Pre-Effective Amendment to Registration of Securities of a Small-Business Issuer — Form SB-2 Filing Table of Contents
Document/ExhibitDescriptionPagesSize
1: SB-2/A Platinum Studios LLC Formsb-2/A HTML 1.19M
2: EX-4.1 Instrument Defining the Rights of Security Holders HTML 91K
3: EX-5.1 Opinion re: Legality HTML 13K
12: EX-10.10 Material Contract HTML 47K
13: EX-10.11 Material Contract HTML 144K
14: EX-10.12 Material Contract HTML 20K
15: EX-10.13 Material Contract HTML 257K
16: EX-10.14 Material Contract HTML 589K
17: EX-10.15 Material Contract HTML 37K
18: EX-10.16 Material Contract HTML 97K
4: EX-10.2 Material Contract HTML 49K
5: EX-10.3 Material Contract HTML 35K
6: EX-10.4 Material Contract HTML 52K
7: EX-10.6 Material Contract HTML 96K
8: EX-10.7 Material Contract HTML 8K
9: EX-10.7 Exhibit 10.7 PDF Version -- ex107 PDF 3.03M
10: EX-10.8 Material Contract HTML 578K
11: EX-10.9 Material Contract HTML 179K
19: EX-23.1 Consent of Experts or Counsel HTML 9K
EX-4.1 — Instrument Defining the Rights of Security Holders
The
Platinum Studios, Inc. 2007 Incentive Plan (the “Plan”) is intended to promote
the interests of Platinum Studios, Inc., a California corporation (the
“Company”), and its shareholders by encouraging officers, employees,
non-employee directors and consultants of the Company and its Affiliates to
acquire or increase their equity interests in the Company and to provide a
means
whereby they may develop a sense of proprietorship and personal involvement
in
the development and financial success of the Company, and to encourage them
to
remain with and devote their best efforts to the business of the Company thereby
advancing the interests of the Company and its stockholders. The Board of
Directors of the Company also contemplates that through the Plan, the Company
and its Affiliates will be better able to attract and retain the services of
individuals who are essential for the growth and profitability of the Company.
The Plan provides for payment of various forms of incentive compensation and
accordingly is not intended to be a plan that is subject to the Employee
Retirement Income Security Act of 1974, as amended, and shall be administered
accordingly.
SECTION
2.Definitions.
As
used
in the Plan, the following terms shall have the meanings set forth
below:
“Affiliate”
shall mean (i) any “parent corporation” of the Company (as defined in Section
424(e) of the Code), (ii) any “subsidiary corporation” of any such parent
corporation (as defined in Section 424(f) of the Code) of the Company and (iii)
any trades or businesses, whether or not incorporated, which are members of
a
controlled group or are under common control (as defined in Sections 414(b)
or
(c) of the Code) with the Company, substituting (for the purpose of determining
whether Options or Other Stock-Based Awards that may be subject to Section
409A
of the Code are derived in respect of “stock of the service recipient” within
the meaning of that term under regulatory guidance issued by the appropriate
governmental authority under Section 409A of the Code) “50 percent” in place of
“80 percent” in determining a controlled group under Section 414(b) of the Code
and in determining trades or businesses that are under common control for
purposes of Section 414(c) of the Code.
“Award”
shall mean any Option, Restricted Stock, Performance Award, Bonus Shares or
Other Stock-Based Award.
“Award
Agreement” shall mean any written agreement, contract, or other instrument or
document evidencing any Award, which may, but need not, be executed or
acknowledged by a Participant.
“Board”
shall mean the Board of Directors of the Company.
“Bonus
Shares” shall mean an award of Shares granted pursuant to Section 6(d) of the
Plan.
“Change
in Control” shall mean the occurrence of any one (1) of the following
events:
(a) any
“person” (as defined in Section 3(a)(9) of the Exchange Act, and as modified in
Section 13(d) and 14(d) of the Exchange Act) other than (i) the Company or
any
of its subsidiaries; (ii) any employee benefit plan of the Company or any of
its
subsidiaries; (iii) or any Affiliate; (iv) a company owned, directly or
indirectly, by stockholders of the Company in substantially the same proportions
as their ownership of the Company; or (v) an underwriter temporarily holding
securities pursuant to an offering of such securities (a “Person”), becomes the
“beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of securities of the Company representing more than fifty percent
(50%) of the shares of voting stock of the Company then
outstanding;
1
(b) the
consummation of any merger, organization, business combination or consolidation
of the Company or one (1) of its subsidiaries with or into any other company,
other than a merger, reorganization, business combination or consolidation
which
would result in the holders of the voting securities of the Company outstanding
immediately prior thereto holding securities which represent immediately after
such merger, reorganization, business combination or consolidation more than
fifty percent (50%) of the combined voting power of the voting securities of
the
Company or the surviving company or the parent of such surviving
company;
(c) the
consummation of a sale, lease, transfer, conveyance or other disposition
(including by merger or consolidation) by the Company in one (1) or a series
of
related transactions, of all or substantially all of the Company’s assets, other
than any such transaction if the holders of the voting securities of the Company
outstanding immediately prior thereto hold securities immediately thereafter
which represent more than fifty percent (50%) of the combined voting power
of
the voting securities of the acquiror, or parent of the acquiror, of such
assets;
(d) the
stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company; or
(e) individuals
who, as of the Effective Date, constitute the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the Effective
Date whose election by the Board was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but excluding,
for
this purpose, any such individual whose initial assumption of office occurs
as a
result of either (i) an actual or threatened election contest (as such terms
are
used in Rule 14A-11 of Regulation 14A promulgated under the Exchange Act) with
respect to the election or removal of directors or an actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the
Board or (ii) a plan or agreement to replace a majority of the members of the
Board then comprising the Incumbent Board.
