Exhibit 4.6
EMERSON RADIO CORP.
2004 EMPLOYEE STOCK INCENTIVE PLAN
1. PURPOSES OF THE PLAN. The purposes of this Emerson Radio
Corp. 2004 Employee Stock Incentive Plan are: to attract and retain the
best available personnel for positions of substantial responsibility,
to provide additional incentives to Employees and Consultants, and to
promote the success of the Company's business. Options granted under
the Plan may be Incentive Stock Options or Nonstatutory Stock Options,
as determined by the Administrator at the time of grant. Stock Purchase
Rights may also be granted under the Plan.
2. DEFINITIONS. As used herein, the following definitions shall apply:
"Administrator" means the Board or any of its Committees as shall be
administering the Plan, in accordance with Section 4 of the Plan.
"Applicable Laws" means the requirements relating to the administration
of stock option plans under U.S. state corporate laws, U.S. federal and state
securities laws, the Code, any stock exchange or quotation system on which the
Common Stock is listed or quoted and the applicable laws of any foreign country
or jurisdiction where Options or Stock Purchase Rights are, or will be, granted
under the Plan.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means a committee of Directors appointed by the Board in
accordance with Section 4 of the Plan.
"Common Stock" means the common stock, par value $.01 per share, of the
Company.
"Company" means Emerson Radio Corp., a Delaware corporation.
"Consultant" means any person, including an advisor, engaged by the
Company or a Parent or Subsidiary to render services to such entity, other than
an Employee or a Director.
"Director" means a member of the Board.
"Disability" means total and permanent disability as defined in Section
22(e)(3) of the Code.
"Employee" means any person, including officers and Inside Directors,
serving as an employee of the Company or any Parent or Subsidiary. An individual
shall not cease to be an Employee in the case of (i) any leave of absence
approved by the Company or (ii) transfers between locations of the Company or
between the Company, its Parent, any Subsidiary or any successor. For purposes
of an Option initially granted as an Incentive Stock Option, if a leave of
absence of more than three months precludes such Option from being treated as an
Incentive Stock Option under the Code, such Option thereafter shall be treated
as a Nonstatutory Stock Option for purposes of this Plan. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means, 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 National Market or The Nasdaq SmallCap Market of The
Nasdaq Stock Market, the Fair Market Value of a Share of Common
Stock shall be the closing sales price of a Share of Common Stock
(or the closing bid, if no such sales were reported) as quoted on
such exchange or system for the last market trading day prior to
the time of determination, as reported in The Wall Street Journal
or such other source as the Administrator deems reliable;
(ii) if the Common Stock is regularly quoted by a recognized
securities dealer but is not listed in the manner contemplated by
clause (i) above, the Fair Market Value of a Share of Common Stock
shall be the mean between the high bid and low asked prices for the
Common Stock on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other
source as the Administrator deems reliable; or
(iii) if neither clause (i) above nor clause (ii) above
applies, the Fair Market Value shall be determined in good faith by
the Administrator.
"Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
"Inside Director" means a Director who is an Employee.
"Nonstatutory Stock Option" means an Option not intended to qualify as
an Incentive Stock Option.
"Notice of Grant" means a written or electronic notice evidencing
certain terms and conditions of an individual Option or Stock Purchase Right
grant. The Notice of Grant is part of the Option Agreement.
"Option" means a stock option granted pursuant to the Plan.
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"Option Agreement" means an agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant. The
Option Agreement is subject to the terms and conditions of the Plan.
"Optioned Stock" means the Common Stock subject to an Option or Stock
Purchase Right.
"Optionee" means the holder of an outstanding Option or Stock Purchase
Right granted under the Plan.
"Parent" means a "parent corporation" of the Company (or, in the
context of Section 13(c) of the Plan, of a successor corporation), whether now
or hereafter existing, as defined in Section 424(e) of the Code.
"Plan" means this Emerson Radio Corp. 2004 Employee Stock Incentive
Plan.
"Restricted Stock" means shares of Common Stock acquired pursuant to a
grant of Stock Purchase Rights under Section 11 of the Plan.
