Incentive Compensation Plan - Hurray! Holding Co. Ltd.
HURRAY! HOLDING CO., LTD.
2002 INCENTIVE COMPENSATION PLAN
(CHINA PLAN)
1. Purposes of the Plan. The purposes of this Incentive Compensation Plan
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are to attract and retain the best available personnel, to provide additional
incentive to Employees, Directors and Consultants and to promote the success of
the Company's business.
2. Definitions. As used herein, the following definitions shall apply:
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2.1 "Administrator" means the Board or any of the Committees appointed
to administer the Plan.
2.2 "Applicable Laws" means the legal requirements relating to the
administration of share incentive plans, if any, under applicable provisions of
the U.S. federal securities laws, the U.S. state corporate and securities laws,
the Code, the rules of any applicable stock exchange or national market system,
and the laws and rules of any jurisdiction outside the U.S. applicable to Awards
granted to residents therein.
2.3 "Award" means the grant of an Option or SAR, or Restricted Shares.
2.4 "Award Agreement" means the written agreement evidencing the grant
of an Award executed by the Company and the Grantee, including any amendments
thereto.
2.5 "Board" means the Board of Directors of the Company.
2.6 "Code" means the U.S. Internal Revenue Code of 1986, as amended.
2.7 "Committee" means any committee appointed by the Board to
administer the Plan, provided that the Committee shall consist of not fewer than
two (2) members of the Board and shall, following the Registration Date and,
solely to the extent required to comply with Applicable Laws, be composed of
"non-employee" directors within the meaning of Rule 16b-3 as promulgated under
the Exchange Act and "outside directors" within the meaning of the Code. To the
extent the Plan is administered by the Board, the term "Committee" shall refer
to the Board.
2.8 "Common Share" means a share of US$0.001 nominal or par value, of
the Company, or, if applicable, the number or fraction of American Depositary
Receipt representing a Common Share.
2.9 "Company" means Hurray! Holding Co., Ltd., a company incorporated
under the laws of the Cayman Islands.
2.10 "Consultant" means any person (other than an Employee or a
Director) who is engaged by the Company or any Related Entity to render
consulting or advisory services to the Company
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or such Related Entity or any other selective persons the Administrator
determines provides, directly or indirectly, bona fide value to the Company or
any Related Entity.
2.11 "Continuous Service" means that the provision of services to the
Company or a Related Entity in any capacity of Employee, Director or Consultant,
is not interrupted or terminated. Continuous Service shall not be considered
interrupted in the case of (i) any approved leave of absence, (ii) transfers
among the Company, any Related Entity, or any successor, in any capacity of
Employee, Director or Consultant, or (iii) any change in status as long as the
individual remains in the service of the Company or a Related Entity in any
capacity of Employee, Director or Consultant (except as otherwise provided in
the Award Agreement). An approved leave of absence shall include sick leave,
maternity leave, or any other authorized personal leave. For purposes of
Incentive Share Options, no such leave may exceed ninety (90) days, unless
re-employment upon expiration of such leave is guaranteed by statute or
contract.
2.12 "Corporate Transaction" means any of the following transactions
to which the Company is a party:
(i) a merger or consolidation or reorganization in which the
Company is not the surviving entity; or
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company (including the share capital of
the Company's Subsidiaries).
2.13 "Director" means a member of the Board or the board of directors
of any Related Entity.
2.14 "Disability" means that a Grantee is permanently unable to carry
out the responsibilities and functions of the position held by the Grantee by
reason of any medically determinable physical or mental impairment as determined
by the Administrator. A Grantee will not be considered to have incurred a
Disability unless he or she furnishes proof of such impairment sufficient to
satisfy the Administrator in its discretion.
2.15 "Employee" means any person, including an Officer or Director,
who is an employee of the Company or any Related Entity. The payment of an
independent director's fee by the Company or a Related Entity shall not be
sufficient to constitute "employment" of such person by the Company.
2.16 "Exchange Act" means the U.S. Securities Exchange Act of 1934, as
amended.
