NONQUALIFIED STOCK OPTION AWARD AGREEMENT Issued Pursuant to the Resolution of the Board of Directors of Purple Beverage Company, Inc.
Issued
Pursuant to the Resolution of the
Board
of Directors of Purple Beverage Company, Inc.
THIS
OPTION AWARD AGREEMENT (“Agreement”), effective March 25, 2008 (the “Date of
Grant”) represents the grant of a nonqualified stock option (“Option”) by Purple
Beverage Company, Inc. (the “Company”), to Xxxxxxx Xxxxxx (the “Holder”). The
Option granted hereby is not intended to be an “Incentive Stock Option,” within
the meaning of Section 422 of the Internal Revenue Code.
Attached
hereto as Exhibit A, and incorporated herein, is a complete description of
the
terms and conditions governing this Option (the “Governing Document”). If there
is any inconsistency between the terms of this Agreement and the terms of
the
Governing Document, the Governing Document’s terms shall completely supersede
and replace the conflicting terms of this Agreement. All capitalized terms
shall
have the meanings ascribed to them in the Governing Document, unless
specifically set forth otherwise herein, and the receipt of a copy of which
the
Holder hereby acknowledges by his or her signature below. The parties hereto
agree as follows:
1. General
Option Grant Information.
The
individual named above has been selected to receive a nonqualified stock
option
grant, as of the Date of Grant, as specified below:
(a) Number
of Shares Covered by this Option:
1,414,286
(b) Exercise
Price per share:
$0.01
(c) Date
of Expiration:
March
25, 2011
2. Grant
of Option.
The
Company hereby grants to the Holder an Option to purchase the number of Shares
set forth above, at the stated Exercise Price per share, which has been approved
by the Board of Directors of the Company (“Board”), in the manner and subject to
the terms and conditions of the Governing Document and this Agreement.
3. Option
Term.
The term
of this Option begins as of the Date of Grant as detailed above and continues
through the Date of Expiration as detailed above, unless sooner terminated
in
accordance with the terms of this Agreement.
4. Vesting
Period:
This
Option shall vest and be exercisable immediately upon the Date of Grant.
5. Exercise.
This
Option shall not be transferable by the Holder other than by will or the
laws of
descent and distribution. The Holder, or the Holder’s representative upon the
Holder’s death or disability, may exercise this Option at any time prior to the
termination of the Option, subject to and as provided in Sections 3 and 9.
6. How
to Exercise.
Once
vested, the Options hereby granted shall be exercised by written notice to
the
Company, specifying the number of Shares subject to this Option Holder desires
to exercise. Except as stated in Section 7 of this Agreement, the Exercise
Price
of the Options shall be payable to the Company in full either: (a) in cash
or its equivalent; or (b) any other method approved or accepted by the Board
in
its sole discretion. In no event may the Option be exercised for a fraction
of a
share.
1
Unless
otherwise determined by the Board, all cash payments under all of the methods
indicated above shall be paid in United States dollars.
7. Cashless
Exercise.
(a) If
a
registration statement (“Registration Statement”) is effective for the public
unrestricted resale of all of the Shares issuable upon exercise of this Option,
if the Shares issuable upon exercise of this Option can be sold pursuant
to Rule
144 promulgated under the Securities Act of 1933, as amended (the “Securities
Act”), or if there is any other method through which the Holder can sell the
Shares issuable upon exercise of this Option through the public market without
restriction (collectively, “No-Restriction Sales Methods”), this Option may be
exercised in whole or in part for cash only as set forth in Section 6 above.
If
such No-Restriction Sales Methods are not available, payment upon exercise
may
be made at the option of the Holder either in (i) cash, wire transfer or by
certified or official bank check payable to the order of the Company equal
to
the applicable aggregate Exercise Price, (ii) by delivery of Common Stock
issuable upon exercise of the Option in accordance with
Section (b) below or (iii) by a combination of any of the
foregoing methods, for the number of Shares specified in such form (as such
exercise number shall be adjusted to reflect any adjustment in the total
number
of shares of Shares issuable to the holder per the terms of this Option)
and the
holder shall thereupon be entitled to receive the number of duly authorized,
validly issued, fully-paid and non-assessable Shares determined as provided
herein.