"Restricted Stock Purchase Agreement" means a written agreement between
the Company and an Optionee evidencing the terms and restrictions applying to
stock purchased under a Stock Purchase Right. The Restricted Stock Purchase
Agreement is subject to the terms and conditions of the Plan and the Notice of
Grant.
"Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor to
Rule 16b-3, as in effect when discretion is being exercised with respect to the
Plan.
"Section 16(b)" means Section 16(b) of the Exchange Act.
"Service Provider" means an Employee or Consultant.
"Share" means a share of the Common Stock, as adjusted in accordance
with Section 13 of the Plan.
"Stock Purchase Right" means the right to purchase Common Stock
pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.
"Subsidiary" means a "subsidiary corporation" of the Company (or, in
the context of Section 13(c) of the Plan, of a successor corporation), whether
now or hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 14
of the Plan, the maximum aggregate number of Shares that may be optioned and
sold under the Plan is two million five hundred thousand (2,500,000) Shares. The
Shares may be authorized, but unissued, or reacquired Common Stock. If an Option
or Stock Purchase Right expires or becomes unexercisable without having been
exercised in full, the unpurchased Shares that were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated); provided, however, that Shares that have actually been issued under
the Plan, whether upon exercise of an Option or Right, shall not be returned to
the Plan and shall not become available for future distribution under the Plan,
except that if Shares of Restricted Stock are repurchased by the Company at
their original purchase price, such Shares shall become available for future
grant or sale under the Plan.
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4. ADMINISTRATION OF THE PLAN.
(a) Procedure.
(i) Multiple Administrative Bodies. Different Committees with
respect to different groups of Service Providers may administer the
Plan.
(ii) Section 162(m). To the extent that the Administrator
determines it to be desirable to qualify Options granted hereunder
as "performance-based compensation" within the meaning of Section
162(m) of the Code, the Plan shall be administered by a Committee
of two or more "outside directors" within the meaning of Section
162(m) of the Code and the regulations promulgated thereunder.
(iii) Rule 16b-3. If the Company is subject to Section 16(b),
the transactions contemplated hereunder shall (from the date that
the Company is first subject to Section 16(b)), be structured to
satisfy the requirements for exemption under Rule 16b-3.
(iv) Other Administration. Other than as provided above, the
Plan shall be administered by (A) the Board or (B) a Committee,
which committee shall be constituted to satisfy Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the Plan,
and in the case of a Committee, subject to the specific duties delegated by the
Board to such Committee, the Administrator shall have the authority, in its
discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options and Stock
Purchase Rights may be granted hereunder;
(iii) to determine the number of shares of Common Stock to be
covered by each Option and Stock Purchase Right granted hereunder;
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any Option or Stock Purchase Right
granted hereunder. Such terms and conditions include, but are not
limited to, the exercise price, the time or times when Options or
Stock Purchase Rights may be exercised (which may be based on
performance criteria), any vesting acceleration or waiver of
forfeiture provisions, and any restriction or limitation regarding
any Option or Stock Purchase Right or the shares of Common Stock
relating thereto, based in each case on such factors as the
Administrator, in its sole discretion, shall determine;
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(vi) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan;
(vii) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to
sub-plans established for the purpose of qualifying for preferred
tax treatment under foreign tax laws;
(viii) to modify or amend each Option or Stock Purchase Right
(subject to Section 15(c) of the Plan), including the discretionary
authority to extend the post-termination exercisability period of
Options longer than is otherwise provided for in the Plan;
(ix) to allow Optionees to satisfy withholding tax obligations
by having the Company withhold from the Shares to be issued upon
exercise of an Option or Stock Purchase Right that number of Shares
having a Fair Market Value equal to the amount required to be
withheld, provided that withholding is calculated at the minimum
statutory withholding level. The Fair Market Value of the Shares to
be withheld shall be determined on the date that the amount of tax
to be withheld is to be determined. All determinations to have
Shares withheld for this purpose shall be made by the Administrator
in its discretion;
(x) to authorize any person to execute on behalf of the Company
any instrument required to effect the grant of an Option or Stock
Purchase Right previously granted by the Administrator; and
(xi) to make all other determinations deemed necessary or
advisable for administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's decisions,
determinations and interpretations shall be final and binding on all Optionees
and any other holders of Options or Stock Purchase Rights.
