTION 1. General Purpose of Plan; Definitions .......................... 1
1.1 Agreement ..................................................... 1
1.2 Board ......................................................... 1
1.3 Cause ......................................................... 1
1.4 Change in Control ............................................. 1
1.5 Code .......................................................... 3
1.6 Committee ..................................................... 3
1.7 Company 3
1.8 Consultant .................................................... 3
1.9 Disability .................................................... 3
1.10 Event ......................................................... 3
1.11 Fair Market Value ............................................. 3
1.12 Incentive Option .............................................. 4
1.13 Non-Employee Director ......................................... 4
1.14 Non-Qualified Option .......................................... 4
1.15 Outside Director .............................................. 4
1.16 Option ........................................................ 5
1.17 Parent Corporation ............................................ 5
1.18 Retirement .................................................... 5
1.19 Stock ......................................................... 5
1.20 Subsidiary .................................................... 5
SECTION 2 Administration ................................................ 5
2.1 Grant of Authority ............................................ 5
2.2 Powers. 5
2.3 Delegation of Authority ....................................... 6
2.4 Rule Making and Interpretations ............................... 6
2.5 Modification to Options ....................................... 6
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2.6 Substitute Options ............................................ 7
SECTION 3 Stock Subject to Plan ......................................... 7
3.1 Shares Reserved for Issuance .................................. 7
3.2 Adjustments ................................................... 7
SECTION 4 Eligibility ................................................... 8
4.1 Eligible Optionees ............................................ 8
4.2 Eligibility for Incentive Stock Options ....................... 8
SECTION 5 Terms and Conditions of Options ............................... 8
5.1 Types of Options .............................................. 8
5.2 Limit on Option Grants ........................................ 8
5.3 Annual Limit on Incentive Options ............................. 8
5.4 Option Exercise Price ......................................... 9
5.5 Option Term ................................................... 9
5.6 Exercisability ................................................ 9
5.7 Method of Exercise ............................................ 9
5.8 Tax Withholding ............................................... 10
5.9 Transferability of Options .................................... 10
5.10 Termination by Death or Disability ............................ 11
5.11 Termination by Reason of Retirement ........................... 11
5.12 Other Termination ............................................. 12
5.13 Effect of Transfer/Leave of Absence ........................... 12
SECTION 6 Change in Control and Occurrence of an Event .................. 12
6.1 Acceleration of Exercise of Option ............................ 12
6.2 Dissolution, Liquidation, and Xxxxxx .......................... 12
SECTION 7 Amendments and Termination .................................... 13
SECTION 8 General Provisions ............................................ 14
8.1 Compliance With Laws .......................................... 14
8.2 No Rights to Employment ....................................... 14
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8.3 Governing Law ................................................. 14
8.4 Repurchase Right .............................................. 15
8.5 Restrictions on Transfer ...................................... 15
8.6 Forfeiture for Competition .................................... 15
8.7 Recovery of Profits for Termination for Cause or Competition .. 16
SECTION 9 Effective Date of Plan ........................................ 16
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VIPER MOTORCYCLE COMPANY 2004 STOCK PLAN
SECTION 1. General Purpose of Plan; Definitions.
The name of this plan is the Viper Motorcycle Company 2004 Stock Option
Plan (the "Plan"). The purpose of the Plan is to enable Viper Motorcycle Company
(the "Company") and its Subsidiaries to retain and attract executives, other
employees, members of the Board of Directors, and Consultants who contribute to
the Company's success by their ability, ingenuity and industry, and to enable
such individuals to participate in the long-term success and growth of the
Company by giving them a proprietary interest in the Company.
For purposes of the Plan, the following terms shall be defined as set
forth below:
1.1 "AGREEMENT" means an agreement by and between the Company and an
Optionee under the Plan setting forth the terms and conditions of the Option.
1.2 "BOARD" means the Board of Directors of the Company as it may be
comprised from time to time.
