NOVASTAR
RESOURCES LTD.
SECOND
AMENDED AND RESTATED 2006 STOCK PLAN
1.
Purpose.
The
purpose of this plan (the “Plan”) is to secure for Novastar Resources Ltd. (the
“Corporation”) and its stockholders the benefits arising from capital stock
ownership by employees, officers and directors of, and consultants or advisors
to, the Corporation and its subsidiary corporations who are expected to
contribute to the Corporation’s future growth and success. The Plan permits
grants of options to purchase shares of Common Stock, $0.001 par value per
share, of the Corporation (“Common Stock”) and awards of shares of Common Stock
that are restricted as provided in Section 12 (“Restricted Shares”). Those
provisions of the Plan which make express reference to Section 422 of the
Internal Revenue Code of 1986, as amended or replaced from time to time (the
“Code”), shall apply only to Incentive Stock Options (as that term is defined in
the Plan).
2.
Type
of Options and Administration.
(a)
Types
of Options.
Options
granted pursuant to the Plan shall be authorized by action of the Board of
Directors of the Corporation (or a Committee designated by the Board of
Directors) and may be either incentive stock options (“Incentive Stock Options”)
meeting the requirements of Section 422 of the Code or non-statutory options
which are not intended to meet the requirements of Section 422 of the
Code.
(b)
Administration.
The
Plan will be administered by the Board of Directors of the Corporation, whose
construction and interpretation of the terms and provisions of the Plan shall
be
final and conclusive. The Board of Directors may in its sole discretion grant
Restricted Shares and options to purchase shares of Common Stock and issue
shares upon exercise of such options as provided in the Plan. The Board shall
have authority, subject to the express provisions of the Plan, to construe
the
respective option and Restricted Share agreements and the Plan, to prescribe,
amend and rescind rules and regulations relating to the Plan, to determine
the
terms and provisions of the respective option and Restricted Share agreements,
which need not be identical, and to make all other determinations in the
judgment of the Board of Directors necessary or desirable for the administration
of the Plan. The Board of Directors may correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in any option or
Restricted Share agreement in the manner and to the extent it shall deem
expedient to carry the Plan into effect and it shall be the sole and final
judge
of such expediency. No director or person acting pursuant to authority delegated
by the Board of Directors shall be liable for any action or determination
under
the Plan made in good faith. The Board of Directors may, to the full extent
permitted by or consistent with applicable laws or regulations (including,
without limitation, applicable state law and Rule 16b-3 promulgated under
the
Securities Exchange Act of 1934 (the “Exchange Act”), or any successor rule
(“Rule 16b-3”)), delegate any or all of its powers under the Plan to a committee
(the “Committee”) appointed by the Board of Directors, and if the Committee is
so appointed all references to the Board of Directors in the Plan shall mean
and
relate to such Committee with respect to the powers so delegated. Any director
to whom an option or stock grant is awarded shall be ineligible to vote upon
his
or her option or stock grant, but such option or stock grant may be awarded
any
such director by a vote of the remainder of the directors, except as limited
below.
(c)
Applicability
of Rule 16b-3.
Those
provisions of the Plan which make express reference to Rule 16b-3 shall apply
to
the Corporation only at such time as the Corporation’s Common Stock is
registered under the Exchange Act, and then only to such persons as are required
to file reports under Section 16(a) of the Exchange Act (a “Reporting
Person”).
(d)
Compliance
with Section 162(m) of the Code.
Section
162(m) of the Code, added by the Omnibus Budget Reconciliation Act of 1993,
generally limits the tax deductibility to publicly held companies of
compensation in excess of $1,000,000 paid to certain “covered employees”
(“Covered Employees”). It is the Corporation’s intention to preserve the
deductibility of such compensation to the extent it is reasonably practicable
and to the extent it is consistent with the Corporation’s compensation
objectives. For purposes of this Plan, Covered Employees of the Corporation
shall be those employees of the Corporation described in Section 162(m)(3)
of
the Code.
(e)
Special
Provisions Applicable to Options Granted to Covered Employees.
In
order for the full value of options granted to Covered Employees to be
deductible by the Corporation for federal income tax purposes, the Corporation
may intend for such options to be treated as “qualified performance based
compensation” as described in Treas. Reg. §1.162-27(e) (or any successor
regulation). In such case, options granted to Covered Employees shall be
subject
to the following additional requirements:
(i)
such
options and rights shall be granted only by a committee comprised solely
of two
or more “outside directors”, within the meaning of Treas. Reg. § 1.162.27(e)(3);
and
(ii)
the
exercise price of such options shall in no event be less than the Fair Market
Value (as defined below) of the Common Stock as of the date of grant of such
options.