5. ELIGIBILITY. Nonstatutory Stock Options and Stock Purchase
Rights may be granted to Service Providers. Incentive Stock Options may
be granted only to Employees.
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6. LIMITATIONS.
(a) Each Option shall be designated in the Option Agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option.
However, notwithstanding such designation, if a single Employee becomes
eligible in any given year to exercise Incentive Stock Options for
Shares having a Fair Market Value in excess of $100,000, those Options
representing the excess shall be treated as Nonstatutory Stock Options.
In the previous sentence, "Incentive Stock Options" include Incentive
Stock Options granted under any plan of the Company or any Parent or
any Subsidiary. For the purpose of deciding which Options apply to
Shares that "exceed" the $100,000 limit, Incentive Stock Options shall
be taken into account in the same order as granted. The Fair Market
Value of the Shares shall be determined as of the time the Option with
respect to such Shares is granted.
(b) Neither the Plan nor any Option or Stock Purchase Right
shall confer upon an Optionee any right with respect to continuing the
Optionee's relationship as a Service Provider with the Company, nor
shall they interfere in any way with the Optionee's right or the
Company's right to terminate such relationship at any time, with or
without cause.
(c) The following limitations shall apply to grants of
Options:
(i) No Service Provider shall be granted, in any fiscal year of
the Company, Options to purchase more than one million (1,000,000)
Shares.
(ii) The foregoing limitation shall be adjusted proportionately
in connection with any change in the Company's capitalization as
described in Section 13.
(iii) If an Option is canceled in the same fiscal year of the
Company in which it was granted (other than in connection with a
transaction described in Section 13), the canceled Option will be
counted against the limits set forth in subsection (i) above.
7. TERM OF THE PLAN.Subject to Section 19 of the Plan, the Plan shall
become effective upon its adoption by the Board. It shall continue in effect for
a term of ten (10) years unless terminated earlier under Section 15 of the Plan.
8. TERM OF OPTIONS. The term of each Option shall be stated in the
Option Agreement. In the case of an Incentive Stock Option, the term shall be
ten (10) years from the date of grant or such shorter term as may be provided in
the Option Agreement. Moreover, in the case of an Incentive Stock Option granted
to an Optionee who, at the time the Incentive Stock Option is granted, owns,
directly or indirectly, stock representing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or any Parent
or Subsidiary, the term of the Incentive Stock Option shall be five (5) years
from the date of grant or such shorter term as may be provided in the Option
Agreement.
9. OPTION EXERCISE PRICE; EXERCISABILITY.
(a) Exercise Price. The per share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
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(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the Incentive
Stock Option is granted, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price shall be no less
than 110% of the Fair Market Value per Share on the date of grant, or
(B) granted to any Employee other than an Employee
described in paragraph (A) immediately above, the per Share exercise
price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
(ii) In the case of a Nonstatutory Stock Option, the per Share
exercise price shall be determined by the Administrator. In the
case of a Nonstatutory Stock Option intended to qualify as
"performance-based compensation" within the meaning of Section
162(m) of the Code, the per Share exercise price shall be no less
than 100% of the Fair Market Value per Share on the date of grant.
(iii) Notwithstanding the foregoing, Options may be granted
with a per Share exercise price of less than 100% (or 110%, if
clause (A) above applies) of the Fair Market Value per Share on the
date of grant pursuant to a merger or other corporate transaction.
(b) Waiting Period and Exercise Dates. At the time an Option is
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions that must be satisfied before the
Option may be exercised.