1.3 "CAUSE" means, except as may otherwise be provided in the terms of
the Option Agreement or in a written employment agreement between the Company
and the Optionee, a material breach of any written employment agreement between
the Company and the Optionee, a material breach of any code of conduct
established by the Company, a felony conviction of a Optionee or the failure of
an Optionee to contest prosecution for a felony, or an Optionee's willful
misconduct or dishonesty, any of which, in the judgment of the Company, is
directly and materially harmful to the business or reputation of the Company
1.4 "CHANGE IN CONTROL" means, except as may otherwise be provided in
the terms of the Option Agreement or in a written employment agreement between
the Company and the Optionee, any of the following:
(a) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934) acquires or becomes a
"beneficial owner" (as defined in Rule 13d-3 or any successor rule under
the Exchange Act), directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of the Stock,
provided, however, that the following shall not constitute a Change in
Control pursuant to this subsection 1.4(a):
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(i) any acquisition of Stock of the Company directly
from the Company other than in connection with a transaction
described in Section 1(d)(iii) below;
(ii) any acquisition or beneficial ownership by the
Company or a subsidiary;
(iii) any acquisition or beneficial ownership by any
employee benefit plan (or related trust) sponsored or maintained
by the Company or one or more of its subsidiaries;
(iv) any acquisition or beneficial ownership by any
corporation with respect to which, immediately following such
acquisition, more than 50% of both the combined voting power of
the Company's then outstanding Stock of the Company is then
beneficially owned, directly or indirectly, by all or
substantially all of the persons who beneficially owned Stock of
the Company immediately prior to such acquisition in substantially
the same proportions as their ownership of such Stock, as the case
may be, immediately prior to such acquisition;
(b) A majority of the members of the Board of the Company shall
not be Continuing Directors. "Continuing Directors" means:
(i) individuals who, on the date hereof, are directors
of the Company,
(ii) individuals elected as directors of the Company
subsequent to the date hereof for whose election proxies shall
have been solicited by the Board or
(iii) any individual elected or appointed by the Board to
fill vacancies on the Board caused by death or resignation (but
not by removal) or to fill newly-created directorships.
(c) Approval by the stockholders of the Company of a
reorganization, merger or consolidation of the Company or a statutory
exchange of outstanding Stock of the Company, unless, immediately
following such reorganization, merger, consolidation or exchange, all or
substantially all of the persons who were the beneficial owners,
respectively, of Stock of the Company immediately prior to such
reorganization, merger, consolidation or exchange beneficially own,
directly or indirectly, more than 50% of, respectively, the combined
voting power of the then outstanding stock entitled to vote generally in
the election of directors and the then outstanding shares of common
stock, as the case may be, of the corporation resulting from such
reorganization, merger, consolidation or exchange in substantially the
same proportions as their ownership, immediately prior to such
reorganization, merger, consolidation or exchange, of the stock of the
Company entitled to vote for directors, as the case may be; or
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(d) Approval by the stockholders of the Company of (i) a
complete liquidation or dissolution of the Company or (ii) the sale or
other disposition of all or substantially all of the assets of the
Company (in one or a series of transactions), other than to a corporation
with respect to which, immediately following such sale or other
disposition, more than 50% of, respectively, the combined voting power of
the then outstanding voting securities of such corporation entitled to
vote generally in the election of directors and the then outstanding
shares of common stock of such corporation is then beneficially owned,
directly or indirectly, by all or substantially all of the persons who
were the beneficial owners, respectively, of the Voting Securities and
Stock of the Company immediately prior to such sale or other disposition
in substantially the same proportions as their ownership, immediately
prior to such sale or other disposition, of the stock of the Company
entitled to vote for directors, as the case may be.
1.5 "CODE" means the Internal Revenue Code of 1986, as amended from
time to time, or any successor statute.
1.6 "COMMITTEE" means the Committee referred to in Section 2 of the
Plan. If at any time no Committee shall be in office, then the functions of the
Committee specified in the Plan shall be exercised by the Board, unless the Plan
specifically states otherwise.
1.7 "COMPANY" means Viper Motorcycle Company, a corporation organized
under the laws of the State of Minnesota (or any successor corporation).
1.8 "CONSULTANT" means any natural person providing bona fide services
to the Company or a Parent Corporation or a Subsidiary of the Company (other
than persons either providing services in connection with the offer or sale of
securities in a capital raising transaction or directly or indirectly promoting
or maintaining a market for the Company's Stock), who is compensated for such
services and who is not an employee of the Company or any Parent Corporation or
Subsidiary of the Company. A Non-Employee Director may serve as a Consultant.
1.9 "DISABILITY" means, except as may otherwise be provided in the
terms of the Option Agreement or in a written employment agreement between the
Company and the Optionee, permanent and total disability as determined by the
Committee.
1.10 "EVENT" means the actual effective date of (a) a transaction
described in Sections 1(d)(i), 1(d)(ii), and 1(d)(iii), without regard to the
exception contained therein.
1.11 "FAIR MARKET VALUE" of Stock on any given date shall be determined
by the Committee as follows:
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(a) if the Stock is listed for trading on one of more national
securities exchanges, or is traded on the Nasdaq Stock Market (including
the Nasdaq Small Cap Market), the last reported sales price on such
national securities exchange or the Nasdaq Stock Market on the day prior
to the date in question, or if such Stock shall not have been traded on
such principal exchange on such date, the last reported sales price on
such principal exchange on the first day prior thereto on which such
Stock was so traded; or
(b) if the Stock is not listed for trading on a national
securities exchange or the Nasdaq Stock Market, but is traded in the
over-the-counter market, including the Nasdaq OTC Bulletin Board, the
closing bid price for such Stock on day prior to the date in question, or
if there is no closing bid price for such Stock on such date, the closing
bid price on the first day prior thereto on which such price existed; or
(c) if neither (a) nor (b) is applicable, by any means fair and
reasonable by the Committee, which determination shall be final and
binding on all parties.
