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Delaware
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001-32954
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20-0077155
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(State
or other jurisdiction
of
incorporation or organization)
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(Commission
File Number)
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(I.R.S.
Employer Identification
Number)
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¨
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Written
communications pursuant to Rule 425 under the Securities Act
(17 CFR
230.425)
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¨
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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¨
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR
240.14d-2(b))
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¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR
240.13e-4(c))
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Item 1.01
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Entry
into a Material Definitive
Agreement.
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Item 5.02
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Departure
of Directors or Certain Officers; Election of Directors; Appointment
of
Certain Officers; Compensatory Arrangements of Certain
Officers.
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Item 9.01
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Financial
Statements and Exhibits
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| (d) |
Exhibits
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Exhibit
No.
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Exhibit
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10.1
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Cleveland
BioLabs, Inc. Equity Incentive Plan, as amended and restated
effective
April 29, 2008
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CLEVELAND
BIOLABS, INC.
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Date:
April 30, 2008
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By: | /s/ Michael Fonstein |
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Michael
Fonstein
President
and Chief Executive Officer
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Exhibit
No.
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Exhibit
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10.1
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Cleveland
BioLabs, Inc. Equity Incentive Plan, as amended and restated
effective
April 29, 2008
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(a)
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to
select the Eligible Individuals to whom Awards may from time
to time be
granted;
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(b)
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to
determine whether and to what extent Stock Options, Stock Appreciation
Rights, Stock Awards or any combination thereof are to be granted
hereunder;
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(c)
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to
determine the number of shares of Stock to be covered by each
Award
granted hereunder;
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(d)
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to
approve forms of agreement for use under the
Plan;
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(e)
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to
determine the terms and conditions, not inconsistent with the
terms of
this Plan, of any Award granted hereunder (including, but not
limited to,
the option price, any vesting restriction or limitation, any
vesting
acceleration or waiver of forfeiture, and any right of repurchase,
right
of first refusal or other transfer restriction regarding any
Award and the
shares of Stock relating thereto, based on such factors or criteria
as the
Administrator shall determine);
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(f)
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subject
to Section
9(a),
to modify, amend or adjust the terms and conditions of any Award,
at any
time or from time to time, including, but not limited to, with
respect to
(i) performance goals and targets applicable to performance based
Awards
pursuant to the terms of the Plan and (ii) extension of the
post-termination exercisability period of Stock Options;
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(g)
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to
determine the Fair Market Value;
and
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(h)
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to
determine the type and amount of consideration to be received
by the
Company for any Stock Award issued under Section
6.
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(a)
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Exercise
Price.
The exercise price per share of Stock purchasable under a Stock
Option
shall be determined by the Administrator at the time of grant;
provided,
however,
that the exercise price per share shall be not less than the
Fair Market
Value per share on the date the Stock Option is granted, or in
the case of
an Incentive Stock Option granted to an individual who is a Ten
Percent
Holder, not less than 110% of such Fair Market Value per share
on the date
the Stock Option is granted.
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(b)
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Option
Term.
The term of each Stock Option shall be fixed by the Administrator
at the
time of grant, but no Incentive Stock Option shall be exercisable
more
than 10 years (or five years in the case of an individual who
is a Ten
Percent Holder) after the date the Incentive Stock Option is
granted.
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(c)
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Vesting.
Except as otherwise provided in the applicable option agreement,
an
Optionee may not exercise a Stock Option during the period commencing
on
the date of the grant of such Stock Option to him or her and
ending on the
day immediately preceding the first anniversary of such date.
Except as
otherwise provided in the applicable option agreement, an Optionee
may (i)
during the period commencing on the first anniversary of the
date of the
grant of a Stock Option to him or her and ending on the day immediately
preceding the second anniversary of such date, exercise such
Stock Option
with respect to one-fourth of the shares granted thereby; (ii) during
the period commencing on the second anniversary of the date of
such grant
and ending on the day immediately preceding the third anniversary
of the
date of such grant, exercise such Stock Option with respect to
one-half of
the shares granted thereby; (iii) during the period commencing
on the
third anniversary of the date of such grant and ending on the
day
immediately preceding the fourth anniversary of such date, exercise
such
Stock Option with respect to three-fourths of the shares granted
thereby
and (iv) during the period commencing on the fourth anniversary
of the
date of such grant and ending at the time the Stock Option expires
pursuant to the terms of the Plan, exercise such Stock Option
with respect
to all of the shares granted thereby.
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(d)
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Exercisability.
Except as otherwise provided herein, Stock Options shall be subject
to
such terms and conditions, performance requirements, restrictions,
forfeiture provisions, contingencies and limitations, if any,
as shall be
determined by the Administrator and listed in the applicable
Stock Option
agreement. If any Stock Option is exercisable only in installments,
the
Administrator may at any time waive such installment exercise
provisions,
in whole or in part, based on such factors as the Administrator
may
determine. In addition, the Administrator may at any time, in
whole or in
part, accelerate the exercisability of any Stock Option.
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(e)
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Method
of Exercise.
Stock Options may be exercised, in whole or in part, by giving
written
notice of exercise to the Company specifying the number of shares
of Stock
subject to the Stock Option to be
purchased.
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(f)
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Transferability
of Stock Options.