(b) Subject
to the provisions herein to the contrary, if the Fair Market Value of one
Share
is greater than the Exercise Price (at the date of calculation as set forth
below), in lieu of exercising this Option for cash, the holder may elect
to
receive shares equal to the value (as determined below) of this Option (or
the
portion thereof being cancelled) by surrender of this Option at the principal
office of the Company, in which event the Company shall issue to the holder
a
number of Shares computed using the following formula:
X=Y
(A-B)
A
Where
X=
|
the
number of Shares to be issued to the holder
|
|
Y=
|
the
number of Shares purchasable under the Option or, if only a portion
of the
Option is being exercised, the portion of the Option being exercised
(at
the date of such calculation)
|
|
A=
|
the
average of the closing sale prices of the Common Stock for the
ten (10)
trading days immediately prior to (but not including) the date
of
exercise, (or if no such closing prices are available, then the
Fair
Market Value)
|
|
B=
|
Exercise
Price (as adjusted to the date of such
calculation)
|
For
purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Shares issued in a cashless exercise
transaction shall be deemed to have been acquired by the Holder, and the
holding
period for the Shares shall be deemed to have commenced, on the date this
Option
was originally issued pursuant to the Subscription Agreement.
2
8. Nontransferability.
This
Option may not be sold, transferred, pledged, assigned, or otherwise alienated
or hypothecated, other than by will or by the laws of descent and distribution,
and may be exercised or surrendered during Holder’s lifetime only by the Holder
or his or her guardian or legal representative. No assignment or transfer
of the
Option in violation of this Section 8, whether voluntary or involuntary,
by
operation of law or otherwise, except by will or the laws of descent and
distribution or as otherwise required by applicable law, shall vest in the
assignee or transferee any interest whatsoever. Notwithstanding the foregoing,
upon the request of the Holder, the Board may, in its sole discretion, permit
the Holder to transfer this Option under such terms and conditions as the
Board
may determine.
9. [Reserved]
10. [Reserved]
11. Administration.
This
Agreement and the rights of the Holder hereunder are subject to all the terms
and conditions of the Governing Document, as the same may be amended from
time
to time, as well as to such rules and regulations as the Board may adopt
for
administration of the Governing Document. It is expressly understood that
the
Board is authorized to administer, construe, and make all determinations
necessary or appropriate to the administration of the Governing Document
and
this Agreement, all of which shall be binding upon the Holder. Any inconsistency
between the Agreement and the Governing Document shall be resolved in favor
of
the Governing Document.
12. Reservation
of Shares.
The
Company hereby agrees that at all times there shall be reserved for issuance
and/or delivery upon exercise of the Option such number of Shares as shall
be
required for issuance or delivery upon exercise hereof.
13. Adjustments.
The
number of Shares subject to this Option, and the exercise price, shall be
subject to adjustment in accordance with the Governing Document.
14. Exclusion
from Pension Computations.
By
acceptance of the grant of this Option, the Holder hereby agrees that any
income
or gain realized upon the receipt or exercise hereof, or upon the disposition
of
the Shares received upon its exercise, is special incentive compensation
and
shall not be taken into account, to the extent permissible under applicable
law,
as “wages”, “salary” or “compensation” in determining the amount of any payment
under any pension, retirement, incentive, profit sharing, bonus or deferred
compensation Governing Document of the Company or any of its Subsidiaries
or
Affiliates.
15. Amendment.
The
Board may, with the consent of the Holder, at any time or from time to time
amend the terms and conditions of the Option, and may at any time or from
time
to time amend the terms of this Option in accordance with the Governing
Document.
16. Notices.
Any
notice which either party hereto may be required or permitted to give to
the
other shall be in writing, and may be delivered personally or by mail, postage
prepaid, or overnight courier, addressed as follows: if to the Company, at
its
office at 000 X. Xxx Xxxx Xxxxxxxxx, Xxxxx 000, Xx. Xxxxxxxxxx, Xxxxxxx 00000,
Attention: Xxxxxxxx Xxxxxxxxxx, or at such other address as the Company by
notice to the Holder may designate in writing from time to time; and if to
the
Holder, at the address shown below his or her signature on this Agreement,
or at
such other address as the Holder by notice to the Company may designate in
writing from time to time. Notices shall be effective upon receipt.