2.17 "Fair Market Value" means, as of any date, the value of Common
Shares as follows:
(a) Where there exists a public market for the Common Shares, the
Fair Market Value shall be (i) the closing price for a Share for the last market
trading day prior to the time of the determination (or, if no closing price was
reported on that date, on the last trading date on which a closing price was
reported) on the stock exchange determined by the Administrator to be the
primary market for the Common Shares or the Nasdaq National Market, whichever is
applicable, or (ii) if the Common Shares are not traded on any such exchange or
national market system, the average of the
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closing bid and asked prices of a Share on the Nasdaq Small Cap Market for the
day prior to the time of the determination (or, if no such prices were reported
on that date, on the last date on which such prices were reported), in each
case, as reported in The Wall Street Journal or such other source as the
Administrator deems reliable; or
(b) In the absence of an established market for the Common Shares
of the type described in (a), above, the Fair Market Value thereof shall be
determined by the Administrator in good faith by reference to the placing price
of the latest private placement of the Shares and the development of the
Company's business operations since such latest private placement.
2.18 "Grantee" means an Employee, Director or Consultant who receives
an Award under the Plan.
2.19 "Immediate Family" 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, including adoptive relationships, any person sharing the
Grantee's household (other than a tenant or employee), a trust in which these
persons (or the Grantee) have more than fifty percent (50%) of the beneficial
interest, a foundation in which these persons (or the Grantee) control the
management of assets, and any other entity in which these persons (or the
Grantee) own more than fifty percent (50%) of the voting interests.
2.20 "Incentive Share Option" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code.
2.21 "Liquidation Event" means a complete dissolution or liquidation
of the Company.
2.22 "Non-Statutory Share Option" means an Option not intended to
qualify as an Incentive Share Option.
2.23 "Officer" means a person who is an officer of the Company or a
Related Entity within the meaning of Section 16 of the Exchange Act and the
rules and regulations promulgated thereunder or, to the extent applicable, other
Applicable Laws.
2.24 "Option" means an option to purchase Shares pursuant to an Award
Agreement granted under the Plan.
2.25 "Parent" means a "parent corporation", whether now or hereafter
existing, as defined in Section 424(e) of the Code or, to the extent applicable,
other Applicable Laws.
2.26 "Plan" means this 2002 Incentive Compensation Plan.
2.27 "Registration Date" means the first to occur of (a) the closing
of the first sale to the general public of (i) the Common Shares or (ii) the
same class of securities of a successor corporation (or its Parent) issued
pursuant to a Corporate Transaction in exchange for or in substitution of the
Common Shares, pursuant to a registration statement filed with and declared
effective by the Securities and Exchange Commission under the Securities Act or
an equivalent thereof in a jurisdiction outside the U.S.; and (b) in the event
of a Corporate Transaction, the date of the consummation of the Corporate
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Transaction if the same class of securities of the successor corporation (or its
Parent) issuable in such Corporate Transaction shall have been sold to the
general public pursuant to a registration statement filed with and declared
effective by the Securities and Exchange Commission under the Securities Act or
an equivalent thereof in a jurisdiction outside the U.S., on or prior to the
date of consummation of such Corporate Transaction.
2.28 "Related Entity" means any Parent, Subsidiary and any other
corporation, partnership, limited liability company or other business entity in
which the Company, its Parent or a Subsidiary holds a substantial ownership
interest, directly or indirectly.
2.29 "Restricted Shares" mean Common Shares issued to a Grantee under
this Plan.
2.30 "Securities Act" means the U.S. Securities Act of 1933, as
amended.
2.31 "SAR" means a Share Appreciation Right granted to a Grantee under
this Plan.
2.32 "Shares" mean Common Shares of the Company.
2.33 "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code or, to the extent
applicable, other Applicable Laws.
3. Shares Subject to the Plan.
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3.1 Subject to the provisions of Section 10.1 below, the maximum
aggregate number of Shares which may be issued pursuant to all Awards (including
Incentive Share Options) under this Plan and other similar plans adopted by the
Company is 5,000,000 Shares.