10. EXERCISE OF OPTIONS; CONSIDERATION.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option granted
hereunder shall be exercisable according to the terms of the Plan and at such
times and under such conditions as determined by the Administrator and set forth
in the Option Agreement. In the event that the Option Agreement does not provide
for a vesting schedule, the applicable Option shall vest and become exercisable
as to 33-1/3% of the Shares subject to the Option on the first anniversary of
its date of grant, as to 66-2/3% of the Shares subject to the Option on the
second anniversary of its date of grant, and as to 100% of the Shares subject to
the Option on the third anniversary of its date of grant. Unless the
Administrator provides otherwise, vesting of Options granted hereunder shall be
tolled during any unpaid leave of absence. An Option may not be exercised for a
fraction of a Share. An Option shall be deemed exercised when the Company
receives: (i) written or electronic notice of exercise (in accordance with the
Option Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and Section 10(e) of the
Plan. Shares issued upon exercise of an Option shall be issued in the name of
the Optionee. 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), no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be issued) such
Shares promptly after the Option is exercised. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the
Shares are issued, except as provided in Section 13 of the Plan. Exercising an
Option in any manner shall decrease the number of Shares thereafter available,
both for purposes of the Plan and for sale under the Option, by the number of
Shares as to which the Option is exercised.
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(b) Termination of Relationship as a Service Provider. If an Optionee
ceases to be a Service Provider, other than due to termination for Cause (as
hereinafter defined) or upon the Optionee's death or Disability, the Optionee
may exercise his or her Option within such period of time as is specified in the
Option Agreement to the extent that the Option is vested on the date of
termination (but in no event later than the expiration of the term of such
Option as set forth in the Option Agreement). In the absence of a specified time
in the Option Agreement and except as otherwise provided in Sections 10(d) and
10(e) of this Plan, the Option shall remain exercisable for three months
following the Optionee's termination (but in no event later than the expiration
of the term of such Option). If, on the date of termination, the Optionee is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option in full within the time specified
by the Administrator, the unexercised portion of the Option shall terminate, and
the Shares covered by such unexercised portion of the Option shall revert to the
Plan. An Optionee who changes his or her status as a Service Provider (e.g.,
from being an Employee to being a Consultant) shall not be deemed to have ceased
being a Service Provider for purposes of this Section 10(b); however, if an
Optionee owning Incentive Stock Options ceases being an Employee but continues
as a Service Provider, such Incentive Stock Options shall be deemed to be
Nonstatutory Options three months after the date of such cessation.
(c) Termination of Service Provider for Cause. If an Optionee ceases to
be a Service Provider as a result of termination for Cause (as hereinafter
defined), all rights of Optionee to exercise his or her Option shall terminate
immediately. For purposes of this Plan, "Cause" shall have the meaning ascribed
to it in such Service Provider's written agreement with the Company or if such
person is not a party to a written agreement with the Company or such agreement
does not define "Cause" in connection with the termination of services, "Cause"
shall mean, in each case as determined by the Committee, (i) fraud,
misappropriation, embezzlement, or willful and material damage of or to any
property of the Company; (ii) conviction of any crime (whether or not involving
the Company) which constitutes a felony in the jurisdiction involved; (iii)
malfeasance or nonfeasance in the performance by Service Provider of his or her
duties; (iv) failure or refusal of Service Provider to perform his or her duties
in accordance with the reasonable directions given by the Board of Directors; or
(v) the commission of any material act of dishonesty involving the Company or
the disclosure of any confidential information of the Company in an unauthorized
manner. It is also specifically understood that, in the event that the
termination of a Service Provider is not for "Cause" (as defined herein), but
the Company determines after such termination that, in its reasonable judgment,
it could have terminated Service Provider for "Cause" (as defined herein), all
remaining rights of Optionee to exercise his or her Option(s) during any time
period that may still be open pursuant to Section 10(b) herein shall terminate
immediately.
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(d) Disability of an Optionee. If an Optionee ceases to be a Service
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option Agreement
to the extent the Option is vested on the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the Optionee's
termination (but in no event later than the expiration of the term of such
Option). If, on the date of termination, the Optionee is not vested as to his or
her entire Option, the Shares covered by the unvested portion of the Option
shall revert to the Plan. If, after termination, the Optionee does not exercise
his or her Option in full within the time specified herein, the unexercised
portion of the Option shall terminate, and the Shares covered by such
unexercised portion of the Option shall revert to the Plan.
