Registration of Securities to be Offered to Employees Pursuant to an Employee Benefit Plan — Form S-8
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-8 Intrepid Holdings, Inc. Form S-8 5 26K
2: EX-4 2005 Stock Plan for Directors, Officers and 12 75K
Consultants
3: EX-5 Legal Opinion 2± 8K
EX-4 — 2005 Stock Plan for Directors, Officers and Consultants
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Exhibit 4
INTREPID HOLDINGS, INC.
2005 STOCK PLAN FOR DIRECTORS, OFFICERS AND CONSULTANTS
SECTION 1. PURPOSE OF THE PLAN.
The purpose of the 2005 Directors, Officers and Consultants Stock Option, Stock
Warrant and Stock Award Plan ("Plan") is to enhance the ability of Intrepid
Holdings, Inc., a Nevada corporation (the "Company") and its subsidiaries to
attract and retain highly qualified and experienced directors, employees and
consultants and to give such directors, employees and consultants a continued
proprietary interest in the success of the Company and its subsidiaries. In
addition the Plan is intended to encourage ownership of common stock, $.001 par
value ("Common Stock"), of the Company by the directors, employees and
consultants of the Company and its Affiliates (as defined below) and to provide
increased incentive for such persons to render services and to exert maximum
effort for the success of the Company's business. The Plan provides eligible
employees and consultants the opportunity to participate in the enhancement of
shareholder value by the grants of warrants, options, restricted common or
convertible preferred stock, unrestricted common or convertible preferred stock
and other awards under this Plan and to have their bonuses and/or consulting
fees payable in warrants, restricted common or convertible preferred stock,
unrestricted common or convertible preferred stock and other awards, or any
combination thereof. In addition, the Company expects that the Plan will
further strengthen the identification of the directors, employees and
consultants with the stockholders. Certain options and warrants to be granted
under this Plan are intended to qualify as Incentive Stock Options ("ISOs")
pursuant to Section 422 of the Internal Revenue Code of 1986, as amended
("Code"), while other options and warrants and preferred stock granted under
this Plan will be nonqualified options or warrants which are not intended to
qualify as ISOs ("Nonqualified Options"), either or both as provided in the
agreements evidencing the options or warrants described in Section 5 hereof and
shares of preferred stock. As provided in the designation described in Section
7. Employees, consultants and directors who participate or become eligible to
participate in this Plan from time to time are referred to collectively herein
as "Participants". As used in this Plan, the term "Affiliates" means any
"parent corporation" of the Company and any "subsidiary corporation" of the
Company within the meaning of Code Sections 424(e) and (f), respectively.
SECTION 2. ADMINISTRATION OF THE PLAN.
(a) Composition of Committee. The Plan shall be administered by the Board of
Directors of the Company (the "Board") or to a committee of the Board to which
responsibility for the administration of this Plan has been assigned on behalf
of the Board. When acting in such capacity the Board is herein referred to as
the "Committee," which shall also designate the Chairman of the Committee. If
the Company is governed by Rule 16b-3 promulgated by the Securities and Exchange
Commission ("Commission") pursuant to the Securities Exchange Act of 1934, as
amended ("Exchange Act"), no director shall serve as a member of the Committee
unless he or she is a "disinterested person" within the meaning of such Rule
16b-3.
(b) Committee Action. The Committee shall hold its meetings at such times and
places as it may determine. A majority of its members shall constitute a
quorum, and all determinations of the Committee shall be made by not less than a
majority of its members. Any decision or determination reduced to writing and
signed by a majority of the members shall be fully as effective as if it had
been made by a majority vote of its members at a meeting duly called and held.
The Committee may designate the Secretary of the Company or other Company
employees to assist the Committee in the administration of the Plan, and may
grant authority to such persons to execute award agreements or other documents
on behalf of the Committee and the Company. Any duly constituted committee of
the Board satisfying the qualifications of this Section 2 may be appointed as
the Committee.
(c) Committee Expenses. All expenses and liabilities incurred by the Committee
in the administration of the Plan shall be borne by the Company. The Committee
may employ attorneys, consultants, accountants or other persons.
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SECTION 3. STOCK RESERVED FOR THE PLAN.
Subject to adjustment as provided in Section 5(d)(xiii) hereof, the aggregate
number of shares that may be optioned, subject to conversion or issued under the
Plan is 3,000,000 shares of Common Stock, warrants, options, preferred stock or
any combination thereof. The shares subject to the Plan shall consist of
authorized but unissued shares of Common Stock and such number of shares shall
be and is hereby reserved for sale for such purpose. Any of such shares which
may remain unsold and which are not subject to issuance upon exercise of
outstanding options or warrants or conversion of outstanding shares of preferred
stock at the termination of the Plan shall cease to be reserved for the purpose
of the Plan, but until termination of the Plan or the termination of the last of
the options or warrants granted under the Plan, whichever last occurs, the
Company shall at all times reserve a sufficient number of shares to meet the
requirements of the Plan. Should any option or warrant expire or be cancelled
prior to its exercise in full, the shares theretofore subject to such option or
warrant may again be made subject to an option, warrant or shares of convertible
preferred stock under the Plan.
SECTION 4. ELIGIBILITY.
The Participants shall include directors, employees, including officers, of the
Company and its divisions and subsidiaries, and consultants and attorneys who
provide bona fide services to the Company. Participants are eligible to be
granted warrants, options, restricted common or convertible preferred stock,
unrestricted common or convertible preferred stock and other awards under this
Plan and to have their bonuses and/or consulting fees payable in warrants,
restricted common or convertible preferred stock, unrestricted common or
convertible preferred stock and other awards. A Participant who has been
granted an option, warrant or preferred stock hereunder may be granted an
additional option, warrant options, warrants or preferred stock, if the
Committee shall so determine.