1.12 "INCENTIVE OPTION" means any Option intended to be and designated
as an "Incentive Option" within the meaning of Section 422 of the Code.
1.13 "NON-EMPLOYEE DIRECTOR" means a non-employee director within the
meaning of Rule 16b-3(b)(3) under the Securities Exchange Act of 1934.
1.14 "NON-QUALIFIED OPTION" means any Option that is not an Incentive
Option, and is intended to be and is designated as a "Non-Qualified Option."
1.15 "OUTSIDE DIRECTOR" means a Director who:
(a) is not a CURRENT employee of the Company or any member of
an affiliated group which includes the Company;
(b) is not a FORMER employee of the Company who receives
compensation for prior services (other than benefits under a
tax-qualified retirement plan) during the taxable year;
(c) has not been an officer of the Company;
(d) does not receive remuneration from the Company, either
directly or indirectly, in any capacity other than as a director, except
as otherwise permitted under Section 162(m) of the Code and regulations
thereunder. For this purpose, remuneration includes any payment in
exchange for goods or services.
This definition shall be further governed by the provisions of Section 162(m) of
the Code and regulations promulgated thereunder.
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1.16 "OPTION" means any Option to purchase shares of Stock granted
pursuant to Section 5 below.
1.17 "PARENT CORPORATION" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company if each of
the corporations (other than the Company) owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one of the other
corporations in the chain.
1.18 "RETIREMENT" means, except as may otherwise be provided in the
terms of the Option Agreement or in a written employment agreement between the
Company and the Optionee, a Optionee's date of termination which is designated
by the Committee as a "retirement" for purposes of the Plan. If no designation
is made, Retirement means retirement from active employment with the Company or
any Subsidiary or Parent Corporation of the Company on or after age 65.
1.19 "STOCK" means the Common Stock, no par value per share, of the
Company.
1.20 "SUBSIDIARY" means any corporation (other than the Company),
foreign or domestic, in an unbroken chain of corporations beginning with the
Company if each of the corporations (other than the last corporation in the
unbroken chain) owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in the chain.
SECTION 2. ADMINISTRATION.
2.1 GRANT OF AUTHORITY. The Plan shall be administered by the Board or
by a Committee appointed by the Board consisting of at least three members of
the Board of Directors. At such time as the Company becomes subject to the
reporting requirements of the Securities Exchange Act of 1934, and regulations
promulgated thereunder, all of the members of the Committee shall be
Non-Employee Directors and at such time as the Company is subject to the limits
under Section 162(m) of the Code, and regulations promulgated thereunder, all of
the members of the Committee shall be Outside Directors, each of whom shall
serve at the pleasure of the Board. Any or all of the functions of the Committee
specified in the Plan may be exercised by the Board, except for Options intended
to comply with regulations under Section 162(m) of the Code and regulations
promulgated thereunder.
2.2 POWERS. The Committee shall have the power and authority to grant
Options to eligible Optionees pursuant to the terms of the Plan. In particular,
the Committee shall have the authority:
(a) to select Optionees to whom Options may from time to time
be granted hereunder;
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(b) to determine whether and to what extent Incentive Options,
Non-Qualified Options, or a combination of the foregoing, are to be
granted hereunder;
(c) to determine the number of shares to be covered by each
such award granted hereunder;
(d) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder (including,
but not limited to, any restriction on any Option and/or the shares of
Stock relating thereto) PROVIDED, HOWEVER, that in the event of an
applicable corporate transaction, the applicable provisions of Section
5(c) of the Plan shall govern the acceleration of the vesting of any
Option.; and
(e) to make any other determination and take any other action
that the Committee deems necessary or desirable for the administration of
the plan.
2.3 DELEGATION OF AUTHORITY. Except to the extent prohibited by
applicable law or the applicable rules of a stock exchange, the Committee may
delegate to the chief executive officer of the Company the authority to exercise
the powers specified in Section 2.2 above; provided, however, that from and
after the date that the Company is subject to the limits under Section 162(m) of
the Code, and regulations promulgated thereunder, such authority shall not be
exercised by the chief executive officer with respect to persons who are either
the chief executive officer of the Company or the four highest paid officers of
the Company other than the chief executive officer.
