OTHER MATTERS
The
Company knows of no other matters to be submitted to the meeting.
If any other matters properly come before the meeting, it is the
intention of the persons named in the enclosed Proxy to vote the
shares they represent as the Board of Directors may
recommend.
|
|
By Order of the
Board of Directors,
GAYN
ERICKSON
President and Chief Executive Officer
|
Dated:
September 26, 2019
APPENDIX A
AEHR TEST SYSTEMS
2016 EQUITY INCENTIVE
PLAN
1.
Purposes of the Plan. The
purposes of this Plan are:
●
to attract and
retain the best available personnel for positions of substantial
responsibility,
●
to provide
additional incentive to Employees, Directors and Consultants,
and
●
to promote the
success of the Company’s business.
The
Plan permits the grant of Incentive Stock Options, Nonstatutory
Stock Options, Restricted Stock, Restricted Stock Units, Stock
Appreciation Rights, Performance Units, Performance Shares, and
other stock or cash awards as the Administrator may
determine.
2.
Definitions. As used herein,
the following definitions will apply:
(a) “Administrator”
means the Board or any of its Committees as will be administering
the Plan, in accordance with Section 4 of the Plan.
(b) “Affiliate”
means any entity that, directly or indirectly, controls, is
controlled by, or is under common control with, the
Company.
(c) “Applicable
Laws” means the legal and regulatory requirements
relating to the administration of equity-based awards, including
but not limited to U.S. federal and 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 non-U.S. country or jurisdiction where
Awards are, or will be, granted under the Plan.
(d) “Award”
means, individually or collectively, a grant under the Plan of
Options, Stock Appreciation Rights, Restricted Stock, Restricted
Stock Units, Performance Units, Performance Shares, or other stock
or cash awards as the Administrator may determine.
(e) “Award
Agreement” means the written or electronic agreement
setting forth the terms and provisions applicable to each Award
granted under the Plan. The Award Agreement is subject to the terms
and conditions of the Plan.
(f) “Board”
means the Board of Directors of the Company.
(g) “Change
in Control” means the occurrence of any of the
following events:
(i) A
change in the ownership of the Company which occurs on the date
that any one person, or more than one person acting as a group
(“Person”), acquires ownership of the stock of the
Company that, together with the stock held by such Person,
constitutes more than fifty percent (50%) of the total voting power
of the stock of the Company; provided, however, that for purposes
of this subsection, the acquisition of additional stock by any one
Person, who is considered to own more than fifty percent (50%) of
the total voting power of the stock of the Company will not be
considered a Change in Control. Further, if the shareholders of the
Company immediately before such change in ownership continue to
retain immediately after the change in ownership, in substantially
the same proportions as their ownership
of
shares of the Company’s voting stock immediately prior to the
change in ownership, direct or indirect beneficial ownership of
fifty percent (50%) or more of the total voting power of the stock
of the Company or of the ultimate parent entity of the Company,
such event shall not be considered a Change in Control under this
subsection (i). For this purpose, indirect beneficial ownership
shall include, without limitation, an interest resulting from
ownership of the voting securities of one or more corporations or
other business entities which own the Company, as the case may be,
either directly or through one or more subsidiary corporations or
other business entities; or
(ii) A
change in the effective control of the Company which occurs on the
date that a majority of members of the Board is replaced during any
twelve (12)-month period by Directors whose appointment or election
is not endorsed by a majority of the members of the Board prior to
the date of the appointment or election. For purposes of this
subsection (ii), if any Person is considered to be in effective
control of the Company, the acquisition of additional control of
the Company by the same Person will not be considered a Change in
Control; or
(iii) A
change in the ownership of a substantial portion of the
Company’s assets which occurs on the date that any Person
acquires (or has acquired during the twelve (12) month period
ending on the date of the most recent acquisition by such person or
persons) assets from the Company that have a total gross fair
market value equal to or more than fifty percent (50%) of the total
gross fair market value of all of the assets of the Company
immediately prior to such acquisition or acquisitions; provided,
however, that for purposes of this subsection (iii), the following
will not constitute a change in the ownership of a substantial
portion of the Company’s assets: (A) a transfer to an entity
that is controlled by the Company’s shareholders immediately
after the transfer, or (B) a transfer of assets by the Company to:
(1) a shareholder of the Company (immediately before the asset
transfer) in exchange for or with respect to the Company’s
stock, (2) an entity, fifty percent (50%) or more of the total
value or voting power of which is owned, directly or indirectly, by
the Company, (3) a Person, that owns, directly or indirectly, fifty
percent (50%) or more of the total value or voting power of all the
outstanding stock of the Company, or (4) an entity, at least fifty
percent (50%) of the total value or voting power of which is owned,
directly or indirectly, by a Person described in this subsection
(iii)(B)(3). For purposes of this subsection (iii), gross fair
market value means the value of the assets of the Company, or the
value of the assets being disposed of, determined without regard to
any liabilities associated with such assets.
For
purposes of this definition, persons will be considered to be
acting as a group if they are owners of a corporation that enters
into a merger, consolidation, purchase or acquisition of stock, or
similar business transaction with the Company.
Notwithstanding the
foregoing, a transaction will not be deemed a Change in Control
unless the transaction qualifies as a change in control event
within the meaning of Code Section 409A, as it has been and may be
amended from time to time, and any proposed or final Treasury
Regulations and Internal Revenue Service guidance that has been
promulgated or may be promulgated thereunder from time to
time.
Further
and for the avoidance of doubt, a transaction will not constitute a
Change in Control if: (i) its sole purpose is to change the state
of the Company’s incorporation, or (ii) its sole purpose is
to create a holding company that will be owned in substantially the
same proportions by the persons who held the Company’s
securities immediately before such transaction.
(h)
“Code”
means the Internal Revenue Code of 1986, as amended. Reference to a
specific section of the Code or regulation thereunder will include
such section or regulation, any valid regulation promulgated under
such section, and any comparable provision of any future
legislation or regulation amending, supplementing or superseding
such section or regulation.
(i)
“Committee” means a
committee of Directors or of other individuals satisfying
Applicable Laws appointed by the Board, or a duly authorized
committee of the Board, in accordance with Section 4
hereof.
(j)
“Common
Stock” means the common stock of the
Company.
(k)
“Company” means Aehr Test
Systems, a California corporation, or any successor
thereto.
(l)
“Consultant” means any
natural person, including an advisor, engaged by the Company or a
Parent, Subsidiary or Affiliate to render bona fide services to
such entity, provided the services (i) are not in connection with
the offer or sale of securities in a capital-raising transaction,
and (ii) do not directly promote or maintain a market for the
Company’s securities, in each case, within the meaning of
Form S-8 promulgated under the Securities Act, and provided,
further, that a Consultant will include only those persons to whom
the issuance of Shares may be registered under Form S-8 promulgated
under the Securities Act.
