1)
|
Title
of each class of securities to which transaction applies:
_________________________________________________________
|
2)
|
Aggregate
number of securities to which transaction
applies:_________________________________________________________
|
3)
|
Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is
calculated and state how it was determined):
_____________________________________________________________________________________
|
4)
|
Proposed
maximum aggregate value of transaction:
_________________________________________________________________
|
5)
|
Total
fee
paid:_____________________________________________________________________________________________
|
1)
|
Amount
Previously Paid:
________________________________________________________________________
|
2)
|
Form
Schedule or Registration Statement No.:
_________________________________________________________
|
3)
|
Filing
Party:
__________________________________________________________________________________
|
4)
|
Date
Filed:
___________________________________________________________________________________
|
1.
|
To
elect to our Board of Directors five directors, to serve until our
next
Annual Meeting of Stockholders or until their successors are elected
and
qualified, subject to their prior death, resignation or
removal.
|
2.
|
To
consider and vote upon an amendment to our certificate of incorporation
to
increase the authorized number of shares of common stock from 11,500,000
shares to 19,500,000 shares.
|
3.
|
To
adopt our 2007 Stock Incentive Award Plan (the “2007 Plan”) and to reserve
up to 1,500,000 shares of common stock for issuance under the 2007
Plan.
|
4.
|
To
transact such other business that may properly come before the Annual
Meeting or any adjournment or postponement
thereof.
|
Page | |
ABOUT
THE ANNUAL MEETING
|
1
|
PROPOSAL
NO. 1 ELECTION OF DIRECTORS
|
5
|
PROPOSAL
NO. 2 INCREASE OF AUTHORIZED SHARES OF COMMON STOCK
|
9
|
PROPOSAL
NO. 3 APPROVAL OF REED’S 2007 STOCK INCENTIVE AWARD PLAN
|
11
|
CORPORATE
GOVERNANCE
|
14
|
REPORT
OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
|
16
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|
16
|
EXECUTIVE
COMPENSATION
|
18
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
|
20
|
SECTION
16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
|
22
|
PRINCIPAL
AUDITOR FEES AND SERVICES
|
22
|
OTHER
MATTERS
|
23
|
STOCKHOLDER
PROPOSALS FOR THE NEXT ANNUAL MEETING OF STOCKHOLDERS
|
23
|
NO
INCORPORATION BY REFERENCE OF CERTAIN PORTIONS OF THIS PROXY
STATEMENT
|
23
|
APPROVAL
OF THE BOARD OF DIRECTORS
|
24
|
A:
|
The
Board of Directors of Reed’s is soliciting your vote at the 2007 Annual
Meeting of Stockholders.
|
A:
|
You
will be voting on three proposals:
|
Q:
|
What
is the Board of Directors’
recommendations?
|
A:
|
The
Board of Directors recommends a
vote:
|
A:
|
The
Board of Directors set October 12, 2007 as the record date for
the Annual
Meeting (the “record date”). All stockholders who owned Reed’s common
stock at the close of business on October 12, 2007 may attend and
vote at
the Annual Meeting. We have 55,540 outstanding shares of Series
A
preferred stock which do not have voting rights on any matters,
including,
without limitation, the election of directors. However, so long
as any
shares of Series A preferred stock are outstanding, we will not,
without
first obtaining the approval of at least a majority of the holders
of the
Series A preferred stock: (i) amend our certificate of incorporation
or
bylaws in any manner which adversely affects the rights of the
Series A
preferred stockholders, or (ii) authorize or issue any equity security
having a preference over the Series A preferred stock with respect
to an
equity security other than any senior preferred stock. The Board
of
Directors does not believe that we will have to obtain the approval
of the
holders of the Series A preferred stock with respect to any of
the
proposals set forth in this proxy
statement.
|
A:
|
You
will have one vote for each share of Reed’s common stock you owned at the
close of business on the record date, provided those shares are
either
held directly in your name as the stockholder of record or were
held for
you as the beneficial owner through a broker, bank or other
nominee.
|
A:
|
Many
stockholders of Reed’s hold their shares through a broker, bank or other
nominee rather than directly in their own name. As summarized below,
there
are some distinctions between shares held of record and those owned
beneficially.
|
A.
|
Your
vote is important. You may vote by mail or by attending the Annual
Meeting
and voting by ballot. If you choose to vote by mail, simply mark
your
proxy, date and sign it, and return it to our transfer agent, Transfer
On-Line, Inc., Portland, Oregon, in the postage-paid envelope
provided.
|
A.
|
Each
share of Reed’s common stock is entitled to one vote. There is no
cumulative voting. We had 8,721,045 shares of common stock outstanding
and
entitled to vote on the record
date.
|
A:
|
A
majority of Reed’s outstanding shares as of the record date must be
present at the Annual Meeting in order to hold the Annual Meeting
and
conduct business. This is called a “quorum.” Shares are counted as present
at the Annual Meeting if you are present and vote in person at
the Annual
Meeting or a proxy card has been properly submitted by you or on
your
behalf. Both abstentions and broker non-votes are counted as present
for
the purpose of determining the presence of a
quorum.
|
A:
|
Proposal
1 - Election of Directors.
Directors are elected by a plurality
of
the votes cast. This means that the five individuals nominated
for
election to the Board of Directors who receive the most “FOR” votes (among
votes properly cast in person or by proxy) will be elected. Nominees
do
not need to receive a majority to be elected. If you withhold authority
to
vote with respect to the election of some or all of the nominees,
your
shares will not be voted with respect to those nominees indicated.
Your
shares will be counted for purposes of determining whether there
is a
quorum, but it will have no effect on the election of those
nominees.
|
A:
|
If
you hold shares in your name and you return your signed proxy card
in the
enclosed envelope but do not mark selections, it will be voted
in
accordance with the recommendations of the Board of Directors.
If you
indicate a choice with respect to any matter to be acted upon on
your
proxy card, the shares will be voted in accordance with your instructions.
With
respect to any other matter that properly comes before the meeting,
the
proxyholders will vote as recommended
by our Board of Directors, or if no recommendation is given, in
their own
discretion.
|
A:
|
Yes.
Even if you sign the proxy card in the form accompanying this proxy
statement, you retain the power to revoke your proxy. You can revoke
your
proxy at any time before it is exercised by giving written notice
to the
Secretary of Reed’s, Inc. specifying such
revocation.
|
A:
|
It
generally means your shares are registered differently or are in
more than
one account. Please provide voting instructions for all proxy cards
you
receive.
|
A:
|
All
stockholders as of the record date, or their duly appointed proxies,
may
attend.
|
A:
|
In
order to be admitted to the Annual Meeting, a stockholder must
present
proof of ownership of Reed’s common stock on the record date. If your
shares are held in the name of a bank, broker or other holder of
record, a
brokerage statement or letter from a bank or broker is an example
of proof
of ownership. Any holder of a proxy from a stockholder must present
the
proxy card, properly executed, to be admitted. Stockholders and
proxyholders must also present a form of photo identification such
as a
driver’s license.
|
A:
|
We
will bear the expense of printing and mailing proxy materials.
In addition
to this solicitation of proxies by mail, our directors, officers
and other
employees may solicit proxies by personal interview, telephone,
facsimile
or email. They will not be paid any additional compensation for
such
solicitation. We will request brokers and nominees who hold shares
of our
common stock in their names to furnish proxy material to beneficial
owners
of the shares. We may reimburse such brokers and nominees for their
reasonable expenses incurred in forwarding solicitation materials
to such
beneficial owners.
|
A:
|
A
copy of our 2006 Annual Report is being mailed with this proxy
statement
to each stockholder of record. Stockholders not receiving a copy
of the
annual report may obtain one without charge. Requests
and inquiries
should be addressed to:
Reed’s, Inc., 13000 South Spring Street, Los Angeles, California 90061,
Attn: Corporate Secretary.
|
Q:
|
Is
a list of stockholders available?
|
A:
|
The
names of stockholders of record entitled to vote at the Annual
Meeting
will be available to stockholders entitled to vote at the Annual
Meeting
for ten days prior to the meeting for any purpose relevant to the
meeting.
This list can be viewed between the hours of 9:00 a.m. and 5:00
p.m. at
our principal executive offices at 13000 South Spring Street, Los
Angeles,
California 90061. Please contact Reed’s Secretary to make
arrangements.
|
A:
|
Preliminary
voting results will be announced at the Annual Meeting, and the
final
voting results will be published in our Quarterly Report on Form
10-QSB
for the quarter ending September 30, 2007, which we will file with
the
Securities and Exchange Commission
(“SEC”).
|
Name | Age | Position Held with Reed's |
Christopher
J. Reed
|
48
|
President,
Chief Executive Officer and Chairman of the Board
|
Judy
Holloway Reed
|
47
|
Secretary
and Director
|
Mark
Harris
|
50
|
Director
|
Dr.
