As
filed with the Securities and Exchange Commission on February 4, 2010
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
IVEDA CORPORATION
(Exact name of Registrant as specified in its charter)
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Nevada
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98-0611159
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(State or other jurisdiction of
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(I.R.S. Employer Identification No.)
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incorporation or organization)
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1201 South Alma School Road, Suite 4450
Mesa, Arizona 85210
(Address of principal executive offices)
Iveda Corporation 2010 Stock Option Plan
(Full title of the Plan)
David Ly
Chief Executive Officer
Iveda Corporation
1201 South Alma School Road, Suite 4450
Mesa, Arizona 85210
(480) 307-8700
(Name, address and telephone number, including area code, of agent for service)
Copy to:
Stephen R. Boatwright, Esq.
Alicia M. Corbett, Esq.
Keller Rohrback, P.L.C.
3101 North Central Avenue, Suite 1400
Phoenix, Arizona 85012-2600
(602) 248-0088
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act.
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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CALCULATION OF REGISTRATION FEE
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Proposed
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Proposed
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Maximum
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Maximum
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Maximum
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Amount to be
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Offering Price
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Aggregate
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Amount of
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Title of Securities to be Registered
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Registered
(1)
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Per Share
(2)
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Offering Price
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Registration Fee
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Common Stock,
$0.00001 par value
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1,000,000
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$
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1.30
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$
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1,300,000
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$
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92.69
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(1)
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Pursuant to Rule 416(a) under the Securities Act of 1933, as amended (the
Securities Act), this Registration Statement shall also cover any additional shares of the
Registrants common stock which become issuable under the Plan by reason of any stock divided,
stock split, recapitalization or any other similar transaction effected without the
Registrants receipt of consideration which results in an increase in the number of the
Registrants outstanding shares of Common Stock.
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(2)
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Estimated in accordance with Rule 457(h) under the Securities Act of 1933 (the
Securities Act) solely for the purpose of calculating the registration fee. The computation
is based on the average of the high and low prices of the Registrants common stock, as
reported by the Over-the-Counter Bulletin Board, on January 21, 2010 (the most recent date on
which the Registrants common stock was traded).
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Proposed sale to take place as soon after the effective date of the registration statement as options under the plan are exercised.
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The information called for in Part I of Form S-8 is not being filed with or included in this
Form S-8 (by incorporation by reference or otherwise) in accordance with the rules and regulations
of the Securities and Exchange Commission (the Commission).
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
In this registration statement, Iveda Corporation is sometimes referred to as the Registrant, we, us or
our.
Item 3. Incorporation of Documents by Reference.
The Commission requires us to incorporate by reference certain of our publicly-filed
documents into this prospectus, which means that information included in those documents is
considered part of this prospectus. Information that we file with the Commission after the
effective date of this prospectus will automatically update and supersede this information.
The following documents previously filed with the Commission are hereby incorporated by
reference:
(a) Our prospectus filed with the Commission pursuant to Rule 424(b) under the Securities Act,
on August 14, 2009, relating to the registration statement on Form S-4, as amended (Registration
No. 333-159272), which contains audited financial statements for our latest fiscal year for which
such statements have been filed, including all material incorporated by reference therein.
(b) Our Quarterly Reports on Form 10-Q for the fiscal quarters ended April 30, 2009, July 31,
2009 and September 30, 2009 (filed June 16, 2009, September 14, 2009 and November 25, 2009),
including all material incorporated by reference therein.
(c) Our Current Reports on Forms 8-K and 8-K/A filed on October 21, 2009, November 2, 2009,
November 4, 2009, November 12, 2009, January 27, 2010
and February 4, 2010, including all material incorporated by
reference therein.
(d) The description of our common stock contained in our Registration Statement on Form 8-A,
filed with the Commission under Section 12(g) of the Securities Exchange Act of 1934, as amended,
(the Exchange Act) on June 18, 2008 (Registration No. 000-53285), including any amendments or
reports filed for the purpose of updating such description.