(m)
“Determination
Date” means the latest possible date that will not
jeopardize the qualification of an Award granted under the Plan as
“performance-based compensation” under Code Section
162(m).
(n)
“Director” means a member
of the Board.
(o)
“Disability” means total
and permanent disability as defined in Section 22(e)(3) of the
Code, provided that in the case of Awards other than Incentive
Stock Options, the Administrator in its discretion may determine
whether a permanent and total disability exists in accordance with
uniform and non-discriminatory standards adopted by the
Administrator from time to time.
(p)
“Employee” means any
person, including Officers and Directors, employed by the Company
or any Parent, Subsidiary or Affiliate of the Company. Neither
service as a Director nor payment of a director’s fee by the
Company will be sufficient to constitute “employment”
by the Company.
(q)
“Exchange
Act” means the Securities Exchange Act of 1934, as
amended.
(r)
“Exchange
Program” means a program under which (i) outstanding
Awards are surrendered or cancelled in exchange for awards of the
same type (which may have higher or lower exercise prices and
different terms), awards of a different type, and/or cash, (ii)
Participants would have the opportunity to transfer any outstanding
Awards to a financial institution or other person or entity
selected by the Administrator, and/or (iii) the exercise price of
an outstanding Award is increased or reduced.
(s)
“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 New York
Stock Exchange, the NASDAQ Capital Select Market, the NASDAQ Global
Market or the NASDAQ Capital Market of The NASDAQ Stock Market, its
Fair Market Value will 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 day 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 selling prices are not reported, the Fair Market Value
of a Share will be the mean between the high bid and low asked
prices for the Common Stock on the date of determination (or, if no
bids and asks were
reported
on that date, as applicable, on the last trading date such bids and
asks were reported), as reported in The Wall Street Journal or such
other source as the Administrator deems reliable; or
(iii) In
the absence of an established market for the Common Stock, the Fair
Market Value will be determined in good faith by the
Administrator.
(t) “Fiscal
Year” means the fiscal year of the
Company.
(u)
“Full Value
Award” means any Award which results in the issuance
of Shares other than Options, Stock Appreciation Rights or other
Awards that are based solely on an increase in value of the Shares
following the grant date.
(v)
“Incentive Stock
Option” means an Option that by its terms qualifies
and is intended to qualify as an incentive stock option within the
meaning of Section 422 of the Code.
(w)
“Nonstatutory Stock
Option” means an Option that by its terms does not
qualify or is not intended to qualify as an Incentive Stock
Option.
(x)
“Officer” means a person
who is an officer of the Company within the meaning of Section 16
of the Exchange Act and the rules and regulations promulgated
thereunder.
(y)
“Option” means a stock
option granted pursuant to the Plan.
(z)
“Outside
Director” means a Director who is not an
Employee.
(aa)
“Parent” means a
“parent corporation,” whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(bb)
“Participant” means the
holder of an outstanding Award.
(cc)
“Performance
Goals” will have the meaning set forth in Section 12
of the Plan.
(dd)
“Performance
Period” means any Fiscal Year of the Company or such
other period as determined by the Administrator in its sole
discretion.
(ee)
“Performance
Share” means an Award denominated in Shares which may
be earned in whole or in part upon attainment of Performance Goals
or other vesting criteria as the Administrator may determine
pursuant to Section 11.
(ff)
“Performance
Unit” means an Award which may be earned in whole or
in part upon attainment of Performance Goals or other vesting
criteria as the Administrator may determine and which may be
settled for cash, Shares or other securities or a combination of
the foregoing pursuant to Section 11.
(gg)
“Period of
Restriction” means the period during which the
transfer of Shares of Restricted Stock are subject to restrictions
and therefore, the Shares are subject to a substantial risk of
forfeiture. Such restrictions may be based on the passage of time,
continued service, the achievement of target levels of performance,
or the occurrence of other events as determined by the
Administrator.
(hh)
“Plan”
means this 2016 Equity Incentive Plan.
(ii)
“Restricted
Stock” means Shares issued pursuant to a Restricted
Stock award under Section 8 of the Plan, or issued pursuant to the
early exercise of an Option.
(jj) “Restricted
Stock Unit” means a bookkeeping entry representing an
amount equal to the Fair Market Value of one Share, granted
pursuant to Section 9. Each Restricted Stock Unit represents an
unfunded and unsecured obligation of the Company.
(kk)
“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.
(ll) “Section
16(b)” means Section 16(b) of the Exchange
Act.
(mm)
“Securities
Act” means the Securities Act of 1933, as
amended.
(nn)
“Section
409A” means Section 409A of the Code and the final
regulations and any guidance promulgated thereunder, as may be
amended from time to time.
(oo)
“Service
Provider” means an Employee, Director or
Consultant.
(pp)
“Share”
means a share of the Common Stock, as adjusted in accordance with
Section 15 of the Plan.
(qq)
“Stock Appreciation
Right” means an Award, granted alone or in connection
with an Option, that pursuant to Section 10 is designated as a
Stock Appreciation Right.
(rr)
“Subsidiary” means a
“subsidiary corporation,” whether now or hereafter
existing, as defined in Section 424(f) of the Code.
3.
Stock Subject to the
Plan.
(a) Stock
Subject to the Plan. Subject to the provisions of Section
15(a) of the Plan, the maximum aggregate number of Shares that may
be issued under the Plan is (i) 1,600,000 Shares, plus (ii) any
Shares which have been reserved but not issued pursuant to any
awards granted under the Company’s 2006 Stock Plan, as
amended, as of the date of stockholder approval of this Plan, plus
(iii) any Shares subject to stock options, restricted stock units,
performance shares, performance units, or similar awards granted
under the Company’s 2006 Stock Plan, as amended, or the Company’s 1996 Stock Option Plan,
as amended (together, the “Existing
Plans”) that, on
or after the date this Plan is approved by the Company’s
shareholders, expire or otherwise terminate without having been
exercised in full and Shares issued pursuant to awards granted
under the Existing Plans that are forfeited to or repurchased by
the Company, with the maximum number of Shares to be added to the
Plan from the Existing Plans pursuant to clauses (ii) and (iii)
equal to 4,893,353. The Shares may be authorized, but unissued, or
reacquired Common Stock.