2.4 RULE MAKING AND INTERPRETATIONS. The Committee shall have the
authority to adopt, alter and repeal such administrative rules, guidelines and
practices governing the Plan as it shall, from time to time, deem advisable; to
interpret the terms and provisions of the Plan and any award issued under the
Plan (and any agreements relating thereto); and to otherwise supervise the
administration of the Plan. Except as provided in the next sentence, the
Committee shall interpret and administer the Plan and any Incentive Options in a
manner consistent with the requirements under Section 422 of the Code. The
preceding sentence shall not preclude any modification or amendment to an
outstanding Incentive Option, whether or not such modification or amendment
results in disqualification of such Option as an Incentive Option, provided the
Optionee consents in writing to the modification or amendment. All decisions
made by the Committee pursuant to the provisions of the Plan shall be final and
binding on all persons, including the Company and all Optionees.
2.5 MODIFICATION TO OPTIONS. The Committee may amend the terms of any
Option theretofore granted, prospectively or retroactively, to the extent such
amendment is consistent with the terms of the Plan, but no such amendment shall
impair the rights of any Optionee without his or her consent except to the
extent authorized under the Plan. Except for adjustments pursuant to Section 3
(relating to the adjustment of Stock), no Option may be amended to reduce
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its initial exercise price and no Option may be canceled and replaced with a
Option having a lower exercise price without the approval of the Company's
shareholders. The provisions of this subsection (relating to Option repricing)
cannot be amended unless the amendment is approved by the Company's
shareholders.
2.6 SUBSTITUTE OPTIONS. Options may be granted under this Plan from
time to time in substitution for stock Options held by employees of other
corporations who are about to become employees of the Company, or any parent or
subsidiary thereof, or whose employer is about to become a subsidiary of the
Company, as the result of a merger or consolidation of the Company or a
subsidiary of the Company with another corporation, the acquisition by the
Company or a subsidiary of the Company of all or substantially all the assets of
another corporation or the acquisition by the Company or a subsidiary of the
Company of at least 50% of the issued and outstanding stock of another
corporation. The terms and conditions of the substitute Option so granted may
vary from the terms and conditions set forth in this Plan to such extent as the
Board of the Company at the time of the grant may deem appropriate to conform,
in whole or in part to the provisions of the stock Options in substitution for
which they are granted, but with respect to stock Options which are incentive
stock Options, no such variation shall be permitted which affects the status of
any such substitute Option as an incentive stock Option without the consent of
the optionee.
SECTION 3. STOCK SUBJECT TO PLAN.
3.1 SHARES RESERVED FOR ISSUANCE. The total number of shares of Stock
reserved and available for distribution under the Plan shall be 495,000. Such
shares shall consist of authorized and unissued shares of Stock of the Company.
If any shares become available as a result of canceled, unexercised,
lapsed or terminated Options under this Plan, such shares shall again be
available for distribution in connection with future awards under the Plan. Upon
a stock-for-stock exercise of a Option or upon the withholding of stock for the
payment of the Option price or taxes, only the net number of shares issued to
the Optionee shall be used to calculate the number of shares remaining available
for distribution under the Plan.
3.2 ADJUSTMENTS. The grant of a Option pursuant to the Plan shall not
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, exchange or consolidate or to dissolve, liquidate or
transfer all or any part of its business or assets.
In the event of a corporate transaction involving the Company (including,
without limitation, any merger, reorganization, consolidation, recapitalization,
stock dividend, stock split, other change in corporate structure affecting the
Stock, or spin-off or other distribution of assets to stockholders) or other
event affecting the Stock which would be reasonably likely to result in the
diminution or enlargement of any of the benefits intended to be made available
under the
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Plan or an Option, the Committee shall adjust the aggregate number of shares
reserved for issuance under the Plan, and the number and Option price of shares
subject to outstanding Options granted under the Plan, and make any other
adjustments determined to be appropriate by the Committee, in its sole
discretion, to reflect such change, provided that the number of shares subject
to any award shall always be a whole number.
SECTION 4. ELIGIBILITY.
4.1 ELIGIBLE OPTIONEES. Officers, other employees of the Company and
its Subsidiaries, members of the Board, and Consultants who are responsible for
or contribute to the management, growth and/or profitability of the business of
the Company and its Subsidiaries are eligible to be granted Options under the
Plan. Eligible persons to be granted Options under the Plan shall be selected
from time to time by the Committee, in its sole discretion, from among those
eligible, and the Committee shall determine, in its sole discretion, the number
of shares of stock covered by each award.
4.2 ELIGIBILITY FOR INCENTIVE STOCK OPTIONS. The Committee shall have
the authority to grant Incentive Options only to persons who are employees of
the Company, any Subsidiary or Parent Corporation and to grant Non-Qualified
Options to employees, Directors and Consultants. To the extent that any Option
or portion of an Option does not qualify as an Incentive Option, it shall
constitute a separate Non-Qualified Option.