All documents that the Registrant subsequently files pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Exchange Act prior to the filing of a post-effective amendment to the registration
statement which indicates that all of the shares of common stock offered have been sold or which
deregisters all of such shares then remaining unsold, shall be deemed to be incorporated by
reference in this registration statement and to be a part hereof from the date of the filing of
such documents; except as to any portion of any future annual or quarterly report to shareholders
or document or current report furnished under current Items 2.02 or 7.01 of Form 8-K that is not
deemed filed under such provisions. For the purposes of this registration statement, any statement
contained in a document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this registration statement.
Under no circumstances will any information filed under current Items 2.02 or 7.01 of Form 8-K
be deemed incorporated herein by reference unless such Form 8-K expressly provides to the contrary.
We will furnish without charge to you, on written or oral request, a copy of any or all of the
documents incorporated by reference, other than exhibits to those documents. You should direct any
requests for documents to Luz Berg, Corporate Secretary, Iveda Corporation, 1201 South Alma School
Road, Suite 4450, Mesa, Arizona 85210.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Under our Articles of Incorporation and Bylaws, we may indemnify an officer or director who is
made a party to any proceeding, including a law suit, because of his position, if he acted in good
faith and in a manner he reasonably believed to be in our best interest. We may advance expenses
incurred in defending a proceeding. To the extent that the officer or director is successful on the
merits in a proceeding as to which he is to be indemnified, we must indemnify him against all
expenses incurred, including attorneys fees. With respect to a derivative action, indemnity may be
made only for expenses actually and reasonably incurred in defending the proceeding, and if the
officer or director is judged liable, only by a court order. The indemnification is intended to be
to the fullest extent permitted by the laws of the State of Nevada.
Nevada law provides that a director is not individually liable to the corporation or its
shareholders or creditors for any damages as a result of any act or failure to act in such
directors capacity as a director unless it is proven that:
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the directors act or failure to act constituted a breach of the
directors fiduciary duty as a director; and
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the directors breach of those duties involved intentional
misconduct, fraud or a knowing violation of law.
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Our articles of incorporation provide that, to the extent permitted by Nevada law, a director
will not be personally liable for monetary damages to the corporation or its shareholders for
breach of his or her fiduciary duty as a director, except for liability under the above-listed
exception.
Nevada law does not permit a corporation to indemnify directors against judgments in actions
brought by or in the right of the corporation in which the director was adjudged liable to the
corporation and extends this limitation to indemnification of officers. However, Nevada law does
permit indemnification for reasonable expenses in these situations if the indemnification is
ordered by a court.
Under Nevada law, directors and officers as well as other individuals may be indemnified
against expenses (including attorneys fees), judgments, fines and amounts paid in settlement in
connection with specified actions, suits or proceedings, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation as a derivative action)
if they acted in a manner they reasonably believed to be in, or not opposed to, the best interest
of the corporation, and, with respect to any criminal action or proceeding, if they had no
reasonable cause to believe their conduct was unlawful. In addition, Nevada law permits the
corporation to advance expenses upon a written undertaking for their repayment if the person
receiving the advance is not ultimately entitled to indemnification. Nevada law specifies that the
statutory provisions are not exclusive of other rights to
indemnification or advancement of expenses that may be provided by bylaws, agreements, votes
of shareholders or disinterested directors, or otherwise.
Our articles of incorporation provide to directors and officers indemnification to the full
extent provided by law; therefore, directors and officers will have all the protections available
to directors and officers of Nevada corporations. The articles of incorporation also provide that
the corporation may enter into specific agreements with individual officers or directors for
greater or different indemnification.