3
17. Withholding
Taxes.
(a)
The
Company shall have the right to withhold from a Holder, or otherwise require
such Holder or assignee to pay, any Withholding Taxes arising as a result
of
exercise of the Option, or any other taxable event occurring pursuant to
the
Governing Document or this Agreement. If the Holder shall fail to make such
tax
payments as are required, the Company (or its Affiliates or Subsidiaries)
shall,
to the extent permitted by law, have the right to deduct any such Withholding
Taxes from any payment of any kind otherwise due to such Holder or to take
such
other action as may be necessary to satisfy such Withholding Taxes. In
satisfaction of the requirement to pay Withholding Taxes, the Holder may
make a
written election which may be accepted or rejected in the discretion of the
Board (i) to have withheld a portion of any Shares or other payments then
issuable to the Holder pursuant to any Award, or (ii) to tender other Shares
to
the Company (either by actual delivery or attestation, in the sole discretion
of
the Board, provided that,
except
as otherwise determined by the Board, the Shares that are tendered must have
been held by the Holder for at least six (6) months prior to their tender
to
satisfy the Exercise Price or have been purchased on the open market), in
either
case having an aggregate Fair Market Value equal to the Withholding Taxes.
18. Registration;
Legend.
The
Company may postpone the issuance and delivery of Shares upon any exercise
of
this Option until (a) the admission of such Shares to listing on any stock
exchange or exchanges on which Shares of the Company of the same class are
then
listed and (b) the completion of such registration or other qualification
of
such Shares under any state or federal law, rule or regulation as the Company
shall determine to be necessary or advisable. The Holder shall make such
representations and furnish such information as may, in the opinion of counsel
for the Company, be appropriate to permit the Company, in light of the then
existence or non-existence with respect to such Shares of an effective
Registration Statement under the Securities Act to issue the Shares in
compliance with the provisions of that or any comparable act.
The
Company may cause the following or a similar legend to be set forth on each
certificate representing Shares or any other security issued or issuable
upon
exercise of this Option unless counsel for the Company is of the opinion
as to
any such certificate that such legend is unnecessary:
NEITHER
THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO
AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE ACCEPTABLE TO THE COMPANY.
4
19. Miscellaneous.
(a) [Reserved]
(b) The
Holder shall have no rights as a stockholder of the Company with respect
to the
Shares subject to this Option Agreement until such time as the purchase price
has been paid, and the Shares have been issued and delivered to the
Holder.
(c) With
the
approval of the stockholders, if necessary, the Board may terminate, amend,
or
modify the Governing Document; provided, however, that no such termination,
amendment, or modification of the Governing Document may in any way adversely
affect the Holder’s rights under this Agreement.
(d) This
Agreement shall be subject to all applicable laws, rules, and regulations,
and
to such approvals by any governmental agencies or national securities exchanges
as may be required.
(e) To
the
extent not preempted by federal law, this Agreement shall be governed by,
and
construed in accordance with the laws of the State of Nevada, without regard
to
the principles of conflicts of law which might otherwise apply.
(f) All
obligations of the Company under the Governing Document and this Agreement,
with
respect to the Option, shall be binding on any successor to the Company,
whether
the existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.
(g) The
provisions of this Agreement are severable and if any one or more provisions
are
determined to be illegal or otherwise unenforceable, in whole or in part,
the
remaining provisions shall nevertheless be binding and enforceable.
(h) By
accepting this Award or other benefit under the Governing Document, the Holder
and each person claiming under or through the Holder shall be conclusively
deemed to have indicated their acceptance and ratification of, and consent
to,
any action taken under the Governing Document by the Company or the
Board.
(i) The
Holder, every person claiming under or through the Holder, and the Company
hereby waives to the fullest extent permitted by applicable law any right
to a
trial by jury with respect to any litigation directly or indirectly arising
out
of, under, or in connection with the Governing Document or this Award Agreement
issued pursuant to the Governing Document.