Except as otherwise provided in the applicable option agreement,
a
Non-Qualified Stock Option (i) shall be transferable by the Optionee
to a
Family Member of the Optionee, provided that
(A) any such transfer shall be by gift with no consideration
and (B) no
subsequent transfer of such Stock Option shall be permitted other
than by
will or the laws of descent and distribution, and (ii) shall
not otherwise
be transferable except by will or the laws of descent and distribution.
An
Incentive Stock Option shall not be transferable except by will
or the
laws of descent and distribution. A Stock Option shall be exercisable,
during the Optionee’s lifetime, only by the Optionee or by the guardian or
legal representative of the Optionee, it being understood that
the terms
“holder” and “Optionee”
include the guardian and legal representative of the Optionee
named in the
applicable option agreement and any person to whom the Stock
Option is
transferred (X) pursuant to the first sentence of this Section
4(f) or
pursuant to the applicable option agreement or (Y) by will or
the laws of
descent and distribution. Notwithstanding the foregoing, references
herein
to the termination of an Optionee’s employment or provision of services
shall mean the termination of employment or provision of services
of the
person to whom the Stock Option was originally
granted.
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(g)
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Termination
by Death.
Except as otherwise provided in the applicable option agreement,
if an
Optionee’s employment or provision of services terminates by reason of
death, any Stock Option held by such Optionee may thereafter
be exercised
for a period of one year from the date of such death or until
the
expiration of the stated term of such Stock Option, whichever
period is
shorter.
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(h)
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Termination
by Reason of Disability.
Except as otherwise provided in the applicable option agreement,
if an
Optionee’s employment or provision of services terminates by reason of
Disability, any Stock Option held by such Optionee may thereafter
be
exercised by the Optionee for a period of one year from the date
of such
termination of employment or provision of services or until the
expiration
of the stated term of such Stock Option, whichever period is
shorter.
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(i)
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Termination
by Reason of Retirement.
Except as otherwise provided in the applicable option agreement,
if an
Optionee’s employment or provision of services terminates by reason of
Retirement, any Stock Option held by such Optionee may thereafter
be
exercised by the Optionee for a period of three years from the
date of
such termination of employment or provision of services or until
the
expiration of the stated term of such Stock Option, whichever
period is
shorter.
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(j)
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Involuntary
Termination Without Cause.
Except as otherwise provided in the applicable option agreement,
if an
Optionee’s employment or provision of services terminates involuntarily
without Cause, and for reasons other than death, Disability or
Retirement,
any Stock Option held by such Optionee may thereafter be exercised,
to the
extent it was exercisable at the time of termination, for a period
of 90
days from the date of such termination of employment or provision
of
services or until the expiration of the stated term of such Stock
Option,
whichever period is shorter, and any Stock Option that is unvested
or
unexercisable at the date of termination shall thereupon terminate.
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(k)
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Involuntary
Termination for Cause.
Except as otherwise provided in the applicable option agreement,
if an
Optionee’s employment or provision of services terminates involuntarily
for Cause, vesting of all outstanding Stock Options held by such
Optionee
shall thereupon terminate and all Stock Options held by such
Optionee
shall thereupon terminate.
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(l)
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Other
Termination.
Except as otherwise provided in the applicable option agreement,
if an
Optionee’s employment or provision of services is terminated by the
Optionee for any reason other than death, Disability or Retirement,
any
Stock Option held by such Optionee may thereafter be exercised,
to the
extent it was exercisable at the time of termination, for a period
of 30
days from the date of such termination of employment or provision
of
services or until the expiration of the stated term of such Stock
Option,
whichever period is shorter, and any Stock Option that is unvested
or
unexercisable at the date of termination shall thereupon terminate.
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(m)
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Exception
to Termination.
If provision of services by the Optionee to the Company or an
Affiliate
ceases as a result of a transfer of such Optionee from the Company
to an
Affiliate, or from an Affiliate to the Company, such transfer
shall not be
a termination of employment or provision of services for purposes
of this
Plan, unless expressly determined otherwise by the Administrator.
A
termination of employment or provision of services shall occur
for an
Optionee who is employed by, or provides services to, an Affiliate
of the
Company if the Affiliate shall cease to be an Affiliate and the
Optionee
shall not immediately thereafter be employed by, or provide services
to,
the Company or an Affiliate.
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(n)
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Notwithstanding
the foregoing, to the extent permitted under Section 409A of
the Code, the
exercise period following a termination described in subsection
(g), (h),
(i), (j) or (l) above shall be tolled for any applicable window/blackout
period restrictions under the Company’s insider trading
policy.
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(a)
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Stock
Appreciation Right Term.
The term of each Stock Appreciation Right shall be fixed by the
Administrator at the time of grant.
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(b)
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Vesting.
