(1)
| All ofThe following table provides information about the Company’s equity compensation plans, including its employee stock purchase plan, as of December 31, 2022. | Equity compensation plans have been approved by stockholders. This information, as of December 31, 2020, is with respect to the 1995 Stock Plan, the 2002 Director Stock Plan and the ESPP.security holders(2) | | | 605,204(3) | | | $— | | | 8,953,052 | | | Equity compensation plan not approved by security holders | | | — | | | — | | | — | | | Total | | | — | | | $— | | | 8,953,052 | |
(2) (1)
| The weighted average exercise price of outstanding options, warrants and rights, excluding the Company’s unvested RSUs for which there is no exercise consideration, is $5.8049.$0. |
(2)
| All of the Company’s equity compensation plans have been approved by stockholders. This information, as of December 31, 2022, is with respect to the 1995 Stock Plan, the 2002 Director Stock Plan and the ESPP. |
(3)
| Unvested performance-based RSU awards granted to Mr. Harshman in 2020, 2021 and 2022, and to Mr. Kalra in 2021 and 2022. Each such award cover a target number of shares, with vesting determined by the TSR of Company common stock compared to the TSR of companies in the NASDAQ Telecommunication Index, measured based on the 90 consecutive trading day average stock price at both the beginning and end of a three-year performance period, plus continued employment through completion of the performance period. See “Outstanding Equity Awards as of December 31, 2022” above and “Equity Compensation Plans – TSR Award” on page 33 of this Proxy Statement. The weighted-average exercise price in the second column of this table excludes these TSR awards, for which there is no exercise consideration. |
TABLE OF CONTENTS Pay Versus Performance
Pursuant to Item 402(v) of Regulation S-K, we are providing the following information regarding the relationship between “compensation actually paid” (or “CAP”) to our principal executive officer (“PEO”) and other NEOs (“non-PEO NEOs”) and certain measures of our financial performance for each of the last three completed fiscal years. In determining the CAP to our NEOs, we make various adjustments to amounts that have been previously reported in the Summary Compensation Table (“SCT”) in previous years, as the SEC’s valuation methods for this section differ from those required in the SCT. Note that for our non-PEO NEOs, compensation is reported as an average of the CAP for such non-PEO NEOs. It is important to note that CAP does not represent the actual amount of pay that has been fully earned or realized, either in the fiscal year set forth in the table or at all. For a description of our executive compensation program and the alignment of executive compensation and performance for our PEO and our non-PEO NEOs, please refer to the Compensation Discussion and Analysis section of this Proxy Statement. | 2022 | | | $4,831,571 | | | $7,726,443 | | | $1,580,011 | | | $1,887,872 | | | $167.95 | | | $82.21 | | | $28,182 | | | $315,884 | | | 2021 | | | $4,628,135 | | | $10,868,485 | | | $2,056,418 | | | $2,966,573 | | | $150.77 | | | $112.44 | | | $13,254 | | | $259,742 | | | 2020 | | | $3,498,333 | | | $2,928,232 | | | $1,280,848 | | | $1,275,324 | | | $94.74 | | | $110.08 | | | $(29,271) | | | $194,997 | |
(1)
| The PEO for each year was our Chief Executive Officer, Patrick Harshman. |
(2)
| Represents the total compensation paid to our PEO in each listed year, as shown in the Summary Compensation Table of this Proxy Statement for such listed year. |
(3)
| The CAP does not mean that our PEO was actually paid those amounts in the listed year, or that our non-PEO NEOs were actually paid those amounts averaged and shown in the listed year, but these are dollar amounts derived from the starting point of SCT total compensation under the methodology prescribed under the relevant SEC rules as shown in the adjustment table below. For non-PEO NEOs, the indicated figures in the table show an average of each such figure for all such non-PEO NEOs in each listed year. The methodologies used for determining the fair values shown in the adjustment table below, including use of a Monte-Carlo methodology to determine fair value of TSR awards, are materially consistent with those used to determine the fair values disclosed as of the grant date of such awards. Note that we have not reported any amounts in our Summary Compensation Table with respect to “Change in Pension and Nonqualified Deferred Compensation,“ and we do not maintain any defined benefit or actuarial pension plans for our NEO’s. Accordingly, the adjustments with respect to such items prescribed by the pay-versus-performance rules are not relevant to our analysis and no adjustments have been made. |
| Summary Compensation Table Total | | | $3,498,333 | | | $4,628,135 | | | $4,831,571 | | | $1,280,848 | | | $2,056,418 | | | $1,580,011 | | | Subtract Grant Date Fair Value of Stock Awards Granted in Fiscal Year | | | ($2,270,749) | | | ($3,069,282) | | | ($3,116,592) | | | ($653,820) | | | ($1,271,651) | | | ($751,151) | | | Add Fair Value at Fiscal Year-End of Outstanding and Unvested Stock Awards Granted in Fiscal Year | | | $2,475,519 | | | $5,343,927 | | | $5,003,296 | | | $828,308 | | | $1,876,882 | | | $1,072,004 | | | Adjust for Change in Fair Value of Outstanding and Unvested Stock Awards at Fiscal Year-End Granted in Prior Fiscal Years | | | ($401,000) | | | $3,778,266 | | | $1,957,765 | | | ($18,963) | | | $206,713 | | | $132,497 | | | Adjust for Fair Value at Vesting of Stock Awards Granted in Fiscal Year That Vested During Fiscal Year | | | $— | | | $— | | | $— | | | $— | | | $— | | | $— | | | Adjust for Change in Fair Value at Vesting of Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year | | | ($278,321) | | | $187,439 | | | ($949,597) | | | ($136,451) | | | $98,210 | | | ($145,489) | | | Subtract Fair Value as of Prior Fiscal Year-End of Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year | | | ($95,550) | | | $— | | | $— | | | ($24,598) | | | $— | | | $— | | | Compensation Actually Paid | | | $2,928,232 | | | $10,868,485 | | | $7,726,443 | | | $1,275,324 | | | $2,966,573 | | | $1,887,872 | |
(4)
| This figure is the average of the total compensation paid to our non-PEO NEOs in each listed year, as shown in the SCT of this proxy statement for such listed year. The non-PEO NEOs in each listed year were Sanjay Kalra, Nimrod Ben-Natan, Neven Haltmayer and Ian Graham. |
TABLE OF CONTENTS (5)
| Total shareholder return (“TSR”) is calculated by assuming that a $100 investment was made on the last trading day prior to the first fiscal year reported in the table and reinvesting all dividends, if any, until the last day of each listed year. |
(6)
| The peer group used is the NASDAQ Telecommunications Index, as used in the Company’s performance graph in our annual report on Form 10-K. Total shareholder return is calculated by assuming that a $100 investment was made on the day prior to the first fiscal year reported below and reinvesting all dividends, if any, until the last day of each listed year. |