SECTION 5. GRANT OF OPTIONS OR WARRANTS.
(a) Committee Discretion. The Committee shall have sole and absolute
discretionary authority (i) to determine, authorize, and designate those persons
pursuant to this Plan who are to receive warrants, options, restricted common or
convertible preferred stock, or unrestricted common or convertible preferred
stock under the Plan, (ii) to determine the number of shares of Common Stock to
be covered by such grant or such options or warrants and the terms thereof,
(iii) to determine the type of Common Stock granted: restricted common or
convertible preferred stock, unrestricted common or convertible preferred stock
or a combination of restricted and unrestricted common or convertible preferred
stock, and (iv) to determine the type of option or warrant granted: ISO,
Nonqualified Option or a combination of ISO and Nonqualified Options. The
Committee shall thereupon grant options or warrants in accordance with such
determinations as evidenced by a written option or warrant agreement. Subject
to the express provisions of the Plan, the Committee shall have discretionary
authority to prescribe, amend and rescind rules and regulations relating to the
Plan, to interpret the Plan, to prescribe and amend the terms of the option or
warrant agreements (which need not be identical) and to make all other
determinations deemed necessary or advisable for the administration of the Plan.
(b) Stockholder Approval. All ISOs granted under this Plan are subject to, and
may not be exercised before, the approval of this Plan by the stockholders prior
to the first anniversary date of the Board meeting held to approve the Plan, by
the affirmative vote of the holders of a majority of the outstanding shares of
the Company present, or represented by proxy, and entitled to vote thereat, or
by written consent in accordance with the laws of the State of Nevada, provided
that if such approval by the stockholders of the Company is not forthcoming, all
options or warrants and stock awards previously granted under this Plan other
than ISOs shall be valid in all respects.
(c) Limitation on Incentive Stock Options and Warrants. The aggregate fair
market value (determined in accordance with Section 5(d)(ii) of this Plan at the
time the option or warrant is granted) of the Common Stock with respect to which
ISOs may be exercisable for the first time by any Participant during any
calendar year under all such plans of the Company and its Affiliates shall not
exceed $3,000,000.
(d) Terms and Conditions. Each option or warrant granted under the Plan shall
be evidenced by an agreement, in a form approved by the Committee, which shall
be subject to the following express terms and conditions and to such other terms
and conditions as the Committee may deem appropriate:
(i) Option or Warrant Period. The Committee shall promptly notify the
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Participant of the option or warrant grant and a written agreement shall
promptly be executed and delivered by and on behalf of the Company and the
Participant, provided that the option or warrant grant shall expire if a written
agreement is not signed by said Participant (or his agent or attorney) and
returned to the Company within 60 days from date of receipt by the Participant
of such agreement. The date of grant shall be the date the option or warrant is
actually granted by the Committee, even though the written agreement may be
executed and delivered by the Company and the Participant after that date. Each
option or warrant agreement shall specify the period for which the option or
warrant thereunder is granted (which in no event shall exceed ten years from the
date of grant) and shall provide that the option or warrant shall expire at the
end of such period. If the original term of an option or warrant is less than
ten years from the date of grant, the option or warrant may be amended prior to
its expiration, with the approval of the Committee and the Participant, to
extend the term so that the term as amended is not more than ten years from the
date of grant. However, in the case of an ISO granted to an individual who, at
the time of grant, owns stock possessing more than 10 percent of the total
combined voting power of all classes of stock of the Company or its Affiliate
("Ten Percent Stockholder"), such period shall not exceed five years from the
date of grant.
(ii) Option or Warrant Price. The purchase price of each share of Common
Stock subject to each option or warrant granted pursuant to the Plan shall be
determined by the Committee at the time the option or warrant is granted and, in
the case of ISOs, shall not be less than 100% of the fair market value of a
share of Common Stock on the date the option or warrant is granted, as
determined by the Committee. In the case of an ISO granted to a Ten Percent
Stockholder, the option or warrant price shall not be less than 110% of the fair
market value of a share of Common Stock on the date the option or warrant is
granted. The purchase price of each share of Common Stock subject to a
Nonqualified Option or Warrant under this Plan shall be determined by the
Committee prior to granting the option or warrant. The Committee shall set the
purchase price for each share subject to a Nonqualified Option or Warrant at
either the fair market value of each share on the date the option or warrant is
granted, or at such other price as the Committee in its sole discretion shall
determine.
At the time a determination of the fair market value of a share of Common Stock
is required to be made hereunder, the determination of its fair market value
shall be made by the Committee in such manner as it deems appropriate.
(iii) Exercise Period. The Committee may provide in the option or warrant
agreement that an option or warrant may be exercised in whole, immediately, or
is to be exercisable in increments. In addition, the Committee may provide that
the exercise of all or part of an option or warrant is subject to specified
performance by the Participant.
(iv) Procedure for Exercise. Options or warrants shall be exercised in the
manner specified in the option or warrant agreement. The notice of exercise
shall specify the address to which the certificates for such shares are to be
mailed. A Participant shall be deemed to be a stockholder with respect to
shares covered by an option or warrant on the date specified in the option or
warrant agreement. As promptly as practicable, the Company shall deliver to the
Participant or other holder of the warrant, certificates for the number of
shares with respect to which such option or warrant has been so exercised,
issued in the holder's name or such other name as holder directs; provided,
however, that such delivery shall be deemed effected for all purposes when a
stock transfer agent of the Company shall have deposited such certificates with
a carrier for overnight delivery, addressed to the holder at the address
specified pursuant to this Section 6(d).