Except as otherwise provided in the applicable stock appreciation
right
agreement, a Participant may not exercise a Stock Appreciation
Right
during the period commencing on the date of the grant of such
Stock
Appreciation Right to him or her and ending on the day immediately
preceding the first anniversary of such date. Except as otherwise
provided
in the applicable stock appreciation right agreement, a Participant
may
(i) during the period commencing on the first anniversary of
the date of
the grant of a Stock Appreciation Right and ending on the day
immediately
preceding the second anniversary of such date, exercise the Stock
Appreciation Right with respect to one-fourth of the shares to
which the
Stock Appreciation Right applies, (ii) during the period commencing
on the second anniversary of the date of such grant and ending
on the day
immediately preceding the third anniversary of the date of such
grant,
exercise the Stock Appreciation Right with respect to one-half
of the
shares to which the Stock Appreciation Right applies, (iii) during
the
period commencing on the third anniversary of the date of such
grant and
ending on the day immediately preceding the fourth anniversary
of such
date, exercise the Stock Appreciation Right with respect to three-fourths
of the shares to which the Stock Appreciation Right applies;
and (iv)
during the period commencing on the fourth anniversary of the
date of such
grant ending at the time the Stock Appreciation Right expires
pursuant to
the terms of the Plan, exercise the Stock Appreciation Right
with respect
to all the shares to which the Stock Appreciation Right applies.
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(c)
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Exercisability.
Notwithstanding Section
5(a),
the Administrator may at any time, in whole or in part, accelerate
the
exercisability of any Stock Appreciation Right.
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(d)
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Method
of Exercise.
Subject to the provisions of this Section
5,
Stock Appreciation Rights may be exercised, in whole or in part,
at such
time or times during the exercisability as determined by the
Administrator
by giving written notice of exercise to the Company specifying
the number
of shares with respect to which the Stock Appreciation Right
is being
exercised.
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(e)
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Upon
the exercise of a Stock Appreciation Right, a Participant shall
be
entitled to receive an amount in cash or in shares of Stock,
which in the
aggregate are equal in value to the excess of the Fair Market
Value of one
share of Stock on the date of exercise over the Fair Market Value
of one
share of Stock on the date of grant, multiplied by the number
of shares in
respect of which the Stock Appreciation Right shall have been
exercised.
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(f)
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A
Stock Appreciation Right shall be transferable only to, and shall
be
exercisable only by, such persons permitted in accordance with
Section
4(f).
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(g)
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Termination
by Death.
Except as otherwise provided in the applicable option agreement,
if a
Participant’s employment or provision of services terminates by reason of
death, any Stock Appreciation Right held by such Participant
may
thereafter be exercised for a period of one year from the date
of such
death or until the expiration of the stated exercisability period
of such
Stock Appreciation Right, whichever period is shorter.
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(h)
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Termination
by Reason of Disability.
Except as otherwise provided in the applicable option agreement,
if a
Participant’s employment or provision of services terminates by reason of
Disability, any Stock Appreciation Right held by such Participant
may
thereafter be exercised by the Participant for a period of one
year from
the date of such termination of employment or provision of services
or
until the expiration of the exercisability period of such Stock
Appreciation Right, whichever period is shorter.
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(i)
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Termination
by Reason of Retirement.
Except as otherwise provided in the applicable option agreement,
if a
Participant’s employment or provision of services terminates by reason of
Retirement, any Stock Appreciation Right held by such Participant
may
thereafter be exercised by the Participant for a period of three
years
from the date of such termination of employment or provision
of services
or until the expiration of the exercisability period of such
Stock
Appreciation Right, whichever period is shorter.
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(j)
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Involuntary
Termination Without Cause.
Except as otherwise provided in the applicable option agreement,
if a
Participant’s employment or provision of services terminates involuntarily
without Cause, and for reasons other than death, Disability or
Retirement,
any Stock Appreciation Right held by such Participant may thereafter
be
exercised, to the extent it was exercisable at the time of termination,
for a period of 90 days from the date of such termination of
employment or
provision of services or until the expiration of the exercisability
period
of such Stock Appreciation Right, whichever period is shorter,
and any
Stock Appreciation Right that is unvested or unexercisable at
the date of
termination shall thereupon
terminate.
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(k)
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Termination
for Cause.
Except as otherwise provided in the applicable option agreement,
if a
Participant’s employment or provision of services terminates involuntarily
for Cause vesting of all outstanding Stock Appreciation Rights
held by
such Participant shall thereupon terminate and all Stock Appreciation
Rights held by such Participant shall thereupon
terminate.
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(l)
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Other
Termination.
Except as otherwise provided in the applicable option agreement,
if a
Participant’s employment or provision of services is terminated by the
Participant for any reason other than death, Disability or Retirement,
any
Stock Appreciation Right held by such Participant may thereafter
be
exercised, to the extent it was exercisable at the time of termination,
for a period of 30 days from the date of such termination of
employment or
provision of services or until the expiration of the exercisability
period
of such Stock Appreciation Right, whichever period is shorter,
and any
Stock Appreciation Right that is unvested or unexercisable at
the date of
termination shall thereupon
terminate.
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(m)
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Notwithstanding
the foregoing, to the extent permitted under Section 409A of
the Code, the
exercise period following a termination described in subsection
(g), (h),
(i), (j) or (l) above shall be tolled for any applicable window/blackout
period restrictions under the Company’s insider trading
policy.
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(a)
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cash
or cash equivalents;
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(b)
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past
services rendered to the Company or any Affiliate;
or
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(c)
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future
services to be rendered to the Company or any Affiliate (provided that,
in such case, the par value of the stock subject to such Stock
Award shall
be paid in cash or cash equivalents, unless the Administrator
provides
otherwise).
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(a)
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Performance
Conditions.