Solely
with respect to any Award that is subject to Section 409A of the Code, this
definition is intended to comply with the definition of change in control under
Section 409A of the Code as in effect commencing January 1, 2005 and, to the
extent that the above definition does not so comply, such definition shall
be
void and of no effect and, to the extent required to ensure that this definition
complies with the requirements of Section 409A of the Code, the definition
of
such term set forth in regulations or other regulatory guidance issued under
Section 409A of the Code by the appropriate governmental authority is hereby
incorporated by reference into and shall form part of this Plan as fully as
if
set forth herein verbatim and the Plan shall be operated in accordance with
the
above definition of Change in Control as modified to the extent necessary to
ensure that the above definition complies with the definition prescribed in
such
regulations or other regulatory guidance insofar as the definition relates
to
any Award that is subject to Section 409A of the Code.
“Code”
shall mean the Internal Revenue Code of 1986, as amended from time to time,
and
the rules and regulations thereunder.
2
“Committee”
shall mean the compensation committee of the Board which, for any period in
which the Company is subject to the reporting requirements of the Exchange
Act,
shall consist of not less than two (2) members of the Board, each of whom shall
qualify as a “non-employee director” (as that term is defined in Rule 16b-3 of
the General Rules and Regulations under the Exchange Act) appointed by and
serving at the pleasure of the Board to administer the Plan or, if none, the
Board; provided however, that with respect to any Award granted to a Covered
Employee which is intended to be “performance-based compensation” as described
in Section 162(m)(4)(C) of the Code, the Committee shall consist solely of
two
(2) or more “outside directors” as described in Section 162(m)(4)(C)(i) of the
Code.
“Company”
shall mean the corporation described in Section 1 of the Plan or any successor
thereto that assumes and continues the Plan.
“Consultant”
shall mean any individual, other than a Director or an Employee, who renders
consulting services to the Company or an Affiliate for a fee.
“Covered
Employee” shall mean any of the Chief Executive Officer of the Company and the
four (4) highest paid officers of the Company other than the Chief Executive
Officer as described in Section 162(m)(3) of the Code or any individual
Consultant, Director or other Employee, or class of Consultants, Directors
or
Employees, who the Committee specifies in an Award shall be treated as a Covered
Employee.
“Director”
shall mean a member of the Board who is not an Employee of the
Company.
“Effective
Date” means the date that the Plan is (i) adopted by the Board; and (ii)
approved by shareholders of the Company, provided that such shareholder approval
occurs not more than one (1) year prior to or after the date of such adoption.
The provisions of the Plan are applicable to all Awards granted on or after
the
Effective Date.
“Employee”
shall mean any employee of the Company or an Affiliate.
“Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended.
“Fair
Market Value” shall mean, with respect to Shares, the closing sales price of a
Share on the applicable date (or if there is no trading in the Shares on such
date, on the next preceding date on which there was trading) as reported in
The
Wall Street Journal (or other reporting service approved by the Committee).
In
the event the Shares are not publicly traded at the time a determination of
its
fair market value is required to be made hereunder, the determination of fair
market value shall be made in good faith by the Committee.
“Option”
shall mean an option granted under Section 6(a) of the Plan. Options granted
under the Plan may constitute “incentive stock options” for purposes of Section
422 of the Code or nonqualified stock options.
“Other
Stock-Based Award” shall mean an award granted pursuant to Section 6(e) of the
Plan that is not otherwise specifically provided for, the value of which is
based in whole or in part upon the value of a Share.
3
“Participant”
shall mean any Director, Employee or Consultant granted an Award under the
Plan.
“Performance
Award” shall mean any right granted under Section 6(c) of the Plan.
“Performance
Objectives” means the objectives, if any, established by the Committee that are
to be achieved with respect to an Award granted under this Plan, which may
be
described in terms of Company-wide objectives, in terms of objectives that
are
related to performance of a business, division, subsidiary, department, unit
or
function within the Company or an Affiliate in which the Participant receiving
the Award is employed or in individual or other terms, and which will relate
to
the period of time determined by the Committee. Which objectives to use with
respect to an Award, the weighting of the objectives if more than one (1) is
used, and whether the objective is to be measured against a Company-established
budget or target, an index or a peer group of companies, shall be determined
by
the Committee in its discretion at the time of grant of the Award. One or more
of the following business criteria for the Company shall be used by the
Committee in establishing Performance Objectives for Performance Awards granted
to a Participant: (i) earnings per share; (ii) increase in price per share,
(iii) increase in revenues; (iv) increase in cash flow; (v) return on net
assets; (vi) return on assets; (vii) return on investment; (viii) return on
equity; (ix) economic value added; (x) gross margin; (xi) net income; (xii)
pretax earnings; (xiii) pretax earnings before interest, depreciation, depletion
and amortization; (xiv) pretax operating earnings after interest expense and
before incentives, service fees, and extraordinary or special items; (xv)
operating income; (xvi) total stockholder return; (xvii) debt reduction; and
(xviii) any of the above goals determined on the absolute or relative basis
or
as compared to the performance of a published or special index deemed applicable
by the Committee including, but not limited to, the Standard & Poor’s 500
Stock Index or components thereof or a group of comparable companies. A
Performance Objective need not be based on an increase or a positive result
and
may include, for example, maintaining the status quo or limiting economic
losses.