(j) The
Holder consents to the exclusive jurisdiction of any court exercising competent
jurisdiction in Xxxxx County, Nevada (or any court exercising competent
appellate jurisdiction), over any dispute arising out of or relating to this
Agreement. The Holder irrevocably agrees that all claims in respect of such
dispute or proceeding may be heard and determined in such court. The Holder
hereby irrevocably waives, to the fullest extent permitted by applicable
law,
any objection that he may now or hereafter have to the laying of venue of
any
such dispute or proceeding brought in such court or any defense of inconvenient
forum in connection therewith. The Holder consents to such service of process
made in the manner set forth in Section 16 hereof.
20. Exculpation.
This
Option and all documents, agreements, understandings and arrangements relating
hereto have been executed by the undersigned in his/her capacity as an officer
of the Company, and not individually, and neither the Directors, officers
or
stockholders of the Company nor of any Subsidiary or Affiliate of the Company
shall be bound or have any personal liability hereunder. Each party hereto
shall
look solely to the assets of the Company for satisfaction of any liability
of
the Company in respect of the Option and all documents, agreements,
understanding and arrangements relating hereto and will not seek recourse
or
commence any action against any of the Directors, officers or stockholders
of
the Company or of any Subsidiary or Affiliate of the Company, or any of their
personal assets for the performance or payment of any obligation hereunder
or
thereunder. The foregoing shall also apply to any future documents, agreements,
understandings, arrangements and transactions between the parties
hereto.
5
COMPANY:
/s/
Xxxxxxxx Xxxxxxxxxx
Xxxxxxxx
Xxxxxxxxxx, Chief Executive Officer
PARTICIPANT:
XXXXXXX
XXXXXX
/s/
Xxxxxxx Xxxxxx
Address:
6
EXHIBIT
A
Governing
Document
Article
1. Definitions
Whenever
used in this Governing Document, the following terms shall have the meanings
set
forth below, and when the meaning is intended, the initial letter of the
word
shall be capitalized.
|
1.1
|
“Affiliate”
shall have the meaning ascribed to such term in Rule 12b-2 of the
General Rules and Regulations of the Exchange
Act.
|
|
1.2
|
“Award”
means the grant of Nonqualified Options, subject to the terms of this
Governing Document, pursuant to the Award Agreement.
|
|
1.3
|
“Award
Agreement”
means that certain written agreement entered into by the Company
and the
Holder setting forth the terms and provisions applicable to the
Award,
effective as of March 25, 2008.
|
|
1.5
|
“Board”
means the Board of Directors of
the Company.
|
|
1.6
|
“Code”
means the U.S. Internal Revenue Code of 1986, as amended from time
to
time.
|
|
1.7
|
“Company”
means Purple Beverage Company, Inc., and any successor
thereto.
|
|
1.8
|
“Director”
means
any individual who is a member of the
Board.
|
|
1.9
|
“Effective
Date”
has the same meaning as “Date of Grant” as set forth in the Award
Agreement.
|
|
1.10
|
“Exchange
Act”
means the Securities Exchange Act of 1934, as amended from time
to time,
or any successor act thereto.
|
|
1.11
|
“Fair
Market Value”
means, if Shares are traded “over the counter” at the time a determination
of their Fair Market Value is required to be made hereunder, the
average
between the reported high and low or closing bid and asked prices
of a
Share on the most recent date on which Shares were publicly traded,
an
average of such trading dates (whether or not volume weighted),
or such
other measure as the Board deems appropriate. If the Shares are
traded on
an established stock exchange (such as the New York Stock Exchange,
American Stock Exchange or NASDAQ Stock Market), then Fair Market
Value
means a price that is based on the opening, closing, actual, high,
low, or
average selling prices of a Share reported on such established
stock
exchange (or exchanges) on the applicable date, the preceding trading
day,
the next succeeding trading day, or an average of trading days
(whether or
not volume weighted), as determined by the Board in its discretion.