SECTION 5. TERMS AND CONDITIONS OF OPTIONS. Options granted under the Plan
shall be subject to the following terms and conditions and shall contain such
additional terms and conditions, not inconsistent with the terms of the Plan, as
the Committee shall deem desirable:
5.1 TYPES OF OPTIONS. Each Option shall be evidenced by a written
Agreement, in such form as the Committee may approve from time to time, which
shall be subject to the provisions of this Plan and to such other terms and
conditions as the Committee may deem appropriate. The Options granted under the
Plan may be of two types: (a) Incentive Options, and (b) Non-Qualified Options.
No Incentive Option may be issued more than 10 years after the earlier of the
date the Plan is adopted by the Board or is approved by the shareholders.
5.2 LIMIT ON OPTION GRANTS. Limitation under Section 162(m) of the
Code. Notwithstanding anything in the Plan to the contrary, from and after the
date that the Company is subject to the limits under Section 162(m) of the Code,
and regulations promulgated thereunder, no person shall receive grants of
Options under this Plan that exceed 100,000 shares of Stock during any fiscal
year of the Company.
5.3 ANNUAL LIMIT ON INCENTIVE OPTIONS. The aggregate Fair Market Value
(determined as of the time the Option is granted) of the Stock with respect to
which an Incentive Option under this Plan or any other plan of the Company and
any Subsidiary or Parent
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Corporation is exercisable for the first time by a person during any calendar
year shall not exceed $100,000.
5.4 OPTION EXERCISE PRICE. The Option exercise price per share of
Stock purchasable under a Option shall be determined by the Committee at the
time of grant, except that:
(a) except as provide below, the exercise price of an Incentive
Option shall not be less than 100% of the Fair Market Value of the Stock
on the date of grant of such Option; and
(b) the exercise price of a Non Qualified Option shall not be
less than 50%. of the Fair Market Value of the Stock of the Company as of
the date of the grant of such Option.
If an employee owns or is deemed to own (by reason of the attribution
rules applicable under Section 424(d) of the Code) more than 10% of the combined
voting power of all classes of capital stock of the Company or any Parent
Corporation or Subsidiary and an Incentive Option is granted to such employee,
the Option exercise price shall not be less than 110% of the Fair Market Value
of the Stock on the date of grant of such Option.
5.5 OPTION TERM. The term of each Option shall be fixed by the
Committee, but no Incentive Option shall be exercisable more than ten years
after the date the Option is granted. In the event that the Committee does not
fix the term of a Option, the term shall be ten years from the date the Option
is granted, subject to earlier termination as otherwise provided herein.
Notwithstanding the foregoing, if an employee owns or is deemed to own (by
reason of the attribution rules of Section 424(d) of the Code) more than 10% of
the combined voting power of all classes of capital stock of the Company or any
Parent Corporation or Subsidiary and an Incentive Option is granted to such
employee, the term of such Option shall be no more than five years from the date
of grant of such Option.
5.6 EXERCISABILITY. Options shall be exercisable in accordance with
such terms and conditions and during such periods as determined by the Committee
at or after grant, subject to the restrictions stated in Section 5.3 above. In
the event that the Committee does not determine the time at which a Option shall
be exercisable, such Option shall be exercisable one year after the date of
grant subject to earlier termination otherwise provided herein. If the Committee
provides, in its discretion, that any Option is exercisable only in
installments, the Committee may waive such installment exercise provisions at
any time.
5.7 METHOD OF EXERCISE. Options may be exercised in whole or in part
at any time during the Option term by giving written notice of exercise to the
Company, specifying the number of shares of Stock to be purchased. Such notice
shall be accompanied by payment in full of the purchase price, either by
certified or bank check, delivery of irrevocable instructions to a broker
acceptable to the Company to promptly deliver to the Company the amount of sale
or loan
9
proceeds to pay the entire exercise price and any tax withholding resulting from
such exercise or by any other form of legal consideration deemed sufficient by
the Committee and consistent with the Plan's purpose and applicable law,
including promissory notes (except to the extent prohibited by law or SEC rule).
As determined by the Committee at the time of grant or exercise, in its sole
discretion, payment in full or in part may also be made by tendering, by either
actual delivery of shares or attestation, shares of Stock already owned by the
Optionee and valued at Fair Market Value (which, in the case of Stock acquired
upon exercise of an Option, have been owned for more than six months on the date
of surrender); PROVIDED, HOWEVER, that, in the case of an Incentive Option, the
right to make a payment in the form of already owned shares may be authorized
only at the time the Option is granted. No shares of Stock shall be issued until
full payment therefor has been made. An Optionee shall generally have the rights
to dividends and other rights of a shareholder with respect to shares subject to
the Option only after the person has given written notice of exercise, has paid
in full for such shares, and, if requested, has given the representation
described in Section 9.1.