(v) Termination of Employment. If an executive officer to whom an option or
warrant is granted ceases to be employed by the Company for any reason other
than death or disability, any option or warrant which is exercisable on the date
of such termination of employment may be exercised during a period beginning on
such date and ending at the time set forth in the option or warrant agreement;
provided, however, that if a Participant's employment is terminated because of
the Participant's theft or embezzlement from the Company, disclosure of trade
secrets of the Company or the commission of a willful, felonious act while in
the employment of the Company (such reasons shall hereinafter be collectively
referred to as "for cause"), then any option or warrant or unexercised portion
thereof granted to said Participant shall expire upon such termination of
employment. Notwithstanding the foregoing, no ISO may be exercised later than
three months after an employee's termination of employment for any reason other
than death or disability.
(vi) Disability or Death of Participant. In the event of the determination
of disability or death of a Participant under the Plan while he or she is
employed by the Company, the options or warrants previously granted to him may
be exercised (to the extent he or she would have been entitled to do so at the
date of the determination of disability or death) at any time and from time to
time, within a period beginning on the date of such determination of disability
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or death and ending at the time set forth in the option or warrant agreement, by
the former employee, The guardian of his estate, the executor or administrator
of his estate or by the person or persons to whom his rights under the option or
warrant shall pass by will or the laws of descent and distribution, but in no
event may the option or warrant be exercised after its expiration under the
terms of the option or warrant agreement. Notwithstanding the foregoing, no ISO
may be exercised later than one year after the determination of disability or
death. A Participant shall be deemed to be disabled if, in the opinion of a
physician selected by the Committee, he or she is incapable of performing
services for the Company of the kind he or she was performing at the time the
disability occurred by reason of any medically determinable physical or mental
impairment which can be expected to result in death or to be of long, continued
and indefinite duration. The date of determination of disability for purposes
hereof shall be the date of such determination by such physician.
(vii) Assignability. An option or warrant shall be assignable or otherwise
transferable, in whole or in part, by a Participant as provided in the option,
warrant or designation of the series of preferred stock.
(viii) Incentive Stock Options. Each option or warrant agreement may contain
such terms and provisions as the Committee may determine to be necessary or
desirable in order to qualify an option or warrant designated as an incentive
stock option.
(ix) Restricted Stock Awards. Awards of restricted stock under this Plan
shall be subject to all the applicable provisions of this Plan, including the
following terms and conditions, and to such other terms and conditions not
inconsistent therewith, as the Committee shall determine:
(A) Awards of restricted stock may be in addition to or in lieu of option
or warrant grants. Awards may be conditioned on the attainment of particular
performance goals based on criteria established by the Committee at the time of
each award of restricted stock. During a period set forth in the agreement (the
"Restriction Period"), the recipient shall not be permitted to sell, transfer,
pledge, or otherwise encumber the shares of restricted stock; except that such
shares may be used, if the agreement permits, to pay the option or warrant price
pursuant to any option or warrant granted under this Plan, provided an equal
number of shares delivered to the Participant shall carry the same restrictions
as the shares so used. Shares of restricted stock shall become free of all
restrictions if during the Restriction Period, (i) the recipient dies, (ii) the
recipient's directorship, employment, or consultancy terminates by reason of
permanent disability, as determined by the Committee, (iii) the recipient
retires after attaining both 59 1/2 years of age and five years of continuous
service with the Company and/or a division or subsidiary, or (iv) if provided in
the agreement, there is a "change in control" of the Company (as defined in such
agreement). The Committee may require medical evidence of permanent disability,
including medical examinations by physicians selected by it. Unless and to the
extent otherwise provided in the agreement, shares of restricted stock shall be
forfeited and revert to the Company upon the recipient's termination of
directorship, employment or consultancy during the Restriction Period for any
reason other than death, permanent disability, as determined by the Committee,
retirement after attaining both 59 1/2 years of age and five years of continuous
service with the Company and/or a subsidiary or division, or, to the extent
provided in the agreement, a "change in control" of the Company (as defined in
such agreement), except to the extent the Committee, in its sole discretion,
finds that such forfeiture might not be in the best interests of the Company
and, therefore, waives all or part of the application of this provision to the
restricted stock held by such recipient. Certificates for restricted stock shall
be registered in the name of the recipient but shall be imprinted with the
appropriate legend and returned to the Company by the recipient, together with a
stock power endorsed in blank by the recipient. The recipient shall be entitled
to vote shares of restricted stock and shall be entitled to all dividends paid
thereon, except that dividends paid in Common Stock or other property shall also
be subject to the same restrictions.
(B) Restricted Stock shall become free of the foregoing restrictions upon
expiration of the applicable Restriction Period and the Company shall then
deliver to the recipient Common Stock certificates evidencing such stock.
Restricted stock and any Common Stock received upon the expiration of the
restriction period shall be subject to such other transfer restrictions and/or
legend requirements as are specified in the applicable agreement.
(x) Bonuses and Past Salaries and Fees Payable in Unrestricted Stock.
(A) In lieu of cash bonuses otherwise payable under the Company's or
applicable division's or subsidiary's compensation practices to employees and
consultants eligible to participate in this Plan, the Committee, in its sole
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discretion, may determine that such bonuses shall be payable in unrestricted
Common Stock or partly in unrestricted Common Stock and partly in cash. Such
bonuses shall be in consideration of services previously performed and as an
incentive toward future services and shall consist of shares of unrestricted
Common Stock subject to such terms as the Committee may determine in its sole
discretion. The number of shares of unrestricted Common Stock payable in lieu of
a bonus otherwise payable shall be determined by dividing such bonus amount by
the fair market value of one share of Common Stock on the date the bonus is
payable, with fair market value determined as of such date in accordance with
Section 5(d)(ii).