In the
event Shares are not publicly traded at the time a determination
of their
Fair Market Value is required to be made hereunder, the determination
of
their Fair Market Value shall be made by the Board in such manner
as it
deems appropriate.
|
7
|
1.12
|
“Holder”
means Xxxxxxx Xxxxxx.
|
|
1.13
|
“Nonqualified
Option”, “NQSO”,
and “Option”
means an option that is not intended to meet the requirements of Code
Section 422, or that otherwise does not meet such
requirements.
|
|
1.14
|
“Option
Price”
means the price at which a Share may be purchased by the Holder
pursuant
to the Option.
|
|
1.16
|
“Shares”
means the Company’s shares of common stock, par value $.001 per share.
|
|
1.17
|
“Subsidiary”
means any Corporation, partnership, limited liability company or
other
entity, whether domestic or foreign, in which the Company has or
obtains,
directly or indirectly, a proprietary interest.
|
|
1.18
|
“Withholding
Taxes” means
any federal, state, local or foreign income taxes, withholding
taxes, or
employment taxes required to be withheld by law or
regulations.
|
Article
2. Administration
2.1 General.
The
Board shall be responsible for administering the Governing Document, subject
to
this Article 2 and the other provisions of the Governing Document. The Board
may
employ attorneys, consultants, accountants, agents, and other individuals,
and
the Board, the Company, and its officers and Directors shall be entitled
to rely
upon the advice, opinions, or valuations of any such individuals. All actions
taken and all interpretations and determinations made by the Board shall
be
final and binding upon the Holder, the Company, and all other interested
individuals.
2.2 Authority
of the Board.
The
Board shall have full and exclusive discretionary power to interpret the
terms
and the intent of the Governing Document and the Award Agreement or other
agreement or document ancillary to or in connection with the Governing Document,
to adopt such rules, regulations, forms, instruments, and guidelines for
administering the Governing Document as the Board may deem necessary or proper.
Such authority shall include, but not be limited to, subject to Article 7,
adopting modifications and amendments to the Governing Document or the Award
Agreement, including without limitation, any that are necessary to comply
with
the laws of the countries and other jurisdictions in which the Company, its
Affiliates, and/or its Subsidiaries operate.
2.3 Delegation.
The
Board
may delegate to one or more of its members or to one or more officers of
the
Company, and/or its Subsidiaries and Affiliates or to one or more agents
or
advisors such administrative duties or powers as it may deem advisable, and
the
Board or any individual to whom it has delegated duties or powers as aforesaid
may employ one or more individuals to render advice with respect to any
responsibility the Board or such individual may have under the Governing
Document.
8
Article
3. Adjustments
In
the
event of any corporate event or transaction (including, but not limited to,
a
change in the Shares of the Company or the capitalization of the Company)
such
as a merger, consolidation, reorganization, recapitalization, separation,
stock
dividend, stock split, reverse stock split, split-up, spin-off, or other
distribution of stock or property of the Company, combination of Shares,
exchange of Shares, dividend-in-kind, or other like change in capital structure
or distribution (other than normal cash dividends) to stockholders of the
Company, or any similar corporate event or transaction, in order to prevent
dilution or enlargement of Holder’s rights under the Governing Document, the
Board shall substitute or adjust, as applicable, the number and kind of Shares
subject to the Award, the Option applicable to the Award, and other value
determinations applicable to the Award.
Subject
to the provisions of Article 7, the Board shall authorize the issuance or
assumption of benefits under this Governing Document in connection with any
merger, consolidation, spin-off, split-off, split-up, acquisition of property
or
stock, or reorganization (collectively, a “Reorganization”) upon such terms and
conditions as it may deem appropriate, subject to compliance with the provisions
of Section 409A of the Code, where applicable. Without limiting the foregoing,
in the event of any Reorganization, the Board may cause the Award as of the
effective date of the Reorganization to be cancelled in consideration of
a cash
payment or alternate Award made to the holder of such cancelled Award equal
in
value to the fair market value of such cancelled Award; provided,
however,
that
nothing in this Article 3 shall permit the repricing, replacing or regranting
of
Options in violation of Section 7.1 or the provisions of Section 409A of
the
Code.