(f) Section
409A of the Code.
The
Board of Directors may only grant those awards that either comply with the
applicable requirements of Section 409A of the Code, or do not result in
the
deferral of compensation within the meaning of Section 409A of the
Code.
3.
Eligibility.
(a)
General.
Options
and Restricted Shares may be granted to persons who are, at the time of grant,
in a Business Relationship (as defined below) with the Corporation; provided,
that Incentive Stock Options may only be granted to individuals who are
employees of the Corporation (within the meaning of Section 3401(c) of the
Code). A person who has been granted an option or Restricted Shares may,
if he
or she is otherwise eligible, be granted additional options or Restricted
Shares
if the Board of Directors shall so determine. For purposes of the Plan,
“Business Relationship” means that a person is serving the Corporation, its
parent, if applicable, or any of its subsidiaries, if applicable, in the
capacity of an employee, officer, director, advisor or consultant.
(b)
Grant
of Options to Reporting Persons.
From
and after the registration of the Common Stock of the Corporation under the
Exchange Act, the selection of a director or an officer who is a Reporting
Person (as the terms “director” and “officer” are defined for purposes of Rule
16b-3) as a recipient of an option or Restricted Shares, the timing of the
option or Restricted Share grant, the exercise price of the option and the
number of Restricted Shares or shares subject to the option shall be determined
either (i) by the Board of Directors, or (ii) by a committee consisting of
two
or more “Non-Employee Directors” having full authority to act in the matter. For
the purposes of the Plan, a director shall be deemed to be a “Non-Employee
Director” only if such person qualifies as a “Non-Employee Director” within the
meaning of Rule 16b-3, as such term is interpreted from time to time.
4.
Stock
Subject to Plan.
The
stock
subject to options granted under the Plan or grants of Restricted Shares
shall
be shares of authorized but unissued or reacquired Common Stock. Subject
to
adjustment as provided in Section 16 below, the maximum number of shares
of
Common Stock of the Corporation (“Shares”) which may be issued and sold under
the Plan is 75 million Shares. If any Restricted Shares shall be reacquired
by
the Corporation, forfeited or an option granted under the Plan shall expire,
terminate or is canceled for any reason without having been exercised in
full,
the forfeited Restricted Shares or unpurchased Shares subject to such option
shall again be available for subsequent option or Restricted Share grants
under
the Plan. Subject to adjustment in accordance with Section 16:
(a)
No
more
than an aggregate of 75 million Shares may be issued under Incentive Stock
Options during the term of the Plan;
(b)
No
more
than an aggregate of 37.5 million Shares may be issued in the form of Restricted
Shares during the term of the Plan;
(c)
The
maximum number of Shares with respect to which options may be granted to
any one
person during any fiscal year of the Corporation may not exceed eight million
Shares; and
(d)
The
maximum number of Restricted Shares which may be granted to any one person
during any fiscal year of the Corporation may not exceed five million
Shares.
These
limits shall be applied and construed consistently with Section 162(m) of
the
Code.
5.
Forms
of Option and Restricted Share Agreements.
As
a
condition to the grant of Restricted Shares or an option under the Plan,
each
recipient of Restricted Shares or an option shall execute an option or
Restricted Share agreement in such form not inconsistent with the Plan as
may be
approved by the Board of Directors. Such option or Restricted Share agreements
may differ among recipients.
6.
Purchase
Price.
(a)
General.
The
purchase price per Share deliverable upon the exercise of an option shall
be
determined by the Board of Directors at the time of grant of such option;
provided, however, that the exercise price of an option shall not be less
than
100% of the Fair Market Value (as hereinafter defined) of a Share, at the
time
of grant of such option, or less than 110% of such Fair Market Value in the
case
of an Incentive Stock Option described in Section 11(b). “Fair Market Value” of
a Share as of a specified date for the purposes of the Plan shall mean the
closing price of a Share on the principal securities exchange on which such
Shares are traded on the day immediately preceding the date as of which Fair
Market Value is being determined, or on the next preceding date on which
such
Shares are traded if no shares were traded on such immediately preceding
day, or
if the Shares are not traded on a securities exchange, Fair Market Value
shall
be deemed to be the average of the high bid and low asked prices of the Shares
in the over-the-counter market on the day immediately preceding the date
as of
which Fair Market Value is being determined or on the next preceding date
on
which such high bid and low asked prices were recorded. In no case shall
Fair
Market Value be determined with regard to restrictions other than restrictions
which, by their terms, will never lapse. The Board of Directors may also
permit
optionees, either on a selective or aggregate basis, to simultaneously exercise
options and sell the Shares thereby acquired, pursuant to a brokerage or
similar
arrangement, approved in advance by the Board of Directors, and to use the
proceeds from such sale as payment of the purchase price of such
shares.