“Person”
shall mean an individual or a corporation, limited liability company,
partnership, association, joint-stock company, trust, unincorporated
organization, government or political subdivision thereof or other
entity.
“Plan”
means the plan described in Section 1 of the Plan and set forth in this
document, as amended from time to time.
“Restricted
Period” shall mean the period established by the Committee with respect to an
Award during which the Award remains subject to forfeiture and/or is not
exercisable by the Participant.
“Restricted
Stock” shall mean any Share, prior to the lapse of restrictions thereon, granted
under Sections 6(b) of the Plan.
“Rule
16b-3” shall mean Rule 16b-3 promulgated by the SEC under the Exchange Act, or
any successor rule or regulation thereto as in effect from time to
time.
“SEC”
shall mean the Securities and Exchange Commission, or any successor
thereto.
“Shares”
or “Common Shares” or “Common Stock” shall mean the common stock of the Company,
$.0001 par value, and such other securities or property as may become the
subject of Awards under the Plan.
4
SECTION
3.Administration
The
Plan
shall be administered by the Committee. A majority of the Committee shall
constitute a quorum, and the acts of the members of the Committee who are
present at any meeting thereof at which a quorum is present, or acts unanimously
approved by the members of the Committee in writing, shall be the acts of the
Committee. No member of the Committee shall vote or act upon any matter relating
solely to himself. Grants of Awards to members of the Committee must be ratified
by the Board. Subject to the terms of the Plan and applicable law, and in
addition to other express powers and authorizations conferred on the Committee
by the Plan, the Committee shall have full power and authority to: (i) designate
Participants; (ii) determine the type or types of Awards to be granted to a
Participant; (iii) determine the number of Shares to be covered by, or with
respect to which payments, rights, or other matters are to be calculated in
connection with, Awards; (iv) determine the terms and conditions of any Award;
(v) determine whether, to what extent, and under what circumstances Awards
may
be settled or exercised in cash, Shares, other securities, other Awards or
other
property, or canceled, forfeited, or suspended and the method or methods by
which Awards may be settled, exercised, canceled, forfeited, or suspended;
(vi)
determine whether, to what extent, and under what circumstances cash, Shares,
other securities, other Awards, other property, and other amounts payable with
respect to an Award shall be deferred either automatically or at the election
of
the holder thereof or of the Committee; (vii) interpret and administer the
Plan
and any instrument or agreement relating to an Award made under the Plan; (viii)
establish, amend, suspend, or waive such rules and regulations and appoint
such
agents as it shall deem appropriate for the proper administration of the Plan;
and (ix) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the Plan.
Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations, and other decisions under or with respect
to
the Plan or any Award shall be within the sole discretion of the Committee,
may
be made at any time and shall be final, conclusive, and binding upon all
Persons, including the Company, any Affiliate, any Participant, any holder
or
beneficiary of any Award, any stockholder and any Employee, Consultant or
Director. No member of the Board or the Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any Award
granted hereunder and the members of the Board and the Committee shall be
entitled to indemnification and reimbursement by the Company and its Affiliates
in respect of any claim, loss, damage or expense (including legal fees) arising
therefrom to the full extent permitted by law.
SECTION
4.Shares
Available for Awards
(a)Shares
Available. Subject to adjustment as provided in Section 4(c), the number of
Shares with respect to which Awards may be granted under the Plan shall be
Thirty Million (30,000,000) Shares. In addition, during any calendar year in
which Section 162(m) of the Code shall apply to the Company, the number of
Shares reserved for issuance under the Plan which are subject to Options that
may be granted to any one (1) Participant shall not exceed 30,000,000
Shares. If any Award is exercised, paid, forfeited, terminated or
canceled without the delivery of Shares, then the Shares covered by such Award,
to the extent of such exercise, payment, forfeiture, termination or
cancellation, shall again be Shares with respect to which Awards may be granted;
provided, however, that Shares not delivered due to withholding or payment
of
taxes or payment of exercise price shall not again be Shares with respect to
which Awards may be granted.
(b)Sources
of Shares Deliverable Under Awards. Any Shares delivered pursuant to an
Award shall consist of authorized and unissued Shares. No fractional
Shares shall be issued under the Plan; payment for any fractional Shares shall
be made in cash.
(c)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, issuance of warrants or other rights to purchase Shares or other
securities of the Company, or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the Committee to
be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all
of
(i) the number and type of Shares (or other securities or property) with respect
to which Awards may be granted; (ii) the number and type of Shares (or other
securities or property) subject to outstanding Awards; and (iii) the grant
or
exercise price with respect to any Award or, if deemed appropriate, make
provision for a cash payment to the holder of an outstanding Award.
5
SECTION
5.Eligibility
Any
Employee, Director or Consultant shall be eligible to be designated a
Participant and receive an Award under the Plan.
SECTION
6.Awards
(a)Options.