(b) Full
Value Awards. Any Shares subject to Full Value Awards will
be counted against the numerical limits of Section 3(a) as 2.00
Shares for every 1 Share subject thereto. Further, if Shares
subject to any Full Value Award are forfeited to or repurchased by
the Company and otherwise would return to the Plan pursuant to
Section 3(c), 2.00 times the number of Shares so forfeited or
repurchased will return to the Plan and will again become available
for issuance under the Plan.
(c) Lapsed
Awards. If an Award expires or becomes unexercisable without
having been exercised in full, or, with respect to Restricted
Stock, Restricted Stock Units, Performance Units or Performance
Shares, is forfeited to, or repurchased by, the Company due to
failure to vest, then the unpurchased Shares (or for Awards other
than Options or Stock Appreciation Rights the forfeited or
repurchased Shares), which were subject thereto will become
available for future grant or sale under the Plan (unless the Plan
has terminated). With respect to Stock Appreciation Rights, the
gross Shares issued (i.e., Shares actually issued pursuant to a
Stock Appreciation Right, as well as the Shares that
represent
payment
of the exercise price and any applicable tax withholdings) pursuant
to a Stock Appreciation Right will cease to be available under the
Plan. Shares used to pay the exercise price of an Award or to
satisfy the tax withholding obligations related to an Award will
not become available for future grant or sale under the Plan. To
the extent an Award under the Plan is paid out in cash rather than
Shares, such cash payment will not result in reducing the number of
Shares available for issuance under the Plan. For purposes of
clarification, no Shares purchased by the Company with proceeds
received from the exercise of an Option or Stock Appreciation Right
will become available for issuance under this Plan. Notwithstanding
the foregoing and, subject to adjustment as provided in Section 15,
the maximum number of Shares that may be issued upon the exercise
of Incentive Stock Options will equal the aggregate Share number
stated in Section 3(a), plus, to the extent allowable under Section
422 of the Code, any Shares that become available for issuance
under the Plan pursuant to Section 3(c).
(d) Share
Reserve. The Company, during the term of this Plan, will at
all times reserve and keep available such number of Shares as will
be sufficient to satisfy the requirements of the Plan.
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 Awards granted hereunder as “performance-based
compensation” within the meaning of Code Section 162(m), the
Plan will be administered by a Committee of two (2) or more
“outside directors” within the meaning of Code Section
162(m).
(iii)
Rule 16b-3. To the
extent desirable to qualify transactions hereunder as exempt under
Rule 16b-3, the transactions contemplated hereunder will be
structured to satisfy the requirements for exemption under Rule
16b-3.
(iv)
Other
Administration. Other than as provided above, the Plan will
be administered by (A) the Board or (B) a Committee, which
committee will 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 will
have the authority, in its discretion:
(i)
to determine the Fair Market Value;
(ii)
to select the Service Providers to whom Awards may be granted
hereunder;
(iii)
to determine the number of Shares to be covered by each Award
granted hereunder;
(iv)
to approve forms of Award Agreements for use under the
Plan;
(v)
to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any Award granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the
time or times when Awards may be exercised (which may be based on
performance
criteria),
any vesting acceleration or waiver of forfeiture restrictions, and
any restriction or limitation regarding any Award or the Shares
relating thereto, based in each case on such factors as the
Administrator will determine;
(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 satisfying applicable foreign laws
or for qualifying for favorable tax treatment under applicable
foreign laws;
(viii)
to modify or amend each Award (subject to Sections 5(d) and 21 of
the Plan), including but not limited to the discretionary authority
to extend the post-termination exercisability period of Awards and
to extend the maximum term of an Option (subject to Section 7(b) of
the Plan regarding Incentive Stock Options);
(ix) to
allow Participants to satisfy tax withholding obligations in such
manner as prescribed in Section 16 of the Plan;
(x)
to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Award
previously granted by the Administrator;
(xi) to
allow a Participant to defer the receipt of the payment of cash or
the delivery of Shares that otherwise would be due to such
Participant under an Award; and
(xii)
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 will be final and
binding on all Participants and any other holders of Awards and
will be given the maximum deference permitted by Applicable
Laws.
(a) Annual
Awards for Employees and Consultants. Subject to adjustment
as provided in Section 15, during any Fiscal Year, no Employee or
Consultant will be granted:
(i)
Options covering more than 200,000 Shares
during any Fiscal Year, increasing to 400,000 Shares in the Fiscal
Year of his or her initial service as an Employee.
(ii) Stock
Appreciation Rights covering more than 200,000 Shares during any
Fiscal Year, increasing to 400,000 Shares in the Fiscal Year of his
or her initial service an as Employee.
(iii)
Shares of Restricted covering more than 75,000 Shares during any
Fiscal Year, increasing to 150,000 Shares in the Fiscal Year of his
or her initial service as an Employee.
(iv)
Restricted Stock Units covering more than 75,000 Shares during any
Fiscal Year, increasing to 150,000 Shares in the Fiscal Year of his
or her initial service as an Employee.
(v) Performance
Shares covering more than 75,000 Shares during any Fiscal Year,
increasing to 150,000 Shares in the Fiscal Year of his or her
initial service as an Employee.
(vi) Performance
Units covering more than 75,000 Shares or having an initial value
greater than $250,000, increasing to 150,000 and $500,000,
respectively in the Fiscal Year of his or her initial service as an
Employee.
(b) Annual
Awards for Outside Directors. No Outside Director may be
granted, in any Fiscal Year, Awards with a grant date fair value
(determined in accordance with GAAP) of greater than $150,000,
increasing to $300,000 in the Fiscal Year of his or her initial
service as an Outside Director. Any Award granted to a Participant
while he or she was an Employee, or while he or she was a
Consultant but not an Outside Director, will not count for purposes
of the limitations under this Section 5(b).
(c) No
Exchange Program. The Administrator may not implement an
Exchange Program.
6.
Eligibility.
Nonstatutory Stock Options, Stock Appreciation Rights, Restricted
Stock, Restricted Stock Units, Performance Shares, Performance
Units, and such other cash or stock awards as the Administrator
determines may be granted to Service Providers. Incentive Stock
Options may be granted only to Employees.
7.
Stock
Options.
(a) Grant
of Option. Each Option will be designated in the Award
Agreement as either an Incentive Stock Option or a Nonstatutory
Stock Option. However, notwithstanding such designation, to the
extent that the aggregate fair market value of the Shares with
respect to which incentive stock options are exercisable for the
first time by the Participant during any calendar year (under all
plans of the Company and any Parent or Subsidiary) exceeds one
hundred thousand dollars ($100,000), the portion of the Options
falling within such limit will be Incentive Stock Options and the
excess Options will be treated as Nonstatutory Stock Options. For
purposes of this Section 7(a), incentive stock options will be
taken into account in the order in which they were granted. The
fair market value of the Shares will be determined as of the time
the option with respect to such Shares is granted.