The right of a Participant to exercise or receive a grant or
settlement of
any Award, and its timing, may be subject to performance conditions
specified by the Administrator at the time of grant (except as
provided in
this Section
7).
The Administrator may use business criteria and other measures
of
performance it deems appropriate in establishing any performance
conditions, and may exercise its discretion to reduce or increase
amounts
payable under any Award subject to performance conditions, except
as
limited under Section
7(b)
hereof in the case of a Performance Award intended to qualify
under
Section 162(m) of the Code.
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(b)
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Performance
Awards Granted to Designated Covered Employees.
If the Administrator determines that a Performance Award to be
granted to
a person the Administrator regards as likely to be a Covered
Employee
should qualify as “performance-based compensation” for purposes of Section
162(m) of the Code, the grant and/or settlement of such Performance
Award
shall be contingent upon achievement of pre-established performance
goals
and other terms set forth in this Section
7(b)
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| .1 |
(ii) Business
Criteria.
One or more of the following business criteria for the Company,
on a
consolidated basis, and/or for specified Subsidiaries or business
units of
the Company (except with respect to the total stockholder return
and
earnings per share criteria), shall be used by the Administrator
in
establishing performance goals for such Performance Awards and
set forth
in the applicable Performance Award Agreement (each a “Performance
Measure”):
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| (1) |
Earnings
before interest, tax, depreciation or amortization (“EBITDA”) (actual and
adjusted and either in the aggregate or on a per-Share
basis);
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| (2) |
Earnings
(either in the aggregate or on a per-Share
basis);
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| (3) |
Net
income or loss (either in the aggregate or on a per-Share
basis);
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| (4) |
Operating
profit;
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| (5) |
Growth
or rate of growth in cash flow;
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| (6) |
Cash
flow provided by operations (either in the aggregate or on a per-Share
basis);
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| (7) |
Free
cash flow (either in the aggregate on a per-Share
basis);
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| (8) |
Costs;
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| (9) |
Gross
revenues;
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| (10) |
Reductions
in expense levels;
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| (11) |
Operating
and maintenance cost management and employee
productivity;
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| (12) |
Stockholder
returns (including return on assets, investments, equity, or gross
sales);
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| (13) |
Return
measures (including return on assets, equity, or
sales);
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| (14) |
Growth
or rate of growth in return measures;
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| (15) |
Share
price (including growth measures and total stockholder return or
attainment by the Shares of a specified value for a specified period
of
time);
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| (16) |
Net
economic value;
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| (17) |
Economic
value added;
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| (18) |
Aggregate
product unit and pricing targets;
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| (19) |
Strategic
business criteria, consisting of one or more objectives based on
meeting
specified revenue, market share, market penetration, geographic
business
expansion goals, objectively identified project milestones, production
volume levels, cost targets, and goals relating to acquisitions
or
divestitures;
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| (20) |
Achievement
of business or operational goals such as market share and/or business
development;
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| (21) |
Achievement
of diversity objectives;
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| (22) |
Results
of customer satisfaction surveys;
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| (23) |
Debt
ratings, debt leverage and debt service
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| (24) |
Safety
performance;
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| (25) |
Business
unit and site accomplishments;
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| (26) |
Achievement
of scientific milestones;
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| (27) |
Corporate
governance objectives; and
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| (28) |
Adherence
to budget levels.
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(a)
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Impact
of Event.
Notwithstanding any other provision of the Plan to the contrary,
in the
event of a Change in Control:
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(i)
|
Subject
to Section
8(a)(iv)
hereof, the vesting and exercisability of any Stock Options and
Stock
Appreciation Rights outstanding as of the date such Change in
Control is
determined to have occurred and not then vested and exercisable
shall
become fully vested and
exercisable;
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(ii)
|
Subject
to Section
8(a)(iv)
hereof, any restrictions applicable to any outstanding Stock
Awards shall
lapse and the Stock relating to such Awards shall become free
of all
restrictions and fully vested and
transferable;
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(iii)
|
Subject
to Sections
8(a)(iv)
and 8(a)(v)
hereof, all outstanding repurchase rights of the Company with
respect to
any outstanding Awards may, in the discretion of the Administrator,
terminate;
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(iv)
|
Outstanding
Awards shall, provided that no material modification of the Award
or any
liability results under Section 409A of the Code, be subject
to any
agreement of merger or reorganization that effects such Change
in Control
and that provides for:
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(A)
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The
continuation of the outstanding Awards by the Company, if the
Company is a
surviving corporation;
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(B)
|
The
assumption of the outstanding Awards by the surviving corporation
or its
parent or subsidiary;
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(C)
|
The
substitution by the surviving corporation or its parent or subsidiary
of
equivalent awards for the outstanding Awards;
or
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(D)
|
Settlement
of each share of Stock subject to an outstanding Award for the
Change in
Control Price (less, to the extent applicable, the per share
exercise
price), or, if the per share exercise price equals or exceeds
the Change
in Control Price, the outstanding Award shall terminate and be
canceled;
and
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(v)
|
In
the absence of any agreement of merger or reorganization (if
applicable)
which addresses the effects of such Change in Control and subject
to
Section 409A of the Code, each share of Stock subject to an outstanding
Award shall be settled for the Change in Control Price (less,
to the
extent applicable, the per share exercise price), or, if the
per share
exercise price equals or exceeds the Change in Control Price,
the
outstanding Award shall terminate and be
canceled.