Article
4. Restrictions
4.1 Transferability
of Nonqualified Options. Except
as
otherwise provided in the Award Agreement or otherwise determined at any
time by
the Board, no NQSO granted may be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated, other than by will or by the laws of
descent, intestate succession and distribution; provided that the Board or
Board
may permit further transferability, on a general or a specific basis, and
may
impose conditions and limitations on any permitted transferability. Further,
except as otherwise provided in the Award Agreement or otherwise determined
at
any time by the Board, or unless the Board decides to permit further
transferability, all NQSOs granted to the Holder shall be exercisable during
his
lifetime only by such Holder. With respect to those NQSOs, if any, that are
permitted to be transferred to another individual, references in the Governing
Document to exercise or payment of the Option Price by the Holder shall be
deemed to include, as determined by the Board, the Holder’s permitted
transferee.
4.2 Buyout
Provisions. The
Board
may at any time offer to purchase or redeem, for a payment in cash or Shares,
an
Option previously granted, based on such terms and conditions as the Board
shall
establish and communicate to the Holder at the time that such offer is made.
Article
5. Beneficiary Designation
The
Holder may, from time to time, name any beneficiary or beneficiaries (who
may be
named contingently or successively) to whom any benefit under the Governing
Document is to be paid in case of his death before he receives any or all
of
such benefit. Each such designation shall revoke all prior designations by
the Holder, shall be in a form prescribed by the Board, and will be effective
only when filed by the Holder in writing with the Company during the Holder’s
lifetime. In the absence of any such designation, benefits remaining unpaid
at
the Holder’s death shall be paid to the Holder’s estate.
9
Article
6. Rights of Holders
6.1 Rights
as a Stockholder.
Except
as otherwise provided herein, the Holder shall have none of the rights of
a
stockholder with respect to Shares covered by the Award until the Holder
becomes
the record holder of such Shares.
Article
7. Amendment, Modification, Suspension, and Termination
7.1 Amendment,
Modification, Suspension, and Termination.
Subject
to Section 7.3, the Board may, at any time and from time to time, alter,
amend, modify, suspend, or terminate the Governing Document and the Award
Agreement in whole or in part; provided,
however,
that,
without the prior approval of the Company’s stockholders and except as provided
in Article 3, Options issued under the Governing Document will not be repriced,
replaced, or regranted through cancellation, or by lowering the Option Price.
Further, no amendment of the Governing Document shall be made without
stockholder approval if stockholder approval is required by law, regulation,
or
stock exchange rule.
7.2 Adjustment
of Awards Upon the Occurrence of Certain Unusual or Nonrecurring
Events.
The
Board shall make adjustments in the terms and conditions of, and the criteria
included in, the Award in recognition of unusual or nonrecurring events
(including, without limitation, the events described in Article 3 hereof)
affecting the Company or the financial statements of the Company or of changes
in applicable laws, regulations, or accounting principles, in order to prevent
unintended dilution or enlargement of the benefits or potential benefits
intended to be made available under the Governing Document. Any actions of
the
Board with respect to the foregoing adjustments shall be conclusive and binding
on the Holder under the Governing Document.
7.3 Awards
Previously Granted.
Notwithstanding any other provision of the Governing Document to the contrary,
and except to the extent necessary to avoid the imposition of additional
tax
and/or interest under Section 409A of the Code with respect to the Award
that is
treated as nonqualified deferred compensation, no termination, amendment,
suspension, or modification of the Governing Document or the Award Agreement
shall adversely affect in any material way the Award, without the written
consent of the Holder.