(b)
Payment
of Purchase Price.
Options
granted under the Plan may provide for the payment of the exercise price
by
delivery of cash or a check to the order of the Corporation in an amount
equal
to the exercise price of such options, or, to the extent provided in the
applicable option agreement, (i) by delivery to the Corporation of Shares
having
a Fair Market Value on the date of exercise equal in amount to the exercise
price of the options being exercised, (ii) through any cashless exercise
feature
that may be included in the option agreement covering a particular option
grant,
(iii) by any other means which the Board of Directors determines are consistent
with the purpose of the Plan and with applicable laws and regulations
(including, without limitation, the provisions of Rule 16b-3 and Regulation
T
promulgated by the Federal Reserve Board) or (iv) by any combination of such
methods of payment.
7.
Option
Period.
Subject
to earlier termination as provided in the Plan, each option and all rights
thereunder shall expire on such date as determined by the Board of Directors
and
set forth in the applicable option agreement, provided, that such date shall
not
be later than (10) ten years after the date on which the option is
granted.
8.
Exercise
of Options.
Each
option granted under the Plan shall be exercisable either in full or in
installments at such time or times and during such period as shall be set
forth
in the option agreement evidencing such option, subject to the provisions
of the
Plan. No option granted to a Reporting Person for purposes of the Exchange
Act,
however, shall be exercisable during the first six months after the date
of
grant. Subject to the requirements in the immediately preceding sentence,
if an
option is not at the time of grant immediately exercisable, the Board of
Directors may (i) in the agreement evidencing such option, provide for the
acceleration of the exercise date or dates of the subject option upon the
occurrence of specified events, and/or (ii) at any time prior to the complete
termination of an option, accelerate the exercise date or dates of such option,
unless it would cause an option that otherwise qualified as an Incentive
Stock
Option to lose Incentive Stock Option treatment by application of Section
422(d)(1) of the Code and Section 11(c) of the Plan.
9.
Nontransferability
of Options.
No
option
granted under this Plan shall be assignable or otherwise transferable by
the
optionee except by will or by the laws of descent and distribution or pursuant
to a qualified domestic relations order as defined in the Code or Title I
of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or the
rules thereunder. An option may be exercised during the lifetime of the optionee
only by the optionee. In the event an optionee dies during his employment
by the
Corporation or any of its subsidiaries, or during the three-month period
following the date of termination of such employment, his option shall
thereafter be exercisable, during the period specified to the full extent
to
which such option was exercisable by the optionee at the time of his death
during the periods set forth in Section 10 or 11(d). If any optionee should
attempt to dispose of or encumber his or her options, other than in accordance
with the applicable terms of this Plan or the applicable option agreement,
his
or her interest in such options shall terminate.
10.
Effect
of Termination of Employment or Other Relationship.
Except
as
provided in Section 11(d) with respect to Incentive Stock Options, and subject
to the provisions of the Plan and the applicable option agreement, an optionee
may exercise an option (but only to the extent such option was exercisable
at
the time of termination of the optionee’s employment or other relationship with
the Corporation) at any time within three (3) months following the termination
of the optionee’s employment or other relationship with the Corporation or
within one (1) year if such termination was due to the death or disability
of
the optionee, but, except in the case of the optionee’s death, in no event later
than the expiration date of the Option. If the termination of the optionee’s
employment is for cause or is otherwise attributable to a breach by the optionee
of an employment or confidentiality or non-disclosure agreement, the option
shall expire immediately upon such termination. The Board of Directors shall
have the power to determine what constitutes a termination for cause or a
breach
of an employment or confidentiality or non-disclosure agreement, whether
an
optionee has been terminated for cause or has breached such an agreement,
and
the date upon which such termination for cause or breach occurs. Any such
determinations shall be final and conclusive and binding upon the optionee.
11.
Incentive
Stock Options.
Options
granted under the Plan which are intended to be Incentive Stock Options shall
be
subject to the following additional terms and conditions:
(a)
Express
Designation.
All
Incentive Stock Options granted under the Plan shall, at the time of grant,
be
specifically designated as such in the option agreement covering such Incentive
Stock Options.