3.2 Any Shares covered by an Award (or portion of an Award) which is
forfeited or cancelled, expires or is settled in cash or otherwise, shall be
deemed not to have been issued for purposes of determining the maximum aggregate
number of Shares which may be issued under the Plan. If any unissued Shares are
retained by the Company upon exercise of an Award in order to satisfy the
exercise price for such Award or any withholding taxes due with respect to such
Award, such retained Shares subject to such Award shall become available for
future issuance under the Plan (unless the Plan has terminated). Shares that
actually have been issued under the Plan pursuant to an Award shall not be
returned to the Plan and shall not become available for future issuance under
the Plan.
4. Administration of the Plan.
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4.1 Plan Administrator. With respect to grants of Awards to Employees,
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Directors, or Consultants, the Plan shall be administered by (a) the Board or
(b) a Committee (or a subcommittee of the Committee) designated by the Board,
which Committee shall be constituted in such a manner as to satisfy Applicable
Laws. Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board.
4.2 Powers of the Administrator. Subject to Applicable Laws and the
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provisions of the Plan (including any other powers given to the Administrator
hereunder), and except as otherwise provided by the Board, the Administrator
shall have the authority, in its discretion:
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(a) to select the Employees, Directors and Consultants to whom
Awards may be granted from time to time hereunder;
(b) to determine whether and to what extent Awards are granted
hereunder;
(c) to determine the number of Shares or the amount of other
consideration to be covered by each Award granted hereunder;
(d) to approve forms of Award Agreements for use under the Plan;
(e) to determine the terms and conditions of any Award granted
hereunder;
(f) to establish additional terms, conditions, rules or
procedures to accommodate the rules or laws of applicable foreign jurisdictions
and to afford Grantees favorable treatment under such rules or laws; provided,
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however, that no Award shall be granted under any such additional terms,
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conditions, rules or procedures with terms or conditions which are inconsistent
with the provisions of the Plan;
(g) to amend the terms of any outstanding Award granted under the
Plan, and to reduce the exercise price of any Option or SAR to the then current
Fair Market Value if the Fair Market Value of the Shares covered by such Award
shall have declined since the date the Award was granted and to make any other
amendments or adjustments to any Award that the Administrator determines, in its
discretion and under the authority granted to it under this Plan, to be
necessary or advisable, provided that the exercise price shall never fall below
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the nominal or par value of the Shares, and that any such amendment or
adjustment that would adversely affect the Grantee's rights under an outstanding
Award shall not be made without the Grantee's written consent;
(h) to construe and interpret the terms of the Plan and Awards,
including without limitation, any notice of Award or Award Agreement, granted
pursuant to the Plan; and
(i) to take such other action, not inconsistent with the terms of
the Plan, as the Administrator deems appropriate.
5. Eligibility. Incentive Share Options may be granted only to Employees of
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the Company, a Parent or a Subsidiary. Awards other than Incentive Share Options
may be granted to Employees, Directors and Consultants. An Employee, Director or
Consultant who has been granted an Award may, if otherwise eligible, be granted
additional Awards. Awards may be granted to such Employees, Directors or
Consultants who are residing in foreign jurisdictions as the Administrator may
determine from time to time.
6. Type of Awards; Terms and Conditions of Awards. Awards under the Plan
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may consist of one or more of the following: Options, SARs, or Restricted Shares
(which may be granted as Restricted Share units). Awards of Restricted Shares
may provide the Grantee with dividends or dividend equivalents and voting rights
prior to vesting. Each Award shall be designated in the Award Agreement.
6.1 Options.
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(a) Option Designation. In the case of an Option, the Option
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shall be designated as either an Incentive Share Option or a Non-Statutory Share
Option. However,
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notwithstanding such designation, to the extent that the aggregate Fair Market
Value of Shares subject to Options designated as Incentive Share Options which
become exercisable for the first time by a Grantee during any calendar year
(under all plans of the Company or any of its Parent or Subsidiary) exceeds
US$100,000, such excess Options, to the extent of the Shares covered thereby in
excess of the foregoing limitation, shall be treated as Non-Statutory Share
Options. For this purpose, Incentive Share Options shall be taken into account
in the order in which they were granted, and the Fair Market Value of the Shares
shall be determined as of the grant date of the relevant Option.