(b) Term
of Option. The term of each Option will be stated in the
Award Agreement but will not exceed ten (10) years from the date
the Option is granted. Moreover, in the case of an Incentive Stock
Option granted to a Participant who, at the time the Incentive
Stock Option is granted, owns 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 will be five (5) years from the date of
grant or such shorter term as may be provided in the Award
Agreement.
(c) Option
Exercise Price and Consideration.
(i) Exercise
Price. The per share exercise price for the Shares to be
issued pursuant to exercise of an Option will be determined by the
Administrator, subject to the following:
(1) 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 will be no less than
one hundred ten percent (110%) of the Fair Market Value per Share
on the date of grant.
(B) granted
to any Employee other than an Employee described in paragraph (A)
immediately above, the per Share exercise price will be no less
than one hundred percent (100%) of the Fair Market Value per Share
on the date of grant.
(2) In
the case of a Nonstatutory Stock Option, the per Share exercise
price will be no less than one hundred percent (100%) of the Fair
Market Value per Share on the date of grant.
(3) Notwithstanding
the foregoing, Options may be granted with a per Share exercise
price of less than one hundred percent (100%) of the Fair Market
Value per Share on the date of grant pursuant to a transaction
described in, and in a manner consistent with, Section 424(a) of
the Code.
(ii) Waiting
Period and Exercise Dates. At the time an Option is granted
and subject to the provisions of this Plan, the Administrator will
fix the period within which the Option may be exercised and will
determine any conditions that must be satisfied before the Option
may be exercised.
(iii) Form
of Consideration. The Administrator will 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 will determine the acceptable form of
consideration at the time of grant. Such consideration may consist
entirely of: (1) cash; (2) check; (3) other Shares, provided that
such Shares have a fair market value on the date of surrender equal
to the aggregate exercise price of the Shares as to which such
Option will be exercised and provided that accepting such Shares
will not result in any adverse accounting consequences to the
Company, as the Administrator determines in its sole discretion;
(4) consideration received by the Company under a broker-assisted
(or other) cashless exercise program (whether through a broker or
otherwise) implemented by the Company in connection with the Plan;
(5) by net exercise; (6) such other consideration and method of
payment for the issuance of Shares to the extent permitted by
Applicable Laws; or (7) any combination of the foregoing methods of
payment.
(d) Exercise
of Option.
(i) Procedure
for Exercise; Rights as a Shareholder. Any Option granted
hereunder will be exercisable according to the terms of the Plan
and at such times and under such conditions as determined by the
Administrator, subject to the provisions of this Plan, and set
forth in the Award Agreement. An Option may not be exercised for a
fraction of a Share.
An
Option will be deemed exercised when the Company receives: (i) a
notice of exercise (in such form as the Administrator may specify
from time to time) from the person entitled to exercise the Option,
and (ii) full payment for the Shares with respect to which the
Option is exercised (together with applicable withholding taxes).
Full payment may consist of any consideration and method of payment
authorized by the Administrator and permitted by the Award
Agreement and the Plan. Shares issued upon exercise of an Option
will be issued in the name of the Participant or, if requested by
the Participant, in the name of the Participant and his or her
spouse. 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 will exist
with respect to the Shares subject to an Option, notwithstanding
the exercise of the Option. The Company will 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 15 of the Plan.
Exercising an
Option in any manner will 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.
(ii) Termination
of Relationship as a Service Provider other than Death or
Disability. If a Participant ceases to be a Service
Provider, other than upon the Participant’s termination as
the result of the Participant’s death or Disability, the
Participant may exercise his or her Option within such
period
of time as is specified in the Award 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 Award Agreement). In the absence of a specified time in the
Award Agreement, the Option will remain exercisable for three (3)
months following the Participant’s termination, but in no
event later than the expiration of the term of such Option as set
forth in the Award Agreement. If Participant dies during such
post-employment period, the Option may be exercised following the
Participant’s death for one (1) year after
Participant’s death, but in no event later than the
expiration of the term of such Option as set forth in the Award
Agreement. Unless otherwise provided by the Administrator, if on
the date of termination the Participant is not vested as to his or
her entire Option, the Shares covered by the unvested portion of
the Option will revert to the Plan. If after termination the
Participant does not exercise his or her Option within the time
specified by the Administrator, the Option will terminate, and the
Shares covered by such Option will revert to the Plan.
(iii) Disability
of Participant. If a Participant ceases to be a Service
Provider as a result of the Participant’s Disability, the
Participant may exercise his or her Option within such period of
time as is specified in the Award 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
Award Agreement). In the absence of a specified time in the Award
Agreement, the Option will remain exercisable for twelve (12)
months following the Participant’s termination, but in no
event later than the expiration of the term of such Option as set
forth in the Award Agreement. Unless otherwise provided by the
Administrator, if on the date of termination the Participant is not
vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option will revert to the Plan. If, after
termination the Participant does not exercise his or her Option
within the time specified herein, the Option will terminate, and
the Shares covered by such Option will revert to the
Plan.
(iv) Death
of Participant. If a Participant dies while a Service
Provider, the Option may be exercised following the
Participant’s death within such period of time as is
specified in the Award Agreement to the extent that the Option is
vested on the date of death (but in no event may the option be
exercised later than the expiration of the term of such Option as
set forth in the Award Agreement), by the Participant’s
designated beneficiary, provided such beneficiary has been
designated prior to Participant’s death in a form acceptable
to the Administrator. If no such beneficiary has been designated by
the Participant, then such Option may be exercised by the personal
representative of the Participant’s estate or by the
person(s) to whom the Option is transferred pursuant to the
Participant’s will or in accordance with the laws of descent
and distribution. In the absence of a specified time in the Award
Agreement, the Option will remain exercisable for twelve (12)
months following Participant’s death, but in no event later
than the expiration of the term of such Option as set forth in the
Award Agreement. If the Option is not so exercised within the time
specified herein, the Option will terminate, and the Shares covered
by such Option will revert to the Plan. Unless otherwise provided
by the Administrator, if at the time of death Participant is not
vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option will immediately revert to the
Plan.