(7)
| The dollar amounts reported are the Company’s net income reflected in the Company’s audited financial statements. |
(8)
| In the Company’s assessment, gross profit as reflected in the Company’s audited financial statements is the financial performance measure that is the most important financial performance measure (other than total shareholder return and net income) used by the Company in each of the listed years to link compensation actually paid to performance. Gross profit is determined by subtracting cost of revenue from net revenue. |
Important Performance Measures The list below includes financial and certain other performance measures that in our assessment represent the most important performance measures used to link the compensation of our PEO and non-PEO NEOs, for 2022, to Company performance. The performance measures included in this table are not ranked by relative importance. | Most Important Performance Measures | | | Broadband business gross profit
| | | Broadband business DOCSIS customer bookings
| | | Broadband business fiber-to-the-home (FTTH) bookings
| | | Video business gross profit
| | | SaaS revenue
| | | Relative TSR vs. NASDAQ Telecommunications Index
| |
TABLE OF CONTENTS Certain CAP Relationships The relationships between the Company’s TSR and the peer group TSR reported in the 2022 Pay Versus Performance table above, as well as between CAP and the Company’s TSR, net income and gross profit, are shown below. As shown in these charts and as more fully described in the notes to the 2022 Pay Versus Performance table above and the Compensation Discussion and Analysis in this Proxy Statement, there is significant alignment between CAP and the Company’s TSR, net income and gross profit; TSR and gross profit are measures that have been specifically selected by the Compensation Committee for use in our executive compensation program for purposes of aligning executive compensation with Company performance. In addition, because a significant portion of target total direct pay to our PEO and non-PEO NEOs is delivered in the form of long-term equity-based incentives, the change in CAP over time is impacted significantly by changes in our stock price. TABLE OF CONTENTS Pursuant to Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are required to calculate and disclose the median of the annual total compensation paid to our median paid employee,employees excluding our CEO (the “median employee”), as well as the ratio of the total compensation paid to the median employee as compared to the total compensation paid to Harmonic’s CEO, Patrick Harshman. The paragraphs that follow describe our methodology and the resulting CEO pay ratio. TABLE OF CONTENTS
Measurement Date. We identified the median employee using our employee population as of December 31, 2020,2022, which is a date within the last 3 months of our last completed fiscal year. Consistently Applied Compensation Measure (CACM). Under the relevant rules, we were required to identify the median employee by use of a “consistently applied compensation measure,” or CACM. We chose a CACM that closely approximates the annual total target direct compensation of our employees. Specifically, we identified the median employee by looking at annual base pay, bonus or commission opportunity at target, and the grant date fair value for standard equity awards. We adjusted the compensation paid to part-time employees by annualizing base pay and any bonus or commission target, as applicable, to calculate what they would have been paid on a full-time basis. With respect to our non-U.S. employees, we converted all compensation amounts to U.S. dollar using the applicable currency exchange rate as of April 2, 2021.1, 2023. Methodology and Pay Ratio. After applying our CACM methodology, we determined our median employee. The 20202022 total annual compensation of our median employee was $97,413.$99,766. Our CEO’s total 20202022 compensation as reported in the Summary Compensation Table was $3,498,333.$4,831,571. Therefore, the ratio of the annual total compensation of the Company’s CEO to the annual total compensation of the median employee is 36:48:1. As of December 31, 2020,2022, approximately 31%28% of our global workforce was based in the United States and approximately 69%72% was based outside of the United States, with approximately 50%53% of our employees located in the Europe-Middle-East-Africa (EMEA) region and 17%13% in the Asia-Pacific (APAC) region. If our median employee was determined using only our U.S. employees as of December 31, 2020,2022, the 20202022 compensation of our median employee would be $152,281$158,722 and our CEO to median employee pay ratio would be 23:30:1. This information is being provided for compliance purposes and is a reasonable estimate calculated in a manner consistent with Item 402(u). Neither the Compensation Committee nor management of the companyCompany used the pay ratio measure in making compensation decisions. 42
| 47 |
TABLE OF CONTENTS SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company with respect to beneficial ownership of the Company’s Common Stock as of April 1, 2021,2023, by (i) each beneficial owner of more than 5% of the Common Stock; (ii) each director; (iii) each NEO; and (iv) all of the Company’s current directors and executive officers as a group. Except as otherwise indicated, each person has sole voting and investment power with respect to all shares shown as beneficially owned, subject to community property laws where applicable. The address for each of the directors and NEOs is c/o Harmonic Inc., 2590 Orchard Parkway, San Jose, California 95131. | Name and Address of Beneficial Owner | | | Number of Shares | | | Percent of Total(1) | | Name and Address of Beneficial Owner | | | Number of Shares | | | Percent of Total(1) | | | T. Rowe Price Associates, Inc., 100 E. Pratt Street, Baltimore, MD 21202(2) | | | 16,629,739 | | | 16.4% | | Greater than 5% Stockholders: | | | | | | | | | BlackRock Inc., 55 East 52nd St. New York, NY 10022(3) | | | 15,283,067 | | | 15.1% | | BlackRock, Inc., 55 East 52nd St. New York, NY 10022(2) | | | 16,528,285 | | | 14.9% | | | Scopia Capital Management LP, 152 West 57th St. New York, NY 10019(4) | | | 9,692,935 | | | 9.6% | | Scopia Capital Management LP, 152 West 57th St. New York, NY 10019(3) | | | 5,975,978 | | | 5.4% | | | The Vanguard Group, 100 Vanguard Blvd., Malvern, PA 19355(5) | | | 6,293,330 | | | 6.2% | | The Vanguard Group, 100 Vanguard Blvd., Malvern, PA 19355(4) | | | 7,591,061 | | | 6.8% | | | Dimensional Fund Advisors LP, 6300 Bee Cave Road, Building One, Austin, TX 78746(6) | | | 5,306,105 | | | 5.2% | | Trigran Investments, Inc., 630 Dundee Road, Suite 230, Northbrook, IL 60062(5) | | | 7,387,478 | | | 6.6% | | | Patrick Gallagher(7) | | | 220,561 | | | * | | Wellington Management Group LLP, 280 Congress Street, Boston, MA 02210(6) | | | 5,778,513 | | | 5.2% | | | Deborah Clifford(7) | | | 41,101 | | | * | | Named