D.S.J. Muffoletto, N.D.
|
52
|
Director
|
Michael
Fischman
|
51
|
Director
|
Name
|
Age
|
Position
Held with Reed’s
|
Thierry
Foucaut
|
42
|
Chief
Operating Officer
|
David
M. Kane
|
44
|
Chief
Financial Officer
|
Rory
Ahearn
|
56
|
Senior
Vice President - Sales
|
Neal
Cohane
|
47
|
Vice
President - Sales
|
Robert
T. Reed, Jr.
|
51
|
Vice
President and National Sales Manager - Mainstream
|
Eric
Scheffer
|
39
|
Vice
President and National Sales Manager - Natural Foods
|
Robert
Lyon
|
57
|
Vice
President Sales - Special Projects
|
·
|
selecting,
hiring and terminating our independent auditors;
|
·
|
evaluating
the
qualifications, independence and performance of our independent
auditors;
|
·
|
approving
the
audit and non-audit services to be performed by our independent
auditors;
|
·
|
reviewing
the
design, implementation, adequacy and effectiveness of our internal
controls and critical accounting policies;
|
·
|
overseeing
and
monitoring the integrity of our financial statements and our compliance
with legal and regulatory requirements as they relate to financial
statements or accounting matters;
|
·
|
reviewing
with
management and our independent auditors, any earnings announcements
and
other public announcements regarding our results of operations;
and
|
·
|
preparing
the
audit committee report that the SEC requires in our annual proxy
statement.
|
·
|
approving
the
compensation and benefits of our executive officers;
|
·
|
reviewing
the
performance objectives and actual performance of our officers;
and
|
·
|
administering
our stock option and other equity compensation
plans.
|
·
|
evaluating
the
composition, size and governance of our Board of Directors and
its
committees and making recommendations regarding future planning
and the
appointment of directors to our
committees;
|
·
|
establishing
a
policy for considering stockholder nominees for election to our
Board of
Directors; and
|
·
|
evaluating
and
recommending candidates for election to our Board of
Directors.
|
·
|
a
representation that the stockholder is a holder of record of our
capital
stock;
|
·
|
the
name and address, as they appear on our books, of the stockholder
sending
such communication; and
|
·
|
the
class and number of shares of our capital stock that are beneficially
owned by such stockholder.
|
Name
of Beneficial Owner
|
Beneficially
Owned
|
Percentage
of Shares
Beneficially Owned (1)
|
||
Directors
and Named Executive Officers
|
||||
Christopher
J. Reed (2)
|
3,200,000
|
36.69
|
||
Judy
Holloway Reed (2)
|
3,200,000
|
36.69
|
||
Mark
Harris (3)
|
4,319
|
*
|
||
Dr.
Daniel S.J. Muffoletto, N.D.
|
0
|
0
|
||
Michael
Fischman
|
0
|
0
|
||
Directors
and executive officers as a group (12 persons) (4)
|
3,732,101
|
41.61
|
||
5%
or greater stockholders
|
||||
Joseph
Grace
|
500,000
|
5.74
|
||
Alma
and Gabriel Elias (5)
|
1,318,724
|
14.70
|
(1)
|
Beneficial
ownership is determined in accordance with the rules of the SEC.
Shares of
common stock subject to options or warrants currently exercisable
or
exercisable within 60 days of October 12, 2007, are deemed outstanding
for
computing the percentage ownership of the stockholder holding the
options
or warrants, but are not deemed outstanding for computing the percentage
ownership of any other stockholder. Unless otherwise indicated
in the
footnotes to this table, we believe stockholders named in the table
have
sole voting and sole investment power with respect to the shares
set forth
opposite such stockholder's name. Unless otherwise indicated, the
officers, directors and stockholders can be reached at our principal
offices. Percentage of ownership is based on 8,721,045 shares of
common
stock outstanding as of October 12,
2007.
|
(2)
|
Christopher
J. Reed and Judy Holloway Reed are husband and wife. The same number
of
shares of common stock is shown for each of them, as they may each
be
deemed to be the beneficial owner of all of such shares. These
shares have
been pledged as collateral to Robert T. Reed, Jr. to secure a pledge
of
Mr. Reed of his shares as collateral for a line of credit extended
to
us.
|
(3)
|
Consists
of: (i) 319 shares of common stock, and (ii) 4,000 shares of common
stock,
which can be converted at any time from 1,000 shares of Series
A preferred
stock. The address for Mr. Harris is 160 Barranca Road, Newbury
Park,
California 91320.
|
(4)
|
Includes
three executive officers (including Robert T. Reed, Jr., our Executive
Vice-President and National Sales Manager - Mainstream (282,282
shares of
common stock, options exercisable into 50,000 shares of common
stock, and
60,000 shares of common stock, which can be converted at any time
from
15,000 shares of Series A preferred stock), Robert Lyon, our Vice
President Sales - Special Projects (options to purchase up to 60,000
shares) and Eric Scheffer, our Vice President and National Sales
Manager -
Natural Foods (500 shares and options to purchase up to 75,000
shares))
who beneficially own in the aggregate of 527,782 shares of common
stock.
Does not include options to purchase up to 360,000 shares of common
stock
which vest in portions through the period ending December
2010.
|
(5)
|
Elias
Family Charitable Trust, Alma and Gabriel Elias JTWROS and Wholesale
Realtors Supply may be deemed to be affiliates of each other for
purposes
of calculating beneficial ownership of their securities in this
table. The
registered ownership of such stockholders is as follows: (a) Elias
Family
Charitable Trust (25,500
shares
of common stock and warrants to purchase up to 10,000 shares of
common
stock), (b) Alma and Gabriel Elias JTWROS (376,000 shares of common
stock
and warrants to purchase up to 157,528 shares of common stock),
and (c)
Wholesale Realtors Supply (666,363 shares of common stock and warrants
to
purchase up to 83,333 shares of common
stock).
|
Name
and Principal Position
|
Year
|
Salary
|
Bonus
|
Stock
Awards
|
Option
Awards
|
Non-Equity
Incentive
Plan
Compensation
|
Non-Qualified
Deferred
Compensation
Earnings
|
All
Other
Compensation
|
Total
|
|||||||||||||||||||
Christopher
J. Reed, Chief Executive Officer
|
2006
|
$
|
150,000
|
0
|
0
|
0
|
0
|
0
|
0
|
$
|
150,000
|
|||||||||||||||||
2005
|
$
|
150,000
|
0
|
0
|
0
|
0
|
0
|
0
|
$
|
150,000
|
·
|
Any
breach of their duty of loyalty to our company or our
stockholders.
|
·
|
Acts
or
omissions not in good faith or which involve intentional misconduct
or a
knowing violation of law.
|
·
|
Unlawful
payments of dividends or unlawful stock repurchases or redemptions
as
provided in Section 174 of the Delaware General Corporation
Law.
|
·
|
Any
transaction from which the director derived an improper personal
benefit.
|
2006
|
2005
|
||||||
Audit
Fees
|
$
|
153,000
|
$
|
144,000
|
|||
Audit-Related
Fees
|
0
|
0
|
|||||
Tax
Fees
|
0
|
0
|
|||||
All
Other Fees
|
0
|
0
|
|||||
Total
|
$
|
153,000
|
$
|
144,000
|
|||
Section 1. |
Purpose.
|
(a) |
The
purpose of this 2007 Stock Incentive Award Plan (the “Plan”)
is to enable Reed’s, Inc. (the “Company”)
and its Subsidiaries and Affiliates to attract, retain, motivate,
and
reward employees, directors, and certain select service providers
of the
Company and its Subsidiaries and Affiliates, to provide for equitable
and
competitive compensation opportunities, to recognize individual
contributions and reward achievement of Company goals, and to promote
the
creation of long-term value for stockholders by strengthening the
mutuality of interests between those employees, directors and select
service providers and the Company’s stockholders.
|
(b) |
The
Plan authorizes stock-based and cash-based incentives for Participants.
Awards may be made in the form of (i) Incentive Stock Options; (ii)
Nonqualified Stock Options; (iii) Restricted Stock; (iv) Stock
Appreciation Rights; (v) Stock Units; and (vi) any combination of
the
foregoing.
|
Section 2. |
Definitions.