Article
8. Withholding
The
Company shall have the right to withhold from the Holder (or a permitted
assignee thereof), or otherwise require the Holder or assignee to pay, any
Withholding Taxes arising as a result of the grant of the Award, exercise
of an
Option, or any other taxable event occurring pursuant to this Governing Document
or the Award Agreement. If the Holder (or a permitted assignee thereof) shall
fail to make such tax payments as are required, the Company (or its Affiliates
or Subsidiaries) shall, to the extent permitted by law, have the right to
deduct
any such Withholding Taxes from any payment of any kind otherwise due to
the
Holder or to take such other action as may be necessary to satisfy such
Withholding Taxes. In satisfaction of the requirement to pay Withholding
Taxes,
the Holder (or permitted assignee) may make a written election, which may
be
accepted or rejected in the discretion of the Board, (i) to have withheld
a
portion of any Shares or other payments then issuable to the Holder (or
permitted assignee) pursuant to the Award, or (ii) to tender other Shares
to the
Company (either by actual delivery or attestation, in the sole discretion
of the
Board, provided that,
except
as otherwise determined by the Board, the Shares that are tendered must have
been held by the Holder for at least six months prior to their tender or
have
been purchased on the open market), in either case having an aggregate Fair
Market Value equal to the Withholding Taxes.
10
Article
9. Successors
All
obligations of the Company under the Governing Document with respect to the
Award shall be binding on any successor to the Company, whether the existence
of
such successor is the result of a direct or indirect purchase, merger,
consolidation, or otherwise, of all or substantially all of the business
and/or
assets of the Company.
Article
10. General Provisions
10.1 Forfeiture
Events.
If the
Company is required to prepare an accounting restatement due to the material
noncompliance of the Company, as a result of misconduct, with any financial
reporting requirement under the securities laws, if the Holder knowingly
or
grossly negligently engaged in the misconduct, or knowingly or grossly
negligently failed to prevent the misconduct, or if the Holder is one of
the
individuals subject to automatic forfeiture under Section 304 of the
Xxxxxxxx-Xxxxx Act of 2002, the Holder shall reimburse the Company the amount
of
any payment in settlement of the Award earned or accrued during the twelve-month
period following the first public issuance or filing with the United States
Securities and Exchange Commission (whichever just occurred) of the financial
document embodying such financial reporting requirement.
10.2 Legend.
The
certificates for Shares may include any legend that the Board deems appropriate
to reflect any restrictions on transfer of such Shares.
10.3 Gender
and Number.
Except
where otherwise indicated by the context, any masculine term used herein
also
shall include the feminine, the plural shall include the singular, and the
singular shall include the plural.
10.4 Severability. In
the
event any provision of the Governing Document shall be held illegal or invalid
for any reason, the illegality or invalidity shall not affect the remaining
parts of the Governing Document, and the Governing Document shall be construed
and enforced as if the illegal or invalid provision had not been
included.
10.5 Requirements
of Law. The
granting of the Award and the issuance of Shares under the Governing Document
shall be subject to all applicable laws, rules, and regulations, and to such
approvals by any governmental agencies or national securities exchanges as
may
be required.
10.6 Delivery
of Title. The
Company shall have no obligation to issue or deliver evidence of title for
Shares issued under the Governing Document prior to:
|
(a)
|
Obtaining
any approvals from governmental agencies that the Company determines
are
necessary or advisable; and
|
|
(b)
|
Completion
of any registration or other qualification of the Shares under
any
applicable national or foreign law or ruling of any governmental
body that
the Company determines to be necessary or
advisable.
|
11
10.7 Inability
to Obtain Authority. The
inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company’s counsel to be necessary
to the lawful issuance and sale of any Shares hereunder, shall relieve the
Company of any liability in respect of the failure to issue or sell such
Shares
as to which such requisite authority shall not have been obtained.
10.8 Investment
Representations. The
Board
may require any individual receiving Shares pursuant to the Award under this
Governing Document to represent and warrant in writing that the individual
is
acquiring the Shares for investment and without any present intention to
sell or
distribute such Shares.
10.9 Uncertificated
Shares.
To the
extent that the Governing Document provides for issuance of certificates
to
reflect the transfer of Shares, the transfer of such Shares may be effected
on
an uncertificated basis, to the extent not prohibited by applicable law or
the
rules of any stock exchange.