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(b)
|
Definition
of Change in Control.
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(i)
|
For
purposes of the Plan, a “Change
in Control”
shall occur or be deemed to have occurred only if any of the
following
events occur:
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(A)
|
The
acquisition, directly or indirectly, by any person or group (as
those
terms are defined in Sections 3(a)(9), 13(d) and 14(d) of the
Exchange Act
and the rules thereunder) of beneficial ownership (as determined
pursuant
to Rule 13d-3 under the Exchange Act) of securities entitled
to vote
generally in the election of directors (voting securities) of
the Company
that represent 50% or more of the combined voting power of the
Company’s
then outstanding voting securities, other than:
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(1)
|
An
acquisition by a trustee or other fiduciary holding securities
under any
employee benefit plan (or related trust) sponsored or maintained
by the
Company or any person controlled by the Company or by any employee
benefit
plan (or related trust) sponsored or maintained by the Company
or any
person controlled by the Company; or
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(2)
|
An
acquisition of voting securities by the Company or a corporation
owned,
directly or indirectly by the stockholders of the Company in
substantially
the same proportions as their ownership of the stock of the Company;
or
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|
(3)
|
An
acquisition of voting securities pursuant to a transaction described
in
clause (C) below that would not be a Change of Control under
clause (C);
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|
(B)
|
During
any period of two consecutive years, individuals who, at the
beginning of
such period, constitute the Board together with any new director(s)
(other
than a director designated by a person who shall have entered
into an
agreement with the Company to effect a transaction described
in clauses
(A) or (C) of this subsection (i)) whose election by the Board
or
nomination for election by the Company’s stockholders was approved by a
vote of at least two-thirds of the directors then still in office
who
either were directors at the beginning of the two year period
or whose
election or nomination for election was previously so approved,
cease for
any reason to constitute a majority thereof;
or
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(C)
|
The
consummation by the Company (whether directly involving the Company
or
indirectly involving the Company through one or more intermediaries)
of
(x) a merger, consolidation, reorganization, or business combination
or
(y) a sale or other disposition of all or substantially all of
the
Company’s assets or (z) the acquisition of assets or stock of another
entity, in each case other than a transaction:
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|
(1)
|
Which
results in the Company’s voting securities outstanding immediately before
the transaction continuing to represent (either by the remaining
outstanding or by being converted into voting securities of the
Company or
the person that, as a result of the transaction, controls, directly
or
indirectly, the Company or owns, directly or indirectly, all
or
substantially all of the Company’s assets or otherwise succeeds to the
business of the Company (the Company or such person, the “Successor
Entity”))
directly or indirectly, at least a majority of the combined voting
power
of the Successor Entity’s outstanding voting securities immediately after
the transaction; and
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(2)
|
After
which no person or group beneficially owns voting securities
representing
50% or more of the combined voting power of the Successor Entity;
provided,
however,
that no person or group shall be treated for purposes of this
clause (2)
as beneficially owning 50% or more of combined voting power of
the
Successor Entity solely as a result of the voting power held
in the
Company prior to the consummation of the transaction;
or
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|
(D)
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The
Company’s stockholders approve a liquidation or dissolution of the
Company.
|
| (ii) |
For
purposes of Section
8(b),
stock ownership is determined under Section 409A of the
Code.
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|
(c)
|
Change
in Control Price.
For purposes of the Plan, “Change
in Control Price”
means the lowest of (i) the highest reported sales price of a
share of
Stock in any transaction reported on the Nasdaq Capital Market,
the Nasdaq
National Stock Market, or other national securities exchange
on which such
shares are listed, as applicable, during the 60-day period prior
to and
including the date of a Change in Control, (ii) if the Change
in Control
is the result of a tender or exchange offer or a Corporate Transaction,
the highest price per share of Stock paid in such tender or exchange
offer
or Corporate Transaction, and (iii) the Fair Market Value of
a share of
Stock upon the Change in Control. To the extent that the consideration
paid in any such transaction described above consists all or
in part of
securities or other non-cash consideration, the value of such
securities
or other non-cash consideration shall be determined in the sole
discretion
of the Board. The Participant shall receive the same form of
consideration
as holders of common stock, subject to the same restrictions
and
limitations and indemnification obligations as the holders of
common stock
and will execute any and all documents required by the Administrator
to
evidence the same.
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(a)
|
Amendment.
The Board may at any time terminate, amend, alter, or discontinue
the
Plan, but no amendment, alteration or discontinuation shall be
made which
would adversely affect the rights of a Participant under an Award
theretofore granted without the Participant’s consent, except such an
amendment (i) made to avoid an expense charge to the Company
or an
Affiliate under applicable law or regulation, (ii) made to permit
the
Company or an Affiliate a deduction under the Code, or (iii)
made to avoid
liability under Section 409A of the Code. No such amendment or
alteration
shall be made without the approval of a majority vote of the
Company’s
shareholders, present in person or by proxy at any special or
annual
meeting of the shareholders (1) to the extent such approval is
required by
law, agreement or the rules of any stock exchange or market on
which the
Stock is listed,
or (2) with respect to any Award that is intended to qualify
for an
exemption from the limitations of Section 162(m) of the Code,
to the
extent such approval is required under Section 162(m) to maintain
such
exemption.