(v) Tolling
Expiration. A Participant’s Award Agreement may also
provide that:
(1) if
the exercise of the Option following the termination of
Participant’s status as a Service Provider (other than upon
the Participant’s death or Disability) would result in
liability under Section 16(b), then the Option will terminate on
the earlier of (A) the expiration of the term of the Option set
forth in the Award Agreement, or (B) the tenth (10th) day after the
last date on which such exercise would result in liability under
Section 16(b); or
(2) if
the exercise of the Option following the termination of the
Participant’s status as a Service Provider (other than upon
the Participant’s death or Disability) would be
prohibited
at any time solely because the issuance of Shares would violate the
registration requirements under the Securities Act, then the Option
will terminate on the earlier of (A) the expiration of the term of
the Option or (B) the expiration of a period of thirty (30)-day
period after the termination of the Participant’s status as a
Service Provider during which the exercise of the Option would not
be in violation of such registration requirements.
8. Restricted
Stock.
(a) Grant
of Restricted Stock. Subject to the terms of the Plan, the
Administrator, at any time and from time to time, may grant Shares
of Restricted Stock to Service Providers in such amounts as the
Administrator, in its sole discretion, will determine. Unless the
Administrator determines otherwise, the Company as escrow agent
will hold Shares of Restricted Stock until the restrictions on such
Shares have lapsed.
(b) Restricted
Stock Agreement. Each Award of Restricted Stock will be
evidenced by an Award Agreement that will specify the Period of
Restriction, the number of Shares granted, and such other terms and
conditions as the Administrator, in its sole discretion, will
determine.
(c) Transferability.
Except as provided in this Section 8, Shares of Restricted Stock
may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated until the end of the applicable Period of
Restriction.
(d) Other
Restrictions. Subject to the provisions of this Plan, the
Administrator, in its sole discretion, may impose such other
restrictions on Shares of Restricted Stock as it may deem advisable
or appropriate.
(e) Removal
of Restrictions. Except as otherwise provided in this
Section 8, Shares of Restricted Stock covered by each Restricted
Stock grant made under the Plan will be released from escrow as
soon as practicable after the last day of the Period of
Restriction. The Administrator, in its discretion, may accelerate
the time at which any restrictions will lapse or be
removed.
(f) Voting
Rights. During the Period of Restriction, Service Providers
holding Shares of Restricted Stock granted hereunder may exercise
full voting rights with respect to those Shares, unless the
Administrator determines otherwise.
(g) Dividends
and Other Distributions. During the Period of Restriction,
Service Providers holding Shares of Restricted Stock will be
entitled to receive all dividends and other distributions paid with
respect to such Shares unless otherwise provided in the Award
Agreement. If any such dividends or distributions are paid in
Shares, the Shares will be subject to the same restrictions on
transferability and forfeitability as the Shares of Restricted
Stock with respect to which they were paid.
(h) Return
of Restricted Stock to Company. On the date set forth in the
Award Agreement, the Restricted Stock for which restrictions have
not lapsed will revert to the Company and again will become
available for grant under the Plan in accordance with Section 3(b)
of the Plan.
(i) Section
162(m) Performance Restrictions. For purposes of qualifying
grants of Restricted Stock as “performance-based
compensation” under Code Section 162(m), the Administrator,
in its discretion, may set restrictions based upon the achievement
of Performance Goals. The Performance Goals will be set by the
Administrator on or before the Determination Date. In granting
Restricted Stock that is intended to qualify under Code Section
162(m), the Administrator will follow any procedures determined by
it from time to time to be necessary or appropriate to ensure
qualification of the Award under Code Section 162(m) (e.g., in
determining the Performance Goals).
9.
Restricted Stock
Units.
(a) Grant
of Restricted Stock Units. Subject to the terms of the Plan,
the Administrator, at any time and from time to time, Restricted
Stock Units may be granted to Service Providers at any time and
from time to time as determined by the Administrator.
(b) Restricted
Stock Unit Agreement. Each Award of Restricted Stock Units
will be evidenced by an Award Agreement that will specify such
other terms and conditions as the Administrator, in its sole
discretion, will determine, including all terms, conditions, and
restrictions related to the grant, the number of Restricted Stock
Units and the form of payout, which, subject to Section 9(e), may
be left to the discretion of the Administrator.
(c) Vesting
Criteria and Other Terms. Subject to the provisions of this
Plan, the Administrator will set vesting criteria in its
discretion, which, depending on the extent to which the criteria
are met, will determine the number of Restricted Stock Units that
will be paid out to the Participant. The Administrator may set
vesting criteria based upon the achievement of Company-wide,
divisional, business unit, or individual goals (including, but not
limited to, continued employment or service), applicable federal or
state securities laws or any other basis determined by the
Administrator in its discretion. After the grant of Restricted
Stock Units, the Administrator, in its sole discretion, may reduce
or waive any restrictions for such Restricted Stock
Units.
(d) Earning
Restricted Stock Units. Upon meeting the applicable vesting
criteria, the Participant will be entitled to receive a payout as
specified in the Award Agreement.
(e) Form
and Timing of Payment. Payment of earned Restricted Stock
Units will be made as soon as practicable after the date(s) set
forth in the Award Agreement. The Administrator, in its sole
discretion, may pay earned Restricted Stock Units in cash, Shares,
or a combination thereof. Shares represented by Restricted Stock
Units that are fully paid in cash again will be available for grant
under the Plan.
(f) Cancellation.
On the date set forth in the Award Agreement, all unearned
Restricted Stock Units will be forfeited to the Company and become
available for grant under the Plan.
(g) Section
162(m) Performance Restrictions. For purposes of qualifying
grants of Restricted Stock Units as “performance-based
compensation” under Code Section 162(m), the Administrator,
in its discretion, may set restrictions based upon the achievement
of Performance Goals. The Performance Goals will be set by the
Administrator on or before the Determination Date. In granting
Restricted Stock Units which are intended to qualify under Code
Section 162(m), the Administrator will follow any procedures
determined by it from time to time to be necessary or appropriate
to ensure qualification of the Award under Code Section 162(m)
(e.g., in determining the Performance Goals).
10.
Stock Appreciation
Rights.
(a) Grant
of Stock Appreciation Rights. Subject to the terms and
conditions of the Plan, a Stock Appreciation Right may be granted
to Service Providers at any time and from time to time as will be
determined by the Administrator, in its sole
discretion.
(b) Exercise
Price and Other Terms. The Administrator, subject to the
provisions of the Plan, will have complete discretion to determine
the terms and conditions of Stock Appreciation Rights granted under
the Plan, provided, however, that the exercise price will be not
less than 100% of the Fair Market Value of a Share on the date of
grant.
(c) Stock
Appreciation Right Agreement. Each Stock Appreciation Right
grant will be evidenced by an Award Agreement that will specify the
exercise price, the term of the Stock Appreciation Right, the
conditions of exercise, and such other terms and conditions as the
Administrator, in its sole discretion, will determine.