The above discussion of Nevada law and of our articles of incorporation and bylaws is not
intended to be exhaustive and is qualified in its entirety by such statutes, articles of
incorporation and bylaws.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
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Exhibit Number
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Exhibit
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3.1
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Articles of Incorporation of Charmed Homes Inc. (incorporated by reference from
Exhibit 3.1 to the Registrants registration statement on Form SB-2, filed with the
Commission on April 27, 2007)
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3.2
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Bylaws of Charmed Homes Inc. (incorporated by reference from Exhibit 3.2 to the
Registrants registration statement on Form SB-2, filed with the Commission on April
27, 2007)
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3.3
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Amendment to Bylaws of Charmed Homes Inc. (incorporated by reference from
Exhibit 3.3 to the Registrants current report on Form 8-K, filed with the Commission
on December 15, 2008)
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4.1
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Specimen Stock Certificate (incorporated by reference from Exhibit 4.1 to the
Registrants registration statement on Form SB-2, filed with the Commission on April
27, 2007)
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4.4
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Iveda Corporation 2010 Stock Option Plan
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5.1
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Opinion of Keller Rohrback, P.L.C.
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23.1
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Consent of Keller Rohrback, P.L.C. (included in Exhibit 5.1)
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23.2
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Consent of Manning Elliott LLP
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23.3
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Consent of Eide Bailly LLP
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24.1
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Power of Attorney (see signature page)
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Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective
amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the effective date of
the registration statement (or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum aggregate offering price set forth
in the Calculation of Registration Fee table in the effective registration statement;
(iii) To include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to such
information in the registration statement;
Provided, however
, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the registration
statement is on Form S-8 and the information required to be included in a post-effective amendment
by those paragraphs is contained in reports filed with or furnished to the Commission by the
Registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time shall be deemed to be
the initial
bona fide
offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability
under the Securities Act of 1933, each filing of the Registrants annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plans annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide
offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses incurred or paid by
a director, officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public policy as expressed
in the Securities Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it
has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and
has duly caused this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Mesa, State of Arizona, on this 1
st
day of
February, 2010.
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IVEDA CORPORATION
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By:
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/s/ David Ly
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David Ly,
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Chairman and Chief Executive Officer
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POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby
constitute and appoint David Ly his or her true and lawful attorney-in-fact and agent, with the
power of substitution and resubsitution, to act for him or her in his or her name, place and stead,
in any and all capacities, to sign any and all amendments (including post-effective amendments) to
this Registration Statement on Form S-8, and to file this Registration Statement, with all exhibits
thereto, and other documents in connection therewith, with the Securities and Exchange Commission,
granting to David Ly full power and authority to do and perform each and every act and thing
requisite and necessary to be done in order to effectuate the same as fully, to all intents and
purposes, as he or she might or could do in person, hereby ratifying and confirming all that the
attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has
been signed by the following persons in the capacities and on the dates indicated.
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Signature
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Title
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Date
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Chief Executive Officer and Chairman
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February 1, 2010
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/s/ Robert Brilon
Robert Brilon
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Chief Financial Officer and
Principal Accounting Officer
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February 1, 2010
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/s/ Joe Farnsworth
Joe Farnsworth
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Director
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February 1, 2010
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Director
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February 1, 2010
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/s/ James Staudohar
James Staudohar
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Director
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February 1, 2010
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INDEX TO EXHIBITS
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Exhibit
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Number
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Exhibit
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3.1
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Articles of Incorporation of Charmed Homes Inc. (incorporated by reference from Exhibit 3.1
to the Registrants registration statement on Form SB-2, filed with the Commission on April
27, 2007)
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3.2
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Bylaws of Charmed Homes Inc. (incorporated by reference from Exhibit 3.2 to the Registrants
registration statement on Form SB-2, filed with the Commission on April 27, 2007)
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3.3
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Amendment to Bylaws of Charmed Homes Inc. (incorporated by reference from Exhibit 3.3 to the
Registrants current report on Form 8-K, filed with the Commission on December 15, 2008)
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4.1
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Specimen Stock Certificate (incorporated by reference from Exhibit 4.1 to the Registrants
registration statement on Form SB-2, filed with the Commission on April 27, 2007)
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4.4
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Iveda Corporation 2010 Stock Option Plan
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5.1
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Opinion of Keller Rohrback, P.L.C.