(b)
10%
Stockholder.
If any
employee to whom an Incentive Stock Option is to be granted under the Plan
is,
at the time of the grant of such option, the owner of stock possessing more
than
10% of the total combined voting power of all classes of stock of the
Corporation (after taking into account the attribution of stock ownership
rules
of Section 424(d) of the Code), then the following special provisions shall
be
applicable to the Incentive Stock Option granted to such
individual:
(i)
The
purchase price per share of the Common Stock subject to such Incentive Stock
Option shall not be less than 110% of the Fair Market Value of one share
of
Common Stock at the time of grant; and
(ii)
the
option exercise period shall not exceed five years from the date of
grant.
(c)
Dollar
Limitation.
For so
long as the Code shall so provide, options granted to any employee under
the
Plan (and any other incentive stock option plans of the Corporation) which
are
intended to constitute Incentive Stock Options shall not constitute Incentive
Stock Options to the extent that such options, in the aggregate, become
exercisable for the first time in any one calendar year for shares of Common
Stock with an aggregate Fair Market Value, as of the respective date or dates
of
grant, of more than $100,000 (or such other limitations as the Code may
provide).
(d)
Termination
of Employment, Death or Disability.
No
Incentive Stock Option may be exercised unless, at the time of such exercise,
the optionee is, and has been continuously since the date of grant of his
or her
option, employed by the Corporation, except that, unless otherwise specified
in
the applicable option agreement:
(i)
an
Incentive Stock Option may be exercised within the period of three months
after
the date the optionee ceases to be an employee of the Corporation (or within
such lesser period as may be specified in the applicable option agreement),
provided, that the agreement with respect to such option may designate a
longer
exercise period and that the exercise after such three-month period shall
be
treated as the exercise of a non-statutory option under the Plan;
(ii)
if
the
optionee dies while in the employ of the Corporation, or within three months
after the optionee ceases to be such an employee, the Incentive Stock Option
may
be exercised by the person to whom it is transferred by will or the laws
of
descent and distribution within the period of one year after the date of
death
(or within such lesser period as may be specified in the applicable option
agreement); and
(iii)
if
the
optionee becomes disabled (within the meaning of Section 22(e)(3) of the
Code or
any successor provisions thereto) while in the employ of the Corporation,
the
Incentive Stock Option may be exercised within the period of one year after
the
date the optionee ceases to be such an employee because of such disability
(or
within such lesser period as may be specified in the applicable option
agreement).
For
all
purposes of the Plan and any option granted hereunder, “employment” shall be
defined in accordance with the provisions of Section 1.421-1(h) of the Income
Tax Regulations (or any successor regulations). Notwithstanding the foregoing
provisions no Incentive Stock Option may be exercised after its expiration
date.
12.
Restricted
Shares.
(a)
Awards.
The
Board of Directors may from time to time in its discretion award Restricted
Shares to persons having a Business Relationship with the Corporation and
may
determine the number of Restricted Shares awarded and the terms and conditions
of, and the amount of payment, if any, to be made by such persons. Each award
of
Restricted Shares will be evidenced by a written agreement executed on behalf
of
the Corporation and containing terms and conditions not inconsistent with
the
Plan as the Board of Directors shall determine to be appropriate in its sole
discretion.
(b)
Restricted
Period; Lapse of Restrictions.
At the
time an award of Restricted Shares is made, the Board of Directors shall
establish a period of time (the “Restricted Period”) applicable to such award
which shall not be less than one year nor more than ten years. Each award
of
Restricted Shares may have a different Restricted Period. In lieu of
establishing a Restricted Period, the Board of Directors may establish
restrictions based only on the achievement of specified performance measures.
At
the time an award is made, the Board of Directors may, in its discretion,
prescribe conditions for the incremental lapse of restrictions during the
Restricted Period and for the lapse or termination of restrictions upon the
occurrence of other conditions in addition to or other than the expiration
of
the Restricted Period with respect to all or any portion of the Restricted
Shares. Such conditions may include, without limitation, the death or disability
of the participant to whom Restricted Shares are awarded, retirement of the
participant pursuant to normal or early retirement under any retirement plan
of
the Corporation or termination by the Corporation of the participant’s
employment other than for cause, or the occurrence of a change in control
of the
Corporation. Such conditions may also include performance measures, which,
in
the case of any such award of Restricted Shares to a participant who is a
“covered employee” within the meaning of Section 162(m) of the Code, shall be
based on one or more of the following criteria: earnings per share, market
value
per share, return on invested capital, return on operating assets and return
on
equity. The Board of Directors may also, in its discretion, shorten or terminate
the Restricted Period or waive any conditions for the lapse or termination
of
restrictions with respect to all or any portion of the Restricted Shares
at any
time after the date the award is made.