Subject to the provisions of the Plan, the Committee shall have the authority
to
determine the Participants to whom Options shall be granted, the number of
Shares to be covered by each Option, the purchase price therefor and the
conditions and limitations applicable to the exercise of the Option, including
the following terms and conditions and such additional terms and conditions,
as
the Committee shall determine, that are not inconsistent with the provisions
of
the Plan.
(i)Exercise
Price. The purchase price per Share purchasable under an Option shall be
determined by the Committee at the time the Option is granted, but shall not
be
less than one hundred percent (100%) of the Fair Market Value per Share on
such
grant date. If any Employee to whom an Option that is an incentive stock option
is granted owns stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or any parent
corporation, within the meaning of Section 424(e) of the Code, or any subsidiary
corporation of the Company, within the meaning of Section 424(f) of the Code,
then the exercise price per share shall not be less than one hundred ten percent
(110%) of the Fair Market Value per Share on the date of grant and the option
term shall not exceed five (5) years measured from the date of
grant. For purposes of the immediately preceding sentence, the
attribution rules under Section 424(d) of the Code shall apply for purposes
of
determining an Employee’s ownership.
(ii)Time
and Method of Exercise. The Committee shall determine the time or times at
which an Option may be exercised in whole or in part (which may include the
achievement of one (1) or more Performance Objectives), and the method or
methods by which, and the form or forms in which payment of the exercise price
with respect thereto may be made. In that connection, in order to exercise
an
Option, the person or persons entitled to exercise it shall deliver to the
Company payment in full for (A) the shares being purchased and (B) unless other
arrangements have been made with the Committee, any required withholding taxes.
The payment of the exercise price for each Option shall either be (x) in cash
or
by check payable and acceptable to the Company (y) with the consent of the
Committee, by tendering to the Company shares of Common Stock owned by the
person for more than six (6) months having an aggregate Fair Market Value as
of
the date of exercise that is not greater than the full exercise price for the
shares with respect to which the Option is being exercised and by paying any
remaining amount of the exercise price as provided in (A) above, or (z) with
the
consent of the Committee and compliance with such instructions as the Committee
may specify, by delivering to the Company and to a broker a properly executed
exercise notice and irrevocable instructions to such broker to deliver to the
Company cash or a check payable and acceptable to the Company to pay the
exercise price and any applicable withholding taxes. Upon receipt of the cash
or
check from the broker, the Company will deliver to the broker the shares for
which the Option is exercised. In the event that the person elects to make
payment as allowed under clause (z) above, the Committee may, upon confirming
that the optionee owns the number of additional shares being tendered, authorize
the issuance of a new certificate for the number of shares being acquired
pursuant to the exercise of the Option less the number of shares being tendered
upon the exercise and return to the person (or not require surrender of) the
certificate for the shares being tendered upon the exercise. The date of sale
of
the shares by the broker pursuant to a cashless exercise under (z) above shall
be the date of exercise of the Option.
(iii)Option
Repricing. With shareholder approval, the Committee, in its absolute
discretion, may grant to holders of outstanding Options that are not incentive
stock options, in exchange for the surrender and cancellation of such Options
that are not incentive stock options, new Options that are not incentive stock
options having exercise prices lower (or higher with any required consent)
than
the exercise price provided in the Options so surrendered and canceled and
containing such other terms and conditions as the Committee may deem
appropriate.
(iv)Incentive
Stock Options. The terms of any Option granted under the Plan intended to be
an incentive stock option shall comply in all respects with the provisions
of
Section 422 of the Code, or any successor provision, and any regulations
promulgated thereunder. Incentive stock options may be granted only to employees
of the Company, while it is a “corporation” described in Section 7701(a)(3) of
the Code and Treas. Reg. Section 1.421-1(i)(l), and its parent corporation
and
subsidiary corporations, within the meaning of Section 424 of the Code. To
the
extent the aggregate Fair Market Value of the Shares (determined as of the
date
of grant) of an Option to the extent exercisable for the first time during
any
calendar year (under all plans of the Company and its parent and subsidiary
corporations) exceeds $100,000, such Option Shares in excess of $100,000 shall
not be incentive stock options. No Option that is an incentive stock option
shall be exercisable more than three (3) months after the Participant ceases
to
be an Employee for any reason other than death or disability, or more than
one
(1) year after the Participant ceases to be an Employee due to death or
disability.
6
(b)Restricted
Stock. Subject to the provisions of the Plan, the Committee shall have the
authority to determine the Participants to whom Restricted Stock shall be
granted, the number of Shares of Restricted Stock to be granted to each such
Participant, the duration of the Restricted Period during which, and the
conditions, including Performance Objectives, if any, under which if not
achieved, the Restricted Stock may be forfeited to the Company, and the other
terms and conditions of such Awards.
(i)Dividends.
Dividends paid on Restricted Stock may be paid directly to the Participant
or
may be subject to risk of forfeiture and/or transfer restrictions during any
period established by the Committee in its discretion.
(ii)Registration.
Any Restricted Stock may be evidenced in such manner as the Committee shall
deem
appropriate, including, without limitation, book-entry registration or issuance
of a stock certificate or certificates. In the event any stock certificate
is
issued in respect of Restricted Stock granted under the Plan, such certificate
shall be registered in the name of the Participant and shall bear an appropriate
legend referring to the terms, conditions, and restrictions applicable to such
Restricted Stock.