5.8 TAX WITHHOLDING. Each Optionee shall, no later than the date as of
which any part of the value of an award first becomes includable as compensation
in the gross income of the Optionee for federal income tax purposes, pay to the
Company, or make arrangements satisfactory to the Committee regarding payment
of, any federal, state, or local taxes of any kind required by law to be
withheld with respect to the award. The obligations of the Company under the
Plan shall be conditional on such payment or arrangements and the Company, any
Parent Corporation, and any Subsidiary shall, to the extent permitted by law,
have the right to deduct any such taxes from any payment of any kind otherwise
due to the Optionee. If the terms of a Option so permit, an Optionee may elect
by written notice to the Company to satisfy part or all of the withholding tax
requirements associated with the award by (i) authorizing the Company to retain
from the number of shares of Stock that would otherwise be deliverable to the
Optionee, or (ii) delivering to the Company from shares of Stock already owned
by the Optionee, that number of shares having an aggregate Fair Market Value
equal to part or all of the tax payable by the Optionee under this Section, and
in the event shares are withheld, the amount withheld shall not exceed the
minimum required federal, state and FICA withholding amount. Any such election
shall be in accordance with, and subject to, applicable tax and securities laws,
regulations and rulings.
5.9 TRANSFERABILITY OF OPTIONS.
(a) No Incentive Option shall be transferable by the Optionee
otherwise than by will or by the laws of descent and distribution, and
all Incentive Options shall be exercisable, during the Optionee's
lifetime, only by the Optionee.
(b) The Committee may, in its discretion, authorize all or a
portion of any Nonqualified Options to be granted to an Optionee to be on
terms which permit transfer by such Optionee to
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(i) the spouse, children or grandchildren of the
Optionee ("Immediate Family Members"),
(ii) a trust or trusts for the exclusive benefit of such
Immediate Family Members, or
(iii) a partnership or partnerships in which such
Immediate Family Members are the only partners, provided that (A)
there may be no consideration for any such transfer, (B) the
Option pursuant to which such Options are granted must be approved
by the Committee, and must expressly provide for transferability
in a manner consistent with this subsection 5.9(b), and (c)
subsection transfers of transferred Options shall be prohibited
except those in accordance with this Section 5.9(b).
Following transfer, any such Options shall continue to be subject
to the same terms and conditions as were applicable immediately prior to
transfer, provided that the term "Optionee" herein shall in such event be
deemed to refer to the transferee, except that the events of termination
of employment and the provisions of Sections 5.10, 5.11 and 5.12 hereof
shall continue to be applied with respect to the original Optionee,
following which the Options shall be exercisable by the transferee only
to the extent, and for the periods specified in such Sections.
5.10 TERMINATION BY DEATH OR DISABILITY. Unless the Option Agreement
provides otherwise or the Committee determines, if an Optionee's employment by
the Company or any Subsidiary or Parent Corporation terminates by reason of
death or Disability, the Option may thereafter be exercised, to the extent it
was exercisable at the time of death or Disability (or on such accelerated basis
as the Committee shall determine at or after grant), by the Optionee or the
legal representative of the estate or by the legatee of the Optionee under the
will of the Optionee, but may not be exercised after three years from the date
of such Disability or death or the expiration of the stated term of the Option,
whichever period is shorter. In the event of termination of employment by reason
of death or Disability, if an Incentive Option is exercised after the expiration
of the exercise periods that apply for purposes of Section 422 of the Code, the
Option will thereafter be treated as a Non-Qualified Option.
5.11 TERMINATION BY REASON OF RETIREMENT. Unless the Option Agreement
provides otherwise or the Committee determines, if an Optionee's employment by
the Company or any Subsidiary or Parent Corporation terminates by reason of
Retirement, any Option held by such Optionee may thereafter be exercised, to the
extent it was exercisable by the Optionee at the time of such Retirement, but
may not be exercised after three years from the date of such Retirement or the
expiration of the stated term of the Option, whichever period is shorter. In the
event of termination of employment by reason of Retirement, if an Incentive
Option is exercised after the expiration of the exercise periods that apply for
purposes of Section 422 of the Code, the Option will thereafter be treated as a
Non-Qualified Option.
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5.12 OTHER TERMINATION. Unless the Option Agreement provides otherwise
or the Committee determines:
(a) if an Optionee's employment by the Company and any
Subsidiary or Parent Corporation terminates for any reason other than
death, Disability-Retirement, or as provided in Section 5(l)(ii), the
Option shall thereupon immediately terminate; and
(b) if the Optionee is involuntarily terminated without Cause
by the Company and any Subsidiary or Parent Corporation, the Option may
thereafter be exercised to the extent it was exercisable at the time of
such termination for three months from the date of such termination or
the expiration of the stated Option's term, whichever period is shorter.