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23.1
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Consent of Keller Rohrback, P.L.C. (included in Exhibit 5.1)
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23.2
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Consent of Manning Elliott LLP
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23.3
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Consent of Eide Bailly LLP
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24.1
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Power of Attorney (see signature page)
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Exhibit 4.4
IVEDA CORPORATION
2010 STOCK OPTION PLAN
1.
Establishment, Purpose and Term of Plan
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1.1
Establishment
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The Iveda Corporation 2010 Stock Option Plan (the
Plan
) is hereby
established effective as of January 18, 2010 (the
Effective Date
).
1.2
Purpose
.
The purpose of the Plan is to advance the interests of the Participating Company
Group and its shareholders by providing an incentive to attract, retain and reward persons
performing services for the Participating Company Group and by motivating such persons to
contribute to the growth and profitability of the Participating Company Group.
1.3
Term of Plan.
The Plan shall continue in effect until the earlier of its termination by
the Board or the date on which all of the shares of Stock available for issuance under the Plan
have been issued and all restrictions on such shares under the terms of the Plan and the agreements
evidencing Options granted under the Plan have lapsed. However, all Options shall be granted, if
at all, within ten (10) years from the earlier of the date the Plan is adopted by the Board or the
date the Plan is duly approved by the shareholders of the Company. The Company intends that the
Plan comply with Section 409A of the Code, including any amendments or replacements of such
section, and the Plan shall be so construed.
2.
Definitions and Construction
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2.1
Definitions.
Whenever used herein, the following terms shall have their respective
meanings set forth below:
(a)
Affiliate
means (i) an entity, other than a Parent Corporation, that directly, or
indirectly, through one or more intermediary entities, controls the Company or (ii) an entity,
other than a Subsidiary Corporation, that is controlled by the Company directly, or indirectly
through one or more intermediary entities. For this purpose, the term control (including the
term controlled by) means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of the relevant entity, whether through the ownership of
voting securities, by contract or otherwise; or shall have such other meaning assigned such term
for the purposes of registration on Form S-8 under the Securities Act.
(b)
Board
means the Board of Directors of the Company. If one or more Committees have been
appointed by the Board to administer the Plan,
Board
also means such Committee(s).
(c)
Code
means the Internal Revenue Code of 1986, as amended, and any applicable regulations
promulgated thereunder.
(d)
Committee
means the Compensation Committee or other committee of the Board duly
appointed to administer the Plan and having such powers as shall be specified by the Board. Unless
the powers of the Committee have been specifically limited, the
Committee shall have all of the powers of the Board granted herein, including, without
limitation, the power to amend or terminate the Plan at any time, subject to the terms of the Plan
and any applicable limitations imposed by law.
(e)
Company
means Iveda Corporation, a Nevada corporation, or any successor corporation
thereto.
(f)
Consultant
means a person engaged to provide consulting or advisory services (other than
as an Employee or a Director) to a Participating Company, provided that the identity of such
person, the nature of such services or the entity to which such services are provided would not
preclude the Company from offering or selling securities to such person pursuant to the Plan in
reliance on either the exemption from registration provided by Rule 701 under the Securities Act
or, if the Company is required to file reports pursuant to Section 13 or 15(d) of the Exchange Act,
registration on a Form S-8 Registration Statement under the Securities Act.
(g)
Director
means a member of the Board or of the board of directors of any other
Participating Company.
(h)
Disability
means the inability of the Optionee, in the opinion of a qualified physician
acceptable to the Company, to perform the major duties of the Optionees position with the
Participating Company Group because of the sickness or injury of the Optionee.
(i)
Employee
means any person treated as an employee (including an Officer or a Director who
is also treated as an employee) in the records of a Participating Company and, with respect to any
Incentive Stock Option granted to such person, who is an employee for purposes of Section 422 of
the Code; provided, however, that neither service as a Director nor payment of a directors fee
shall be sufficient to constitute employment for purposes of the Plan. The Company shall determine
in good faith and in the exercise of its discretion whether an individual has become or has ceased
to be an Employee and the effective date of such individuals employment or termination of
employment, as the case may be. For purposes of an individuals rights, if any, under the Plan as
of the time of the Companys determination, all such determinations by the Company shall be final,
binding and conclusive, notwithstanding that the Company or any court of law or governmental agency
subsequently makes a contrary determination.