(iii)Forfeiture
and Restrictions Lapse. Except as otherwise determined by the Committee or
the terms of the Award that granted the Restricted Stock, upon termination
of a
Participant’s employment (as determined under criteria established by the
Committee) for any reason during the applicable Restricted Period, all
Restricted Stock shall be forfeited by the Participant and reacquired by the
Company. Unrestricted Shares, evidenced in such manner as the Committee shall
deem appropriate, shall be issued to the holder of Restricted Stock promptly
after the applicable restrictions have lapsed or otherwise been
satisfied.
(iv)Transfer
Restrictions. During the Restricted Period, Restricted Stock will be subject
to the limitations on transfer as provided in Section 6(f)(b)(iii).
(c)Performance
Awards. The Committee shall have the authority to determine the Participants
who shall receive a Performance Award, which shall confer on the Participant
the
right to receive payment of such Award, in whole or in part, upon the
achievement of such Performance Objectives during such performance periods
as
the Committee shall establish with respect to the Award.
(i)Terms
and Conditions. Subject to the terms of the Plan and any applicable Award
Agreement, the Committee shall determine the Performance Objectives to be
achieved during any performance period, the length of any performance period,
the amount of any Performance Award and the amount of any payment or transfer
to
be made pursuant to any Performance Award.
(ii)General.
In the case of any Award granted to a Covered Employee, Performance Objectives
shall be designed to be objective and shall otherwise meet the requirements
of
Section 162(m) of the Code and regulations thereunder (including Treasury
Regulations sec. 1.162-27 and successor regulations thereto), including the
requirement that the level or levels of performance targeted by the Committee
are such that the achievement of performance goals is “substantially uncertain”
at the time of grant. The Committee may determine that such Performance Awards
shall be granted and/or settled upon achievement of any one (1) performance
goal
or that two (2) or more of the performance goals must be achieved as a condition
to the grant and/or settlement of such Performance Awards. Performance
Objectives may differ among Performance Awards granted to any one (1)
Participant or for Performance Awards granted to different
Participants.
(iii)Performance
Period; Timing for Establishing Performance Goals. Achievement of
Performance Objectives in respect of Performance Awards that are granted to
a
Covered Employee and intended to meet the requirements of Section 162(m) of
the
Code shall be measured over a performance period of not less than six (6) months
and not more than ten (10) years, as specified by the Committee. Performance
Objectives in the case of any Award granted to a Participant shall be
established not later than ninety (90) days after the beginning of any
performance period applicable to such Performance Awards, or at such other
date
as may be required or permitted for “performance-based compensation” under
Section 162(m) of the Code.
7
(iv)Settlement
of Performance Awards; Other Terms. After the end of each performance
period, the Committee shall determine the amount, if any, of Performance Awards
payable to each Participant based upon achievement of business criteria over
a
performance period. Except as may otherwise be required under Section 409A
of
the Code, payment described in the immediately preceding sentence shall be
made
by the later of (i) the date that is 2 ½ months after the end of the
Participant’s first taxable year in which the Performance Award is earned and
payable under the Plan and (ii) the date that is 2 ½ months after the end of the
Company’s first taxable year in which the Performance Award is earned and
payable under the Plan, and such payment shall not be subject to any election
by
the Participant to defer the payment to a later period. The Committee may not
exercise discretion to increase any such amount payable in respect of a
Performance Award which is intended to comply with Section 162(m) of the Code.
The Committee shall specify the circumstances in which such Performance Awards
shall be paid or forfeited in the event of termination of employment by the
Participant prior to the end of a performance period or settlement of
Performance Awards.
(v)Written
Determinations. All determinations by the Committee as to the establishment
of Performance Objectives, the amount of any Performance Award, and the
achievement of Performance Objectives relating to Performance Awards shall
be
made in a written agreement or other document covering the Performance Award.
The Committee may not delegate any responsibility relating to such Performance
Awards that are granted to a Covered Employee and intended to meet the
requirements of Section 162(m) of the Code.
(vi)Status
of Performance Awards under Section 162(m) of the Code. It is the intent of
the Company that Performance Awards granted to persons who are designated by
the
Committee as likely to be Covered Employees within the meaning of Section 162(m)
of the Code and regulations thereunder (including Treasury Regulations sec.
1.162-27 and successor regulations thereto) shall constitute “performance-based
compensation” within the meaning of Section 162(m) of the Code and regulations
thereunder. Accordingly, the terms of this Section shall be interpreted in
a
manner consistent with Section 162(m) of the Code and regulations thereunder.
Notwithstanding the foregoing, because the Committee cannot determine with
certainty whether a given Participant will be a Covered Employee with respect
to
a fiscal year that has not yet been completed, the term Covered Employee as
used
herein shall mean any person designated by the Committee, at the time of grant
of a Performance Award, as likely to be a Covered Employee with respect to
that
fiscal year. If any provision of the Plan as in effect on the date of adoption
or any agreements relating to Performance Awards that are intended to comply
with Section 162(m) of the Code does not comply or is inconsistent with the
requirements of Section 162(m) of the Code or regulations thereunder, such
provision shall be construed or deemed amended to the extent necessary to
conform to such requirements.
(d)Bonus
Shares. The Committee shall have the authority, in its discretion, to grant
Bonus Shares to Participants. Each Bonus Share shall constitute a transfer
of an
unrestricted Share to the Participant, without other payment therefor, as
additional compensation for the Participant’s services to the
Company.