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(b)
|
Unfunded
Status of Plan.
It
is intended that this Plan be an “unfunded” plan for incentive and
deferred compensation. The Administrator may authorize the creation
of
trusts or other arrangements to meet the obligations created
under this
Plan to deliver Stock or make payments, provided that,
unless the Administrator otherwise determines, the existence
of such
trusts or other arrangements is consistent with the “unfunded” status of
this Plan.
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| (c) |
General
Provisions.
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|
(i)
|
Unless
the shares to be issued in connection with an Award are registered
prior
to the issuance thereof under the Securities Act of 1933, as
amended, the
Administrator may require each person purchasing or receiving
shares
pursuant to an Award to represent to and agree with the Company
in writing
that such person is acquiring the shares for his or her own account
as an
investment without a view to or for sale in connection with,
the
distribution thereof. The certificates for such shares may include
any
legend which the Administrator deems appropriate to reflect any
restrictions on transfer.
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(ii)
|
Nothing
contained in the Plan shall prevent the Company or any Affiliate
from
adopting other or additional compensation arrangements for its
employees.
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(iii)
|
The
adoption of the Plan shall not confer upon any employee, director,
associate, consultant or advisor any right to continued employment,
directorship or service, nor shall it interfere in any way with
the right
of the Company or any Subsidiary or Affiliate to terminate the
employment
or service of any employee, consultant or advisor at any
time.
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(iv)
|
No
later than the date as of which an amount first becomes includible
in the
gross income of the Participant for Federal income tax purposes
with
respect to any Award under the Plan, the Participant shall pay
to the
Company, or make arrangements satisfactory to the Company regarding
the
payment of, any Federal, state, local or foreign taxes of any
kind
required by law to be withheld with respect to such amount. Unless
otherwise determined by the Administrator, withholding obligations
may be
settled with Stock, including Stock that is part of the Award
that gives
rise to the withholding requirement. The obligations of the Company
under
the Plan shall be conditional on such payment or arrangements,
and the
Company, its Subsidiaries and its Affiliates shall, to the extent
permitted by law, have the right to deduct any such taxes from
any payment
otherwise due to the Participant. The Administrator may establish
such
procedures as it deems appropriate for the settlement of withholding
obligations with Stock.
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(v)
|
The
Administrator shall establish such procedures as it deems appropriate
for
a Participant to designate a beneficiary to whom any amounts
payable in
the event of the Participant’s death are to be paid. In the event of the
death of a Participant, a condition of exercising any Award shall
be the
delivery to the Company of such tax waivers and other documents
as the
Administrator shall determine.
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|
(vi)
|
Neither
any Participant nor his or her legal representatives, legatees
or
distributees shall be or be deemed to be the holder of any share
of Stock
covered hereby unless and until a certificate for such share
has been
issued. Upon payment of the purchase price thereof, a share shall
be fully
paid and non-assessable.
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|
(vii)
|
The
grant of an Award shall in no way affect the right of the Company
to
adjust, reclassify, reorganize or otherwise change its capital
or business
structure or to merge, consolidate, dissolve, liquidate or sell
or
transfer all or any part of its business or assets, or issue
bonds,
debentures, preferred or prior preference stock ahead of or affecting
the
Stock, or take any other corporate act or proceeding whether
of a similar
character or otherwise.
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|
(viii)
|
If
any payment or right accruing to a Participant under this Plan
(without
the application of this Section
9(c)(viii)),
either alone or together with other payments or rights accruing
to the
Participant from the Company or an Affiliate (“Total
Payments”)
would constitute a “parachute payment” (as defined in Section 280G of the
Code and regulations thereunder), such payment or right shall
be reduced
to the largest amount or greatest right that will result in no
portion of
the amount payable or right accruing under this Plan being subject
to an
excise tax under Section 4999 of the Code or being disallowed
as a
deduction under Section 280G of the Code; provided,
however,
that the foregoing shall not apply to the extent provided otherwise
in an
Award or in the event the Participant is party to an agreement
with the
Company or an Affiliate that explicitly provides for an alternate
treatment of payments or rights that would constitute “parachute
payments.” The determination of whether any reduction in the rights or
payments under this Plan is to apply shall be made by the Administrator
in
good faith after consultation with the Participant, and such
determination
shall be conclusive and binding on the Participant. The Participant
shall
cooperate in good faith with the Administrator in making such
determination and providing the necessary information for this
purpose.
The foregoing provisions of this Section
9(c)(viii)
shall apply with respect to any person only if, after reduction
for any
applicable Federal excise tax imposed by Section 4999 of the
Code and
Federal income tax imposed by the Code, the Total Payments accruing
to
such person would be less than the amount of the Total Payments
as
reduced, if applicable, under the foregoing provisions of this
Plan and
after reduction for only Federal income taxes.
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|
(ix)
|
To
the extent that the Administrator determines that the restrictions
imposed
by the Plan preclude the achievement of the material purposes
of the
Awards in jurisdictions outside the United States, the Administrator
in
its discretion may modify those restrictions as it determines
to be
necessary or appropriate to conform to applicable requirements
or
practices of jurisdictions outside of the United
States.
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|
(x)
|
The
headings contained in this Plan are for reference purposes only
and shall
not affect the meaning or interpretation of this
Plan.