(b) Option Exercise Price. The exercise price of an Option shall
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be as follows:
(i) In the case of an Incentive Share Option:
(A) granted to an Employee who, at the time of the
grant of such Incentive Share Option owns shares representing more than ten
percent (10%) of the voting power of all classes of shares of the Company or any
Parent or Subsidiary, the per Share exercise price shall be not less than one
hundred ten percent (110%) of the Fair Market Value per Share on the date of
grant; or
(B) granted to any Employee other than an Employee
described in the preceding paragraph, the per Share exercise price shall be not
less than one hundred percent (100%) of the Fair Market Value per Share on the
date of grant.
(ii) In the case of a Non-Statutory Share Option:
(A) granted to a person who, at the time of the grant
of such Non-Statutory Share Option owns shares representing more than ten
percent (10%) of the voting power of all classes of shares of the Company or any
Parent or Subsidiary, the per Share exercise price shall be not less than one
hundred percent (100%) of the Fair Market Value per Share on the date of grant;
or
(B) granted to a person other than a person described
in the preceding paragraph, the per Share exercise price shall be not less than
eighty five percent (85%) of the Fair Market Value per Share on the date of
grant.
(iii) Notwithstanding the foregoing provisions of this
Section 6.1(b), in the case of an Option issued pursuant to Section 6.5, below,
the exercise or purchase price for the Option shall be determined in accordance
with the principles of Section 424(a) of the Code or other Applicable Law.
(iv) Notwithstanding the foregoing provisions of this
Section 6.1(b) if the exercise price determined pursuant to the forgoing shall
fall below the nominal or par value of the Shares, the exercise price for an
Option shall be the nominal or par value of the Shares.
(c) Consideration. In addition to any other types of
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consideration the Administrator may determine, the Administrator is authorized
to accept as consideration for Shares issued under the Plan the following: (i)
cash or check in U.S. dollars (in connection therewith the Administrator may
require the Grantee to provide evidence that the funds were taken out of any
relevant non-U.S. jurisdiction in accordance with applicable foreign exchange
control laws and regulations); (ii) cancellation of indebtedness owed by the
Company to the Grantee; (iii) promissory note; (iv) Shares previously acquired
by the Grantee valued at the Fair Market Value at the time of the exercise; (v)
withholding from
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delivery to the Grantee that number of whole Shares having a Fair Market Value
at the time of the exercise equal to the exercise price payable to the Company
upon exercise of the Option; or (vi) any combination of the foregoing methods of
payment.
(d) Easy-Sale Exercise.
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(i) Exercise/Sale. An Award Agreement may, but need not,
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provide that, if Shares are publicly traded, all or part of the exercise price
of an Option and any withholding taxes may be paid by the delivery (on a form
prescribed by the Company) of an irrevocable direction to a securities broker
approved by the Company to sell Shares and to deliver all or part of the sales
proceeds to the Company.
(ii) Exercise/Pledge. An Award Agreement may, but need not,
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provide that, if Shares are publicly traded, all or part of the exercise price
of an Option and any withholding taxes may be paid by the delivery (on a form
prescribed by the Company) of an irrevocable direction to pledge Shares to a
securities broker or lender approved by the Company, as security for a loan, and
to deliver all or part of the loan proceeds to the Company.
6.2 SARs.
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(a) Grant. SARs may be granted in tandem with an Option, in
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addition to an Option, or may be freestanding and unrelated to an Option. SARs
granted in tandem or in addition to a Option may be granted either at the same
time as the Option or at a later time. SARs shall vest and become exercisable at
a rate determined by the Administrator, and shall remain exercisable for such
period as specified by the Administrator. A SAR shall entitle the Grantee to
receive from the Company an amount equal to the excess of the Fair Market Value
of a Share on the exercise of the SAR over the Fair Market Value of a Share on
the date of grant or, in the case of an SAR granted in tandem with an Option,
the per Share exercise price applicable to such Option.
(b) Settlement. The Administrator shall determine in its sole
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discretion whether the SAR shall be settled in cash, Shares or a combination of
cash and Shares. In no event may any Grantee receive grants of SARs with respect
to more than 250,000 Shares in any calendar year.