(e)Other
Stock-Based Awards. The Committee may also grant to Participants an Other
Stock-Based Award, which shall consist of a right which is an Award denominated
or payable in, valued in whole or in part by reference to, or otherwise based
on
or related to, Shares as is deemed by the Committee to be consistent with the
purposes of the Plan. Subject to the terms of the Plan, including the
Performance Objectives, if any, applicable to such Award, the Committee shall
determine the terms and conditions of any such Other Stock-Based Award.
Notwithstanding any other provision of the Plan to the contrary, any Other
Stock-Based Award shall contain terms that (i) are designed to avoid application
of Section 409A of the Code or (ii) are designed to avoid adverse tax
consequences under Section 409A should that Code section apply to such
Award.
(f)General
Provisions Applicable to all Awards.
(i)Awards
May Be Granted Separately or Together. Awards may, in the discretion of the
Committee, be granted either alone or in addition to, in tandem with, or in
substitution for any other Award granted under the Plan or any award granted
under any other plan of the Company or any Affiliate. No Award shall be issued
in tandem with another Award if the tandem Awards would result in adverse tax
consequences under Section 409A of the Code. Awards granted in addition to
or in
tandem with other Awards or awards granted under any other plan of the Company
or any Affiliate may be granted either at the same time as or at a different
time from the grant of such other Awards or awards.
(ii)Forms
of Payment by Company Under Awards. Subject to the terms of the Plan and of
any applicable Award Agreement, payments or transfers to be made by the Company
or an Affiliate upon the grant, exercise or payment of an Award may be made
in
such form or forms as the Committee shall determine, including, without
limitation, cash, Shares, other securities, other Awards or other property,
or
any combination thereof, and may be made in a single payment or transfer, in
installments, or on a deferred basis, in each case in accordance with rules
and
procedures established by the Committee. Such rules and procedures may include,
without limitation, provisions for the payment or crediting of reasonable
interest on installment or deferred payments.
8
(iii)Limits
on Transfer of Awards.
A. Except
as
provided in (C) below, each Award, and each right under any Award, shall be
exercisable only by the Participant during the Participant’s lifetime, or by the
person to whom the Participant’s rights shall pass by will or the laws of
descent and distribution. Notwithstanding anything in the Plan to the contrary,
a nonqualified stock option shall be transferable pursuant to a domestic
relations order.
B. Except
as
provided in (C) below, no Award and no right under any such Award may be
assigned, alienated, pledged, attached, sold or otherwise transferred or
encumbered by a Participant and any such purported assignment, alienation,
pledge, attachment, sale, transfer or encumbrance shall be void and
unenforceable against the Company or any Affiliate.
C. Notwithstanding
anything in the Plan to the contrary, to the extent specifically provided by
the
Committee with respect to a grant, a nonqualified stock option may be
transferred to immediate family members or related family trusts, or similar
entities on such terms and conditions as the Committee may establish. In
addition, Awards may be transferred by will or the laws of descent and
distribution.
(iv)Term
of Awards. The term of each Award shall be for such period as may be
determined by the Committee; provided, that in no event shall the term of any
Award exceed a period of ten (10) years from the date of its grant (or such
shorter term as may be required in respect of an Option that is an incentive
stock option under Section 422 of the Code).
(v)Share
Certificates. All certificates for Shares or other securities of the Company
or any Affiliate delivered under the Plan pursuant to any Award or the exercise
thereof shall be subject to such stop transfer orders and other restrictions
as
the Committee may deem advisable under the Plan or the rules, regulations,
and
other requirements of the SEC, any stock exchange upon which such Shares or
other securities are then listed, and any applicable federal or state laws,
and
the Committee may cause a legend or legends to be put on any such certificates
to make appropriate reference to such restrictions.
(vi)Delivery
of Shares or other Securities and Payment by Participant of Consideration.
No Shares or other securities shall be delivered pursuant to any Award until
payment in full of any amount required to be paid pursuant to the Plan or the
applicable Award Agreement (including, without limitation, any exercise price,
tax payment or tax withholding) is received by the Company. Such payment may
be
made by such method or methods and in such form or forms as the Committee shall
determine, including, without limitation, cash, Shares, other securities, other
Awards or other property, withholding of Shares, cashless exercise with
simultaneous sale, or any combination thereof; provided that the combined value,
as determined by the Committee, of all cash and cash equivalents and the Fair
Market Value of any such Shares or other property so tendered to the Company,
as
of the date of such tender, is at least equal to the full amount required to
be
paid pursuant to the Plan or the applicable Award Agreement to the
Company.
(vii)Code
Section 409A. Notwithstanding any other provision of the Plan to
the contrary, any Award shall contain terms that (i) are designed to avoid
application of Section 409A of the Code to the Award or (ii) are designed to
avoid adverse tax consequences under Section 409A of the Code should that Code
Section apply to the Award.