Executive Officers and Directors: | | | | | | | | | David Krall(7) | | | 109,492 | | | * | | Patrick Gallagher(7) | | | 277,297 | | | * | | | Mitzi Reaugh(7) | | | 236,168 | | | * | | Deborah Clifford(7) | | | 107,769 | | | * | | | Susan G. Swenson(7) | | | 200,668 | | | * | | David Krall(7) | | | 143,044 | | | * | | | Nikos Theodosopoulos(8) | | | 193,745 | | | * | | Mitzi Reaugh(7) | | | 269,720 | | | * | | | Patrick J. Harshman(9) | | | 1,657,317 | | | 1.64% | | Susan G. Swenson(7) | | | 234,220 | | | * | | | Nimrod Ben-Natan(10) | | | 612,133 | | | * | | Dan Whalen(7) | | | 24,518 | | | * | | | Neven Haltmayer(11) | | | 281,522 | | | * | | Sophia Kim(7) | | | 11,126 | | | * | | | Sanjay Kalra(12) | | | 183,275 | | | * | | Patrick J. Harshman(8) | | | 628,385 | | | * | | | Ian Graham(13) | | | 86,223 | | | * | | Nimrod Ben-Natan(9) | | | 324,503 | | | * | | | Eric Louvet(14) | | | — | | | * | | Neven Haltmayer(10) | | | 185,708 | | | * | | | All directors and executive officers as a group (11 persons)(15) | | | | | | 3.78% | | Sanjay Kalra(11) | | | 177,032 | | | * | | | | Ian Graham(12) | | | 125,612 | | | * | | | | All directors and executive officers as a group (12 persons)(13) | | | 2,487,282 | | | 2.2% | |
*
| Percentage of shares beneficially owned is less than one percent of total. |
(1)
| The number of shares of Common Stock outstanding used in calculating the percentage for each listed person or entity is based on 100,989,785111,277,499 shares of Common Stock outstanding as of April 1, 2021.2023. Shares of Common Stock subject to stock options which are currently exercisable or will become exercisable, and RSUs which are currently vested or will become vested, in each case within 60 days of April 1, 2021,2023, are deemed outstanding for purposes of computing the percentage of the person holding such options or RSUs, but are not deemed outstanding for purposes of computing the percentage of any other person. |
(2)
| Based solely on a review of a Schedule 13G/A filed with the SEC on February 16, 2021 by T. Rowe Price Associates, Inc. and T. Rowe Price Small-Cap Value Fund, Inc. T. Rowe Price Associates, Inc. reported sole voting power with respect to 5,319,238January 26, 2023 reporting stock ownership as of December 31, 2022, consists of 16,528,285 shares and sole dispositive power with respect to 16,629,739 shares and T. Rowe Price Small-Cap Value Fund, Inc. reported sole voting power with respect to 10,994,490 shares. |
(3)
| Based solely on a review of a Schedule 13G filed with the SEC on January 25, 2021Common Stock held of record by BlackRock, Inc. Of the shares of Common Stock beneficially owned, BlackRock, Inc. and certain of its wholly-owned subsidiaries reported that it had sole voting power with respect to 15,128,57416,400,150 shares and sole dispositive power with respect to 15,283,06716,528,285 shares and shared dispositive power with respect to 0 shares. Additionally, such Schedule 13G/A reported that the interest of iShares Core S&P Small-Cap ETF in the Common Stock is more than five percent of the total outstanding Common Stock. |
(4)
(3)
| Based solely on a review of a Schedule 13D/A13D filed with the SEC on April 12, 2021October 19, 2022 reporting ownership as of October 17, 2022, consists of 5,975,978 shares of Common Stock held of record by Scopia Capital Management LP, Scopia Management, Inc., Matthew Sirovich, and Jeremy Mindich. Each of these persons and entitiesMindich (together “Scopia”). Scopia reported that it had shared voting power with respect to 9,629,935all 5,975,978 shares and shared dispositive power with respect to all 9,629,9355,975,978 shares. |
(5)
(4)
| Based solely on a review of a Schedule 13G/A filed with the SEC on February 10, 20219, 2023 reporting stock ownership as of December 30, 2022, consists of 7,591,061 shares of Common Stock held of record by The Vanguard Group reporting- 23-1945930 (“The Vanguard Group”). Of the shares of Common Stock beneficially owned, The Vanguard Group reported that it had shared voting power with respect to 92,889159,415 shares, sole dispositive power with respect to 6,121,1387,340,944 shares, and shared dispositive power with respect to 172,192250,117 shares. |
(6)
(5)
| Based solely on a review of a Schedule 13G/A13G filed with the SEC on February 12, 202110, 2023 reporting stock ownership as of December 31, 2022, consists of 7,387,478 shares of Common Stock held of record by Dimensional Fund Advisors LP. Dimensional Fund Advisors LPTrigran Investments, Inc., Douglas Granat, Lawrence A. Oberman, Steven G. Simon, Bradley F. Simon, and Steven R. Monieson (“Trigran”). Trigran reported solethat it had shared voting power with respect to 5,039,6497,028,640 shares, shared dispositive power with respect to all 7,387,478 shares, and sole dispositive power with respect to 5,306,1050 shares. |
(6)
| Based solely on a review of a Schedule 13G filed with the SEC on February 6, 2023 reporting stock ownership as of December 30, 2022, consists of 5,778,513 shares of Common Stock held of record by Wellington Management Group LLP, Wellington Group Holdings LLP, and Wellington Investment Advisors Holdings LLP (“Wellington”). Wellington reported that it had shared voting power with respect to 3,673,542shares, shared dispositive power with respect to all 5,778,513 shares, and sole dispositive power with respect to 0 shares. |
(7)
| Includes no shares which may be acquired upon exercise of options exercisable or vesting of RSUs within 60 days of April 1, 2021.2023. |
(8)
| Includes 30,00030,238 shares which may be acquired upon exercise of options exercisable or vesting of RSUs within 60 days of April 1, 2021.2023. |
(9)
| Includes 565,23515,843 shares which may be acquired upon exercise of options exercisable or vesting of RSUs within 60 days of April 1, 2021.2023. |
(10)
| Includes 175,73316,513 shares which may be acquired upon exercise of options exercisable or vesting of RSUs 60 days of April 1, 2023. |
(11)
| Includes 0 shares which may be acquired upon exercise of options exercisable or vesting of RSUs within 60 days of April 1, 2021.2023. |
(11)
(12)
| Includes 120,733 shares which may be acquired upon exercise of options exercisable or vesting of RSUs 60 days of April 1, 2021. |
(12)
| Includes 20,03013,783 shares which may be acquired upon exercise of options exercisable or vesting of RSUs within 60 days of April 1, 2021.2023. |
(13)
| Includes 8,67484,209 shares which may be acquired upon exercise of options exercisable or vesting of RSUs within 60 days of April 1, 2021. |
(14)
| Mr. Louvet’s employment with the Company terminated on August 17, 2020. |
(15)
| Includes 920,405 shares which may be acquired upon exercise of options exercisable or vesting of RSUs within 60 days of April 1, 2021.2023. |
48 | 43
|
TABLE OF CONTENTS CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