(c)
Rights
of Holder; Limitations Thereon.
Upon an
award of Restricted Shares, a stock certificate representing the number of
Restricted Shares awarded to the participant shall be registered in the
participant’s name and, at the discretion of the Board of Directors, will be
either delivered to the participant with an appropriate legend or held in
custody by the Corporation or a bank for the participant’s account. The
participant shall generally have the rights and privileges of a stockholder
as
to such Restricted Shares, including the right to vote such Restricted Shares,
except that the following restrictions shall apply: (i) with respect to each
Restricted Share, the
participant
shall not be entitled to delivery of an unlegended certificate until the
expiration nor termination of the Restricted Period, and the satisfaction
of any
other conditions prescribed by the Board of Directors, relating to such
Restricted Share; (ii) with respect to each Restricted Share, such share
may not
be sold, transferred, assigned, pledged, or otherwise encumbered or disposed
of
until the expiration of the Restricted Period, and the satisfaction of any
other
conditions prescribed by the Board of Directors, relating to such Restricted
Share (except, subject to the provisions of the participant’s stock restriction
agreement, by will or the laws of descent and distribution or pursuant to
a
qualified domestic relations order as defined by the Code or Title I of ERISA
or
the rules promulgated thereunder) and (iii) all of the Restricted Shares
as to
which restrictions have not at the time lapsed shall be forfeited and all
rights
of the participant to such Restricted Shares shall terminate without further
obligation on the part of the Corporation unless the participant has remained
in
a Business Relationship with the Corporation or any of its subsidiaries until
the expiration or termination of the Restricted Period and the satisfaction
of
any other conditions prescribed by the Board of Directors applicable to such
Restricted Shares. Upon the forfeiture of any Restricted Shares, such forfeited
shares shall be transferred to the Corporation without further action by
the
participant. At the discretion of the Board of Directors, cash and stock
dividends with respect to the Restricted Shares may be either currently paid
or
withheld by the Corporation for the participant’s account, and interest may be
paid on the amount of cash dividends withheld at a rate and subject to such
terms as determined by the Board of Directors. The participant shall have
the
same rights and privileges, and be subject to the same restrictions, with
respect to any shares received pursuant to Section 16 hereof.
(d)
Delivery
of Unrestricted Shares.
Upon
the expiration or termination of the Restricted Period and the satisfaction
of
any other conditions prescribed by the Board of Directors, the restrictions
applicable to the Restricted Shares shall lapse and a stock certificate for
the
number of Restricted Shares with respect to which the restrictions have lapsed
shall be delivered, free of all such restrictions, except any that may be
imposed by law including without limitation securities laws, to the participant
or the participant’s beneficiary or estate, as the case may be. The Corporation
shall not be required to deliver any fractional share of Common Stock but
will
pay, in lieu thereof, the fair market value (determined as of the date the
restrictions lapse) of such fractional share to the participant or the
participant’s beneficiary or estate, as the case may be.
13.
Additional
Provisions.
(a)
Additional
Provisions.
The
Board of Directors may, in its sole discretion, include additional provisions
in
option or Restricted Stock agreements covering options or Restricted Stock
granted under the Plan, including without limitation, restrictions on transfer,
repurchase rights, rights of first refusal, commitments to pay cash bonuses,
to
make, arrange for or guaranty loans or to transfer other property to optionees
upon exercise of options, or such other provisions as shall be determined
by the
Board of Directors; provided, that such additional provisions shall not be
inconsistent with any other term or condition of the Plan and such additional
provisions shall not cause any Incentive Stock Option granted under the Plan
to
fail to qualify as an Incentive Stock Option within the meaning of Section
422
of the Code or result in the imposition of an additional tax under Section
409A
of the Code.
(b)
Acceleration,
Extension, Etc.
The
Board of Directors may, in its sole discretion, (i) accelerate the date or
dates
on which all or any particular option or options granted under the Plan may
be
exercised or (ii) extend the dates during which all, or any particular, option
or options granted under the Plan may be exercised if it would not cause
any
Incentive Stock Option granted under the Plan to fail to qualify as an Incentive
Stock Option within the meaning of Section 422 of the Code or result in the
imposition of an additional tax under Section 409A of the Code.
14.
General
Restrictions.
(a)
Investment
Representations.