SECTION
7.Amendment
and Termination
Except
to
the extent prohibited by applicable law and unless otherwise expressly provided
in an Award Agreement or in the Plan:
(a)Amendments
to the Plan. The Board or the Committee may amend, alter, suspend,
discontinue, or terminate the Plan without the consent of any shareholder,
Participant, other holder or beneficiary of an Award, or other Person; provided,
however, no such amendment may be made without stockholder approval to the
extent that such approval is required by (i) applicable legal requirements
or
(ii) the requirements of any securities exchange or market on which the Shares
are listed. Notwithstanding the foregoing, the Board or the Committee may amend
the Plan in such manner as it deems necessary in order to permit Awards to
meet
the requirements of the Code or other applicable laws, or to prevent adverse
tax
consequences.
9
(b)Amendments
to Awards. The Committee may waive any conditions or rights under, amend any
terms of, or alter any Award theretofore granted, provided no change, other
than
pursuant to Section 7(c), in any Award shall materially reduce the benefit
to
Participant without the consent of such Participant.
(c)Adjustment
of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. The
Committee is hereby authorized to make adjustments in the terms and conditions
of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events affecting the Company, any Affiliate, or the financial
statements of the Company or any Affiliate, or of changes in applicable laws,
regulations, or accounting principles, whenever the Committee determines that
such adjustments are appropriate in order to prevent dilution or enlargement
of
the benefits or potential benefits intended to be made available under the
Plan.
SECTION
8.Adjustments
Upon Changes in Stock/Change in Control
(a)Adjustments
Upon Changes in Stock. If any change is made in the Shares subject to the
Plan, or subject to any Award, without the receipt of consideration by the
Company through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or other transaction not involving the receipt of
consideration by the Company), the Plan will be appropriately adjusted in the
class(es) and maximum number of shares subject to the Plan pursuant to Section
4(c) and the outstanding Awards will be appropriately adjusted in the class(es)
and number of shares and exercise price per share of stock subject to such
outstanding Awards. Such adjustments shall be made by the Board or the
Committee, the determination of which shall be final, binding and conclusive.
(The conversion of any convertible securities of the Company shall not be
treated as a “transaction not involving the receipt of consideration by the
Company”.)
(b)Change
in Control. Unless otherwise provided in the Award, in the event of a Change
in Control described in clauses (b), (c) or (d) of the definition of Change
in
Control under Section 2 of the Plan, (i) if the Company does not survive as
an
independent corporation (excluding as a subsidiary), the surviving corporation
or an affiliate of such surviving corporation shall assume the Awards
outstanding under the Plan or substitute similar awards (including an award
to
acquire the same consideration paid to the stockholders of the Company in the
transaction effecting the Change in Control) for those outstanding under the
Plan, or (ii) if the Company continues as an independent corporation (excluding
as a subsidiary), such Awards shall continue in full force and effect. In the
event of a Change in Control in which the Company does not survive as an
independent corporation (excluding as a subsidiary), if any surviving
corporation and its affiliates refuse to assume or continue the Awards, or
to
substitute similar awards for those outstanding under the Plan, then unless
otherwise provided in the Award:
10
(i) All
Options then outstanding shall become immediately vested and fully exercisable
immediately prior to the Change in Control, notwithstanding any provision
therein for exercise in installments;
(ii) All
restrictions and conditions of all Restricted Stock then outstanding shall
be
deemed satisfied, and the Restricted Period or other limitations on payment
in
full with respect thereto shall be deemed to have expired immediately prior
to
the date of the Change in Control; and
(iii) All
outstanding Performance Awards and any Other Stock or Performance-Based Awards
shall become fully vested, deemed earned in full immediately prior to the date
of the Change in Control and promptly paid to the Participants as of the date
of
the Change of Control, without regard to payment schedules and notwithstanding
that the applicable performance cycle, retention cycle or other restrictions
and
conditions shall not have been completed or satisfied.
(c)Right
of Cash-Out. If approved by the Board prior to or within thirty (30) days
after such time as a Change in Control shall be deemed to have occurred, the
Board shall have the right for a forty-five (45) day period immediately
following the date that the Change in Control is deemed to have occurred to
require all, but not less than all, Participants to transfer and deliver to
the
Company all Awards previously granted to the Participants in exchange for an
amount equal to the “cash value” (defined below) of the Awards. Such right shall
be exercised by written notice to all Participants. For purposes of this
Section, the cash value of an Award shall equal the sum of (i) all cash to
which
the Participant would be entitled upon settlement or exercise of any Award
which
is not an Option and (ii) in the case of any Award that is an Option, the excess
of the “market value” (defined below) per share over the option price, if any,
multiplied by the number of shares subject to such Award. For purposes of the
preceding sentence, “market value” per share shall mean the higher of (i) the
average of the Fair Market Value per share of Common Stock on each of the five
(5) trading days immediately following the date a Change in Control is deemed
to
have occurred or (ii) the highest price, if any, offered in connection with
the
Change in Control. The amount payable to each Participant by the Company
pursuant to this Section shall be in cash or by certified check and shall be
reduced by any taxes required to be withheld.
SECTION
9.General
Provisions
(a)No
Rights to Awards. No Director, Employee, Consultant or other Person shall
have any claim to be granted any Award, and there is no obligation for
uniformity of treatment of Employees, Consultants, or holders or beneficiaries
of Awards. The terms and conditions of Awards need not be the same with respect
to each recipient.
(b)Withholding.