(B) In lieu of salaries and fees otherwise payable by the Company to
employees, attorneys and consultants eligible to participate in this Plan that
were incurred for services rendered during, prior or after the year of 2005, the
Committee, in its sole discretion, may determine that such unpaid salaries and
fees shall be payable in unrestricted Common Stock or partly in unrestricted
Common Stock and partly in cash. Such awards shall be in consideration of
services previously performed and as an incentive toward future services and
shall consist of shares of unrestricted Common Stock subject to such terms as
the Committee may determine in its sole discretion. The number of shares of
unrestricted Common Stock payable in lieu of a salaries and fees otherwise
payable shall be determined by dividing each calendar month's of unpaid salary
or fee amount by the average trading value of the Common Stock for the calendar
month during which the subject services were provided.
(xi) No Rights as Stockholder. No Participant shall have any rights as a
stockholder with respect to shares covered by an option or warrant until the
option or warrant is exercised as provided in clause (d) above.
(xii) Extraordinary Corporate Transactions. The existence of outstanding
options or warrants shall not affect in any way the right or power of the
Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations, exchanges, or other changes in the Company's
capital structure or its business, or any merger or consolidation of the
Company, or any issuance of Common Stock or other securities or subscription
rights thereto, or any issuance of bonds, debentures, preferred or prior
preference stock ahead of or affecting the Common Stock or the rights thereof,
or the dissolution or liquidation of the Company, or any sale or transfer of all
or any part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise. If the Company recapitalizes or
otherwise changes its capital structure, or merges, consolidates, sells all of
its assets or dissolves (each of the foregoing a "Fundamental Change"), then
thereafter upon any exercise of an option or warrant theretofore granted the
Participant shall be entitled to purchase under such option or warrant, in lieu
of the number of shares of Common Stock as to which option or warrant shall then
be exercisable, the number and class of shares of stock and securities to which
the Participant would have been entitled pursuant to the terms of the
Fundamental Change if, immediately prior to such Fundamental Change, the
Participant had been the holder of record of the number of shares of Common
Stock as to which such option or warrant is then exercisable. If (i) the
Company shall not be the surviving entity in any merger or consolidation (or
survives only as a subsidiary of another entity), (ii) the Company sells all or
substantially all of its assets to any other person or entity (other than a
wholly-owned subsidiary), (iii) any person or entity (including a "group" as
contemplated by Section 13(d)(3) of the Exchange Act) acquires or gains
ownership or control of (including, without limitation, power to vote) more than
50% of the outstanding shares of Common Stock, (iv) the Company is to be
dissolved and liquidated, or (v) as a result of or in connection with a
contested election of directors, the persons who were directors of the Company
before such election shall cease to constitute a majority of the Board (each
such event in clauses (i) through (v) above is referred to herein as a
"Corporate Change"), the Committee, in its sole discretion, may accelerate the
time at which all or a portion of a Participant's option or warrants may be
exercised for a limited period of time before or after a specified date.
(xiii) Changes in Company's Capital Structure. If the outstanding shares of
Common Stock or other securities of the Company, or both, for which the option
or warrant is then exercisable at any time be changed or exchanged by
declaration of a stock dividend, stock split, combination of shares,
recapitalization, or reorganization, the number and kind of shares of Common
Stock or other securities which are subject to the Plan or subject to any
options or warrants theretofore granted, and the option or warrant prices, shall
be adjusted only as provided in the option or warrant.
(xiv) Acceleration of Options and Warrants. Except as hereinbefore expressly
provided, (i) the issuance by the Company of shares of stock or any class of
securities convertible into shares of stock of any class, for cash, property,
labor or services, upon direct sale, upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the Company
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convertible into such shares or other securities, (ii) the payment of a dividend
in property other than Common Stock or (iii) the occurrence of any similar
transaction, and in any case whether or not for fair value, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the number of
shares of Common Stock subject to options or warrants theretofore granted or the
purchase price per share, unless the Committee shall determine, in its sole
discretion, that an adjustment is necessary to provide equitable treatment to
Participant. Notwithstanding Anything to the contrary contained in this Plan,
the Committee may, in its sole discretion, accelerate the time at which any
option or warrant may be exercised, including, but not limited to, upon the
occurrence of the events specified in this Section 5, and is authorized at any
time (with the consent of the Participant) to purchase options or warrants
pursuant to Section 6.
SECTION 6. RELINQUISHMENT OF OPTIONS OR WARRANTS.
(a) The Committee, in granting options or warrants hereunder, shall have
discretion to determine whether or not options or warrants shall include a right
of relinquishment as hereinafter provided by this Section 6. The Committee
shall also have discretion to determine whether an option or warrant agreement
evidencing an option or warrant initially granted by the Committee without a
right of relinquishment shall be amended or supplemented to include such a right
of relinquishment. Neither the Committee nor the Company shall be under any
obligation or incur any liability to any person by reason of the Committee's
refusal to grant or include a right of relinquishment in any option or warrant
granted hereunder or in any option or warrant agreement evidencing the same.