The
following terms have the respective meanings, in addition to the
capitalized terms defined in Section 1 hereof or as otherwise defined
throughout this document:
|
(a) |
“Affiliate”
means any entity (other than the Company and any Subsidiary) that
is
designated by the Board as a participating employer under the
Plan.
|
(b) |
“Award”
means any Option, SAR, Restricted Stock, Stock Unit, or Stock granted
as a
bonus or in lieu of another award, Dividend Equivalent, or Other
Stock-Based Award, together with any related right or interest, granted
to
a Participant under the Plan.
|
(c) |
“Award
Agreement”
means any Option Agreement, SAR Agreement, Restricted Stock Agreement,
Stock Unit Agreement, or any other agreement under which the Company
(or a
Subsidiary or Affiliate) grants an Eligible Person an
Award.
|
(d) |
“Beneficiary”
means the person(s) or trust(s) designated as being entitled to receive
the benefits under a Participant’s Award upon and following a
Participant’s death. Unless otherwise determined by the Committee, a
Participant may designate one or more persons or one or more trusts
as his
or her Beneficiary.
|
(e) |
“Board”
means the Company’s Board of
Directors.
|
(f) |
“Code”
means the Internal Revenue Code of 1986, as amended from time to
time, any
successor thereto, and including any regulations promulgated
thereunder.
|
(g) |
“Committee”
means the Compensation Committee of the Board or any other committee
authorized by the Board to administer the Plan of which the majority
of
the members are both Outside Directors and Non-Employee
Directors.
|
(h) |
“Corporate
Transaction”
means the occurrence of any of the following: (i) any person or group
of persons (as defined in Section 13(d) and 14(d) of the Exchange
Act) together with its affiliates, excluding employee benefit plans
of the
Company, is or becomes, directly or indirectly, the “beneficial
owner”
(as defined in Rule 13d-3 of the Exchange Act) of securities of the
Company representing 50% or more of the combined voting power of
the
Company’s then outstanding securities; or (ii) a merger or
consolidation of the Company with any other corporation or entity
is
consummated regardless of which entity is the survivor, other than
a
merger or consolidation which would result in the voting securities
of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or being converted into voting securities
of the surviving entity or its parent) at least 50% of the combined
voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation; or
(iii) the Company is completely liquidated or all or substantially
all of the Company’s assets are
sold.
|
(i) |
“Covered
Employee”
means an Eligible Person who is an employee of the Company, a Subsidiary
or an Affiliate.
|
(j) |
“Date
of Grant”
has the meaning set forth in Treasury Regulation Section
1.409A-1.
|
(k) |
“Disability”
means a permanent and total disability as defined in Code Section
409A.
|
(l) |
“Dividend
Equivalent”
means a right, granted under this Plan, to receive cash, Stock, other
Awards or other property equal in value to all or a portion of the
dividends paid with respect to a specified number of shares of
Stock.
|
(m) |
“Exchange
Act”
means the Securities Exchange Act of 1934, as amended, and shall
include
any successor thereto.
|
(n) |
“Fair
Market Value”
or
“FMV”
means the fair market value of Stock, Awards or other property as
determined in good faith by the Committee or under procedures established
by the Committee as follows: if on the Date of Grant or other
determination date the Stock is listed on an established securities
market, the Fair Market Value of a share of Stock shall be the closing
price of the Stock on such exchange or in such market (if there is
more
than one such exchange or market the Committee shall determine the
appropriate exchange or market) on the Date of Grant or such other
determination date (or if there is no such reported closing price,
the
Fair Market Value shall be the mean between the highest bid and lowest
asked prices or between the high and low sale prices on such trading
day)
or, if no sale of Stock is reported for such trading day, on the
next
preceding day on which any sale shall have been reported. If the
Stock is
not listed on such an exchange, quoted on such system or traded on
such a
market, Fair Market Value shall be the value of the Stock as determined
by
the Committee in good faith. Fair Market Value relating to the exercise
price or base price of any Option or SAR shall at all times conform
to the
applicable requirements of Code Section 409A. Notwithstanding any
provision of this subsection to the contrary, the Fair Market Value
of an
Award shall be established by the Committee immediately prior to
the grant
of such Award.
|
(o) |
“Incentive
Stock Option”
or
“ISO”
means any Option intended to be, designated as, and that otherwise
qualifies as an “Incentive
Stock Option”
within the meaning of Code Section
422.
|
(p) |
“Non-Employee
Director”
has the meaning set forth under Section 16 of the Exchange
Act.
|
(q) |
“Nonqualified
Stock Option”
means any Option that is not an Incentive Stock
Option.
|
(r) |
“Option”
means a right to purchase Stock granted under Section
6(b).
|
(s) |
“Outside
Director”
has the meaning set forth in Code Section
162(m).
|
(t) |
“Other
Stock-Based Awards”
means Awards granted to a Participant that are valued, in whole or
in
part, by reference to, or otherwise based on, shares of
Stock.
|
(u) |
“Participant”
means a person who has been granted an Award under the Plan which
remains
outstanding, including a person who is no longer an Eligible
Person.
|
(v) |
“Restricted
Stock”
means Stock granted under this Plan which is subject to certain
restrictions and to a risk of
forfeiture.
|
(w) |
“Section
16 Participant”
means a Participant under the Plan who is subject to Section 16 of
the
Exchange Act.
|
(x) |
“Stock”
means shares of the Company’s Common Stock, no par value per share, and
any other equity securities of the Company that may be substituted
or
resubstituted for such Stock.
|
(y) |
“Stock
Appreciation Rights”
or
“SARs”
means a right granted to a Participant under Section
6(c).
|
(z) |
“Stock
Units”
means a right granted under this Plan to receive Stock or other Awards
or
a combination thereof at the end of a specified period. Stock Units
subject to a risk of forfeiture may be designated as “Restricted
Stock Units.”
|
(aa) |
“Subsidiary”
means any corporation (other than the Company or an Affiliate) in
an
unbroken chain of corporations beginning with the Company, if each
of the
corporations (other than the last corporation in the unbroken chain)
owns
stock possessing 50% or more of the total combined voting power of
all
classes of stock in one of the other corporations in that
chain.
|
Section 3. |
Administration.
|
(a) |
Authority
of the Committee.
The Plan shall be administered by the Committee. Any interpretation
or
administration of the Plan by the Committee, and all actions and
determinations of the Committee, shall be final, binding and conclusive
on
the Company, its stockholders, Subsidiaries, Affiliates, all Participants
in the Plan, their respective legal representatives, successors and
assigns, and all persons claiming under or through any of
them.
|
(b) |
Composition
of the Committee.
The Committee shall consist of not less than three directors, all
of whom
shall be Outside Directors and Non-Employee Directors. Those Directors
shall be appointed by the Board and shall serve as the Committee
at the
pleasure of the Board. The function of the Committee specified in
the Plan
shall be exercised by the entire Board if, and to the extent that,
no
Committee exists that has the authority to so administer the
Plan.
|
(c) |
Manner
of Exercise of Committee Authority. The
Committee shall have the full power and authority to interpret and
administer the Plan in its sole discretion, including exercising
all the
powers and authorities either specifically granted to it under the
Plan or
necessary or advisable in the administration of the Plan. The Committee’s
powers and authorities include, without limitation, the sole ability
to
determine: eligibility criteria for Awards; persons to whom, and
the time
or times at which, Awards shall be granted; number of shares of Stock
to
be covered by each Award; interpretation of Plan provisions; amendments,
rules, and regulations relating to the Plan; consideration, if any,
to be
paid for Awards; specific terms and conditions of individual Awards;
and
Awards that qualify as performance-based compensation under Code
Section
162(m). The Committee shall have the power and authority to make
all other
determinations deemed necessary or advisable for the administration
of the
Plan.
|
(d) |
Delegation
of Authority.
The Committee may delegate to one or more of its members or to one
or more
agents such administrative duties as it may deem advisable, and the
Committee or any person to whom it has delegated duties as aforesaid
may
employ one or more persons to render advice with respect to any
responsibility the Committee or such person may have under the Plan;
provided, that such delegation may not include the selection or grant
of
Awards to Participants or Eligible Persons who are executive officers
of
the Company or any Subsidiary or Affiliate, or Section 16
Participants.
|
(e) |
Committee
Vacancies.
The Board shall fill all vacancies in the Committee. The Board may
from
time to time appoint additional members to the Committee and may
at any
time remove one or more Committee members and substitute others.
One
member of the Committee shall be selected by the Board as chairman.
The
Committee shall hold its meetings at such times and places as it
shall
deem advisable. All determinations of the Committee shall be made
by not
less than a majority of its members either present in person or
participating by conference telephone at a meeting or by written
consent.
The Committee shall keep minutes of its meetings. The Committee may
appoint a secretary to keep such minutes and may make such rules
and
regulations for the conduct of its business as it shall deem advisable,
but in accordance with the written charter prepared by the Board
and which
may be amended from time to time by the Board. The secretary shall
not
need to be a member of the Committee or a member of the
Board.
|
(f) |
Limitation
of Liability. The
Committee and each member thereof, and any person acting pursuant
to
authority delegated by the Committee, shall be entitled, in good
faith, to
rely or act upon any report or other information furnished by any
executive officer, other officer or employee of the Company or a
Subsidiary or Affiliate, the Company’s independent auditors, consultants
or any other agents assisting in the administration of the Plan.