(e) Death of an Optionee. If an Optionee dies while a Service Provider,
the Option may be exercised within such period of time as is specified in the
Option Agreement (but in no event later than the expiration of the term of such
Option as set forth in the Option Agreement), by the Optionee's estate or by a
person who acquires the right to exercise the Option by bequest or inheritance,
but only to the extent that the Option is vested on the date of death. In the
absence of a specified time in the Option Agreement, the Option shall remain
exercisable for twelve (12) months following the Optionee's death ((but in no
event later than the expiration of the term of such Option). If, at the time of
death, the Optionee is not vested as to his or her entire Option, the Shares
covered by the unvested portion of the Option shall revert to the Plan. If the
Option is not so exercised in full within the time specified herein, the
unexercised portion of the Option shall terminate, and the Shares covered by the
unexercised portion of such Option shall revert to the Plan.
(f) Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration. Such consideration may consist
entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares which (A) in the case of Shares acquired upon
exercise of an option at a time when the Company is subject to
Section 16(b), have been owned by the Optionee for more than six
months on the date of surrender, and (B) have a Fair Market Value
on the date of surrender equal to the aggregate exercise price of
the Shares as to which said Option shall be exercised;
(v) consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the
Plan;
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(vi) a reduction in the amount of any Company liability to the
Optionee, including any liability attributable to the Optionee's
participation in any Company-sponsored deferred compensation
program or arrangement;
(vii) any combination of the foregoing methods of payment; or
(viii) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.
11. STOCK PURCHASE RIGHTS.
(a) Rights to Purchase. Stock Purchase Rights may be issued either
alone, in addition to, or in tandem with other awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator determines
that it will offer Stock Purchase Rights under the Plan, it shall advise the
offeree in writing or electronically, by means of a Notice of Grant and/or a
Restricted Stock Purchase Agreement in the form determined by the Administrator,
of the terms, conditions and restrictions related to the offer, including the
number of Shares that the offeree shall be entitled to purchase and the price to
be paid for such Shares. The offer shall be accepted by execution of a
Restricted Stock Purchase Agreement in the form determined by the Administrator.
(b) Repurchase Option. Unless the Administrator determines otherwise,
the Restricted Stock Purchase Agreement shall grant the Company a repurchase
option exercisable upon the voluntary or involuntary termination of the
purchaser's service with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock Purchase Agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at a rate determined by the
Administrator. In the event that the Restricted Stock Purchase Agreement does
not provide for a lapsing schedule, the restrictions shall lapse as to 33-1/3%
of the Shares subject to the Restricted Stock Purchase Agreement on the first
anniversary of the grant of the Stock Purchase Right, as to 66-2/3% of the
Shares subject to the Restricted Stock Purchase Agreement on the second
anniversary of the grant of the Stock Purchase Right, and as to 100% of the
Shares subject to the Restricted Stock Purchase Agreement on the third
anniversary of the grant of the Stock Purchase Right.
(c) Other Provisions. The Restricted Stock Purchase Agreement shall
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion.
(d) Rights as a Shareholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 13
of the Plan.
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12. NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS. Unless
determined otherwise by the Administrator, an Option or Stock Purchase Right may
not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee. If the
Administrator makes an Option or Stock Purchase Right transferable, such Option
or Stock Purchase Right shall contain such additional terms and conditions as
the Administrator deems appropriate.
13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR
ASSET SALE.
(a) Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, as well as the price per share of Common Stock covered by each
such outstanding Option or Stock Purchase Right, 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 increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that 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 Board,
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 or Stock
Purchase Right.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the Option would not otherwise be exercisable. In addition, the
Administrator may provide that any Company repurchase option applicable to any
Shares purchased upon exercise of an Option or Stock Purchase Right shall lapse
as to all such Shares, provided the proposed dissolution or liquidation takes
place at the time and in the manner contemplated. To the extent it has not been
previously exercised, an Option or Stock Purchase Right will terminate
immediately prior to the consummation of such proposed action.