Subject to the Committee's determination in any case that the grant by it of a
right of relinquishment is consistent with Section 1 hereof, any option or
warrant granted under this Plan, and the option or warrant agreement evidencing
such option or warrant, may provide:
(i) That the Participant, or his or her heirs or other legal representatives
to the extent entitled to exercise the option or warrant under the terms
thereof, in lieu of purchasing the entire number of shares subject to purchase
thereunder, shall have the right to relinquish all or any part of the then
unexercised portion of the option or warrant (to the extent then exercisable)
for a number of shares of Common Stock to be determined in accordance with the
following provisions of this clause (i):
(A) The written notice of exercise of such right of relinquishment shall
state the percentage of the total number of shares of Common Stock issuable
pursuant to such relinquishment (as defined below) that the Participant elects
to receive;
(B) The number of shares of Common Stock, if any, issuable pursuant to
such relinquishment shall be the number of such shares, rounded to the next
greater number of full shares, as shall be equal to the quotient obtained by
dividing (i) the Appreciated Value by (ii) the purchase price for each of such
shares specified in such option or warrant;
(C) For the purpose of this clause (C), "Appreciated Value" means the
excess, if any, of (x) the total current market value of the shares of Common
Stock covered by the option or warrant or the portion thereof to be relinquished
over (y) the total purchase price for such shares specified in such option or
warrant;
(ii) That such right of relinquishment may be exercised only upon receipt by
the Company of a written notice of such relinquishment which shall be dated the
date of election to make such relinquishment; and that, for the purposes of this
Plan, such date of election shall be deemed to be the date when such notice is
sent by registered or certified mail, or when receipt is acknowledged by the
Company, if mailed by other than registered or certified mail or if delivered by
hand or by any telegraphic communications equipment of the sender or otherwise
delivered; provided, that, in the event the method just described for
determining such date of election shall not be or remain consistent with the
provisions of Section 16(b) of the Exchange Act or the rules and regulations
adopted by the Commission thereunder, as presently existing or as may be
hereafter amended, which regulations exempt from the operation of Section 16(b)
of the Exchange Act in whole or in part any such relinquishment transaction,
then such date of election shall be determined by such other method consistent
with Section 16(b) of the Exchange Act or the rules and regulations thereunder
as the Committee shall in its discretion select and apply;
(iii) That the "current market value" of a share of Common Stock on a
particular date shall be deemed to be its fair market value on that date as
determined in accordance with Paragraph 5(d)(ii); and
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(iv) That the option or warrant, or any portion thereof, may be relinquished
only to the extent that (A) it is exercisable on the date written notice of
relinquishment is received by the Company, and (B) the holder of such option or
warrant pays, or makes provision satisfactory to the Company for the payment of,
any taxes which the Company is obligated to collect with respect to such
relinquishment.
(b) The Committee shall have sole discretion to consent to or disapprove, and
neither the Committee nor the Company shall be under any liability by reason of
the Committee's disapproval of, any election by a holder of preferred stock to
relinquish such preferred stock in whole or in part as provided in Paragraph
7(a), except that no such consent to or approval of a relinquishment shall be
required under the following circumstances. Each Participant who is subject to
the short-swing profits recapture provisions of Section 16(b) of the Exchange
Act ("Covered Participant") shall not be entitled to receive shares of Common
Stock when options or warrants are relinquished during any window period
commencing on the third business day following the Company's release of a
quarterly or annual summary statement of sales and earnings and ending on the
twelfth business day following such release ("Window Period"). A Covered
Participant shall be entitled to receive shares of Common Stock upon the
relinquishment of options or warrants outside a Window Period.
(c) The Committee, in granting options or warrants hereunder, shall have
discretion to determine the terms upon which such options or warrants shall be
relinquishable, subject to the applicable provisions of this Plan, and including
such provisions as are deemed advisable to permit the exemption from the
operation from Section 16(b) of the Exchange Act of any such relinquishment
transaction, and options or warrants outstanding, and option agreements
evidencing such options, may be amended, if necessary, to permit such exemption.
If options or warrants are relinquished, such option or warrant shall be deemed
to have been exercised to the extent of the number of shares of Common Stock
covered by the option or warrant or part thereof which is relinquished, and no
further options or warrants may be granted covering such shares of Common Stock.
(d) Any options or warrants or any right to relinquish the same to the Company
as contemplated by this Paragraph 6 shall be assignable by the Participant,
provided the transaction complies with any applicable securities laws.
(e) Except as provided in Section 6(f) below, no right of relinquishment may be
exercised within the first six months after the initial award of any option or
warrant containing, or the amendment or supplementation of any existing option
or warrant agreement adding, the right of relinquishment.
(f) No right of relinquishment may be exercised after the initial award of any
option or warrant containing, or the amendment or supplementation of any
existing option or warrant agreement adding the right of relinquishment, unless
such right of relinquishment is effective upon the Participant's death,
disability or termination of his relationship with the Company for a reason
other than "for cause."
SECTION 7. GRANT OF CONVERTIBLE PREFERRED STOCK.
(a) Committee Discretion. The Committee shall have sole and absolute
discretionary authority (i) to determine, authorize, and designate those persons
pursuant to this Plan who are to receive restricted preferred stock, or
unrestricted preferred stock under the Plan, and (ii) to determine the number of
shares of Common Stock to be issued upon conversion of such shares of preferred
stock and the terms thereof. The Committee shall thereupon grant shares of
preferred stock in accordance with such determinations as evidenced by a written
preferred stock designation. Subject to the express
provisions of the Plan, the Committee shall have discretionary authority to
prescribe, amend and rescind rules and regulations relating to the Plan, to
interpret the Plan, to prescribe and amend the terms of the preferred stock
designation (which need not be identical) and to make all other determinations
deemed necessary or advisable for the administration of the Plan.
(b) Terms and Conditions. Each series of preferred stock granted under the Plan
shall be evidenced by a designation in the form for filing with the Secretary of
State of the state of incorporation of the Company, containing such terms as
approved by the Committee, which shall be subject to the following express terms
and conditions and to such other terms and conditions as the Committee may deem
appropriate:
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(i) Conversion Ratio. The number of shares of Common Stock issuable upon
conversion of each share of preferred stock granted pursuant to the Plan shall
be determined by the Committee at the time the preferred stock is granted. The
conversion ration may be determined by reference to the fair market value of
each share of Common Stock on the date the preferred stock is granted, or at
such other price as the Committee in its sole discretion shall determine.