Members
of the Committee, any person acting pursuant to authority delegated
by the
Committee, and any officer or employee of the Company or a Subsidiary
or
Affiliate acting at the direction or on behalf of the Committee or
a
delegee shall not be personally liable for any action or determination
taken or made in good faith with respect to the Plan, and shall,
to the
extent permitted by law, be fully indemnified and protected by the
Company
with respect to any such action or
determination.
|
Section 4. |
Stock
Subject to Plan.
|
(a) |
Overall
Number of Shares Available. Subject
to adjustment as provided under Section 11(c), the total number of
shares
of Stock reserved and available for delivery in connection with Awards
under the Plan shall be 1,500,000. Any shares of Stock issued under
the
Plan may consist, in whole or in part, of authorized and unissued
shares
or treasury shares.
|
(b) |
Accounting
Procedures. The
Committee may adopt reasonable accounting procedures to ensure appropriate
counting of Stock subject to the Plan, avoid double counting (as,
for
example, in the case of tandem or substitute Awards), and make adjustments
in accordance with this Section 4(b). Shares shall be counted against
those reserved to the extent such shares have been delivered and
are no
longer subject to a risk of forfeiture. Accordingly, (i) to the extent
that an Award under the Plan is canceled, expired, forfeited, settled
in
cash, settled by delivery of fewer shares than the number underlying
the
Award, or otherwise terminated without delivery of Stock to the
Participant, the Stock retained by or returned to the Company will
not be
deemed to have been delivered under the Plan; and (ii) Stock that
is
withheld from such Award or separately surrendered by the Participant
in
payment of the exercise price or taxes relating to such Award shall
be
deemed to constitute Stock not delivered and will be available under
the
Plan. The Committee may determine that Awards may be outstanding
that
relate to more Stock than the aggregate shares of Stock remaining
available under the Plan so long as Awards will not in fact result
in
delivery and vesting of shares of Stock in excess of the number then
available under the Plan. In addition, in the case of any Award granted
in
assumption of or in substitution for an award of a company or business
acquired by the Company or a Subsidiary or Affiliate or with which
the
Company or a Subsidiary or Affiliate combines, shares delivered or
deliverable in connection with such assumed or substitute Award shall
not
be counted against the number of shares of Stock reserved under the
Plan.
|
(c) |
Individual
Annual Award Limits.
No
Participant may be granted Options or other Awards under the Plan
with
respect to an aggregate of more than 75,000 shares of Stock (subject
to
adjustment as otherwise may be provided for throughout this Plan)
during
any calendar year.
|
Section 5. |
Eligibility.
|
(a) |
Eligibility.
Grants of Awards may be made from time to time to those officers,
employees and directors of the Company or any Subsidiary or Affiliate
who
are designated by the Committee in its sole and exclusive discretion
as
eligible to receive such Awards (“Eligible
Persons”).
Eligible Persons may include, but shall not necessarily be limited
to,
employees, officers, and directors of the Company and any Subsidiary
or
Affiliate; however, Options intended to qualify as ISOs shall be
granted
only to Eligible Persons while actually employed by the Company,
a
Subsidiary or an Affiliate. The Committee may grant more than one
Award to
the same Eligible Person. No Award shall be granted to any Eligible
Person
during any period of time when such Eligible Person is on a leave
of
absence. Awards to be granted to directors, which may include members
of
the Committee, must be approved and granted by a majority of the
disinterested members of the Board.
|
(b) |
Substitutions/Acquisitions.
Holders of awards granted by a company or business acquired by the
Company
or a Subsidiary or Affiliate, or with which the Company or a Subsidiary
or
Affiliate combines, may be eligible for substitute Awards under this
Plan
that will be granted in assumption of or in substitution for such
outstanding awards in connection with such acquisition or combination
transaction. In such cases, holders of the assumed or substituted
awards
will become Participants in the Plan; provided, however, that such
assumption or substitution in no way causes an Award under this Plan
to
become subject to the terms and conditions of Code Section
409A.
|
(c) |
Participation.
An Eligible Person shall become a Participant in the Plan and shall
perfect his or her Award only after he or she has completed the applicable
Award Agreement in a manner that is satisfactory to the Committee
and has
delivered said Award Agreement to the Committee. A Participant shall
continue his or her participation in the Plan, even if no longer
an
Eligible Person, until any and all of his or her interests that are
held
under the Plan expire or are paid.
|
Section 6. |
Specific
Terms of Awards Granted Under the
Plan.
|
(a) |
General
Terms of All Awards. All
Awards granted under the Plan, including Awards of any Stock Units,
shall
be evidenced by individual agreements between the Company (or Subsidiary
or Affiliate) and the applicable Eligible Person (an “Award
Agreement”).
Award Agreements may provide for grants of Awards on the specific
terms
and conditions set forth in this Section 6. Alternatively, the Committee
may impose on any individual Award, as specified in the individual
Award
Agreement, such additional terms and conditions, not inconsistent
with the
provisions of the Plan, or applicable law, as the Committee shall
determine, including terms requiring forfeiture of Awards in the
event of
termination of employment or service by the Participant and terms
permitting a Participant to make elections relating to his or her
Award.
The Committee shall retain full power and discretion with respect
to any
term or condition of an Award that is not mandatory under the Plan
and the
terms of the Award Agreement; provided, that the exercise of such
discretion shall in no event cause an Award that is not otherwise
subject
to the terms and conditions of Code Section 409A to become “subject
to the terms and conditions of Code Section 409A”
unless otherwise agreed upon between the Company (or Subsidiary or
Affiliate) and the Eligible Person; provided further, that, to the
extent
an Award is subject to the terms and conditions of Code Section 409A,
the
Committee shall provide the Award in the form and manner required
by Code
Section 409A, unless otherwise agreed upon by the Company (or Subsidiary
or Affiliate) and Eligible Person. For purposes of the Plan, “subject
to the terms and conditions of Code Section 409A,”
means the applicable Award or compensation subject to said Award
provides
for a deferral of compensation as determined under Code Section 409A.
The
Committee shall require the payment of lawful consideration for an
Award
to the extent necessary to satisfy the requirements of the Delaware
General Company Law, and may otherwise require payment of consideration
for an Award except as limited by the Plan and as otherwise required
by
applicable law.
|
(b) |
Option
Awards.
Options granted under the Plan shall be evidenced by an agreement
(“Option
Agreements”).
Options that are awarded may be of one of two types which shall be
indicated on the face of the Option Agreement: (i) ISOs or (ii)
Nonqualified Stock Options. The Committee is authorized to grant
Options
to Participants on the following terms and
conditions:
|
(i) |
Option
Term; Time and Method of Exercise.
The Committee shall determine the term of each Option; provided that
in no
event shall the term of any Option exceed a period of ten years from
the
Date of Grant. The Committee shall determine the time or times at
which or
the circumstances under which an Option may be exercised in whole
or in
part (including based on achievement of performance goals and/or
future
service requirements), the methods by which such exercise price may
be
paid or deemed to be paid and the form of such payment (including,
without
limitation, cash, Stock (including by withholding Stock deliverable
upon
exercise), other Awards or awards granted under other plans of the
Company
or any Subsidiary or Affiliate, or other property), and the methods
by or
forms in which Stock will be delivered or deemed to be delivered
in
satisfaction of Options to
Participants.
|
(ii) |
Exercise
Price.
The option price per share of Stock purchasable under a Nonqualified
Stock
Option or an Incentive Stock Option shall be determined by the Committee
at the time of grant, shall be set forth on the applicable Option
Agreement, and shall be not less than 100% of the Fair Market Value
of the
Stock at the Date of Grant (or, with respect to an Incentive Stock
Option,
110% of the Fair Market Value of the Stock at the Date of Grant in
the
case of a Participant who at the Date of Grant owns Stock possessing
more
than 10% of the total combined voting power of all classes of Stock
of the
Company or its parent or subsidiary corporations (as determined under
Code
Sections 424(d), (e) and (f))).
|
(iii) |
Non-Transferability
of Options.
No Option shall be transferable by any Participant other than by
will or
by the laws of descent and distribution or pursuant to a qualified
domestic relations order (as defined in the Code or the Employment
Retirement Income Security Act of 1974, as amended) except that,
if so
provided in the Option Agreement, the Participant may transfer the
Option,
other than an ISO, during the Participant’s lifetime to one or more
members of the Participant’s family, to one or more trusts for the benefit
of one or more of the Participant’s family, or to a partnership or
partnerships of members of the Participant’s family, or to a charitable
organization as defined in Code Section 501(c)(3), provided that
the
transfer would not result in the loss of any exemption under Rule
16b-3 of
the Exchange Act with respect to any Option. The transferee of an
Option
will be subject to all restrictions, terms and conditions applicable
to
the Option prior to its transfer, except that the Option will not
be
further transferable by the transferee other than by will or by the
laws
of descent and distribution.
|
(iv) |
Disposition
upon Termination of Employment.
|
(A) |
Termination
by Death.
Subject to Sections 6(b)(i) and 6(b)(v), if any Participant’s employment
with the Company or any Subsidiary or Affiliate terminates by reason
of
death, any Option held by that Participant shall become immediately
and
automatically vested and exercisable. If termination of a Participant’s
employment is due to death, then any Option held by that Participant
may
thereafter be exercised for a period of two years (or with respect
to an
ISO, for a period of one year) (or such other period as the Committee
may
specify at or after grant) from the date of death. Notwithstanding
the
foregoing, in no event will any Option be exercisable after the expiration
of the option period of Option. The balance of the Option shall be
forfeited if not exercised within two years (or one year with respect
to
ISOs).
|
(B) |
Termination
by Reason of Disability.
Subject to Sections 6(b)(i) and 6(b)(v), if a Participant’s employment
with the Company or any Subsidiary or Affiliate terminates by reason
of
Disability, any Option held by that Participant shall become immediately
and automatically vested and exercisable. If termination of a
Participant’s employment is due to Disability, then any Option held by
that Participant may thereafter be exercised by the Participant or
by the
Participant’s duly authorized legal representative if the Participant is
unable to exercise the Option as a result of the Participant’s Disability,
for a period of two years (or with respect to an ISO, for a period
of one
year) (or such other period as the Committee may specify at or after
grant) from the date of such termination of employment; and if the
Participant dies within that two-year period (or such other period
as the
Committee may specify at or after grant), any unexercised Option
held by
that Participant shall thereafter be exercisable by the estate of
the
Participant (acting through its fiduciary) for the duration of the
two-year period from the date of that termination of employment.