(c) Merger or Asset Sale. In the event of a merger or consolidation of
the Company with or into another corporation or any other entity or the exchange
of substantially all of the outstanding stock of the Company for shares of
another entity or other property in which, after either transaction the prior
shareholders of the Company own less than fifty percent (50%) of the voting
shares of the continuing or surviving entity, or in the event of the sale of all
or substantially all of the assets of the Company, (either event, a "Change of
Control"), then each outstanding Option and Stock Purchase Right shall be
assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. In the event
that the Administrator determines that the successor corporation or a Parent or
a Subsidiary of the successor corporation has refused to assume or substitute an
equivalent option or right for each outstanding Option or Stock Purchase Right,
the Optionees shall fully vest in and have the right to exercise each
outstanding Option and Stock Purchase Right as to all of the Optioned Stock
covered thereby, including Shares which would not otherwise be vested or
exercisable. If an Option and/or Stock Purchase Right becomes fully vested and
exercisable in lieu of assumption or substitution in the event of a Change of
Control, the Administrator shall notify all Optionees that all outstanding
Options and Stock Purchase Rights shall be fully exercisable for a period of
fifteen (15) days from the date of such notice and that any Options and Stock
Purchase Rights that are not exercised within such period shall terminate upon
the expiration of such period. For the purposes of this paragraph, all
outstanding Options and Stock Purchase Rights shall be considered assumed if,
following the consummation of the Change of Control, the Option and Stock
Purchase Right confers the right to purchase or receive, for each Share of
Optioned Stock subject to the Option or Stock Purchase Right immediately prior
to the consummation of the Change of Control, the consideration (whether stock,
cash, or other securities property) received in the Change of Control by holders
of Common Stock for each Share held on the effective date of the transaction
(and if holders were offered a choice of consideration, the type chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the Change of Control is not solely common stock
of the successor corporation or its Parent, the Administrator may, with the
consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option or Stock Purchase Right, for each Share
of Optioned Stock subject to the Option or Stock Purchase Right, to be solely
common stock of the successor corporation or its Parent or Subsidiary equal in
fair market value to the per share consideration received by holders of Common
Stock in the Change of Control.
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14. DATE OF GRANT. The date of grant of an Option or Stock Purchase
Right shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other later
date as is determined by the Administrator. Notice of the determination shall be
provided to each Optionee within a reasonable time after the date of such grant.
15. AMENDMENT AND TERMINATION OF THE PLAN.
(a) Amendment and Termination. The Board may at any time amend, alter,
suspend or terminate the Plan.
(b) Shareholder Approval. The Company shall obtain shareholder approval
of any Plan amendment to the extent necessary to comply with Applicable Laws.
(c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to Options granted under the
Plan prior to the date of such termination.
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16. CONDITIONS UPON ISSUANCE OF SHARES.
(a) Legal Compliance. Shares shall not be issued pursuant to the
exercise of an Option or Stock Purchase Right unless the exercise of such Option
or Stock Purchase Right and the issuance and delivery of such Shares shall
comply with Applicable Laws and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
(b) Investment Representations. As a condition to the exercise of an
Option or Stock Purchase Right, the Company may require the person exercising
such Option or Stock Purchase Right 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.
(c) Additional Conditions. The Administrator shall have the authority
to condition the grant of any Option or Stock Purchase Right in such other
manner that the Administrator determines to be appropriate, provided that such
condition is not inconsistent with the terms of the Plan. Such conditions may
include, among other things, obligations of Optionees to execute lock-up
agreements and shareholder agreements in the future.
17. 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.
18. RESERVATION OF SHARES. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
19. SHAREHOLDER APPROVAL. The Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the manner and to the
degree required under Applicable Laws. Notwithstanding any provision in the Plan
to the contrary, any exercise of an Option granted before the Company has
obtained shareholder approval of the Plan in accordance with this Section 19
shall be conditioned upon obtaining such shareholder approval of the Plan in
accordance with this Section 19.
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20. WITHHOLDING; NOTICE OF SALE. The Company shall be entitled to
withhold from any amounts payable to an Employee any amounts which the Company
determines, in its discretion, are required to be withheld under any Applicable
Law as a result of any action taken by a holder of an Option or Stock Purchase
Right. Each Optionee who sells any Shares acquired upon exercise of an Incentive
Stock Option shall, promptly after such sale, provide the Company with notice of
such sale and such information regarding such sale as the Company shall
reasonably request.
21. GOVERNING LAW. This Plan shall be governed by the laws of the state
of Delaware.
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