It is Harmonic’s policy that all employees, officers and directors must avoid any activity that is or has the appearance of conflicting with the interests of the Company. This policy is included in the Company’s Code of Business Conduct and Ethics, which is posted on our website. All related party transactions must be reviewed and approved by the Company’s Audit Committee. Except for the compensation agreements and other arrangements that are described under “Executive Compensation”, beginning on page 37 of this Proxy Statement, there was not during 2020,2022, nor is there currently proposed, any transaction or series of similar transactions to which the Company was or is to be a party in which the amount involved exceeds $120,000 and in which any director, executive officer, 5% stockholder or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest. The Company’s Audit Committee has the responsibility to review proposed related party transactions for potential conflicts of interest and to approve or disapprove all such transactions in advance. The Company knows of no other matters to be properly submitted for stockholder action at the 2021 Annual Meeting. If any other matters properly come before the Annual Meeting, your shares of Common Stock will be voted at the discretion of the designated proxy holders. IT IS IMPORTANT THAT ALL PROXIES BE RETURNED PROMPTLY. THE BOARD OF DIRECTORS URGES YOU TO VOTE VIA THE INTERNET OR BY TELEPHONE AS INSTRUCTED ON THE E-PROXY NOTICE OR PROXY CARD, OR IF YOU HAVE REQUESTED PROXY MATERIALS IN PAPER FORM, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE. By Order of the Board of Directors, Timothy Chu
Corporate Secretary Dated: April 28, 20212023 44
| 49 |
TABLE OF CONTENTS HARMONIC INC.
2002 EMPLOYEE STOCK PURCHASE PLAN
(Amended and Restated, , 2023) The following constitute the provisions of the 2002 Employee Stock Purchase Plan (the “Plan”) of Harmonic Inc. 1)
| Purpose. The purpose of the Plan is to provide employees of the Company and its Designated Companies with an opportunity to purchase Common Stock of the Company through accumulated payroll deductions. |
| The Plan includes two components: a Code Section 423 component (the “423 Component”) and a non-Code Section 423 component (the “Non-423 Component”). It is the intention of the Company to have the 423 Component qualify as an “Employee Stock Purchase Plan” under Section 423 of the Code, and the 423 Component, accordingly, shall be construed so as to extend and limit participation in a uniform and nondiscriminatory basis consistent with the requirements of Section 423. Under the Non-423 Component, which does not qualify as an “Employee Stock Purchase Plan” under Section 423 of the Code, options will be granted pursuant to rules, procedures or sub-plans adopted by the Administrator designed to achieve tax, securities laws or other objectives for eligible employees. Except as otherwise provided herein, the Non-423 Component will operate and be administered in the same manner as the 423 Component. |
a)
| “Administrator” shall mean the Board or any Committee designated by the Board to administer the Plan pursuant to Section 15. |
b)
| “Affiliate” means any entity that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under the common control with, the Company. |
c)
| “Board” shall mean the Board of Directors of the Company. |
d)
| “Change-of-Control” shall mean the occurrence of any of the following events: |
i)
| any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding voting securities; |
ii)
| the consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets; |
iii)
| the consummation of a merger or consolidation of the Company, with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company, or such surviving entity or its parent outstanding immediately after such merger or consolidation; or |
iv)
| a change in the composition of the Board, as a result of which fewer than a majority of the Directors are Incumbent Directors. “Incumbent Directors” shall mean Directors who either (A) are Directors of the Company, as applicable, as of the date hereof, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of those Directors whose election or nomination was not in connection with any transaction described in subsections (i), (ii) or (iii) or in connection with an actual or threatened proxy contest relating to the election of Directors of the Company. |
e)
| “Code” shall mean the U.S. Internal Revenue Code of 1986, as amended. |
f)
| “Committee” means a committee of the Board appointed by the Board in accordance with Section 15 hereof. |
g)
| “Common Stock” shall mean the common stock, par value $.001 per shares, of the Company (including any new, additional or different stock or securities resulting from any change in capitalization pursuant to Section 20 hereof). |
TABLE OF CONTENTS h)
| “Company” shall mean Harmonic Inc., a Delaware corporation, and any Designated Company of the Company. |
i)
| “Compensation” shall mean all base straight time gross earnings, including commissions and payments for overtime and shift premiums, but exclusive of payments for incentive compensation, incentive payments, bonuses and other compensation. The Administrator shall have the discretion to determine the application of this definition to participants outside the U.S. |
j)
| “Designated Company” shall mean any Subsidiary or Affiliate (in the case of a Non-423 Component) selected by the Administrator as eligible to participate in the Plan. The Administrator may so designate any Subsidiary or Affiliate, or revoke any such designation, at any time and from time to time, and may further designate such companies or participants as participating in the 423 Component or the Non-423 Component. The Administrator may also determine which Affiliates or eligible employees may be excluded from participation in the Plan, to the extent consistent with Section 423 of the Code or as implemented under the Non-423 Component. For purposes of the 423 Component, only the Company and its Subsidiaries may be Designated Companies; provided, however, that at any given time, a Subsidiary that is a Designated Company under the 423 Component will not be a Designated Company under the Non-423 Component. |
k)
| “Director” shall mean a member of the Board. |
l)
| “Employee” shall mean any individual who is an employee of the Company or any Designated Company on the payroll records thereof. For purposes of clarity, the term “Employee” shall not include the following, regardless of any subsequent reclassification as an employee by the Company or a Designated Company, any governmental agency, or any court: (i) any independent contractor; (ii) any consultant; (iii) any individual performing services for the Company or a Designated Company who has entered into an independent contractor or consultant agreement with the Company or a Designated Company; (iv) any individual performing services for the Company or a Designated Company under an independent contractor or consultant agreement, a purchase order, a supplier agreement or any other agreement that the Company or a Designated Company enters into for services; (v) any individual classified by the Company or a Designated Company as contract labor (such as contractors, contract employees, job shoppers), regardless of length of service; and (vi) any leased employee. The Administrator shall have discretion to determine whether an individual is an Employee for purposes of the Plan. For purposes of the Plan, the employment relationship shall be treated as continuing intact while the individual is on sick leave or other leave of absence approved by the Company; provided, however, for purposes of the Non-423 Component, where the period of leave exceeds 90 days and the individual’s right to reemployment is not guaranteed either by statute or by contract, the employment relationship shall be deemed to have terminated on the 91st day of such leave. |