(j)
Exchange Act
means the Securities Exchange Act of 1934, as amended.
(k)
Fair Market Value
means, as of any date, the value of a share of Stock or other property
as determined by the Board, in its discretion, or by the Company, in its discretion, if such
determination is expressly allocated to the Company herein, subject to the following:
(i) If, on such date, the Stock is listed on a national or regional securities exchange or
market system, the Fair Market Value of a share of Stock shall be the closing price of a share of
Stock (or the mean of the closing bid and asked prices of a share of
Stock if the Stock is so quoted instead) as quoted on the New York Stock Exchange, the NASDAQ
Global Market, the NASDAQ Global Select Market or such other national or regional securities
exchange or market system constituting the primary market for the Stock, as reported in
The Wall
Street Journal
or such other source as the Company deems reliable. If the relevant date does not
fall on a day on which the Stock has traded on such securities exchange or market system, the date
on which the Fair Market Value shall be established shall be the last day on which the Stock was so
traded prior to the relevant date, or such other appropriate day as shall be determined by the
Board, in its discretion.
(ii) If the Stock is not listed on an established stock exchange or national market system,
but the Stock is regularly quoted by a recognized securities dealer, its Fair Market Value shall be
the mean of the high bid and low asked prices for such date or, if there are no high bid and low
asked prices for a share of Stock on such date, the high bid and low asked prices for a share of
Stock on the last preceding date for which such information exists, as reported in
The Wall Street
Journal
or such other source as the Board deems reliable.
(iii) If, on such date, the Stock is not listed on a national or regional securities exchange
or market system or regularly quoted by a recognized securities dealer, the Fair Market Value of a
share of Stock shall be as determined by the Board in good faith without regard to any restriction
other than a restriction which, by its terms, will never lapse, and subject to compliance with
Section 409A of the Code.
(l)
Incentive Stock Option
means an Option intended to be (as set forth in the Option
Agreement) and which qualifies as an incentive stock option within the meaning of Section 422(b) of
the Code.
(m)
Insider
means an Officer, Director of the Company, or other person whose transactions in
Stock are subject to Section 16 of the Exchange Act.
(n)
Nonstatutory Stock Option
means an Option not intended to be (as set forth in the Option
Agreement) or which does not qualify as an Incentive Stock Option.
(o)
Officer
means any person designated by the Board as an officer of the Company.
(p)
Option
means a right to purchase Stock pursuant to the terms and conditions of the Plan.
An Option may be either an Incentive Stock Option or a Nonstatutory Stock Option.
(q)
Option Agreement
means a written agreement between the Company and an Optionee setting
forth the terms, conditions and restrictions of the Option granted to the Optionee and any shares
acquired upon the exercise thereof. An Option Agreement may consist of a form of Notice of Grant
of Stock Option and a form of Stock Option Agreement incorporated therein by reference, or such
other form or forms as the Board may approve from time to time.
(r)
Optionee
means a person who has been granted one or more Options.
(s)
Parent Corporation
means any present or future parent corporation of the Company, as
defined in Section 424(e) of the Code.
(t)
Participating Company
means the Company or any Parent Corporation, Subsidiary
Corporation or Affiliate.
(u)
Participating Company Group
means, at any point in time, all entities collectively which
are then Participating Companies.
(v)
Rule 16b-3
means Rule 16b-3 under the Exchange Act, as amended from time to time, or any
successor rule or regulation.
(w)
Securities Act
means the Securities Act of 1933, as amended.