(d) Expiration
of Stock Appreciation Rights. A Stock Appreciation Right
granted under the Plan will expire upon the date determined by the
Administrator, in its sole discretion, and set forth in the Award
Agreement; provided, however, that the term will be no more than
ten (10) years from the date of grant thereof. Notwithstanding the
foregoing, the rules of Section 7(d) also will apply to Stock
Appreciation Rights.
(e) Payment
of Stock Appreciation Right Amount. Upon exercise of a Stock
Appreciation Right, a Participant will be entitled to receive
payment from the Company in an amount determined by
multiplying:
(i) The
difference between the Fair Market Value of a Share on the date of
exercise over the exercise price; multiplied by
(ii)
The number of Shares with respect to which the Stock Appreciation
Right is exercised.
At the
discretion of the Administrator, the payment upon Stock
Appreciation Right exercise may be in cash, in Shares of equivalent
value, or in some combination thereof.
11. Performance
Units and Performance Shares.
(a) Grant
of Performance Units/Shares. Subject to the terms of the
Plan, Performance Units and Performance Shares may be granted to
Service Providers at any time and from time to time, as will be
determined by the Administrator, in its sole
discretion.
(b) Value
of Performance Units/Shares. Each Performance Unit will have
an initial value that is established by the Administrator on or
before the date of grant. Each Performance Share will have an
initial value equal to the Fair Market Value of a Share on the date
of grant.
(c) Performance
Objectives and Other Terms. The Administrator will set
performance objectives or other vesting provisions (including,
without limitation, continued status as a Service Provider) in its
discretion which, depending on the extent to which they are met,
will determine the number or value of Performance Units/Shares that
will be paid out to the Service Providers. Each Award of
Performance Units/Shares will be evidenced by an Award Agreement
that will specify the Performance Period, and such other terms and
conditions as the Administrator, in its sole discretion, will
determine. The Administrator may set performance objectives based
upon the achievement of Company-wide, divisional, business unit or
individual goals (including, but not limited to, continued
employment or service), applicable federal or state securities
laws, or any other basis determined by the Administrator in its
discretion.
(d) Earning
of Performance Units/Shares. After the applicable
Performance Period has ended, the holder of Performance
Units/Shares will be entitled to receive a payout of the number of
Performance Units/Shares earned by the Participant over the
Performance Period, to be determined as a function of the extent to
which the corresponding performance objectives or other vesting
provisions have been achieved. After the grant of a Performance
Unit/Share, the Administrator, in its sole discretion, may reduce
or waive any performance objectives or other vesting provisions for
such Performance Unit/Share.
(e) Form
and Timing of Payment of Performance Units/Shares. Payment
of earned Performance Units/Shares will be made as soon as
practicable after the expiration of the applicable
Performance
Period. The Administrator, in its sole discretion, may pay earned
Performance Units/Shares in the form of cash, in Shares (which have
an aggregate Fair Market Value equal to the value of the earned
Performance Units/Shares at the close of the applicable Performance
Period) or in a combination thereof.
(f) Cancellation
of Performance Units/Shares. On the date set forth in the
Award Agreement, all unearned or unvested Performance Units/Shares
will be forfeited to the Company, and again will be available for
grant under the Plan.
(g)
Section 162(m) Performance
Restrictions. For purposes of qualifying grants of
Performance Units/Shares as “performance-based
compensation” under Code Section 162(m), the Administrator,
in its discretion, may set restrictions based upon the achievement
of Performance Goals. The Performance Goals will be set by the
Administrator on or before the Determination Date. In granting
Performance Units/Shares which are intended to qualify under Code
Section 162(m), the Administrator will follow any procedures
determined by it from time to time to be necessary or appropriate
to ensure qualification of the Award under Code Section 162(m)
(e.g., in determining the Performance Goals).
12. Performance-Based
Compensation Under Code Section 162(m).
(a) General.
If the Administrator, in its discretion, decides to grant an Award
intended to qualify as “performance-based compensation”
under Code Section 162(m), the provisions of this Section 12 will
control over any contrary provision in the Plan; provided, however,
that the Administrator may in its discretion grant Awards that are
not intended to qualify as “performance-based
compensation” under Code Section 162(m) to such Participants
that are based on Performance Goals or other specific criteria or
goals but that do not satisfy the requirements of this Section
12.
(b) Performance
Goals. The granting and/or vesting of Awards of Restricted
Stock, Restricted Stock Units, Performance Shares and Performance
Units and other incentives under the Plan may be made subject to
the attainment of performance goals relating to one or more
business criteria within the meaning of Code Section 162(m) and may
provide for a targeted level or levels of achievement
(“Performance
Goals”) including stock price, revenue, profit,
bookings, cash flow, customer retention, customer satisfaction, net
bookings, net income, net profit, operating cash flow, operating
expenses, total earnings; earnings per share, diluted or basic;
earnings per share from continuing operations, diluted or basic;
earnings before interest and taxes; earnings before interest,
taxes, depreciation, and amortization; pre-tax profit; net asset
turnover; inventory turnover; capital expenditures; net earnings;
operating earnings; gross or operating margin; profit margin, debt;
working capital; return on equity; return on net assets; return on
total assets; return on capital; return on investment; return on
sales; net or gross sales; market share; economic value added; cost
of capital; change in assets; expense reduction levels; debt
reduction; productivity; new product introductions; delivery
performance; individual objectives; and total shareholder return.
Any Performance Goals may be used to measure the performance of the
Company as a whole or, except with respect to shareholder return
metrics, to a region, business unit, affiliate or business segment,
and any Performance Goals may be measured either on an absolute
basis, a per share basis or relative to a pre-established target,
to a previous period’s results or to a designated comparison
group, and, with respect to financial metrics, which may be
determined in accordance with United States Generally Accepted
Accounting Principles (“GAAP”), in accordance
with accounting principles established by the International
Accounting Standards Board (“IASB Principles”) or
which may be adjusted when established to either exclude any items
otherwise includable under GAAP or under IASB Principles or include
any items otherwise excludable under GAAP or under IASB Principles.
In all other respects, Performance Goals will be calculated in
accordance with the Company’s financial statements, generally
accepted accounting principles, or under a methodology established
by the Administrator prior to or at the time of the issuance of an
Award and which is consistently applied with respect to a
Performance Goal in the relevant Performance Period. In addition,
the Administrator will adjust any performance criteria, Performance
Goal or other feature of an Award that relates to or is wholly or
partially based on the number of, or the value of,
any
stock of the Company, to reflect any stock dividend or split,
repurchase, recapitalization, combination, or exchange of shares or
other similar changes in such stock. The Performance Goals may
differ from Participant to Participant and from Award to Award.