m)
| “Eligible Employee” shall mean an Employee whose customary employment with the Company or a Designated Company is at least twenty (20) hours per week and more than five (5) months in any calendar year, unless otherwise required under applicable law. |
n)
| “Exchange Act” shall mean the U.S. Securities Exchange Act of 1934, as amended. |
o)
| “Exercise Date” shall mean the last Trading Day of each Purchase Period. |
p)
| “Fair Market Value” shall mean, as of any date, the value of Common Stock determined as follows: |
(i)
| if the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq Global Select Market, the Nasdaq Global Market or the Nasdaq Capital Market of the Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the date of determination, as reported in The Wall Street Journal or such other source as the Board deems reliable; |
(ii)
| if the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean of the closing bid and asked prices for the Common Stock on the date of determination, as reported in The Wall Street Journal or such other source as the Board deems reliable; and |
(iii)
| in the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Board. |
q)
| “Offering Date” shall mean the first Trading Day of each Offering Period. |
r)
| “Offering Periods” shall mean the periods of approximately 6 (six) months during which an option granted pursuant to the Plan |
TABLE OF CONTENTS may be exercised, commencing on the first Trading Day on or after July 1 and January 1 of each year and terminating on the last Trading Day on or after the January 1 and July 1 Offering Period commencement date approximately 6 (six) months later. The duration and timing of Offering Periods may be changed pursuant to Section 4 of this Plan. Unless otherwise specified by the Administrator, each Offering Period under the Plan to the Eligible Employees of the Company or a Designated Company shall be deemed a separate Offering Period, even if the dates of the applicable Offering Periods of each such Offering Period are identical, and the provisions of the Plan will separately apply to each Offering Period. To the extent permitted by U.S. Treasury Regulation Section 1.423-2(a)(1), the terms of each Offering Period need not be identical provided that the terms of the Plan and an Offering Period together satisfy any applicable provisions under U.S. Treasury Regulation Section 1.423-2(a)(2) and (a)(3).s)
| “Plan” shall mean this 2002 Employee Stock Purchase Plan, as amended from time to time. |
t)
| “Purchase Period” shall mean the approximately six (6) month period commencing on one Exercise Date and ending with the next Exercise Date, except that the first Purchase Period of any Offering Period shall commence on the Offering Date and end with the next Exercise Date. |
u)
| “Purchase Price” shall mean 85% (eighty-five percent) of the Fair Market Value of a share of Common Stock on the Offering Date or on the Exercise Date, whichever is lower; provided however, that the Purchase Price may be adjusted by the Administrator pursuant to Section 20. |
v)
| “Subsidiary” shall mean a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code. |
w)
| “Trading Day” shall mean a day on which the Nasdaq Global Select Market or such other securities exchange or inter-dealer quotation system as may at the applicable time be the principal market for the Common Stock System is open for trading. |
a)
| Offering Periods. Any Eligible Employee on a given Offering Date shall be eligible to participate in the Plan. |
b)
| Limitations. Any provisions of the Plan to the contrary notwithstanding, no Eligible Employee shall be granted an option under the Plan (i) to the extent that, immediately after the grant, such Eligible Employee (or any other person whose stock would be attributed to such Eligible Employee pursuant to Section 424(d) of the Code) would own capital stock of the Company and/or hold outstanding options to purchase such stock possessing 5% (five percent) or more of the total combined voting power or value of all classes of the capital stock of the Company or of any Subsidiary, or (ii) to the extent that his or her rights to purchase stock under all employee stock purchase plans of the Company and its subsidiaries accrues at a rate which exceeds $25,000 (twenty-five thousand dollars) worth of stock (determined at the fair market value of the shares at the time such option is granted) for each calendar year in which such option is outstanding at any time. |
4)
| Offering Periods. The Plan shall be implemented by consecutive Offering Periods with a new Offering Period commencing on the first Trading Day on or after July 1 and January 1 each year, or on such other date as the Board shall determine, and continuing thereafter until terminated in accordance with Section 20 hereof. The Board shall have the power to change the duration of Offering Periods (including the commencement dates thereof) with respect to future offerings without stockholder approval if such change is announced prior to the scheduled beginning of the first Offering Period to be affected thereafter. |
a)
| Offering Periods. An Eligible Employee may become a participant in the Plan by completing a subscription agreement in the form provided by the Company authorizing payroll deductions and filing it with the Company’s payroll office at least 5 (five) days prior to the applicable Offering Date or as otherwise determined by the Administrator. |
b)
| Payroll Deductions. Payroll deductions for a participant shall commence on the first pay day following the first day of the applicable Offering Period and shall end on the last pay day in the Offering Period to which such authorization is applicable, unless sooner terminated by the participant as provided in Section 11 hereof. If payroll deductions for purposes of the Plan are prohibited or otherwise problematic under applicable law (as determined by the Administrator in its discretion), the Administrator may require participants to contribute to the Plan by such other means as determined by the Administrator. Any reference to “payroll deductions” in Section 6 (or in any other section of the Plan) will similarly cover contributions by other means made pursuant to this Section 5. |
TABLE OF CONTENTS (a)