Notwithstanding the foregoing, in no event will any Option be exercisable
after the expiration of the option period of such Option. The balance
of
the Option shall be forfeited if not exercised within two years (or
one
year with respect to ISOs).
|
(C) |
Termination
for Cause.
Unless otherwise determined by the Committee at or after the time
of
granting any Option, if a Participant’s employment with the Company or any
Subsidiary or Affiliate terminates for Cause, any unvested Options
will be
forfeited and terminated immediately upon termination and any vested
Options held by that Participant shall terminate 30 days after the
date
employment terminates. Notwithstanding the foregoing, in no event
will any
Option be exercisable after the expiration of the option period of
such
Option. The balance of the Option shall be
forfeited.
|
(D) |
Other
Termination/Retirement.
Unless otherwise determined by the Committee at or after the time
of
granting any Option, if a Participant retires from employment with
the
Company (or a Subsidiary or Affiliate) or a Participant’s employment with
the Company (or a Subsidiary or Affiliate) terminates for any reason
other
than death, Disability, or for Cause, all Options held by that Participant
shall terminate three months after the date employment terminates.
Notwithstanding the foregoing, in no event will any Option be exercisable
after the expiration of the option period (which shall be established
in
the Option Agreement) of such Option. The balance of the Option shall
be
forfeited.
|
(E) |
Leave
of Absence.
In the event a Participant is granted a leave of absence by the Company
or
any Subsidiary or Affiliate to enter military service or because
of
sickness, the Participant’s employment with the Company or such Subsidiary
or Affiliate will not be considered terminated, and the Participant
shall
be deemed an employee of the Company or such Subsidiary or Affiliate
during such leave of absence or any extension thereof granted by
the
Company or such Subsidiary or Affiliate. Notwithstanding the foregoing,
in
the case of an ISO, a leave of absence of more than 90 days will
be viewed
as a termination of employment unless continued employment is guaranteed
by contract or statute.
|
(v) |
Incentive
Stock Options.
Notwithstanding Sections 6(b)(iii) and 6(b)(iv), an ISO shall be
exercisable by (A) a Participant’s authorized legal representative (if the
Participant is unable to exercise the ISO as a result of the Participant’s
Disability) only if, and to the extent, permitted by Section 422
of the
Code and (B) by the Participant’s estate, in the case of death, or
authorized legal representative, in the case of Disability, no later
than
ten years from the date the ISO was granted (in addition to any other
restrictions or limitations that may apply). Anything in the Plan
to the
contrary notwithstanding, no term or provision of the Plan relating
to
ISOs shall be interpreted, amended or altered, nor shall any discretion
or
authority granted under the Plan be exercised, so as to disqualify
the
Plan under Code Section 422 of the Code, or, without the consent
of the
Participants affected, to disqualify any ISO under Code Section
422.
|
(c) |
Stock
Appreciation Rights. SARs
granted under the Plan shall be evidenced by an agreement (“SAR
Agreements”).
The Committee is authorized to grant SARs to Participants on the
following
terms and conditions:
|
(i) |
Right
to Payment.
An SAR shall confer on the Participant to whom it is granted a right
to
receive, upon exercise thereof, the excess of (A) the Fair Market
Value of
one share of Stock on the date of exercise over (B) the grant price
of the
SAR as determined by the Committee. The grant price of each SAR shall
be
not less than the Fair Market Value of a share of Stock on the Date
of
Grant of such SAR.
|
(ii) |
Other
Terms.
The Committee shall determine the term of each SAR, provided that
in no
event shall the term of an SAR exceed a period of ten years from
the Date
of Grant. The Committee shall determine at the Date of Grant or
thereafter, the time or times at which and the circumstances under
which
an SAR may be exercised in whole or in part (including based on
achievement of performance goals and/or future service requirements),
the
method of exercise, method of settlement, form of consideration payable
in
settlement, method by or forms in which Stock will be delivered or
deemed
to be delivered to Participants, whether or not an SAR shall be
free-standing or in tandem or combination with any other Award. The
Committee may require that an outstanding Option be exchanged for
an SAR
exercisable for Stock having vesting, expiration, and other terms
substantially the same as the Option, so long as such exchange will
not
result in additional accounting expense to the
Company.
|
(d) |
Restricted
Stock. Restricted
Stock granted under the Plan shall be evidenced by an agreement
(“Restricted
Stock Agreements”).
The Committee is authorized to grant Restricted Stock to Participants
on
the following terms and conditions:
|
(i) |
Grant
and Restrictions.
Restricted Stock shall be subject to such restrictions on transferability,
risk of forfeiture and other restrictions, if any, as the Committee
may
impose, which restrictions may lapse separately or in combination
at such
times, under such circumstances (including based on achievement of
performance goals and/or future service requirements), in such
installments or otherwise and under such other circumstances as the
Committee may determine at the Date of Grant, and which shall be
set forth
on the applicable Restricted Stock Agreement, or thereafter. Except
to the
extent restricted under the terms of the Plan and any Restricted
Stock
Agreement, a Participant granted Restricted Stock shall have all
of the
rights of a stockholder, including the right to vote the Restricted
Stock
and the right to receive dividends thereon; provided, however, that
the
Committee may require mandatory reinvestment of dividends in additional
Restricted Stock, may provide that no dividends will be paid on Restricted
Stock or retained by the Participant, or may impose other restrictions
on
the rights attached to Restricted
Stock.
|
(ii) |
Forfeiture.
Except as otherwise determined by the Committee, upon termination
of
employment or service during the applicable restriction period, Restricted
Stock that is at that time subject to restrictions shall be forfeited
and
reacquired by the Company; provided that the Committee may provide,
by
rule or regulation or in any Restricted Stock Agreement, or may determine
in any individual case, that restrictions or forfeiture conditions
relating to Restricted Stock will lapse in whole or in part, including
in
the event of terminations resulting from specified
causes.
|
(iii) |
Certificates
for Stock.
Restricted Stock granted under the Plan shall be evidenced in such
manner
as the Committee shall determine. Certificates representing Restricted
Stock shall be registered in the name of the Participant and shall
bear an
appropriate legend referring to the terms, conditions and restrictions
applicable to the Award of such Restricted Stock. The Company shall
retain
physical possession of the stock certificates until the time that
the
restrictions thereon have lapsed, and the Participant shall have
delivered
a stock power to the Company, endorsed in blank, relating to the
Stock
covered by such Restricted Stock.
|
(iv) |
Dividends
and Splits.
As a condition to the grant of an Award of Restricted Stock, the
Committee
may require that any dividends paid on a share of Restricted Stock
shall
be either (A) paid with respect to such Restricted Stock at the dividend
payment date in cash, in kind, or in a number of shares of unrestricted
Stock having a Fair Market Value equal to the amount of such dividends,
or
(B) automatically reinvested in additional Restricted Stock or held
in
kind, which shall be subject to the same terms as applied to the
original
Restricted Stock to which it relates, or (C) deferred as to payment,
either as a cash deferral or with the amount or value thereof
automatically deemed reinvested in Stock Units, other Awards or other
investment vehicles, subject to such terms as the Committee shall
determine or permit a Participant to elect. Unless otherwise determined
by
the Committee, Stock distributed in connection with a Stock split
or Stock
dividend, and other property distributed as a dividend, shall be
subject
to restrictions and a risk of forfeiture to the same extent as the
Restricted Stock with respect to which such Stock or other property
has
been distributed.
|
(e) |
Stock
Units.
Stock Units granted under the Plan, whether or not subject to
restrictions, shall be evidenced by an agreement (“Stock
Unit Agreement”).
The Committee is authorized to grant Stock Units to Participants,
subject
to the following terms and
conditions:
|
(i) |
Award
and Restrictions.
Issuance of Stock will occur upon expiration of the holding period,
if
any, specified for the Stock Units by the Committee. In addition,
Stock
Units shall be subject to such restrictions on transferability, risk
of
forfeiture and other restrictions, if any, as the Committee may impose,
which restrictions may lapse at the expiration of the holding period
or at
earlier specified times (including based on achievement of performance
goals and/or future service requirements), separately or in combination,
in installments or otherwise, and under such other circumstances
as the
Committee may determine at the Date of Grant or thereafter. Stock
Units
may be settled by delivery of Stock, other Awards, or a combination
thereof, as determined by the Committee at the Date of Grant or
thereafter.
|
(ii) |
Forfeiture.
Except as otherwise determined by the Committee, upon termination
of
employment or service during the applicable deferral period or portion
thereof to which forfeiture conditions apply (as provided in the
Award
document evidencing the Stock Units), all Stock Units that are at
that
time subject to such forfeiture conditions shall be forfeited; provided
that the Committee may provide, by rule or regulation or in any Award
document, or may determine in any individual case, that restrictions
or
forfeiture conditions relating to Stock Units will lapse in whole
or in
part, including in the event of terminations resulting from specified
causes. Stock Units subject to a risk of forfeiture shall be designated
as
“Restricted
Stock Units”
unless otherwise determined by the
Committee.
|
(iii) |
Dividend
Equivalents.