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|
(xi)
|
If
any provision of this Plan shall for any reason be held to be
invalid or
unenforceable, such invalidity or unenforceability shall not
effect any
other provision hereby, and this Plan shall be construed as if
such
invalid or unenforceable provision were
omitted.
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|
(xii)
|
This
Plan shall inure to the benefit of and be binding upon each successor
and
assign of the Company. All obligations imposed upon a Participant,
and all
rights granted to the Company hereunder, shall be binding upon
the
Participant’s heirs, legal representatives and
successors.
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|
(xiii)
|
This
Plan and each agreement granting an Award constitute the entire
agreement
with respect to the subject matter hereof and thereof, provided that
in
the event of any inconsistency between this Plan and such agreement,
the
terms and conditions of the Plan shall
control.
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|
(xiv)
|
In
the event there is an effective registration statement under
the
Securities Act pursuant to which shares of Stock shall be offered
for sale
in an underwritten offering, a Participant shall not, during
the period
requested by the underwriters managing the registered public
offering,
effect any public sale or distribution of shares of Stock received,
directly or indirectly, as an Award or pursuant to the exercise
or
settlement of an Award.
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|
(xv)
|
None
of the Company, an Affiliate or the Administrator shall have
any duty or
obligation to disclose affirmatively to a record or beneficial
holder of
Stock or an Award, and such holder shall have no right to be
advised of,
any material information regarding the Company or any Affiliate
at any
time prior to, upon or in connection with receipt or the exercise
of an
Award or the Company’s purchase of Stock or an Award from such holder in
accordance with the terms hereof.
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|
(xvi)
|
This
Plan, and all Awards, agreements and actions hereunder, shall
be governed
by, and construed in accordance with, the laws of the state of
Delaware
(other than its law respecting choice of
law).
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|
(xvii)
|
No
Award granted pursuant to this Plan is intended to constitute
“deferred
compensation” as defined in Section 409A of the Code, and the Plan and the
terms of all Awards shall be interpreted accordingly. If any
provision of
the Plan or an Award contravenes any regulations or Treasury
guidance
promulgated under Section 409A of the Code or could cause an
Award to be
subject to the penalties and interest under Section 409A of the
Code, such
provision of the Plan or Award shall be modified to maintain,
to the
maximum extent practicable, the original intent of the applicable
provision without resulting in liability under Section 409A of
the
Code.
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|
(a)
|
“Affiliate”
means a corporation or other entity (i) controlled by the Company
and
which, in the case of grants of Stock Options and Stock Appreciation
Rights would, together with the Company, be classified as the
“service
recipient” (as defined in the regulations under Section 409A of the Code)
with respect to an Eligible Individual, and (ii) is designated
by the
Administrator as such.
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|
(b)
|
“Award”
means a Stock Appreciation Right, Stock Option or Stock Award.
|
| (c) |
“Board”
means the Board of Directors of the
Company.
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|
(d)
|
“Cause”
means (i) the commission by the Participant of any act or omission
that
would constitute a felony or any crime of moral turpitude under
Federal
law or the law of the state or foreign law in which such action
occurred,
(ii) dishonesty, disloyalty, fraud, embezzlement, theft, disclosure
of
trade secrets or confidential information or other acts or omissions
that
result in a breach of fiduciary or other material duty to the
Company
and/or a Subsidiary; or (iii) continued reporting to work or
working under
the influence of alcohol, an illegal drug, an intoxicant or a
controlled
substance which renders Participant incapable of performing his
or her
material duties to the satisfaction of the Company and/or its
Subsidiaries. Notwithstanding the foregoing, if the Participant
and the
Company or the Affiliate have entered into an employment or services
agreement which defines the term “Cause”
(or a similar term), such definition shall govern for purposes
of
determining whether such Participant has been terminated for
Cause for
purposes of this Plan. The determination of Cause shall be made
by the
Administrator, in its sole
discretion.
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|
(e)
|
“Code”
means the Internal Revenue Code of 1986, as amended from time
to time, and
any successor thereto.
|
|
(f)
|
“Commission”
means the Securities and Exchange Commission or any successor
agency.
|
|
(g)
|
“Committee”
means a committee of Directors appointed by the Board to administer
this
Plan. Insofar as the Committee is responsible for granting Awards
to
Participants hereunder, it shall consist solely of two or more
directors,
each of whom is a “non-employee director” within the meaning of Rule
16b-3, an “outside director” under Section 162(m) of the Code, an
“independent director” as defined by the Sarbanes-Oxley Act of 2002, and
“independent” as defined by the rules of any stock exchange or market on
which the Stock is listed.