6.3 Restricted Shares.
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(a) Grant. Restricted Shares may be granted in the form of Shares
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or share units having a value equal to an identical number of Shares. The
employment conditions and the length of the period for vesting of Restricted
Shares shall be established by the Administrator at time of grant. In the event
that a share certificate is issued in respect of Restricted Shares, such
certificate shall be registered in the name of the Grantee but shall be held by
the Company until the end of the restricted period. During the restricted
period, Restricted Shares may not be sold, assigned, transferred or otherwise
disposed of, or pledged or hypothecated as collateral for a loan or as security
for the performance of any obligation or for any other purpose as the
Administrator shall determine.
(b) Settlement. The Administrator shall determine in its sole
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discretion whether Restricted Shares granted in the form of share units shall be
paid in cash, Shares, or a combination of cash and Shares.
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6.4 Conditions of Award; Vesting and Repurchase Right. Subject to the
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terms of the Plan, the Administrator shall determine the provisions, terms, and
conditions of each Award including, but not limited to, the Award vesting
schedule, repurchase provisions, rights of first refusal, forfeiture provisions,
form of payment (cash, Shares, or other consideration) upon settlement of the
Award, payment contingencies, and satisfaction of any performance criteria,
provided, however, unless specifically provided otherwise in the relevant Award
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Agreement, one third (1/3rd) of the Award shall vest at each of 1st, 2nd, and
3rd anniversaries following the issuance of such Award so long as the Grantee
provides Continuous Service to the Company.
6.5 Acquisitions and Other Transactions. The Administrator may issue
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Awards under the Plan in settlement, assumption or substitution for, outstanding
Awards or obligations to grant future Awards in connection with the Company or a
Related Entity acquiring another entity, an interest in another entity or an
additional interest in a Related Entity whether by merger, share purchase, asset
purchase or other form of transaction.
6.6 Deferral of Award Payment. The Administrator may establish one or
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more programs under the Plan to permit selected Grantees the opportunity to
elect to defer receipt of consideration upon exercise of an Award, satisfaction
of performance criteria, or other event that absent the election would entitle
the Grantee to payment or receipt of Shares or other consideration under an
Award. The Administrator may establish the election procedures, the timing of
such elections, the mechanisms for payments of, and accrual of interest or other
earnings, if any, on amounts, Shares or other consideration so deferred, and
such other terms, conditions, rules and procedures that the Administrator deems
advisable for the administration of any such deferral program.
6.7 Award Exchange Programs. The Administrator may establish one or
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more programs under the Plan to permit selected Grantees to exchange an Award
under the Plan for one or more other types of Awards under the Plan on such
terms and conditions as determined by the Administrator from time to time.
6.8 Separate Programs. The Administrator may establish one or more
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separate programs under the Plan for the purpose of issuing particular forms of
Awards to one or more classes of Grantees on such terms and conditions as
determined by the Administrator from time to time.
6.9 Early Exercise. The Award Agreement may, but need not, include a
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provision whereby the Grantee may elect, at any time while being an Employee,
Director or Consultant, to exercise any part or all of the Award prior to full
vesting of the Award. Any unvested Shares received pursuant to such exercise may
be subject to a repurchase right in favor of the Company or a Related Entity or
to any other restriction the Administrator determines to be appropriate.
6.10 Term of Award. The term of each Award shall be the term stated in
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the Award Agreement up to ten (10) years from the date of grant thereof, except
that in the case of an Incentive Share Option granted to a Grantee who, at the
time the Option is granted, owns Shares representing more than ten percent (10%)
of the voting power of all classes of the shares of the Company or any Parent or
Subsidiary, the term of the Incentive Share Option shall be five (5) years from
the date of grant thereof or such shorter term as may be provided in the Award
Agreement.
6.11 Transferability of Awards. No Award may be sold, pledged,
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assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Grantee, only by the Grantee; provided,
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however, during the lifetime of the Grantee, SARs may be transferred by gift to
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members of the Grantee's Immediate Family to the extent and manner determined by
the Administrator.
6.12 Time of Granting Awards. The date of grant of an Award shall for
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all purposes be the date on which the Administrator makes the determination to
grant such Award, or such other date as is determined by the Administrator.
Notice of the grant determination shall be given to each Employee, Director or
Consultant to whom an Award is so granted within a reasonable time after the
date of such grant.