Unless otherwise determined by the Committee, Dividend Equivalents
on the
specified number of shares of Stock underlying Stock Units shall
be either
(A) paid with respect to such Stock Units at the dividend payment
date in
cash or in shares of unrestricted Stock having a Fair Market Value
equal
to the amount of such dividends, or (B) deferred with respect to
such
Stock Units, either as a cash deferral or as a number of additional
Stock
Units with a value equal to the value of the Dividend Equivalents
or with
such value otherwise deemed reinvested in additional Stock Units,
other
Awards or other investment vehicles having a Fair Market Value equal
to
the amount of such dividends, as the Committee shall determine or
permit a
Participant to elect; provided, however, that the Committee may provide
that no Dividend Equivalents will be paid on a given Award of Stock
Units.
|
(f) |
Bonus
Stock and Awards in Lieu of Obligations.
The Committee is authorized to grant to Participants Stock as a bonus,
or
to grant Stock or other Awards in lieu of obligations of the Company
or a
Subsidiary or Affiliate to pay cash or deliver other property under
the
Plan or under other plans or compensatory arrangements, subject to
such
terms as shall be determined by the Committee; provided, that such
grants
shall not be in lieu of prior promises to pay deferrals of compensation
so
that any Award under this Plan that would not otherwise be subject
to Code
Section 409A does not become subject to Code Section 409A due to
a grant
in lieu of other obligation of the Company, a Subsidiary or an Affiliate;
provided further, that any payment of such Stock as a bonus shall
be paid
or transferred to the Participant on the March 15 of the calendar
year
following the calendar year in which the Participant earned the
bonus.
|
(g) |
Other
Stock-Based Awards.
The Committee is authorized, subject to limitations under applicable
law,
to grant to Participants such other Awards that may be denominated
or
payable in, valued in whole or in part by reference to, or otherwise
based
on, or related to, Stock or factors that may influence the value
of Stock,
including, without limitation, convertible or exchangeable debt
securities, other rights convertible or exchangeable into Stock,
purchase
rights for Stock, Awards with value and payment contingent upon
performance of the Company or business units thereof or any other
factors
designated by the Committee, and Awards valued by reference to the
book
value of Stock or the value of securities of or the performance of
specified subsidiaries or affiliates or other business units. The
Committee shall determine the terms and conditions of such Awards.
Stock
delivered pursuant to an Award in the nature of a purchase right
granted
under this Section shall be purchased for such consideration, paid
for at
such times, by such methods, and in such forms, including, without
limitation, cash, Stock, other Awards, or other property, as the
Committee
shall determine. Cash awards, as an element of or supplement to any
other
Award under the Plan, may also be granted pursuant to this
Section.
|
Section 7. |
Additional
Provisions Applicable to Awards.
|
(a) |
Stand-Alone,
Additional, Tandem, and Substitute Awards.
Awards granted under the Plan may, in the discretion of the Committee,
be
granted either alone or in addition to, in tandem with, or in substitution
or exchange for, any other Award or any award granted under another
plan
of the Company, any Subsidiary or Affiliate, or any business entity
to be
acquired by the Company or a Subsidiary or Affiliate, or any other
right
of a Participant to receive payment from the Company or any Subsidiary
or
Affiliate. Awards granted in addition to or in tandem with other
Awards or
awards may be granted either as of the same time as or a different
time
from the grant of such other Awards. Subject to the Plan’s terms, the
Committee may determine that, in granting a new Award, the in-the-money
value or fair value of any surrendered Award or award or the value
of any
other right to payment surrendered by the Participant may be applied
to
the purchase of any other Award; provided, that such surrender does
not
result in a “modification,”
“extension,”
or “renewal,”
of a Stock right, as determined under Code Section 409A, so that
such
Stock rights thereby become subject to the terms and conditions of
Code
Section 409A. Any transaction otherwise authorized under this Section
7(a)
remains subject to all applicable restrictions under the Plan and
may not
result in an Award that is not otherwise subject to the terms and
conditions of Code Section 409A becoming subject to the terms and
conditions of Code Section 409A by virtue of such transaction; in
such
event, any transaction that would otherwise be permissible under
this
Section 7(a) shall be prohibited unless the Participant and the Company
mutually agree in writing to subject an Award to Code Section 409A
under
this Section 7(a).
|
(b) |
Form
and Timing of Payment Under Awards; Deferrals.
Subject to the terms of the Plan and any applicable Award Agreement,
payments to be made by the Company or a Subsidiary or Affiliate upon
the
exercise of an Option or other Award or settlement of an Award may
be made
in such forms as the Committee shall determine, including, without
limitation, cash, Stock, other Awards or other property, and may
be made
in a single payment or transfer, or in
installments.
|
(c) |
Certain
Limitations on Awards to Ensure Compliance with Code Section
409A.
|
(i) |
409A
Awards and Deferrals.
Other
provisions of the Plan notwithstanding, the terms of any “409A
Award”
(which for this purpose means only such an Award held by a Participant
subject to United States federal income tax and which is subject
to the
terms and conditions of Code Section 409A), including any authority
of the
Company and rights of the Participant with respect to the 409A Award,
shall be limited to those terms permitted under Code Section 409A,
and any
terms or conditions not permitted under Code Section 409A shall be
automatically modified and limited to the extent necessary to conform
said
Award with Code Section 409A. The following rules will apply to 409A
Awards:
|
(A) |
If
a Participant is permitted to elect to defer an Award or any payment
under
an Award, such election shall be permitted only at times in compliance
with Code Section 409A (including transition rules
thereunder);
|
(B) |
The
Company shall have no authority to accelerate or delay distributions
relating to 409A Awards in excess of the authority permitted under
Code
Section 409A;
|
(C) |
Any
distribution of a 409A Award triggered by a Participant’s termination of
employment shall be made only at the time that the Participant has
had a
“Separation
from Service”
within the meaning of Code Section 409A (or at such earlier time
preceding
a termination of employment that there occurs another event triggering
a
distribution under the Plan or the applicable Award Agreement in
compliance with Code Section 409A);
|
(D) |
Any
distribution of a 409A Award to a “Specified
Employee,”
as determined under Code Section 409A, after Separation from Service,
shall occur at the expiration of the six-month period following said
Specified Employee’s Separation from Service. In the case of installment
payments, this six-month delay shall not affect the timing of any
installment otherwise payable after the six-month delay
period;
|
(E) |
In
the case of any distribution of a 409A Award, the time and form of
payment
for such distribution will be specified in the Award Agreement, which
will
be provided to the Participant in the manner provided for under Code
Section 409A; provided that, if the time and form of payment for
such
distribution is not otherwise specified in the Plan or an Award Agreement
or other governing document, the distribution shall be made in one
lump
sum amount on March 15 in the calendar year following the calendar
year at
which the settlement of the Award is specified to occur, any applicable
restriction lapses, or there is no longer a substantial risk of forfeiture
applicable to such amounts;
|
(ii) |
Distribution
upon Vesting.
In the case of any Award providing for a distribution upon the lapse
of a
substantial risk of forfeiture, the time and form of payment for
such
distribution will be specified in the Award Agreement, which will
be
provided to the Participant in the manner provided for under Code
Section
409A; provided that, if the timing and form of payment of such
distribution is not otherwise specified in the Plan or an Award Agreement
or other governing document, the distribution shall be made in one
lump
sum amount on March 15 of the calendar year following the calendar
year in
which the substantial risk of forfeiture
lapses.
|
(iii) |
Scope
and Application of This Provision.
For
purposes of the Plan, references to a term or event (including any
authority or right of the Company or a Participant) being “permitted”
under Code Section 409A mean that the term or event will not cause
the
Participant to be deemed to be in constructive receipt of compensation
relating to the 409A Award prior to the distribution of cash, shares
or
other property or to be liable for payment of interest or a tax penalty
under Code Section 409A.
|
Section 8. |
Corporate
Transactions.
|
(a) |
Corporate
Transaction in which Awards are not Assumed.
Upon the occurrence of a Corporate Transaction in which outstanding
Options, Share Appreciation Rights, Restricted Stock Awards, Stock
Units,
and Other Stock-Based Awards are not being assumed or
continued:
|
(i) |
All
outstanding shares of Restricted Stock shall be deemed to have vested,
and
all Stock Units shall be deemed to have vested and the shares of
Stock
subject thereto shall be delivered, immediately prior to the occurrence
of
such Corporate Transaction, and
|
(ii) |
Either
of the following two actions shall be
taken:
|
(A) |
fifteen
days prior to the scheduled consummation of a Corporate Transaction,
all
Options and Share Appreciation Rights outstanding hereunder shall
become
immediately exercisable and shall remain exercisable for a period
of
fifteen days, or
|
(B) |
the
Committee may elect, in its sole discretion, to cancel any outstanding
Awards of Options, Restricted Stock, Stock Units, and/or Share
Appreciation Rights and pay or deliver, or cause to be paid or delivered,
to the holder thereof an amount in cash or securities having a value
(as
determined by the Committee acting in good faith), in the case of
Restricted Stock or Stock Units, equal to the formula or fixed price
per
share paid to holders of shares of Stock and, in the case of Options
or
Share Appreciation Rights, equal to the product of the number of
shares of
Stock subject to the Option or Share Appreciation Right (the “Award
Shares”)
multiplied by the amount, if any, by which (I) the formula or fixed
price per share paid to holders of shares of Stock pursuant to such
transaction exceeds (II) the Option Price or Share Appreciation Right
Exercise Price applicable to such Award
Shares.
|
(b) |
Corporate
Transaction in which Awards are Assumed.