At the time a determination of the fair market value of a share of Common Stock
is required to be made hereunder, the determination of its fair market value
shall be made in accordance with Paragraph 5(d)(ii).
(ii) Conversion Period. The Committee may provide in the preferred stock
agreement that an preferred stock may be converted in whole, immediately, or is
to be convertible in increments. In addition, the Committee may provide that
the conversion of all or part of an preferred stock is subject to specified
performance by the Participant.
(iii) Procedure for Conversion. Shares of preferred stock shall be
converted in the manner specified in the preferred stock designation. The
notice of conversion shall specify the address to which the certificates for
such shares are to be mailed. A Participant shall be deemed to be a stockholder
with respect to shares covered by preferred stock on the date specified in the
preferred stock agreement . As promptly as practicable, the Company shall
deliver to the Participant or other holder of the warrant, certificates for the
number of shares with respect to which such preferred stock has been so
converted, issued in the holder's name or such other name as holder directs;
provided, however, that such delivery shall be deemed effected for all purposes
when a stock transfer agent of the Company shall have deposited such
certificates with a carrier for overnight delivery, addressed to the holder at
the address specified pursuant to this Section 6(d).
(iv) Termination of Employment. If an executive officer to whom preferred
stock is granted ceases to be employed by the Company for any reason other than
death or disability, any preferred stock which is convertible on the date of
such termination of employment may be converted during a period beginning on
such date and ending at the time set forth in the preferred stock agreement;
provided, however, that if a Participant's employment is terminated because of
the Participant's theft or embezzlement from the Company, disclosure of trade
secrets of the Company or the commission of a willful, felonious act while in
the employment of the Company (such reasons shall hereinafter be collectively
referred to as "for cause"), then any preferred stock or unconverted portion
thereof granted to said Participant shall expire upon such termination of
employment. Notwithstanding the foregoing, no ISO may be converted later than
three months after an employee's termination of employment for any reason other
than death or disability.
(v) Disability or Death of Participant. In the event of the determination of
disability or death of a Participant under the Plan while he or she is employed
by the Company, the preferred stock previously granted to him may be converted
(to the extent he or she would have been entitled to do so at the date of the
determination of disability or death) at any time and from time to time, within
a period beginning on the date of such determination of disability or death and
ending at the time set forth in the preferred stock agreement, by the former
employee, the guardian of his estate, the executor or administrator of his
estate or by the person or persons to whom his rights under the preferred stock
shall pass by will or the laws of descent and distribution, but in no event may
the preferred stock be converted after its expiration under the terms of the
preferred stock agreement. Notwithstanding the foregoing, no ISO may be
converted later than one year after the determination of disability or death. A
Participant shall be deemed to be disabled if, in the opinion of a physician
selected by the Committee, he or she is incapable of performing services for the
Company of the kind he or she was performing at the time the disability occurred
by reason of any medically determinable physical or mental impairment which can
be expected to result in death or to be of long, continued and indefinite
duration. The date of determination of disability for purposes hereof shall be
the date of such determination by such physician.
(vi) Assignability. Preferred stock shall be assignable or otherwise
transferable, in whole or in part, by a Participant.
(vii) Restricted Stock Awards. Awards of restricted preferred stock under
this Plan shall be subject to all the applicable provisions of this Plan,
including the following terms and conditions, and to such other terms and
conditions not inconsistent therewith, as the Committee shall determine:
8
(A) Awards of restricted preferred stock may be in addition to or in lieu
of preferred stock grants. Awards may be conditioned on the attainment of
particular performance goals based on criteria established by the Committee at
the time of each award of restricted preferred stock. During a period set forth
in the agreement (the "Restriction Period"), the recipient shall not be
permitted to sell, transfer, pledge, or otherwise encumber the shares of
restricted preferred stock. Shares of restricted preferred stock shall become
free of all restrictions if during the Restriction Period, (i) the recipient
dies, (ii) the recipient's directorship, employment, or consultancy terminates
by reason of permanent disability, as determined by the Committee, (iii) the
recipient retires after attaining both 59 1/2 years
of age and five years of continuous service with the Company and/or a division
or subsidiary, or (iv) if provided in the agreement, there is a "change in
control" of the Company (as defined in such agreement). The Committee may
require medical evidence of permanent disability, including medical examinations
by physicians selected by it. Unless and to the extent otherwise provided in
the agreement, shares of restricted preferred stock shall be forfeited and
revert to the Company upon the recipient's termination of directorship,
employment or consultancy during the Restriction Period for any reason other
than death, permanent disability, as determined by the Committee, retirement
after attaining both 59 1/2 years of age and five years of continuous service
with the Company and/or a subsidiary or division, or, to the extent provided in
the agreement, a "change in control" of the Company (as defined in such
agreement), except to the extent the Committee, in its sole discretion, finds
that such forfeiture might not be in the best interests of the Company and,
therefore, waives all or part of the application of this provision to the
restricted preferred stock held by such recipient. Certificates for restricted
preferred stock shall be registered in the name of the recipient but shall be
imprinted with the appropriate legend and returned to the Company by the
recipient, together with a preferred stock power endorsed in blank by the
recipient. The recipient shall be entitled to vote shares of restricted
preferred stock and shall be entitled to all dividends paid thereon, except that
dividends paid in Common Stock or other property shall also be subject to the
same restrictions.
(B) Restricted preferred stock shall become free of the foregoing
restrictions upon expiration of the applicable Restriction Period and the
Company shall then deliver to the recipient Common Stock certificates evidencing
such stock. Restricted preferred stock and any Common Stock received upon the
expiration of the restriction period shall be subject to such other transfer
restrictions and/or legend requirements as are specified in the applicable
agreement.