6.13 Buyout Provisions. The Administrator may at any time offer to buy
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out for a payment in cash or Shares or other consideration, any Award previously
granted based on such terms and conditions as the Administrator shall establish
and communicate to the Grantee at the time such offer is made.
7. Withholding. The Company shall have the right to deduct from any payment
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to be made pursuant to the Plan the amount of any taxes required by law to be
withheld therefrom, or to require a Grantee to pay to the Company such amount
required to be withheld prior to the issuance or delivery of any Shares or the
payment of cash under the Plan. The Administrator may, in its discretion, permit
a Grantee to elect to satisfy such withholding obligation by having the Company
retain the number of Shares whose Fair Market Value equals the amount required
to be withheld. Any fraction of a Share required to satisfy such obligation
shall be disregarded and the amount due shall instead be paid in cash by the
Grantee.
8. Exercise of Award.
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8.1 Procedure for Exercise; Rights as a Shareholder.
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(a) Any Award granted hereunder shall be exercisable at such
times and under such conditions as determined by the Administrator under the
terms of the Plan and specified in the Award Agreement.
(b) An Award shall be deemed to be exercised when written notice
of such exercise has been given to the Company, as in a form required under the
applicable Award Agreement, in accordance with the terms of the Award by the
person entitled to exercise the Award and full payment for the Shares is made
with respect to which the Award is exercised. Until the issuance (as evidenced
by the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company) of the share certificate evidencing such Shares,
no right to vote or receive dividends or any other rights as a shareholder shall
exist with respect to Shares subject to an Award, notwithstanding the exercise
of an Option or other Award. The Company shall issue (or cause to be issued)
such share certificate as soon as practicable following the exercise of the
Award. No adjustment will be made for a dividend or other right for which the
record date is prior to the date the share certificate is issued, except as
provided in the Award Agreement or Section 10, below.
8.2 Exercise of Option or SAR Following Termination of Continuous
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Service. If the Grantee's Continuous Service is terminated for any reason other
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than death or Disability, such Grantee shall have the right to exercise the
Option or SAR at any time within thirty (30) days (or such other period of time
not exceeding three (3) months as is determined by the Administrator at the time
of granting the Option), following the date such Grantee ceases his or her
Continuous Service to the extent that such Grantee was entitled to exercise the
Option or SAR at the date of such termination; provided,
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however, that no Option or SAR shall be exercisable after the expiration of the
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term set forth in the applicable Award Agreement. To the extent that such
Grantee was not entitled to exercise the Option or SAR at the date of such
termination, or if such Grantee does not exercise such Option or SAR (which such
Grantee was entitled to exercise) within the time specified herein, the Option
or SAR shall terminate.
8.3 Death or Disability of Grantee. If a Grantee's Continuous Service
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is terminated due to death or Disability, the Option or SAR may be exercised at
any time within six (6) months following the date of death or termination of
employment due to Disability, in the case of death, by the Grantee's estate or
by a person who acquired the right to exercise the Option or SAR by bequest or
inheritance, or, in the case of Disability, by the Grantee, but in any case only
to the extent the Grantee was entitled to exercise the Option or SAR at the date
of his or her termination of Continuous Service by death or Disability;
provided, however, that no Option or SAR shall be exercisable after the
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expiration of the term set forth in the Award Agreement. To the extent that such
Grantee was not entitled to exercise such Option or SAR at the date of his or
her termination of employment by death or Disability or if such Option or SAR is
not exercised (to the extent it could be exercised) within the time specified
herein, the Option or SAR shall terminate.
8.4 Extension of Time to Exercise. Notwithstanding anything to the
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contrary in this Section 8, the Administrator may at any time and from time to
time prior to the termination of a Nonstatutory Share Option, with the consent
of the Grantee, extend the period of time during which the Grantee may exercise
his or her Nonstatutory Share Option following the date the Grantee's ceases
Continuous Services; provided, however, that (a) the maximum period of time
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during which a Nonstatutory Share Option shall be exercisable following such
termination date shall not exceed an aggregate of six (6) months, (b) the
Nonstatutory Share Option shall not become exercisable after the expiration of
the term of such Option as set forth in the Award Agreement as a result of such
extension, and (c) notwithstanding any extension of time during which the
Nonstatutory Share Option may be exercised, such Option, unless otherwise
amended by the Administrator, shall only be exercisable to the extent to which
the Optionee was entitled to exercise it on the date Grantee ceased Continuous
Services. To the extent that such Grantee was not entitled to exercise the
Option at the date of such termination, or if such Grantee does not exercise an
Option which Grantee was entitled to exercise within the time specified herein,
the Option shall terminate.