5.13 EFFECT OF TRANSFER/LEAVE OF ABSENCE. For purposes of the Plan, the
following events shall not be deemed a termination of employment:
(a) a transfer of an employee from the Company to a Parent
Corporation or a Subsidiary, or a transfer of an employee from a Parent
Corporation or a Subsidiary to the Company or any other Parent
Corporation or Subsidiary;
(b) a leave of absence, approved in writing by the Committee,
for military service or sickness, or for any other purpose approved by
the Company if the period of such leave does not exceed ninety (90) days
(or such longer period as the Committee may approve, in its sole
discretion); and
(c) a leave of absence in excess of ninety (90) days, approved
in writing by the Committee, but only if the employee's right to
reemployment is guaranteed either by a statute or by contract, and
provided that, in the case of any leave of absence, the employee returns
to work within 30 days after the end of such leave.
SECTION 6. CHANGE IN CONTROL AND OCCURRENCE OF AN EVENT.
6.1 ACCELERATION OF EXERCISE OF OPTION. Unless the Option Agreement
provides otherwise, any Option granted under this Plan shall be exercisable in
full, without regard to any installment exercise or vesting provisions, upon the
occurrence of a Change in Control
6.2 DISSOLUTION, LIQUIDATION, AND MERGER. Upon an Event, the Committee
may, but shall not be obligated to, either:
(a) if the Event is a merger, consolidation or statutory share
exchange, make appropriate provision for the protection of outstanding
Options granted under this Plan by the substitution, in lieu of such
Options, of Options to purchase appropriate voting
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common stock (the "Survivor's Stock") of the corporation surviving any
such merger or consolidation or, if appropriate, the parent corporation
of the Company or such surviving corporation, or, alternatively, by the
delivery of a number of shares of the survivor's Stock which has a Fair
Market Value as of the effective date of such merger, consolidation or
statutory share exchange equal to the product of (i) the excess of (A)
the Event Proceeds per Share (as hereinafter defined) covered by the
Option as of such effective date over (B) the exercise price per share of
the Stock subject to such Option, times (ii) the number of shares of
Stock covered by such Option, or
(b) declare, at least twenty days prior to the Event, and
provide written notice to each Optionee of the declaration, that each
outstanding Option, whether or not then exercisable, shall be cancelled
at the time of, or immediately prior to the occurrence of, the event
(unless it shall have been exercised prior to the occurrence of the
Event).
In connection with any declaration pursuant to this subsection 6.2(b),
the Committee may, but shall not be obligated to, cause payment to be made,
within twenty days after the Event, in exchange for each cancelled Option to
each holder of an Option that is cancelled, of cash equal to the amount (if
any), for each share of Stock covered by the cancelled Option, by which the
Event Proceeds per Share exceeds the exercise price per share of Stock covered
by such Option. At the time of any declaration pursuant to this subsection
6.2(b), each Option that has not previously expired shall immediately become
exercisable in full and each holder of an Option shall have the right, during
the period preceding the time of cancellation of the Option, to exercise his or
her Option as to all or any part of the Stock covered thereby.
In the event of a declaration pursuant to this subsection 6.2(b), each
outstanding Option granted pursuant to this Plan that shall not have been
exercised prior to the Event shall be cancelled at the time of, or immediately
prior to, the Event, as provided in the declaration, and this Plan shall
terminate at the time of such cancellation, subject to the payment obligations
of the Company provided in this subsection 6.2(b). In addition, in the event of
the proposed dissolution or liquidation of the Company, the Committee may
provide that any right of the Company to repurchase shares received upon
exercise of an Option shall lapse as to all such Stock, provided that the
proposed dissolution or liquidation takes place at the time and in the manner
provided.
For purposes of this subsection 6.2(b), "Event Proceeds per Share" shall
mean the cash plus the fair market value, as determined in good faith by the
Committee, of the non-cash consideration to be received per share of Stock by
the stockholders of the Company upon the occurrence of the Event.
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SECTION 7. AMENDMENTS AND TERMINATION.
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made which would impair the rights of an
Optionee or Optionee under a Option award theretofore granted, without the
Optionee's or Optionee's consent, or which, without the approval of the
shareholders of the Company, would cause the Plan no longer to comply with Rule
16b-3 under the Securities Exchange Act of 1934, Section 422 of the Code, or the
rules of the Nasdaq Stock Market or any stock exchange upon which the Shares are
then traded, or any other regulatory requirements. Adjustments made by the
Committee pursuant to Section 3 (relating to adjustments of Stock) shall not be
subject to the limitations of this Section 7.
SECTION 8. GENERAL PROVISIONS.
8.1 COMPLIANCE WITH LAWS. No shares of Stock will be issued pursuant
to the Plan unless in compliance with applicable legal requirements, including
without limitation, those relating to securities laws and stock exchange listing
requirements. The Committee may require each person purchasing shares pursuant
to a Option under the Plan to represent to and agree with the Company in writing
that the Optionee is acquiring the shares without a view to distribution
thereof.