Prior to the Determination Date, the Administrator will determine
whether any significant element(s) will be included in or excluded
from the calculation of any Performance Goal with respect to any
Participant.
(c) Procedures.
To the extent necessary to comply with the performance-based
compensation provisions of Code Section 162(m), with respect to any
Award granted subject to Performance Goals, within the first
twenty-five percent (25%) of the Performance Period, but in no
event more than ninety (90) days following the commencement of any
Performance Period (or such other time as may be required or
permitted by Code Section 162(m)), the Administrator will, in
writing, (i) designate one or more Participants to whom an Award
will be made, (ii) select the Performance Goals applicable to the
Performance Period, (iii) establish the Performance Goals, and
amounts of such Awards, as applicable, which may be earned for such
Performance Period, and (iv) specify the relationship between
Performance Goals and the amounts of such Awards, as applicable, to
be earned by each Participant for such Performance Period.
Following the completion of each Performance Period, the
Administrator will certify in writing whether the applicable
Performance Goals have been achieved for such Performance Period.
In determining the amounts earned by a Participant, the
Administrator will have the right to reduce or eliminate (but not
to increase) the amount payable at a given level of performance to
take into account additional factors that the Administrator may
deem relevant to the assessment of individual or corporate
performance for the Performance Period. A Participant will be
eligible to receive payment pursuant to an Award for a Performance
Period only if the Performance Goals for such period are
achieved.
(d) Additional
Limitations. Notwithstanding any other provision of the
Plan, any Award which is granted to a Participant and is intended
to constitute qualified performance based compensation under Code
Section 162(m) will be subject to any additional limitations set
forth in the Code (including any amendment to Section 162(m)) or
any regulations and ruling issued thereunder that are requirements
for qualification as qualified performance-based compensation as
described in Code Section 162(m), and the Plan will be deemed
amended to the extent necessary to conform to such
requirements.
13. Leaves
of Absence/Transfer Between Locations. Unless the
Administrator provides otherwise, vesting of Awards granted
hereunder will be suspended during any unpaid leave of absence. A
Participant will 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, or any
Subsidiary. For purposes of Incentive Stock Options, no such leave
may exceed three (3) months, unless reemployment upon expiration of
such leave is guaranteed by statute or contract. If reemployment
upon expiration of a leave of absence approved by the Company is
not so guaranteed, then six (6) months following the first (1st)
day of such leave any Incentive Stock Option held by the
Participant will cease to be treated as an Incentive Stock Option
and will be treated for tax purposes as a Nonstatutory Stock
Option.
14. Transferability
of Awards.
(a) General.
Except to the limited extent provided in Section 14(b), an Award
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 Participant, only by the Participant.
(b) Limited
Transferability. The Administrator may permit an Award
(other than an Incentive Stock Option) to be assigned or
transferred, in whole or in part, during a Participant’s
lifetime: (i) under a domestic relations order, official marital
settlement agreement or other divorce or separation instrument as
permitted by Treasury Regulations Section 1.421-1(b)(2); or (ii) to
a “family member,” within the meaning of and in
accordance with instructions for Form S-8 promulgated under the
Securities
Act, to
the extent such assignment or transfer is in connection with the
Participant’s estate plan; or (iii) to the extent required by
any Applicable Law.
15. Adjustments;
Dissolution or Liquidation; Change in Control.
(a) Adjustments.
In the event that any dividend or other distribution (whether in
the form of cash, Shares, other securities, or other property),
recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase,
or exchange of Shares or other securities of the Company, or other
change in the corporate structure of the Company affecting the
Shares occurs, the Administrator, in order to prevent diminution or
enlargement of the benefits or potential benefits intended to be
made available under the Plan, will adjust the number and class of
Shares that may be delivered under the Plan and/or the number,
class, and price of Shares covered by each outstanding Award, and
the numerical Share limits in Sections 3 and 5 of the
Plan.
(b) Dissolution
or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Administrator will notify each
Participant as soon as practicable prior to the effective date of
such proposed transaction. To the extent it previously has not been
exercised, an Award will terminate immediately prior to the
consummation of such proposed action.
(c) Change
in Control. Except as set forth in this Section 15(c), in
the event of a merger of the Company with or into another
corporation or other entity or a Change in Control, each
outstanding Award will be treated as the Administrator determines,
including, without limitation, that Awards may be assumed, or
substantially equivalent Awards will be substituted, by the
acquiring or succeeding corporation (or an affiliate thereof) with
appropriate adjustments as to the number and kind of shares and
prices. In taking any of the actions permitted under this, the
Administrator will not be required to treat all Awards similarly in
the transaction.
In the
event that the successor corporation does not assume or substitute
for the Award (and for the avoidance of doubt, notwithstanding the
vesting limitations under Section 5(c)), the Participant will fully
vest in and have the right to exercise all of his or her
outstanding Options and Stock Appreciation Rights, including Shares
as to which such Awards would not otherwise be vested or
exercisable, all restrictions on Restricted Stock and Restricted
Stock Units will lapse, and, with respect to Awards with
performance-based vesting, all performance goals or other vesting
criteria will be deemed achieved at one hundred percent (100%) of
target levels and all other terms and conditions met. All other
terms and conditions with respect to such Awards with
performance-based vesting will be deemed met. In addition, if an
Option or Stock Appreciation Right is not assumed or substituted in
the event of a Change in Control, the Administrator will notify the
Participant in writing or electronically that the Option or Stock
Appreciation Right will be exercisable for a period of time
determined by the Administrator in its sole discretion, and the
Option or Stock Appreciation Right will terminate upon the
expiration of such period.
For the
purposes of this subsection (c), an Award will be considered
assumed if, following the Change in Control, the Award confers the
right to purchase or receive, for each Share subject to the Award
immediately prior to the Change in Control, the consideration
(whether stock, cash, or other securities or property) received in
the Change in 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 of consideration chosen
by the holders of a majority of the outstanding Shares); provided,
however, that if such consideration received in the Change in
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 an Option or Stock Appreciation Right or upon
the payout of a Restricted Stock Unit, Performance Unit or
Performance Share, for each Share subject to such Award, to be
solely common stock of the successor corporation or its Parent
equal in fair market value to the per share consideration received
by holders of Common Stock in the Change in Control.
Notwithstanding
anything in this Section 15(c) to the contrary, an Award that
vests, is earned or paid-out upon the satisfaction of one or more
Performance Goals will not be considered assumed if the Company or
its successor modifies any of such Performance Goals without the
Participant’s consent; provided, however, a modification to
such Performance Goals only to reflect the successor
corporation’s post-Change in Control corporate structure will
not be deemed to invalidate an otherwise valid Award
assumption.