9. Conditions Upon Issuance of Shares.
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9.1 No Violation of Law. Shares shall not be issued pursuant to an
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Award or the exercise of an Award unless the exercise of such Award and the
issuance and delivery of such Shares pursuant thereto shall comply with all
Applicable Laws, and the Administrator may further subject any issuance of
Shares to the approval of counsel for the Company with respect to such
compliance.
9.2 Execution of Documents. As a condition to the exercise of an
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Award, the Administrator may require the person exercising such Award to execute
an investment representation statement acceptable to the Company or a share
purchase agreement acceptable to the Company, each in forms approved by the
Administrator from time to time, in addition to the any other instrument the
Administrator deems necessary or advisable.
10. Adjustments Upon Changes in Capitalization or Corporate Transaction.
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10.1 Adjustments upon Changes in Capitalization. Subject to any
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required action by the shareholders of the Company, the number of Shares covered
by each outstanding Award, and the
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number of Shares which have been authorized for issuance under the Plan but as
to which no Awards have yet been granted or which have been returned to the
Plan, the exercise or purchase price of each such outstanding Award, as well as
any other terms that the Administrator determines require adjustment shall be
proportionately adjusted for (a) any increase or decrease in the number of
issued Shares resulting from a share split, reverse share split, share dividend,
combination or reclassification of the Shares, or similar transaction affecting
the Shares, (b) any other increase or decrease in the number of issued Shares
effected without receipt of consideration by the Company, or (c) as the
Administrator may determine in its discretion, any other transaction with
respect to Shares to which Section 424(a) of the Code applies or a similar
transaction; provided, however, that conversion of any convertible securities of
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the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Administrator and its
determination shall be final, binding and conclusive. Except as the
Administrator determines, no issuance by the Company of shares of any class, or
securities convertible into shares of any class, shall affect, and no adjustment
by reason hereof shall be made with respect to, the number or price of Shares
subject to an Award.
10.2 Corporate Transaction. In the event of a proposed Corporate
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Transaction, subject to the actual consummation of the proposed transaction,
each outstanding Award shall automatically become fully vested and exercisable,
unless the Award is assumed or substituted with an equivalent option or right by
the successor corporation or the Parent or Subsidiary thereof. If the successor
corporation refuses to assume or substitute for the Award, the Administrator
shall notify the Grantee that the Award shall be fully vested and exercisable
with respect to all of the Shares underlying the Award (including Shares as to
which it would not otherwise be vested or exercisable) for a period of fifteen
(15) days from the date of such notice. If the Award thus becomes fully vested
and exercisable but is not exercised during this fifteen (15) day period, it
shall terminate immediately prior to the effective time of such Corporate
Transaction. For the purposes of this Section 10.2, the Award shall be
considered assumed or substituted with an equivalent option or right if, in
connection with the Corporate Transaction, the Award is replaced with a
comparable option or right with respect to shares of the successor corporation
or Parent or Subsidiary thereof or is replaced with a cash incentive program of
the successor corporation or Parent or Subsidiary thereof which preserves the
compensation element of such Award existing at the time of the Corporate
Transaction and provides for subsequent payout in accordance with the same
vesting schedule applicable to such Award. The determination of Award
comparability above shall be made by the Administrator and its determination
shall be final, binding and conclusive.
10.3 Liquidation Event. In the event of a proposed Liquidation Event,
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the Administrator shall notify each Grantee of the proposed event at least
twenty (20) days prior to the proposed effective date of the Liquidation Event.