All certificates for shares of Stock delivered under the Plan shall be
subject to such stop transfer orders and other restrictions as the Committee may
deem advisable under the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Stock is
then listed, and any applicable federal or state securities laws, and the
Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions. The issuance of shares of Stock
may be effected on a non-certificated basis to the extent not prohibited by
applicable law or the applicable rules of any stock exchange upon which the
Stock is then listed.
8.2 NO RIGHTS TO EMPLOYMENT. Nothing contained in this Plan shall
prevent the Board from adopting other or additional compensation arrangements,
subject to shareholders approval if such approval is required; and such
arrangements may be either generally applicable or applicable only in specific
cases. The adoption of the Plan shall not confer upon any employee or Consultant
of the Company, any Parent Corporation, or any Subsidiary any right to
continuing employment or contract with the Company, any Parent Corporation, or
any Subsidiary, as the case may be, nor shall it interfere in any way with the
right of the Company, any Parent Corporation, or any Subsidiary to terminate the
employment or contract of any employee or Consultant at any time.
8.3 GOVERNING LAW. To the extent that federal laws do not otherwise
control, this Plan and all determinations made and actions taken under this Plan
shall be governed by the laws of the State of Delaware, without regard to the
conflicts of law provisions thereof, and construed accordingly.
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8.4 REPURCHASE RIGHT. The Committee may, at the time of the grant of
an award under the Plan, provide the Company with the right to repurchase shares
of Stock acquired pursuant to the Plan, pursuant to which the Optionee shall be
required to offer to the Company upon termination of employment for any reason
any shares that the Optionee acquired under the Plan, with the price being the
then Fair Market Value of the Stock or, in the case of a termination for Cause,
an amount equal to the cash consideration paid for the Stock, subject to such
other terms and conditions as the Committee may specify at the time of grant.
8.5 RESTRICTIONS ON TRANSFER.
(a) In the event the Company advises the Optionee that it plans
an underwritten public offering of its Common Stock in compliance with
the Securities Act of 1933, as amended, and the underwriter(s) seek to
impose restrictions under which certain shareholders may not sell or
contract to sell or grant any Option to buy or otherwise dispose of part
or all of their stock purchase rights of the underlying Common Stock, the
Optionee will not, for a period not to exceed 180 days from the
prospectus, sell or contract to sell or grant an Option to buy or
otherwise dispose of any Option granted to Optionee pursuant to the Plan
or any of the underlying shares of Common Stock without the prior written
consent of the underwriter(s) or its representative(s).
(b) In the event the Company makes any public offering of its
securities and determines in its sole discretion that it is necessary to
reduce the number of issued but unexercised stock purchase rights so as
to comply with any state's securities or Blue Sky law limitations with
respect thereto, the Board of Directors of the Company shall have the
right
(i) to accelerate the exercisability of any Option and
the date on which such Option must be exercised, provided that the
Company gives the Optionee prior written notice of such
acceleration, and
(ii) to cancel any Options or portions thereof which the
Optionee does not exercise prior to or contemporaneously with such
public offering.
The Company reserves the right to place a legend on any stock certificate
issued upon the exercise of a Option pursuant to the Plan to assure compliance
with this Section 8.5.
8.6 FORFEITURE FOR COMPETITION. The Committee may, at the time of the
grant of an award under the Plan, provide the Company with the right to
repurchase, or require the forfeiture of, shares of Stock acquired pursuant to
the Plan by any Optionee who, at any time within a period of time specified by
the Committee not to exceed twelve months after termination of employment with
the Company or any Subsidiary or Parent Corporation, directly or indirectly
competes with, or is employed by a competitor of, the Company or any Subsidiary
or Parent Corporation.
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8.7 RECOVERY OF PROFITS FOR TERMINATION FOR CAUSE OR COMPETITION. If
Optionee has sold any shares acquired by Optionee as a result of the exercise of
any portion or all of the Options at any time after the date which is 12 months
prior to the date of the termination of Optionee's employment, Optionee shall
pay to the Company in cash, upon demand, all gains or other economic value
actually or constructively received by Optionee, any member of Optionee's family
or any trust or other entity in which Optionee or any member of Optionee's
family has a beneficial interest, upon the sale of any such shares equal to the
difference between the Option exercise price and the value received.
SECTION 9. EFFECTIVE DATE OF PLAN.
The Plan shall be effective on the date it is adopted by the Board of
Directors. Adoption of the Plan is subject to the condition of approval by the
shareholders of the Company within 12 months before or after the adoption of the
Plan by the Board. Any Incentive Options granted after adoption of the Plan by
the Board of Directors will be treated as Non-Qualified Options if shareholder
approval is not obtained within such 12-month period.
--------------------------------
Adopted by the Board of Directors on February 23, 2004. Approved by the
Shareholders on March 8, 2004.
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