The
Corporation may require any person to whom Restricted Shares or an option
is
granted, as a condition of receiving such Restricted Shares or exercising
such
option, to give written assurances in substance and form satisfactory to
the
Corporation to the effect that such person is acquiring the Restricted Shares
or
Common Stock subject to the option for his or her own account for investment
and
not with any present intention of selling or otherwise distributing the same,
and to such other effects as the Corporation deems necessary or appropriate
in
order to comply with federal and applicable state securities laws, or with
covenants or representations made by the Corporation in connection with any
public offering of its Common Stock.
(b)
Compliance
with Securities Law.
Each
option and grant of Restricted Shares shall be subject to the requirement
that
if, at any time, counsel to the Corporation shall determine that the listing,
registration or qualification of the Restricted Shares or shares subject
to such
option upon any securities exchange or under any state or federal law, or
the
consent or approval of any governmental or regulatory body, or that the
disclosure of non-public information or the satisfaction of any other condition
is necessary as a condition of, or in connection with the issuance or purchase
of shares thereunder, such Restricted Shares shall not be granted and such
option may not be exercised, in whole or in part, unless such listing,
registration, qualification, consent or approval, or satisfaction of such
condition shall have been effected or obtained on conditions acceptable to
the
Board of Directors. Nothing herein shall be deemed to require the Corporation
to
apply for or to obtain such listing, registration or qualification, or to
satisfy such condition.
15.
Rights
as a Stockholder.
The
holder of an option shall have no rights as a stockholder with respect to
any
shares covered by the option (including, without limitation, any rights to
receive dividends or non-cash distributions with respect to such shares)
until
the date of issue of a stock certificate to him or her for such shares. No
adjustment shall be made for dividends or other rights for which the record
date
is prior to the date such stock certificate is issued.
16.
Adjustment
Provisions for Recapitalization, Reorganizations and Related Transactions.
(a) Recapitalization
and Related Transactions.
If,
through or as a result of any recapitalization, reclassification, stock
dividend, stock split, reverse stock split or other similar transaction,
(i) the
outstanding shares of Common Stock are increased, decreased or exchanged
for a
different number or kind of shares or other securities of the Corporation,
or
(ii) additional
shares
or
new or different shares or other non-cash assets are distributed with respect
to
such shares of Common Stock or other securities, an appropriate and
proportionate adjustment shall be made in (x) the maximum number and kind
of
shares reserved for issuance under the Plan, (y) the number and kind of
Restricted Shares granted and shares or other securities subject to any then
outstanding options under the Plan, and (z) the exercise price for each share
subject to any then outstanding options under the Plan, without changing
the
aggregate purchase price as to which such options remain exercisable.
Notwithstanding the foregoing, no adjustment shall be made pursuant to this
Section 16 if such adjustment (i) would cause the Plan to fail to comply
with
Section 422 of the Code or with Rule 16b-3 or (ii) would be considered as
the
adoption of a new plan requiring stockholder approval.
(b)
Reorganization,
Merger and Related Transactions.
If the
Corporation shall be the surviving corporation in any reorganization, merger
or
consolidation of the Corporation with one or more other corporations, any
then
outstanding Restricted Shares or option granted pursuant to the Plan shall
pertain to and apply to the securities to which a holder of the number of
shares
of Common Stock subject to such Restricted Shares or options would have been
entitled immediately following such reorganization, merger, or consolidation,
with a corresponding proportionate adjustment of the purchase price as to
which
such options may be exercised so that the aggregate purchase price as to
which
such options may be exercised shall be the same as the aggregate purchase
price
as to which such options may be exercised for the shares remaining subject
to
the options immediately prior to such reorganization, merger, or
consolidation.
(c)
Board
Authority to Make Adjustments.
Any
adjustments made under this Section 16 will be made by the Board of Directors,
whose determination as to what adjustments, if any, will be made and the
extent
thereof will be final, binding and conclusive. No fractional shares will
be
issued under the Plan on account of any such adjustments.
17.
Merger,
Consolidation, Asset Sale, Liquidation, Etc.
(a)
General.