(x) Bonuses and Past Salaries and Fees Payable in Unrestricted Preferred
stock.
(A) In lieu of cash bonuses otherwise payable under the Company's or
applicable division's or subsidiary's compensation practices to employees and
consultants eligible to participate in this Plan, the Committee, in its sole
discretion, may determine that such bonuses shall be payable in unrestricted
Common Stock or partly in unrestricted Common Stock and partly in cash. Such
bonuses shall be in consideration of services previously performed and as an
incentive toward future services and shall consist of shares of unrestricted
Common Stock subject to such terms as the Committee may determine in its sole
discretion. The number of shares of unrestricted Common Stock payable in lieu
of a bonus otherwise payable shall be determined by dividing such bonus amount
by the fair market value of one share of Common Stock on the date the bonus is
payable, with fair market value determined as of such date in accordance with
Section 5(d)(ii).
(B) In lieu of salaries and fees otherwise payable by the Company to
employees, attorneys and consultants eligible to participate in this Plan that
were incurred for services rendered during, prior or after the year of 2005, the
Committee, in its sole discretion, may determine that such unpaid salaries and
fees shall be payable in unrestricted Common Stock or partly in unrestricted
Common Stock and partly in cash. Such awards shall be in consideration of
services previously performed and as an incentive toward future services and
shall consist of shares of unrestricted Common Stock subject to such terms as
the Committee may determine in its sole discretion. The number of shares of
unrestricted Common Stock payable in lieu of a salaries and fees otherwise
payable shall be determined by dividing each calendar month's of unpaid salary
or fee amount by the average trading value of the Common Stock for the calendar
month during which the subject services were provided.
(xi) No Rights as Stockholder. No Participant shall have any rights as a
stockholder with respect to shares covered by an preferred stock until the
preferred stock is converted as provided in clause (b)(iii) above.
(xii) Extraordinary Corporate Transactions. The existence of outstanding
preferred stock shall not affect in any way the right or power of the Company or
its stockholders to make or authorize any or all adjustments, recapitalizations,
reorganizations, exchanges, or other changes in the Company's capital structure
9
or its business, or any merger or consolidation of the Company, or any issuance
of Common Stock or other securities or subscription rights thereto, or any
issuance of bonds, debentures, preferred or prior preference stock ahead of or
affecting the Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise. If the Company recapitalizes or otherwise
changes its capital structure, or merges, consolidates, sells all of its assets
or dissolves (each of the foregoing a "Fundamental Change"), then thereafter
upon any conversion of preferred stock theretofore granted the Participant shall
be entitled to the number of shares of Common Stock upon conversion of such
preferred stock, in lieu of the number of shares of Common Stock as to which
preferred stock shall then be convertible, the number and class of shares of
stock and securities to which the Participant would have been entitled pursuant
to the terms of the Fundamental Change if, immediately prior to such Fundamental
Change, the Participant had been the holder of record of the number of shares of
Common Stock as to which such preferred stock is then convertible. If (i) the
Company shall not be the surviving entity in any merger or consolidation (or
survives only as a subsidiary of another entity), (ii) the Company sells all or
substantially all of its assets to any other person or entity (other than a
wholly-owned subsidiary), (iii) any person or entity (including a "group" as
contemplated by Section 13(d)(3) of the Exchange Act) acquires or gains
ownership or control of (including, without limitation, power to vote) more than
50% of the outstanding shares of Common Stock, (iv) the Company is to be
dissolved and liquidated, or (v) as a result of or in connection with a
contested election of directors, the persons who were directors of the Company
before such election shall cease to constitute a majority of the Board (each
such event in clauses (i) through (v) above is referred to herein as a
"Corporate Change"), the Committee, in its sole discretion, may accelerate the
time at which all or a portion of a Participant's shares of preferred stock may
be converted for a limited period of time before or after a specified date.
(xiii) Changes in Company's Capital Structure. If the outstanding shares
of Common Stock or other securities of the Company, or both, for which the
preferred stock is then convertible at any time be changed or exchanged by
declaration of a stock dividend, stock split, combination of shares,
recapitalization, or reorganization, the number and kind of shares of Common
Stock or other securities which are subject to the Plan or subject to any
preferred stock theretofore granted, and the conversion ratio, shall be adjusted
only as provided in the designation of the preferred stock.
(xiv) Acceleration of Conversion of Preferred Stock. Except as hereinbefore
expressly provided, (i) the issuance by the Company of shares of stock or any
class of securities convertible into shares of stock of any class, for cash,
property, labor or services, upon direct sale, upon the conversion of rights or
warrants to subscribe therefor, or upon conversion of shares or obligations of
the Company convertible into such shares or other securities, (ii) the payment
of a dividend in property other than Common Stock or (iii) the occurrence of any
similar transaction, and in any case whether or not for fair value, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number of shares of Common Stock subject to preferred stock theretofore granted,
unless the Committee shall determine, in its sole discretion, that an adjustment
is necessary to provide equitable treatment to Participant. Notwithstanding
anything to the contrary contained in this Plan, the Committee may, in its sole
discretion, accelerate the time at which any preferred stock may be converted,
including, but not limited to, upon the occurrence of the events specified in
this Section 7(xiv).
SECTION 8. AMENDMENTS OR TERMINATION.
The Board may amend, alter or discontinue the Plan, but no amendment or
alteration shall be made which would impair the rights of any Participant,
without his consent, under any option, warrant or preferred stock theretofore
granted.
SECTION 9. COMPLIANCE WITH OTHER LAWS AND REGULATIONS.