| At the time a participant files his or her subscription agreement, he or she shall elect to have payroll deductions made on each pay day during the Offering Period in an amount not exceeding 10% (ten percent) of the Compensation which he or she receives on each pay day during the Offering Period; provided, however, that should a pay day occur on an Exercise Date, a participant shall have the payroll deductions made on such day applied to his or her account under the new Offering Period or Purchase Period, as the case may be. A participant’s subscription agreement shall remain in effect for successive Offering Periods unless terminated as provided in Section 11 hereof. |
(b)
| Payroll deductions for a participant shall commence on the first pay day following the Offering Date and shall end on the last pay day in the Offering Period to which such authorization is applicable, unless sooner terminated by the participant as provided in Section 11 hereof, for any Offering Period as determined. |
(c)
| All payroll deductions made for a participant shall be credited to his or her account under the Plan and shall be withheld in whole percentages only. A participant may not make any additional payments into such account. |
(d)
| A participant may discontinue his or her participation in the Plan as provided in Section 11 hereof, or may decrease, but not increase, the rate of his or her payroll deductions during the Offering Period by completing or filing with the Company a new subscription agreement authorizing a change in payroll deduction rate. The Administrator may, in its discretion, limit the nature and/or number of participation rate changes during any Offering Period. The change in rate shall be effective with the first full payroll period following 5 (five) business days after the Company’s receipt of the new subscription agreement unless the Company elects to process a given change in participation more quickly. |
(e)
| Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and Section 3(b) hereof, a participant’s payroll deductions may be decreased to zero percent (0%) at any time during a Purchase Period. Payroll deductions shall recommence at the rate provided in such participant’s subscription agreement at the beginning of the first Purchase Period which is scheduled to end in the following calendar year, unless terminated by the participant as provided in Section 11 hereof. |
7)
| Grant of Option. On the Offering Date of each Offering Period, each Eligible Employee participating in such Offering Period shall be granted an option to purchase on each Exercise Date during such Offering Period (at the applicable Purchase Price) up to a number of shares of the Company’s Common Stock determined by dividing such Eligible Employee’s payroll deductions accumulated prior to such Exercise Date and retained in the Participant’s account as of the Exercise Date by the applicable Purchase Price; provided that in no event shall an Eligible Employee be permitted to purchase during each Purchase Period more than 1,500 shares of the Company’s Common Stock (subject to any adjustment pursuant to Section 20), and provided further that such purchase shall be subject to the limitations set forth in Sections 3(b), 7 and 12 hereof. The Eligible Employee may accept the grant of such option by turning in a completed subscription agreement to the Company at least 5 (five) days prior to an Offering Date or as otherwise determined by the Administrator. The Administrator may, for future Offering Periods, increase or decrease, in its absolute discretion, the maximum number of shares of the Company’s Common Stock an Eligible Employee may purchase during each Purchase Period of such Offering Period. Exercise of the option shall occur as provided in Section 8 hereof, unless the participant has withdrawn pursuant to Section 11 hereof. The option shall expire on the last day of the Offering Period. |
(a)
| Unless a participant withdraws from the Plan as provided in Section 11 hereof, his or her option for the purchase of shares shall be exercised automatically on the Exercise Date, and the maximum number of full shares subject to option shall be purchased for such participant at the applicable Purchase Price with the accumulated payroll deductions in his or her account. No fractional shares shall be purchased. Unless otherwise determined by the Administrator in advance of an Offering Period, any payroll deductions accumulated in a participant’s account which are not sufficient to purchase a full share shall be retained in the participant’s account for the subsequent Purchase Period or Offering Period, subject to earlier withdrawal by the participant as provided in Section 11 hereof. Any other funds left over in a participant’s account after the Exercise Date shall be returned to the participant. During a participant’s lifetime, a participant’s option to purchase shares hereunder is exercisable only by him or her. |
(b)
| If the Administrator determines that, on a given Exercise Date, the number of shares with respect to which options are to be exercised may exceed (i) the number of shares of Common Stock that were available for sale under the Plan on the Offering Date of the applicable Offering Period, or (ii) the number of shares available for sale under the Plan on such Exercise Date, the Administrator may in its sole discretion (x) provide that the Company shall make a pro rata allocation of the shares of Common |
TABLE OF CONTENTS Stock available for purchase on such Offering Date or Exercise Date, as applicable, in as uniform a manner as shall be practicable and as it shall determine in its sole discretion to be equitable among all participants exercising options to purchase Common Stock on such Exercise Date, and continue all Offering Periods then in effect, or (y) provide that the Company shall make a pro rata allocation of the shares available for purchase on such Offering Date or Exercise Date, as applicable, in as uniform a manner as shall be practicable and as it shall determine in its sole discretion to be equitable among all participants exercising options to purchase Common Stock on such Exercise Date, and terminate any or all Offering Periods then in effect pursuant to Section 20 hereof. The Company may make pro rata allocation of the shares available on the Offering Date of any applicable Offering Period pursuant to the preceding sentence, notwithstanding any authorization of additional shares for issuance under the Plan by the Company’s stockholders subsequent to such Offering Date. 9)
| Delivery. As soon as reasonably practicable after each Exercise Date on which a purchase of shares occurs, the Company shall arrange the delivery to each participant the shares purchased upon exercise of his or her option in a form determined by the Administrator. |
10)