The Administrator in its discretion may provide for a Grantee to have the right
to exercise his or her Award until ten (10) days prior to the proposed effective
date for the Liquidation Event with respect to all Shares underlying the Award
(including Shares as to which it would not otherwise be vested or exercisable),
subject to the actual completion of the Liquidation Event at the time and in the
manner contemplated. In addition, the Administrator may provide that any Company
repurchase option applicable to any Shares issued upon grant or an exercise of
an Award shall lapse as to all Shares, subject to the actual completion of the
Liquidation Event at the time and in the manner contemplated. Any unexercised
Award shall terminate immediately prior to effective time of the Liquidation
Event.
11. Effective Date and Term of Plan. The Plan shall become effective upon
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its adoption by the Board. It shall continue in effect for a term of ten (10)
years unless sooner terminated. Subject to
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Section 17, below, and Applicable Laws, Awards may be granted under the Plan
upon its becoming effective.
12. Amendment, Suspension or Termination of the Plan. The Board may at any
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time amend, suspend or terminate the Plan. No Award may be granted during any
suspension of the Plan or after termination of the Plan. Any amendment,
suspension or termination of the Plan (including termination of the Plan
pursuant to this Section 12) shall not affect Awards already granted, and such
Awards shall remain in full force and effect as if the Plan had not been
amended, suspended or terminated, unless mutually agreed otherwise between the
Grantee and the Administrator, which agreement must be in writing and signed by
the Grantee and the Company.
13. Availability of Shares; No Issuance in Violation of Law.
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13.1 Availability of Shares. The Company, during the term of the Plan,
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will at all times keep available such number of unissued Shares as shall be
sufficient to satisfy the requirements of the Plan.
13.2 No Issuance in Violation of Law. The inability of the Company to
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obtain authority from any regulatory body having jurisdiction under Applicable
Law, which authority is deemed by the Company's counsel to be necessary to the
lawful issuance and sale of any Shares hereunder, shall relieve the Company of
any liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.
14. No Effect on Terms of Employment/Consulting Relationship. The Plan
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shall not confer upon any Grantee any right with respect to the Grantee's
Continuous Service, nor shall it interfere in any way with his or her right or
the Company's or a Related Entity's right to terminate the Grantee's Continuous
Service at any time, with or without cause.
15. No Effect on Retirement and Other Benefit Plans. Except as specifically
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required by law or provided in a retirement or other benefit plan of the Company
or a Related Entity, Awards shall not be deemed compensation for purposes of
computing benefits or contributions under any retirement plan of the Company or
a Related Entity, and shall not affect any benefits under any other benefit plan
of any kind or any benefit plan subsequently instituted under which the
availability or amount of benefits is related to level of compensation. The Plan
is not a "Retirement Plan" or "Welfare Plan" under the U.S. Employee Retirement
Income Security Act of 1974, as amended.
16. Liability of the Company; Consents.
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16.1 Qualification as Incentive Share Option. Neither the Company nor
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any Related Entity shall be liable to any Grantee or to any other person if it
is determined that an Option intended to be an Incentive Share Option granted
hereunder does not qualify as incentive stock options within the meaning of
Section 422 or the Code.
16.2 Consents. Grantee shall be responsible for obtaining any
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governmental or other official consent that may be required by any country or
jurisdiction in order to permit the grant or exercise of any Award. Neither the
Company nor any Related Entity shall be responsible for any failure by a Grantee
to obtain such consent or for any tax or other liability to which a Grantee may
become subject to as a result of his or her participation in the Plan.
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17. Shareholder Approval. The grant of Incentive Share Options under the
--------------------
Plan shall be subject to approval of the Plan by the shareholders of the Company
within twelve (12) months before or after the date the Plan is adopted by the
Board excluding Incentive Share Options issued in substitution for outstanding
Incentive Share Options pursuant to Section 424(a) of the Code. Such shareholder
approval shall be obtained in the degree and manner required under Applicable
Laws. The Administrator may grant Incentive Share Options under the Plan prior
to approval by the shareholders, but until such approval is obtained, no such
Incentive Share Option shall be exercisable. In the event that shareholder
approval is not obtained within the twelve (12) month period provided above, all
Incentive Share Options previously granted under the Plan shall be exercisable
as Non-Statutory Share Options.
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