The Plan, Options, Share Appreciation Rights, Restricted Stock Awards,
Stock Units, and Other Stock-Based Awards theretofore granted shall
continue in the manner and under the terms so provided in the event
of any
Corporate Transaction to the extent that provision is made in writing
in
connection with such Corporate Transaction for the assumption or
continuation of the Options, Share Appreciation Rights, Restricted
Stock
Awards, Stock Units, and Other Stock-Based Awards theretofore granted,
or
for the substitution for such Options, Share Appreciation Rights,
Restricted Stock Awards, Stock Units, and Other Stock-Based Awards
for new
common stock options and stock appreciation rights and new common
stock
units and restricted stock relating to the stock of a successor entity,
or
a parent or subsidiary thereof, with appropriate adjustments as to
the
number of shares (disregarding any consideration that is not common
stock)
and option and stock appreciation right exercise prices in accordance
with
the provisions of Sections 5(b) and
10(c).
|
Section 9. |
Additional
Award Forfeiture Provisions.
|
Section 10. |
General
Provisions.
|
(a) |
Compliance
with Legal and Other Requirements.
|
(i) |
The
Company may, to the extent deemed necessary or advisable by the Committee,
postpone the issuance or delivery of Stock or payment of other benefits
under any Award until completion of such registration or qualification
of
such Stock or other required action under any federal or state law,
rule
or regulation, listing or other required action with respect to any
stock
exchange or automated quotation system upon which the Stock or other
securities of the Company are listed or quoted, or compliance with
any
other obligation of the Company, as the Committee may consider
appropriate, and may require any Participant to make such representations,
furnish such information and comply with or be subject to such other
conditions as it may consider appropriate in connection with the
issuance
or delivery of Stock or payment of other benefits in compliance with
applicable laws, rules, and regulations, listing requirements, or
other
obligations. The foregoing notwithstanding, in connection with a
Corporate
Transaction, the Company shall take or cause to be taken no action,
and
shall undertake or permit to arise no legal or contractual obligation,
that results or would result in any postponement of the issuance
or
delivery of Stock or payment of benefits under any Award or the imposition
of any other conditions on such issuance, delivery or payment, to
the
extent that such postponement or other condition would represent
a greater
burden on a Participant than existed on the 90th day preceding the
Corporate Transaction.
|
(ii) |
If
the Participant is subject to the reporting requirements of Section
16(a)
of the Securities Exchange Act of 1934, as amended, the grant of
this
Option shall not be effective until such person complies with the
reporting requirement of Section
16(a).
|
(b) |
Limits
on Transferability; Beneficiaries.
|
(i) |
Awards
granted under the Plan shall not be transferable other than by will
or by
the laws of descent, and Options may be exercised as provided for
under
Section 6(b). A Beneficiary, transferee, or other person claiming
any
rights under the Plan from or through any Participant (except in
the case
of an Option which is governed by Section 6(b)) shall be subject
to all
terms and conditions of the Plan and any Award Agreement applicable
to
such Participant, except as otherwise determined by the Committee,
and to
any additional terms and conditions deemed necessary or appropriate
by the
Committee. Any attempted sale, pledge, assignment, hypothecation
or other
transfer of an Award contrary to the provisions hereof and the levy
of any
execution, attachment or similar process upon an Award shall be null
and
void and without force or effect and shall result in automatic termination
of the Award.
|
(ii) |
(A)
As a condition to the transfer of any shares of Stock issued upon
exercise
of an Award granted under this Plan, the Company may require an opinion
of
counsel, satisfactory to the Company, to the effect that such transfer
will not be in violation of the Securities Act of 1933 or any other
applicable securities laws or that such transfer has been registered
under
federal and all applicable state securities laws; (B) further, the
Company
shall be authorized to refrain from delivering or transferring shares
of
Stock issued under this Plan until the Board determines that such
delivery
or transfer will not violate applicable securities laws and the
Participant has tendered to the Company any federal, state or local
tax
owed by the Participant as a result of exercising the Award, or disposing
of any Stock, when the Company has a legal liability to satisfy such
tax;
(C) the Company shall not be liable for damages due to delay in the
delivery or issuance of any stock certificate for any reason whatsoever,
including, but not limited to, a delay caused by listing requirements
of
any securities exchange or any registration requirements under the
Securities Act of 1933, the Securities Exchange Act of 1934, or under
any
other state or federal law, rule or regulations; (D) the Company
is under
no obligation to take any action or incur any expense in order to
register
or qualify the delivery or transfer of shares of Stock under applicable
securities laws or to perfect any exemption from such registration
or
qualification; and (E) furthermore, the Company will have no liability
to
any Participant for refusing to deliver or transfer shares of Stock
if
such refusal is based upon the foregoing provisions of this
Paragraph.
|
(c) |
Effect
of Certain Changes.
In
the event of any merger, reorganization, consolidation, recapitalization,
share dividend, share split, combination of shares or other change
in
corporate structure of the Company affecting the Stock, such substitution
or adjustment shall be made in the aggregate number of Stock reserved
for
issuance under the Plan, in the number and option price of Stock
subject
to outstanding Options granted under the Plan, in the number and
purchase
price of Stock subject to outstanding Award Agreements granted under
the
Plan, including the number of SARs, the number of shares of Restricted
Stock, and any other outstanding Awards granted under the Plan as
may be
approved by the Committee, in its sole discretion, but the number
of Stock
subject to any Award shall always be a whole number. Any fractional
shares
shall be eliminated. Notwithstanding the foregoing, any event that
results
in a reorganization, consolidation, recapitalization, share dividend,
share split, combination of shares or other change in corporate structure
of the Company that affects the Company’s Stock, any substitution or
adjustment of the number of shares of Stock underlying the applicable
Award shall be done in accordance with Treasury Regulation Section
1.409A-1(b)(5), so that such Award does not result in an extension,
modification, or renewal, as such terms are defined under Code Section
409A.
|
(d) |
Tax
Provisions.
|
(i) |
Withholding.
The Committee shall so require, as a condition of exercise, each
Participant to agree that: (A) no later than the date of exercise
of any
Option granted hereunder, the optionee will pay to the Company or
make
arrangements satisfactory to the Committee regarding payment of any
federal, state or local taxes of any kind required by law to be withheld
upon the exercise of such Option; and (B) the Company shall, to the
extent
permitted or required by law, have the right to deduct federal, state
and
local taxes of any kind required by law to be withheld upon the exercise
of such Option from any payment of any kind otherwise due to the
optionee.
For withholding tax purposes, the shares of Stock shall be valued
on the
date the withholding obligations are incurred. The Company shall
not be
obligated to advise any optionee of the existence of any such tax
or the
amount that the Company will be so required to
withhold.
|
(ii) |
Required
Consent to and Notification of Code Section 83(b) Election.
No election under Code Section 83(b) or under a similar provision
of the
laws of a jurisdiction outside the United States may be made unless
expressly permitted by the terms of the Award Agreement or by action
of
the Committee in writing prior to the making of such election. In
any case
in which a Participant is permitted to make such an election in connection
with an Award, the Participant shall notify the Company of such election
within ten days of filing notice of the election with the Internal
Revenue
Service or other governmental authority, in addition to any filing
and
notification required pursuant to regulations issued under Code Section
83(b) or other applicable
provision.
|
(iii) |
Requirement
of Notification upon Disqualifying Disposition under Code Section
421(b).
If any Participant shall make any disposition of shares of Stock
delivered
pursuant to the exercise of an ISO under the circumstances described
in
Code Section 421(b) (i.e., a disqualifying disposition), such Participant
shall notify the Company of such disposition within ten days
thereof.
|
(iv) |
Right
to Contest.
The Company shall have the right, but not the obligation, to contest,
at
its expense, any tax ruling or decision, administrative or judicial,
on
any issue which is related to the Plan and which the Board believes
to be
important to holders of Options issued under the Plan and to conduct
any
such contest or any litigation arising therefrom to a final
decision.
|
(e) |
Changes
to the Plan.