| Tax Withholding. At the time the participant realizes income in connection with the Plan, the participant must make adequate provision for the U.S. and non-U.S. federal, state, local or other tax withholding obligations, if any, of the Company or (if different) the Subsidiary or Affiliate employing the participant. At any time, the Company and/or the applicable Subsidiary or Affiliate may, but shall not be obligated to, withhold from the participant’s compensation the amount necessary for the Company to meet applicable withholding obligations, including any withholding required to make available to the Company any tax deductions or benefits attributable to sale or early disposition of Common Stock by the Eligible Employee. In addition, the Company and/or the applicable Subsidiary or Affiliate may, but will not be obligated to, withhold from the proceeds of the sale of Common Stock or any other method of withholding that the Company or the Subsidiary or Affiliate deems appropriate to the extent permitted by U.S. Treasury Regulation Section 1.423-2(f) with respect to the 423 Component. The Company will not be required to issue any Common Stock under the Plan until such obligations are satisfied. |
(a)
| A participant may withdraw all but not less than all the payroll deductions credited to his or her account and not yet used to exercise his or her option under the Plan at any time by giving a written notice to the Company in the form provided by the Company. All of the participant’s payroll deductions credited to his or her account shall be paid to such participant as promptly as practicable after receipt of notice of withdrawal and such participant’s option for the Offering Period shall be automatically terminated, and no further payroll deductions for the purchase of shares shall be made for such Offering Period. If a participant withdraws from an Offering Period, payroll deductions shall not resume at the beginning of the succeeding Offering Period unless the participant delivers to the Company a new subscription agreement. |
(b)
| A participant’s withdrawal from an Offering Period shall not have any effect upon his or her eligibility to participate in any similar plan that may hereafter be adopted by the Company or in succeeding Offering Periods which commence after the termination of the Offering Period from which the participant withdraws. |
12)
| Termination of Employment. In the event a participant ceases to be an Eligible Employee of the Company or any Designated Company, as applicable, he or she will be deemed to have elected to withdraw from the Plan and the payroll deductions credited to such participant’s account during the Offering Period but not yet used to exercise the option will be returned to such participant or, in the case of his or her death, to the person or persons entitled thereto under Section 16 hereof, and such participant’s option will be automatically terminated. |
13)
| Interest. No interest shall accrue on the payroll deductions of a participant in the Plan, unless otherwise required under applicable law. |
(a)
| Subject to adjustment upon changes in capitalization of the Company as provided in Section 20 hereof, the maximum number of shares of the Company’s Common Stock which shall be made available for sale under the Plan shall be 20,450,000 shares. |
(b)
| Until the shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), a participant shall only have the rights of an unsecured creditor with respect to such shares, and no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to such shares. |
TABLE OF CONTENTS (c)
| Shares to be delivered to a participant under the Plan shall be registered in the name of the participant or in the name of the participant and his or her spouse. |
15)
| Administration. The Administrator shall administer the Plan and shall have full and exclusive discretionary authority to construe, interpret and apply the terms of the Plan, to determine eligibility, and to adjudicate all disputed claims filed under the Plan. The Administrator shall also have full and exclusive discretionary authority to accommodate the specific requirements of local laws, regulations and procedures for jurisdictions outside the U.S., and to adopt special rules or sub-plans applicable to employees of a particular Designated Company, whenever the Administrator determines that such rules are necessary or appropriate for the implementation of the Plan in a jurisdiction where such Designated Company has employees, regarding, without limitation, eligibility to participate in the Plan, handling and making of payroll deductions or contribution by other means, establishment of bank or trust accounts to hold payroll deductions, payment of interest, conversion of local currency, obligations to pay payroll tax, withholding procedures and handling of share issuances, any of which may vary according to applicable requirements; provided that if such special rules or sub-plans are inconsistent with the requirements of Section 423(b) of the Code, the employees subject to such special rules or sub-plans will participate in the Non-423 Component. Every finding, decision and determination made by the Administrator shall, to the full extent permitted by law, be final and binding upon all parties. |
16)
| Designation of Beneficiary. |
(a)
| A participant may file a written designation of a beneficiary who is to receive any shares and cash, if any, from the participant’s account under the Plan in the event of such participant’s death subsequent to an Exercise Date on which the option is exercised but prior to delivery to such participant of such shares and cash. In addition, a participant may file a written designation of a beneficiary who is to receive any cash from the participant’s account under the Plan in the event of such participant’s death prior to exercise of the option. If a participant is married and the designated beneficiary is not the spouse, spousal consent shall be required for such designation to be effective. |
(b)
| Such designation of beneficiary may be changed by the participant at any time by written notice. In the event of the death of a participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such participant’s death, the Company shall deliver such shares and/or cash to the executor or administrator of the estate of the participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such shares and/or cash to the spouse or to any one or more dependents or relatives of the participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate. |
(b)
| All beneficiary designations shall be in such form and manner as the Administrator may designate from time to time. For participants outside the U.S., the designation of beneficiary is subject to the Administrator’s prior approval. |
17)
| Transferability. Neither payroll deductions credited to a participant’s account nor any rights with regard to the exercise of an option or to receive shares under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution or as provided in Section 16 hereof) by the participant. Any such attempt at assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw funds from an Offering Period in accordance with Section 11 hereof. |
18)
| Use of Funds. All payroll deductions received or held by the Company under the Plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions, unless otherwise required under applicable law. Until shares are issued, participants shall only have the rights of an unsecured creditor. |