(d) Outside
Director Awards. With respect to Awards granted to an
Outside Director, in the event of a Change in Control, the
Participant will fully vest in and have the right to exercise
Options and/or Stock Appreciation Rights as to all of the Shares
underlying such Award, including those Shares which otherwise would
not be vested or exercisable, all restrictions on Restricted Stock
and Restricted Stock Units will lapse, and, with respect to Awards
with performance-based vesting, all performance goals or other
vesting criteria will be deemed achieved at one hundred percent
(100%) of target levels and all other terms and conditions
met.
16. Tax.
(a) Withholding
Requirements. Prior to the delivery of any Shares or cash
pursuant to an Award (or exercise thereof) or such earlier time as
any tax withholding obligations are due, the Company will have the
power and the right to deduct or withhold, or require a Participant
to remit to the Company, an amount sufficient to satisfy federal,
state, local, foreign or other taxes (including the
Participant’s FICA obligation) required to be withheld with
respect to such Award (or exercise thereof).
(b) Withholding
Arrangements. The Administrator, in its sole discretion and
pursuant to such procedures as it may specify from time to time,
may permit a Participant to satisfy such tax withholding
obligation, in whole or in part by (without limitation) (i) paying
cash, (ii) electing to have the Company withhold otherwise
deliverable cash or Shares having a Fair Market Value equal to the
amount required to be withheld or other greater amount up to the
maximum statutory rate under Applicable Laws, as applicable to the
Participant, if such other greater amount would not result in
adverse financial accounting treatment, as determined by the
Company (including in connection with the effectiveness of FASB
Accounting Standards Update 2016-09 amending FASB Accounting
Standards Codification Topic 718, Compensation – Stock
Compensation), (iii) delivering to the Company already-owned Shares
having a fair market value equal to the statutory amount required
to be withheld, provided the delivery of such Shares will not
result in any adverse accounting consequences, as the Administrator
determines in its sole discretion, or (iv) selling a sufficient
number of Shares otherwise deliverable to the Participant through
such means as the Administrator may determine in its sole
discretion (whether through a broker or otherwise) equal to the
amount required to be withheld. The amount of the withholding
requirement will be deemed to include any amount which the
Administrator agrees may be withheld at the time the election is
made, not to exceed the amount determined by using the maximum
federal, state or local marginal income tax rates applicable to the
Participant with respect to the Award on the date that the amount
of tax to be withheld is to be determined.
(c) Compliance
With Section 409A. Awards will be designed and operated in
such a manner that they are either exempt from the application of,
or comply with, the requirements of Section 409A such that the
grant, payment, settlement or deferral will not be subject to the
additional tax or interest applicable under Section 409A, except as
otherwise determined in the sole discretion of the Administrator.
The Plan and each Award Agreement under the Plan is intended to
meet the requirements of Section 409A and will be construed and
interpreted in accordance with such intent, except as otherwise
determined in the sole discretion of the Administrator. To the
extent that an Award or payment, or the settlement or deferral
thereof, is subject to Section 409A, the Award will be granted,
paid, settled or deferred in a manner that will meet the
requirements of Section 409A, such that the grant, payment,
settlement or deferral will not be subject to the additional tax or
interest applicable under Section 409A.
17. Forfeiture
Events. The Administrator may specify in an Award Agreement
that the Participant’s rights, payments, and benefits with
respect to an Award will be subject to the reduction, cancellation,
forfeiture, or recoupment upon the occurrence of certain specified
events, in addition to any otherwise applicable vesting or
performance conditions of an Award. Notwithstanding any provisions
to the contrary under this Plan, an Award shall be subject to the
Company’s clawback policy as may be established and/or
amended from time to time (the “Clawback Policy”). The
Administrator may require a Participant to forfeit, return or
reimburse the Company all or a portion of the Award and any amounts
paid thereunder pursuant to the terms of the Clawback Policy or as
necessary or appropriate to comply with Applicable
Laws.
18.
No Effect on Employment or
Service. Neither the Plan nor any Award will confer upon a
Participant any right with respect to continuing the
Participant’s relationship as a Service Provider, nor will
they interfere in any way with the Participant’s right or the
right of the Company, or Parent or Subsidiary, as applicable, to
terminate such relationship at any time, with or without cause, to
the extent permitted by Applicable Laws.
19. Grant
Date. The grant date of an Award will be, for all purposes,
the date on which the Administrator makes the determination
granting such Award, or such other later date as is determined by
the Administrator. Notice of the determination will be provided to
each Participant within a reasonable time after the date of such
grant.
20. Term
of Plan. Subject to Section 24 of the Plan, the Plan will
become effective upon its adoption by the Board. It will continue
in effect for a term of ten (10) years from the date adopted by the
Board, unless terminated earlier under Section 21 of the
Plan.
21. Amendment
and Termination of the Plan.
(a) Amendment
and Termination. The Administrator may at any time amend,
alter, suspend or terminate the Plan.
(b) Shareholder
Approval. The Company will obtain shareholder approval of
any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.
(c) Effect
of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan will materially impair the
rights of any Participant, unless mutually agreed otherwise between
the Participant and the Administrator, which agreement must be in
writing and signed by the Participant and the Company. Termination
of the Plan will not affect the Administrator’s ability to
exercise the powers granted to it hereunder with respect to Awards
granted under the Plan prior to the date of such
termination.
22. Conditions
Upon Issuance of Shares.
(a) Legal
Compliance. Shares will not be issued pursuant to the
exercise of an Award unless the exercise of such Award and the
issuance and delivery of such Shares will comply with Applicable
Laws and will 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 Award,
the Company may require the person exercising such Award 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.
23. Inability
to Obtain Authority. The inability of the Company to obtain
authority from any regulatory body having jurisdiction or to
complete or comply with the requirements of any registration or
other qualification of the Shares under any state, federal or
foreign law or under the rules and regulations of the Securities
and Exchange Commission, the stock exchange on which Shares of the
same class are then listed, or any other governmental or regulatory
body, which authority, registration, qualification or rule
compliance is deemed by the Company’s counsel to be necessary
or advisable for the issuance and sale of any Shares hereunder,
will relieve the Company of any liability in respect of the failure
to issue or sell such Shares as to which such requisite authority,
registration, qualification or rule compliance will not have been
obtained.
24. Shareholder
Approval. The Plan will be subject to approval by the
shareholders of the Company within twelve (12) months after the
date the Plan is adopted by the Board. Such shareholder approval
will be obtained in the manner and to the degree required under
Applicable Laws.
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