The Company or any Affiliate is authorized to withhold at the minimum statutory
rate from any Award, from any payment due or transfer made under any Award
or
under the Plan or from any compensation or other amount owing to a Participant
the amount (in cash, Shares, other securities, Shares that would otherwise
be
issued pursuant to such Award, other Awards or other property) of any applicable
taxes payable in respect of an Award, its exercise, the lapse of restrictions
thereon, or any payment or transfer under an Award or under the Plan and to
take
such other action as may be necessary in the opinion of the Company to satisfy
all obligations for the payment of such taxes. In addition, the Committee may
provide, in an Award Agreement, that the Participant may direct the Company
to
satisfy such Participant’s tax obligation through the “constructive” tender of
already-owned Shares or the withholding of Shares otherwise to be acquired
upon
the exercise or payment of such Award.
11
(c)No
Right to Employment. The grant of an Award shall not be construed as giving
a Participant the right to be retained in the employ of the Company or any
Affiliate. Further, the Company or an Affiliate may at any time dismiss a
Participant from employment, free from any liability or any claim under the
Plan, unless otherwise expressly provided in the Plan or in any Award
Agreement.
(d)Governing
Law. The validity, construction, and effect of the Plan and any rules and
regulations relating to the Plan shall be determined in accordance with the
laws
of the State of California and applicable federal law.
(e)Severability.
If any provision of the Plan or any Award is or becomes or is deemed to be
invalid, illegal, or unenforceable in any jurisdiction or as to any Person
or
Award, or would disqualify the Plan or any Award under any law deemed applicable
by the Committee, such provision shall be construed or deemed amended to conform
to the applicable laws, or if it cannot be construed or deemed amended without,
in the determination of the Committee, materially altering the intent of the
Plan or the Award, such provision shall be stricken as to such jurisdiction,
Person or Award and the remainder of the Plan and any such Award shall remain
in
full force and effect.
(f)Other
Laws. The Committee may refuse to issue or transfer any Shares or other
consideration under an Award if, acting in its sole discretion, it determines
that the issuance of transfer or such Shares or such other consideration might
violate any applicable law or regulation or entitle the Company to recover
the
same under Section 16(b) of the Exchange Act, and any payment tendered to the
Company by a Participant, other holder or beneficiary in connection with the
exercise of such Award shall be promptly refunded to the relevant Participant,
holder or beneficiary.
(g)No
Trust or Fund Created. Neither the Plan nor the Award shall create or be
construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any
other
Person. To the extent that any Person acquires a right to receive payments
from
the Company or any Affiliate pursuant to an Award, such right shall be no
greater than the right of any general unsecured creditor of the Company or
any
Affiliate.
(h)No
Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award, and the Committee shall determine whether
cash, other securities, or other property shall be paid or transferred in lieu
of any fractional Shares or whether such fractional Shares or any rights thereto
shall be canceled, terminated, or otherwise eliminated.
12
(i)Securities
Laws Compliance. Unless the Shares have been registered under the Securities
Act of 1933 (and, in the case of any Participant who may be deemed an affiliate
of the Company for securities law purposes, such Shares have been registered
under such Act for resale by such Participant), or the Company has determined
that an exemption from registration is available, the Company may require prior
to and as a condition of the exercise or payment of any Award that (i) the
Participant desiring to exercise or receive payment such Award give the Company
written notice thereof and that such notice may not be given by the Participant
until forty-five (45) days thereafter (which time period may be waived by the
Committee in its sole discretion) in order to allow the Company the opportunity
to provide to such Participant any disclosure materials, or to make such
filings, as may be required under federal and state securities laws and (ii)
the
Participant desiring to exercise or be paid such Award furnish the Company
with
a written representation in a form prescribed by the Committee to the effect
that such person is acquiring said Shares solely with a view to investment
for
his or her own account and not with a view to the resale or distribution of
all
or any part thereof, and that such person will not dispose of any of such Shares
otherwise than in accordance with the provisions of Rule 144 under the Act
unless and until either the Shares are registered under the Act or the Company
is satisfied that an exemption from such registration is available.
(j)Headings.
Headings are given to the Sections and subsections of the Plan solely as a
convenience to facilitate reference. Such headings shall not be deemed in any
way material or relevant to the construction or interpretation of the Plan
or
any provision thereof.
(k)Code
Section 409A. Notwithstanding anything in this Plan to the contrary, if any
Plan provision or Award under the Plan would result in the imposition of an
applicable tax under Code Section 409A and related regulations and Treasury
pronouncements (“Section 409A”), that Plan provision or Award may be reformed to
avoid imposition of the applicable tax and no action taken to comply with
Section 409A shall be deemed to adversely affect the Participant’s rights to an
Award.
(l)No
Guarantee of Tax Consequences. None of the Board, the Company nor the
Committee makes any commitment or guarantee that any federal, state or local
tax
treatment will apply or be available to any person participating or eligible
to
participate hereunder.
SECTION
10.Term
of the Plan
No
Award
shall be granted under the Plan after the tenth (10th) anniversary
of
the date the Plan is adopted by the Board as the Plan shall expire on that
date
unless earlier terminated pursuant to Section 7. However, unless otherwise
expressly provided in the Plan or in an applicable Award Agreement, any Award
granted prior to such expiration or termination, and the authority of the Board
or the Committee to amend, alter, adjust, suspend, discontinue, or terminate
any
such Award or to waive any conditions or rights under such Award, shall extend
beyond such expiration or termination date.
13
Dates Referenced Herein and Documents Incorporated by Reference