19)
| Reports. Individual accounts shall be maintained for each participant in the Plan. Statements of account shall be given to participating Eligible Employees at least annually, which statements shall set forth the amounts of payroll deductions, the Purchase Price, the number of shares purchased and the remaining cash balance, if any. |
20)
| Adjustments Upon Changes in Capitalization, Dissolution, Liquidation, Merger or Change-in-Control. |
(a)
| Changes in Capitalization. Subject to any required action by the stockholders of the Company, the maximum number of shares of the Company’s Common Stock which shall be made available for sale under the Plan, the maximum number of shares each participant may purchase each Purchase Period (pursuant to Sections 3(b), and 7), as well as the price per share and the number of shares of Common Stock covered by each option under the Plan which has not yet been exercised shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other change in the number of shares of Common Stock effected without receipt of consideration by the Company; provided, however, that |
TABLE OF CONTENTS conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by the Administrator, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an option. (b)
| Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Offering Period then in progress shall be shortened by setting a New Exercise Date (the “New Exercise Date”), and shall terminate immediately prior to the consummation of such proposed dissolution or liquidation, unless provided otherwise by the Administrator. The New Exercise Date shall be before the date of the Company’s proposed dissolution or liquidation. The Administrator shall notify each participant in writing, at least 10 (ten) business days prior to the New Exercise Date, that the Exercise Date for the participant’s option has been changed to the New Exercise Date and that the participant’s option shall be exercised automatically on the New Exercise Date, unless prior to such date the participant has withdrawn from the Offering Period as provided in Section 11 hereof. |
(c)
| Merger or Change-of-Control. In the event of a merger or Change-of-Control, each outstanding option shall be assumed or an equivalent option substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the option, any Purchase Periods then in progress shall be shortened by setting a New Exercise Date and any Offering Periods then in progress shall end on the New Exercise Date. The New Exercise Date shall be before the date of the Company’s proposed merger or Change-of-Control. The Administrator shall notify each participant in writing, at least 10 (ten) business days prior to the New Exercise Date, that the Exercise Date for the participant’s option has been changed to the New Exercise Date and that the participant’s option shall be exercised automatically on the New Exercise Date, unless prior to such date the participant has withdrawn from the Offering Period as provided in Section 11 hereof. |
21)
| Amendment or Termination. |
(a)
| The Administrator may at any time and for any reason terminate or amend the Plan. Except as otherwise provided in the Plan, no such termination can affect options previously granted, provided that an Offering Period may be terminated by the Administrator on any Exercise Date if the Administrator determines that the termination of the Offering Period or the Plan is in the best interests of the Company and its stockholders. Except as provided in Section 20 and this Section 21 hereof, no amendment may make any change in any option theretofore granted which adversely affects the rights of any participant. To the extent necessary to comply with Section 423 of the Code (or any successor rule or provision or any other applicable law, regulation or stock exchange rule), the Company shall obtain stockholder approval in such a manner and to such a degree as required. |
(b)
| Without stockholder consent and without regard to whether any participant rights may be considered to have been “adversely affected,” the Administrator shall be entitled to change the Offering Periods, limit the frequency and/or number of changes in the amount withheld during an Offering Period, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, permit payroll withholding in excess of the amount designated by a participant in order to adjust for delays or mistakes in the Company’s processing of properly completed withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Stock for each participant properly correspond with amounts withheld from the participant’s Compensation, and establish such other limitations or procedures as the Administrator determines in its sole discretion advisable which are consistent with the Plan. |
(c)
| In the event the Administrator determines that the ongoing operation of the Plan may result in unfavorable financial accounting consequences, the Board may, in its discretion and, to the extent necessary or desirable, modify or amend the Plan to reduce or eliminate such accounting consequence including, but not limited to: |
i)
| increasing the Purchase Price for any Offering Period including an Offering Period underway at the time of the change in Purchase Price; |
(ii)
| shortening any Offering Period so that Offering Period ends on a new Exercise Date, including an Offering Period underway at the time of the Board action; and |
TABLE OF CONTENTS
| Such modifications or amendments shall not require stockholder approval or the consent of any Plan participants. |
22)
| Notices. All notices or other communications by a participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form and manner specified by the Company at the location, or by the person, designated by the Company for the receipt thereof. |
23)
| Conditions Upon Issuance of Shares. Shares shall not be issued with respect to an option unless the exercise of such option and the issuance and delivery of such shares pursuant thereto shall comply with all applicable provisions of law, domestic or foreign, including, without limitation, the U.S. Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated thereunder, and the requirements of any stock exchange upon which the shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance. |
| As a condition to the exercise of an option, the Company may require the person exercising such option to represent and warrant at the time of any such exercise that the shares are being purchased only for investment and without any present intention to sell or distribute such shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned applicable provisions of law. |
24)
| Term of Plan. The Plan shall become effective upon the earlier to occur of its adoption by the Board of Directors or its approval by the stockholders of the Company. It shall continue in effect until terminated under Section 21 hereof. |
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