10.10 Unfunded
Governing Document. Holder
shall have no right, title, or interest whatsoever in or to any investments
that
the Company, its Subsidiaries, and/or its Affiliates may make to aid it in
meeting its obligations under the Governing Document. Nothing contained in
the
Governing Document, and no action taken pursuant to its provisions, shall
create
or be construed to create a trust of any kind, or a fiduciary relationship
between the Company and the Holder, beneficiary, legal representative, or
any
other individual. To the extent that any individual acquires a right to receive
payments from the Company, its Subsidiaries, and/or its Affiliates under
the
Governing Document, such right shall be no greater than the right of an
unsecured general creditor of the Company, a Subsidiary, or an Affiliate,
as the
case may be. All payments to be made hereunder shall be paid from the general
funds of the Company, a Subsidiary, or an Affiliate, as the case may be and
no
special or separate fund shall be established and no segregation of assets
shall
be made to assure payment of such amounts except as expressly set forth in
the
Governing Document.
10.11 No
Fractional Shares.
No
fractional Shares shall be issued or delivered pursuant to the Governing
Document or the Award. The Board shall determine whether cash, Shares, Options,
or other property shall be issued or paid in lieu of fractional Shares or
whether such fractional Shares or any rights thereto shall be forfeited or
otherwise eliminated.
10.12 Retirement
and Welfare Governing Documents.
Neither
the Award nor the Shares paid pursuant to the Award may be included as
“compensation” for purposes of computing the benefits payable to the Holder
under the Company’s or any Subsidiary’s or Affiliate’s retirement plans (both
qualified and non-qualified) or welfare benefit plans unless such other plan
expressly provides that such compensation shall be taken into account in
computing the Holder’s benefit.
10.13 Nonexclusivity
of the Governing Document.
The
adoption of this Governing Document shall not be construed as creating any
limitations on the power of the Board to adopt such other compensation
arrangements as it may deem desirable for the Holder.
12
10.14 No
Constraint on Corporate Action.
Nothing
in this Governing Document shall be construed to: (i) limit, impair, or
otherwise affect the Company’s or a Subsidiary’s or an Affiliate’s right or
power to make adjustments, reclassifications, reorganizations, or changes
of its
capital or business structure, or to merge or consolidate, or dissolve,
liquidate, sell, or transfer all or any part of its business or assets; or,
(ii)
limit the right or power of the Company or a Subsidiary or an Affiliate to
take
any action which such entity deems to be necessary or appropriate.
10.15 Governing
Law.
The
Governing Document and the Award Agreement shall be governed by the laws
of the
State of Nevada,
excluding any conflicts or choice of law rule or principle that might otherwise
refer construction or interpretation of the Governing Document to the
substantive law of another jurisdiction. The Holder is deemed to submit to
the
exclusive jurisdiction and venue of the federal or state courts of Nevada,
to
resolve any and all issues that may arise out of or relate to the Governing
Document or the Award Agreement.
10.16 Indemnification. Each
individual who is or shall have been a member of the Board, or a committee
appointed by the Board, or an officer of the Company to whom authority was
delegated in accordance with Article 2, shall be indemnified and held harmless
by the Company against and from any loss, cost, liability, or expense that
may
be imposed upon or reasonably incurred by him in connection with or resulting
from any claim, action, suit, or proceeding to which he may be a party or
in
which he may be involved by reason of any action taken or failure to act
under
the Governing Document and against and from any and all amounts paid by him
in
settlement thereof, with the Company’s approval, or paid by him in satisfaction
of any judgment in any such action, suit, or proceeding against him, provided
he
shall give the Company an opportunity, at its own expense, to handle and
defend
the same before he undertakes to handle and defend it on his own behalf,
unless
such loss, cost, liability, or expense is a result of his own willful misconduct
or except as expressly provided by statute.
The
foregoing right of indemnification shall not be exclusive of any other rights
of
indemnification to which such individuals may be entitled under the Company’s
Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or
any
power that the Company may have to indemnify them or hold them
harmless.
10.17 Amendment
to Comply with Applicable Law.
It is
intended that the Award shall not be subject to any interest or additional
tax
under Section 409A of the Code. In the event Code Section 409A is amended
after
the date hereof, or regulations or other guidance is promulgated after the
date
hereof that would make the Award subject to the provisions of Code Section
409A,
then the terms and conditions of this Governing Document shall be interpreted
and applied, to the extent possible, in a manner to avoid the imposition
of the
provisions of Code Section 409A.
13