In the
event of a consolidation or merger in which the Corporation is not the surviving
corporation, or sale of all or substantially all of the assets of the
Corporation in which outstanding shares of Common Stock are exchanged for
securities, cash or other property of any other corporation or business entity
or in the event of a liquidation of the Corporation (collectively, a “Corporate
Transaction”), the Board of Directors of the Corporation, or the board of
directors of any corporation assuming the obligations of the Corporation,
may,
in its discretion, take any one or more of the following actions, as to
outstanding options: (i) provide that such Restricted Shares or options shall
be
assumed, or equivalent Restricted Shares or options shall be substituted,
by the
acquiring or succeeding corporation (or an affiliate thereof), provided that
any
such options substituted for Incentive Stock Options shall meet the requirements
of Section 424(a) of the Code, (ii) upon written notice, provide that all
unexercised options and Restricted Shares will terminate immediately prior
to
the consummation of such transaction unless such options are exercised by
the
optionee within a specified period following the date of such notice, (iii)
in
the event of a Corporate Transaction under the terms of which holders of
the
Common Stock of the Corporation will receive upon consummation thereof a
cash
payment for each share surrendered in the Corporate Transaction (the
“Transaction Price”), make or provide for a cash payment to the optionees equal
to the difference between (A) the Transaction Price times the number of shares
of Common Stock subject to such outstanding options (to the extent then
exercisable at prices not in excess of the Transaction Price) and (B) the
aggregate exercise price of all such outstanding options in exchange for
the
termination of such options, and (iv) provide that all restrictions on
Restricted Shares shall lapse in full or in part and all or any outstanding
options shall become exercisable in full or in part immediately prior to
such
event.
(b)
Substitute
Restricted Shares or Options.
The
Corporation may grant Restricted Shares or options under the Plan in
substitution for Restricted Shares or options held by persons in a Business
Relationship with another corporation who enter into a Business Relationship
with the Corporation, or a subsidiary of the Corporation, as the result of
a
merger or consolidation of the employing corporation with the Corporation
or a
subsidiary of the Corporation, or as a result of the acquisition by the
Corporation, or one of its subsidiaries, of property or stock of the other
corporation. The Corporation may direct that substitute Restricted Shares
or
options be granted on such terms and conditions as the Board of Directors
considers appropriate in the circumstances.
18.
No
Special Employment Rights.
Nothing
contained in the Plan or in any Restricted Share or option agreement shall
confer upon any holder of Restricted Shares or optionee any right with respect
to the continuation of his or her employment by, or other Business Relationship
with, the Corporation or interfere in any way with the right of the Corporation
at any time to terminate such employment or Business Relationship or to increase
or decrease the compensation of the optionee.
19.
Other
Employee Benefits.
Except
as
to plans which by their terms include such amounts as compensation, the amount
of any compensation deemed to be received by an employee as a result of the
grant of Restricted Shares or lapse of restrictions thereon, the exercise
of an
option or the sale of shares received upon such exercise will not constitute
compensation with respect to which any other employee benefits of such employee
are determined, including, without limitation, benefits under any bonus,
pension, profit-sharing, life insurance or salary continuation plan, except
as
otherwise specifically determined by the Board of Directors.
20.
Amendment
of the Plan.
(a)
The
Board
of Directors may at any time, and from time to time, modify or amend the
Plan in
any respect, except that if at any time the approval of the stockholders
of the
Corporation is required under Section 422 of the Code or any successor provision
with respect to Incentive Stock Options, or the legal requirements relating
to
the administration of equity compensation plans, if any, under applicable
provisions of federal securities laws, applicable state corporate and securities
laws, the Code, the rules of any applicable stock exchange or national market
system or quotation system on which the Common Stock is listed or quoted,
and
the applicable laws and rules of any foreign country or jurisdiction where
awards are, or will be, granted under the Plan.
(b)
The
termination or any modification or amendment of the Plan shall not, without
the
consent of an optionee or holder of Restricted Shares, affect his or her
rights
under an option or grant of Restricted Shares previously granted to him or
her.
With the consent of the optionee or holder of Restricted Shares affected,
the
Board of Directors may amend outstanding option or Restricted Share agreements
in a manner not inconsistent with the Plan. The Board of Directors shall
have
the right to amend or modify the terms and provisions of the Plan and of
any
outstanding Incentive Stock Options granted under the Plan to the extent
necessary to qualify any or all such options for such favorable federal income
tax treatment (including deferral of taxation upon exercise) as may be afforded
incentive stock options under Section 422 of the Code.
21.
Withholding.