The Board at any time and from time to time may suspend, terminate,
modify
or amend the Plan; provided, however, that any amendment that would:
(i)
materially increase the benefits accruing to Participants under the
Plan,
or (ii) increase the number of shares of Stock as to which Awards
may be
granted under the Plan or materially modify the requirements as to
eligibility for participation in the Plan shall be subject to the
approval
of a majority of the stockholders of the Company presented or represented
and entitled to vote at a duly constituted and held meeting of
stockholders. Any such increase or modification that may result from
adjustments authorized by Section 10(c) hereof shall not require
such
approval. Except as otherwise provided, no suspension, termination,
modification or amendment of the Plan may adversely affect any Award
previously granted, unless the written consent of the Participant
is
obtained.
|
(f) |
Unfunded
Status of Awards, Creation of Trusts. The
Plan is intended to constitute an “unfunded”
plan for equity incentive compensation. With respect to any payments
not
yet made to a Participant or obligations to deliver Stock pursuant
to an
Award, nothing contained in the Plan or any Award shall give any
such
Participant any rights that are greater than those of a general creditor
of the Company; provided that the Committee may authorize the creation
of
trusts and deposit therein cash, Stock, other Awards or other property,
or
make other arrangements to meet the Company’s obligations under the Plan.
Such trusts or other arrangements shall be consistent with the
“unfunded”
status of the Plan unless the Committee otherwise
determines.
|
(g) |
Nonexclusivity
of the Plan.
Neither
the adoption of the Plan by the Board nor its submission to the
stockholders of the Company for approval shall be construed as creating
any limitations on the power of the Board or a committee thereof
to adopt
such other incentive or compensation arrangements, apart from the
Plan, as
it may deem desirable, including incentive or compensation arrangements
and awards that do not qualify under Code Section 162(m) or to which
Code
Section 409A does apply, and such other arrangements may be either
applicable generally or only in specific
cases.
|
(h) |
Payments
in the Event of Forfeitures; Fractional Shares. Unless
otherwise determined by the Committee, in the event of a forfeiture
of an
Award with respect to which a Participant paid cash consideration,
the
Participant shall be repaid the amount of such cash consideration.
No
fractional shares of Stock shall be issued or delivered pursuant
to the
Plan or any Award. The Committee shall determine whether cash, other
Awards or other property shall be issued or paid in lieu of such
fractional shares or whether such fractional shares or any rights
thereto
shall be forfeited or otherwise
eliminated.
|
(i) |
Compliance
with Code Section 162(m).
|
(i) |
It
is the intent of the Company that Options and SARs granted to Covered
Employees and other Awards designated as Awards to Covered Employees
shall
constitute qualified “performance-based
compensation”
within the meaning of Code Section 162(m) unless otherwise determined
by
the Committee at the time of the Award grant. The foregoing
notwithstanding, because the Committee cannot determine with certainty
whether a given Participant will be a Covered Employee with respect
to a
fiscal year that has not yet been completed, the term Covered Employee
as
used herein shall mean only a person designated by the Committee
as likely
to be a Covered Employee with respect to a specified fiscal year.
If any
provision of the Plan or any Award Agreement relating to an Award
that is
designated as intended to comply with Code Section 162(m) does not
comply
or is inconsistent with the requirements of Code Section 162(m),
such
provision shall be construed or deemed amended to the extent necessary
to
conform to such requirements, and no provision shall be deemed to
confer
upon the Committee or any other person discretion to increase the
amount
of compensation otherwise payable in connection with any such Award
upon
attainment of the applicable performance
objectives.
|
(ii) |
Notwithstanding
any other provision of this Plan to the contrary, the Company may
delay
the payment of any amount otherwise due to the Participant under
this Plan
if the Company reasonably anticipates that its deduction resulting
from
such payment, either alone or in combination with any other amounts
to be
paid or provided to under any section of this Plan or any Award Agreement
associated with the Plan, would be reduced or eliminated by the Code
Section 162(m) deduction limitation; provided, however, that the
Company
shall make payments to the Participant at the earliest date at which
the
Company believes the Code Section 162(m) deduction limitation will
no
longer reduce or eliminate the Company’s deduction for such
payments.
|
(j) |
Governing
Law. The
validity, construction, and effect of the Plan, any rules and regulations
relating to the Plan and any Award Agreement shall be determined
in
accordance with the laws of the State of Delaware, without giving
effect
to principles of conflicts of laws, and applicable provisions of
federal
law.
|
(k) |
Limitation
on Rights Conferred Under Plan. Neither
the Plan nor any action taken hereunder shall be construed as (i)
giving
any Eligible Person or Participant the right to continue as an Eligible
Person or Participant or in the employ or service of the Company
or a
Subsidiary or Affiliate, (ii) interfering in any way with the right
of the
Company or a Subsidiary or Affiliate to terminate any Eligible Person’s or
Participant’s employment or service at any time (subject to the terms and
provisions of any separate written agreements), (iii) giving an Eligible
Person or Participant any claim to be granted any Award under the
Plan or
to be treated uniformly with other Participants and employees, or
(iv)
conferring on a Participant any of the rights of a stockholder of
the
Company unless and until the Participant is duly issued or transferred
shares of Stock in accordance with the terms of an Award. Any Award
shall
not be deemed compensation for purposes of computing benefits under
any
retirement plan of the Company or any Subsidiary or Affiliate and
shall
not affect any benefits under any other benefit plan under which
the
availability or amount of benefits is related to the level of compensation
(unless required by any such other plan or arrangement with specific
reference to Awards under this
Plan).
|
(l) |
Termination
of Right of Action.
Every right of action arising out of or in connection with the Plan
by or
on behalf of the Company or of any Subsidiary or Affiliate, or by
any
stockholder of the Company or of any Subsidiary or Affiliate against
any
past, present or future member of the Board, or against any employer,
or
by an employee (past, present or future) against the Company or any
Subsidiary or Affiliate will, irrespective of the place where an
action
may be brought and irrespective of the place of residence of any
such
stockholder, director or employee, cease and be barred as of the
expiration of three years from the date of the act or omission in
respect
of which such right of action is alleged to have
risen.
|
(m) |
Assumption.
The
terms and conditions of any outstanding Awards granted pursuant to
this
Plan shall be assumed by, be binding upon and inure to the benefit
of any
successor company to the Company and shall continue to be governed
by, to
the extent applicable, the terms and conditions of this Plan. Such
successor Company shall not be otherwise obligated to assume this
Plan.
|
(n) |
Severability;
Entire Agreement. If
any of the provisions of this Plan or any Award document is finally
held
to be invalid, illegal or unenforceable (whether in whole or in part),
such provision shall be deemed modified to the extent, but only to
the
extent, of such invalidity, illegality or unenforceability, and the
remaining provisions shall not be affected thereby; provided, that,
if any
of such provisions is finally held to be invalid, illegal, or
unenforceable because it exceeds the maximum scope determined to
be
acceptable to permit such provision to be enforceable, such provision
shall be deemed to be modified to the minimum extent necessary to
modify
such scope in order to make such provision enforceable hereunder.
The Plan
and any Award Agreements contain the entire agreement of the parties
with
respect to the subject matter thereof and supersede all prior agreements,
promises, covenants, arrangements, communications, representations
and
warranties between them, whether written or oral with respect to
the
subject matter thereof. No rule of strict construction shall be applied
against the Company, the Committee, or any other person in the
interpretation of any terms of the Plan, Award, or agreement or other
document relating thereto.
|
(o) |
Plan
Effective Date.
The Plan will become effective if, and at such time as, the stockholders
of the Company have approved it by the affirmative votes of the holders
of
a majority of the voting securities of the Company present, or
represented, and entitled to vote on the subject matter at a duly
held
meeting of stockholders, provided that the total vote cast on the
proposal
represents over 50 percent in interest of all securities entitled
to vote
on the proposal. The date of such stockholder approval will be the
Effective Date. Unless earlier terminated by action of the Board,
the
authority of the Committee to make grants under the Plan will terminate
on
the date that is ten years after the latest date upon which stockholders
of the Company have approved the Plan and the Plan will remain in
effect
until such time as the Company has no further rights or obligations
with
respect to outstanding Awards or otherwise under the
Plan.
|
(p) |
Adoption.
|
(1)
|
(INSTRUCTIONS:
To withhold authority to vote for any individual nominee, strike
a line
through the nominee's name listed below)
|
o
FOR
all
nominees listed herein (except as marked up to the contrary below).
|
o
WITHHOLD AUTHORITY to
vote for all nominees listed below.
|
||
|
01-Christopher
J. Reed
04-Dr.
D.S.J. Muffoletto, N.D.
|
02-Judy
Holloway Reed
05-Michael
Fischman
|
03-Mark
Harris
|
||
(2)
|
To
consider and vote upon an amendment to our certificate of incorporation
to
increase the authorized number of shares of common stock from 11,500,000
shares to 19,500,000 shares.
|
||||
|
o
FOR
|
o
AGAINST
|
o
ABSTAIN
|
|
|
(3)
|
To
adopt our 2007 Stock Incentive Plan (the “2007 Plan”) and to reserve up to
1,500,000 shares of common stock for issuance under the 2007
Plan.
|
||||
|
o
FOR
|
o
AGAINST
|
o
ABSTAIN
|
|
|
PLEASE
MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED,
PRE-PAID ENVELOPE.
|
Please
date and execute this Proxy exactly as your name appears hereon.
When
shares are held by joint tenants, both should sign. When signing
as
attorney, executor, administrator, trustee or guardian, please
give full
title as such. If a corporation, please sign in full corporate
name by the
president or other authorized officer. If a partnership, please
sign in
partnership name by authorized
person.
|