The Plan, the grant and exercise of options or warrants and grant and conversion
of preferred stock thereunder, and the obligation of the Company to sell and
deliver shares under such options, warrants or preferred stock, shall be subject
to all applicable federal and state laws, rules and regulations and to such
approvals by any governmental or regulatory agency as may be required. The
Company shall not be required to issue or deliver any certificates for shares of
Common Stock prior to the completion of any registration or qualification of
such shares under any federal or state law or issuance of any ruling or
regulation of any government body which the Company shall, in its sole
discretion, determine to be necessary or advisable. Any adjustments provided
10
for in subparagraphs 5(d)(xii), (xiii) and (xiv) shall be subject to any
shareholder action required by the corporate law of the state of incorporation
of the Company.
SECTION 10. PURCHASE FOR INVESTMENT.
Unless the options, warrants, shares of convertible preferred stock and shares
of Common Stock covered by this Plan have been registered under the Securities
Act of 1933, as amended, or the Company has determined that such registration is
unnecessary, each person acquiring or exercising an option or warrant under this
Plan or converting shares of preferred stock may be required by the Company to
give a representation in writing that he or she is acquiring such option or
warrant or such shares for his own account for investment and not with a view
to, or for sale in connection with, the distribution of any part thereof.
SECTION 11. TAXES.
(a) The Company may make such provisions as it may deem appropriate for the
withholding of any taxes which it determines is required in connection with any
options, warrants or preferred stock granted under this Plan.
(b) Notwithstanding the terms of Paragraph 11 (a), any Participant may pay
all or any portion of the taxes required to be withheld by the Company or paid
by him or her in connection with the exercise of a nonqualified option or
warrant or conversion of preferred stock by electing to have the Company
withhold shares of Common Stock, or by delivering previously owned shares of
Common Stock, having a fair market value, determined in accordance with
Paragraph 5(d)(ii), equal to the amount required to be withheld or paid. A
Participant must make the foregoing election on or before the date that the
amount of tax to be withheld is determined ("Tax Date"). All such elections are
irrevocable and subject to disapproval by the Committee. Elections by Covered
Participants are subject to the following additional restrictions: (i) such
election may not be made within six months of the grant of an option or warrant,
provided that this limitation shall not apply in the event of death or
disability, and (ii) such election must be made either six months or more prior
to the Tax Date or in a Window Period. Where the Tax Date in respect of an
option or warrant is deferred until six months after exercise and the Covered
Participant elects share withholding, the full amount of shares of Common Stock
will be issued or transferred to him upon exercise of the option or warrant, but
he or she shall be unconditionally obligated to tender back to the Company the
number of shares necessary to discharge the Company's withholding obligation or
his estimated tax obligation on the Tax Date.
SECTION 12. REPLACEMENT OF OPTIONS, WARRANTS AND PREFERRED STOCK.
The Committee from time to time may permit a Participant under the Plan to
surrender for cancellation any unexercised outstanding option or warrant or
unconverted Preferred stock and receive from the Company in exchange an option,
warrant or preferred stock for such number of shares of Common Stock as may be
designated by the Committee. The Committee may, with the consent of the holder
of any outstanding option, warrant or preferred stock, amend such option,
warrant or preferred stock, including reducing the exercise price of any option
or warrant to not less than the fair market value of the Common Stock at the
time of the amendment, increasing the conversion ratio of any preferred stock
and extending the exercise or conversion term of and warrant, option or
preferred stock.
SECTION 13. NO RIGHT TO COMPANY EMPLOYMENT.
Nothing in this Plan or as a result of any option or warrant granted pursuant to
this Plan shall confer on any individual any right to continue in the employ of
the Company or interfere in any way with the right of the Company to terminate
an individual's employment at any time. The option, warrant or preferred stock
agreements may contain such provisions as the Committee may approve with
reference to the effect of approved leaves of absence.
SECTION 14. LIABILITY OF COMPANY.
The Company and any Affiliate which is in existence or hereafter comes into
existence shall not be liable to a Participant or other persons as to:
11
(a) The Non-Issuance of Shares. The non-issuance or sale of shares as to
which the Company has been unable to obtain from any regulatory body having
jurisdiction the authority deemed by the Company's counsel to be necessary to
the lawful issuance and sale of any shares hereunder; and
(b) Tax Consequences. Any tax consequence expected, but not realized, by
any Participant or other person due to the exercise of any option or warrant or
the conversion of any preferred stock granted hereunder.
SECTION 15. EFFECTIVENESS AND EXPIRATION OF PLAN.
The Plan shall be effective on the date the Board adopts the Plan. The Plan
shall expire ten years after the date the Board approves the Plan and thereafter
no option, warrant or preferred stock shall be granted pursuant to the Plan.
SECTION 16. NON-EXCLUSIVITY OF THE PLAN.
Neither the adoption by the Board nor the submission of the Plan to the
stockholders of the Company for approval shall be construed as creating any
limitations on the power of the Board to adopt such other incentive arrangements
as it may deem desirable, including without limitation, the granting of
restricted stock or stock options, warrants or preferred stock otherwise than
under the Plan, and such arrangements may be either generally applicable or
applicable only in specific cases.
SECTION 17. GOVERNING LAW.
This Plan and any agreements hereunder shall be interpreted and construed in
accordance with the laws of the state of incorporation of the Company and
applicable federal law.
SECTION 18. CASHLESS EXERCISE.
The Committee also may allow cashless exercises as permitted under Federal
Reserve Board's Regulation T, subject to applicable securities law restrictions.
or by any other means which the Committee determines to be consistent with the
Plan's purpose and applicable law. The proceeds from such a payment shall be
added to the general funds of the Company and shall be used for general
corporate purposes.
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