(a)
The
Corporation shall have the right to deduct from payments of any kind otherwise
due to the optionee or holder of Restricted Shares any federal, state or
local
taxes of any kind required by law to be withheld with respect to any shares
issued upon exercise of options or lapse of restrictions on Restricted Shares
under the Plan. Subject to the prior approval of the Corporation, which may
be
withheld by the Corporation in its sole discretion, the optionee or holder
of
Restricted Shares may elect to satisfy such obligations, in whole or in part,
(i) by causing the Corporation to withhold shares of Common Stock otherwise
issuable pursuant to the exercise of an option or lapse of restrictions on
Restricted Shares or (ii) by delivering to the Corporation shares of Common
Stock already owned by the optionee or holder of Restricted Shares. The shares
so delivered or withheld shall have a Fair Market Value equal to such
withholding obligation as of the date that the amount of tax to be withheld
is
to be determined. An optionee who has made an election pursuant to this Section
21(a) may satisfy his or her withholding obligation only with shares of Common
Stock which are not subject to any repurchase, forfeiture, unfulfilled vesting
or other similar requirements.
(b)
The
acceptance of shares of Common Stock upon exercise of an Incentive Stock
Option
shall constitute an agreement by the optionee (i) to notify the Corporation
if
any or all of such shares are disposed of by the optionee within two years
from
the date the option was granted or within one year from the date the shares
were
transferred to the optionee pursuant to the exercise of the option, and (ii)
if
required by law, to remit to the Corporation, at the time of and in the case
of
any such disposition, an amount sufficient to satisfy the Corporation’s federal,
state and local withholding tax obligations with respect to such disposition,
whether or not, as to both (i) and (ii), the optionee is in the employ of
the
Corporation at the time of such disposition.
(c)
Notwithstanding
the foregoing, in the case of a Reporting Person whose options have been
granted
in accordance with the provisions of Section 3(b) herein, no election to
use
shares for the payment of withholding taxes shall be effective unless made
in
compliance with any applicable requirements of Rule 16b-3.
22.
Section
162(m) of the Code.
The
Board of Directors, in its sole discretion, may require that one or more
agreements contain provisions which provide that, in the event Section 162(m)
of
the Code, or any successor provision relating to excessive employee
remuneration, would operate to disallow a deduction by the Corporation for
all
or part of any payment of an award under the Plan, a grantee’s receipt of the
portion that would not be deductible by the Corporation shall be deferred
to
either the earliest date at which the Board reasonably anticipates that the
grantee’s remuneration either does not exceed the limit set forth in Section
162(m) of the Code or is not subject to Section 162(m) of Code, or the calendar
year in which the grantee separates from service. This Section 22 shall be
applied and construed consistently with Section 409A of the Code and the
regulations (and guidance) thereunder.
23.
Effective
Date and Duration of the Plan.
(a)
Effective
Date.
The
Plan shall become effective when adopted by the Board of Directors, but no
Incentive Stock Option granted under the Plan shall become exercisable unless
and until the Plan shall have been approved by the Corporation’s stockholders.
If such stockholder approval is not obtained within twelve (12) months after
the
date of the Board’s adoption of the Plan, no options previously granted under
the Plan shall be deemed to be Incentive Stock Options and no Incentive Stock
Options shall be granted thereafter. Amendments to the Plan not requiring
stockholder approval shall become effective when adopted by the Board of
Directors; amendments requiring stockholder approval (as provided in Section
20)
shall become effective when adopted by the Board of Directors, but no Incentive
Stock Option granted after the date of such amendment shall become exercisable
(to the extent that such amendment to the Plan was required to enable the
Corporation to grant such Incentive Stock Option to a particular optionee)
unless and until such amendment shall have been approved by the Corporation’s
stockholders. If such stockholder approval is not obtained within twelve
(12)
months of the Board’s adoption of such amendment, any Incentive Stock Options
granted on or after the date of such amendment shall terminate to the extent
that such amendment to the Plan was required to enable the Corporation to
grant
such option to a particular optionee. Subject to this limitation, options
may be
granted under the Plan at any time after the effective date and before the
date
fixed for termination of the Plan.
(b)
Termination.
Unless
sooner terminated in accordance with Section 17, the Plan shall terminate
upon
the earlier of (i) the close of business on the day next preceding the tenth
anniversary of the date of its adoption by the Board of Directors, or (ii)
the
date on which all shares available for issuance under the Plan shall have
been
issued pursuant to the exercise or cancellation of Restricted Shares or options
granted under the Plan. If the date of termination is determined under (i)
above, then Restricted Shares or options outstanding on such date shall continue
to have force and effect in accordance with the provisions of the instruments
evidencing such Restricted Shares or options.
24.
Governing
Law.
The
provisions of this Plan shall be governed and construed in accordance with
the
laws of the State of Nevada without regard to the principles of conflicts
of
laws.
Adopted
by the Board of Directors on July 17, 2006.