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|
(h)
|
“Covered
Employee”
means a person who is a “covered employee” within the meaning of Section
162(m) of the Code.
|
|
(i)
|
“Director”
means a member of the Company’s
Board.
|
|
(j)
|
“Disability”
means mental or physical illness that entitles the Participant
to receive
benefits under the long-term disability plan of the Company or
an
Affiliate, or if the Participant is not covered by such a plan
or the
Participant is not an employee of the Company or an Affiliate,
a mental or
physical illness that renders a Participant totally and permanently
incapable of performing the Participant’s duties for the Company or an
Affiliate; provided,
however,
that a Disability shall not qualify under this Plan if it is
the result of
(i) a willfully self-inflicted injury or willfully self-induced
sickness;
or (ii) an injury or disease contracted, suffered or incurred
while
participating in a criminal offense. Notwithstanding the foregoing,
if the
Participant and the Company or an Affiliate have entered into
an
employment or services agreement which defines the term “Disability”
(or a similar term), such definition shall govern for purposes
of
determining whether such Participant suffers a Disability for
purposes of
this Plan. The determination of Disability shall be made by the
Administrator, in its sole discretion. The determination of Disability
for
purposes of this Plan shall not be construed to be an admission
of
disability for any other purpose.
|
| (k) |
“Effective
Date”
of
the amendment and restatement of the Plan means April 29, 2008.
The 2006
Plan was originally effective on July 1, 2006.
|
|
(l)
|
“Eligible
Individual”
means any (i) officer, employee, associate or director of the
Company or a
Subsidiary or Affiliate, (ii) any consultant or advisor providing
services
to the Company or a Subsidiary or Affiliate, or (iii) employees
of (x) a
corporation or other business enterprise which has been acquired
by the
Company or a Subsidiary, which, in the case of grants of Stock
Options and
Stock Appreciation Rights would, together with the Company and,
if
applicable, the Subsidiary, be classified as the “service recipient” (as
defined in the regulations under Section 409A of the Code) with
respect to
such employees and (y) who hold options with respect to the stock
of such
corporation which the Company has agreed to assume.
|
|
(m)
|
“Exchange
Act”
means the Securities Exchange Act of 1934, as amended from time
to time,
and any successor thereto.
|
|
(n)
|
“Fair
Market Value”
means, as of any given date, the fair market value of the Stock
as
determined by the Administrator or under procedures established
by the
Administrator, in accordance with Section 409A of the Code and
the
regulations issued thereunder. Unless otherwise determined by
the
Administrator, the Fair Market Value per share on any date shall
be the
most recent closing sales price per share of the Stock on the
Nasdaq
Capital Market, the Nasdaq National Stock Market, or the principal
stock
exchange or market on which the Stock is then traded on the business
day
preceding the date as of which such value is being determined
or the last
previous day on which a sale was reported if no sale of the Stock
was
reported on such date on such Exchange on such business day.
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|
(o)
|
“Family
Member”
means any child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law or
sister-in-law of a Participant (including adoptive relationships);
any
person sharing the Participant’s household (other than a tenant or
employee); any trust in which the Participant and any of these
persons
have all of the beneficial interest; any foundation in which
the
Participant and any of these persons control the management of
the assets;
any corporation, partnership, limited liability company or other
entity in
which the Participant and any of these other persons are the
direct and
beneficial owners of all of the equity interests (provided
the Participant and these other persons agree in writing to remain
the
direct and beneficial owners of all such equity interests); and
any
personal representative of the Participant upon the Participant’s death
for purposes of administration of the Participant’s estate or upon the
Participant’s incompetency for purposes of the protection and management
of the assets of the Participant.
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|
(p)
|
“Incentive
Stock Option”
means any Stock Option intended to be and designated as an “incentive
stock option” within the meaning of Section 422 of the
Code.
|
|
(q)
|
“Non-Qualified
Stock Option”
means any Stock Option that is not an Incentive Stock
Option.
|
|
(r)
|
“Optionee”
means a person who holds a Stock
Option.
|
|
(s)
|
“Participant”
means a person granted an Award.
|
| (t) |
“Performance
Award”
means a right, granted to a Participant under Section
7,
to receive
Awards based upon performance criteria specified by the
Administrator.
|
|
(u)
|
“Representative”
means (i) the person or entity acting as the executor or administrator
of
a Participant’s estate pursuant to the last will and testament of a
Participant or pursuant to the laws of the jurisdiction in which
the
Participant had his or her primary residence at the date of the
Participant’s death; (ii) the person or entity acting as the guardian
or temporary guardian of a Participant; (iii) the person or entity
which is the beneficiary of the Participant upon or following
the
Participant’s death; or (iv) any person to whom an Option has been
transferred with the permission of the Administrator or by operation
of
law; provided that
only one of the foregoing shall be the Representative at any
point in time
as determined under applicable law and recognized by the
Administrator.
|
|
(v)
|
“Retirement”
means termination of employment or provision of services without
Cause,
death or Disability on or after age 65 with 5 years of
service.
|
|
(w)
|
“Stock”
means the common stock, par value $0.005 per share, of the
Company.
|
|
(x)
|
“Stock
Appreciation Right”
means a right granted under Section
5.
|
|
(y)
|
“Stock
Award”
means an Award, other than a Stock Option or Stock Appreciation
Right,
made in Stock or denominated in shares of
Stock.
|
|
(z)
|
“Stock
Option”
means an option granted under Section
4.
|
|
(aa)
|
“Subsidiary”
means any company during any period in which it is a “subsidiary
corporation” (as such term is defined in Section 424(f) of the Code) with
respect to the Company.
|
|
(bb)
|
“Ten
Percent Holder”
means an individual who owns, or is deemed to own, stock possessing
more
than 10% of the total combined voting power of all classes of
stock of the
Company or of any parent or subsidiary corporation of the Company,
determined pursuant to the rules applicable to Section 422(b)(6)
of the
Code.
|