(x)
Service
means an Optionees employment or service with the Participating Company Group,
whether in the capacity of an Employee, a Director or a Consultant. An Optionees Service shall
not be deemed to have terminated merely because of a change in the capacity in which the Optionee
renders Service to the Participating Company Group or a change in the Participating Company for
which the Optionee renders such Service, provided that there is no interruption or termination of
the Optionees Service. Furthermore, an Optionees Service shall not be deemed to have terminated
if the Optionee takes any military leave, sick leave, or other bona fide leave of absence approved
by the Company; provided, however, that if any such leave exceeds ninety (90) days, on the one
hundred eighty-first (181st) day following the commencement of such leave any Incentive Stock
Option held by the Optionee shall cease to be treated as an Incentive Stock Option and instead
shall be treated thereafter as a Nonstatutory Stock Option unless the Optionees right to return to
Service is guaranteed by statute or contract. Notwithstanding the foregoing, unless otherwise
designated by the Company or required by law, a leave of absence shall not be treated as Service
for purposes of determining vesting under the Optionees Option Agreement. The Optionees Service
shall be deemed to have terminated either upon an actual termination of Service or upon the
corporation for which the Optionee performs Service ceasing to be a Participating Company. Subject
to the foregoing, the Company, in its discretion, shall determine whether the Optionees Service
has terminated and the effective date of such termination.
(y)
Stock
means the common stock of the Company, as adjusted from time to time in accordance
with
Section 4.2
.
(z)
Subsidiary Corporation
means any present or future subsidiary corporation of the
Company, as defined in Section 424(f) of the Code.
(aa)
Ten Percent Owner Optionee
means an Optionee who, at the time an Option is granted to
the Optionee, owns stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of a Participating Company within the meaning of Section 424 of the Code.
2.2
Construction.
Captions and titles contained herein are for convenience only and shall not
affect the meaning or interpretation of any provision of the Plan. Except when otherwise indicated
by the context, the singular shall include the plural and the plural shall
include the singular. Use of the term or is not intended to be exclusive, unless the
context clearly requires otherwise.
3.
Administration
.
3.1
Administration by the Board.
The Board shall administer the Plan. The Board shall
determine all questions of interpretation of the Plan or of any Option, and such determinations
shall be final and binding upon all persons having an interest in the Plan or such Option.
3.2
Authority of Officers.
Any Officer shall have the authority to act on behalf of the
Company with respect to any matter, right, obligation, determination or election which is the
responsibility of or which is allocated to the Company herein, provided the Officer has apparent
authority with respect to such matter, right, obligation, determination or election.
3.3
Powers of the Board
.
In addition to any other powers set forth in the Plan and subject to
the provisions of the Plan, the Board shall have the full and final power and authority, in its
discretion:
(a) to determine the persons to whom, and the time or times at which, Options shall be granted
and the number of shares of Stock to be subject to each Option;
(b) to designate Options as Incentive Stock Options or Nonstatutory Stock Options;
(c) to determine the Fair Market Value of shares of Stock or other property;
(d) to determine the terms, conditions and restrictions applicable to each Option (which need
not be identical) and any shares acquired upon the exercise thereof, including, without limitation,
(i) the exercise price of the Option, (ii) the method of payment for shares purchased upon the
exercise of the Option, (iii) the method for satisfaction of any tax withholding obligation arising
in connection with the Option or such shares, including by the withholding or delivery of shares of
stock, (iv) the timing, terms and conditions of the exercisability of the Option or the vesting of
any shares acquired upon the exercise thereof, (v) the time of the expiration of the Option, (vi)
the effect of the Optionees termination of Service with the Participating Company Group on any of
the foregoing, and (vii) all other terms, conditions and restrictions applicable to the Option or
such shares not inconsistent with the terms of the Plan;
(e) to approve one or more forms of Option Agreement;
(f) to amend, modify, extend, cancel or renew any Option or to waive any restrictions or
conditions applicable to any Option or any shares acquired upon the exercise thereof;
(g) to accelerate, continue, extend or defer the exercisability of any Option or the vesting
of any shares acquired upon the exercise thereof, including with respect to
the period following an Optionees termination of Service with the Participating Company
Group;
(h) to prescribe, amend or rescind rules, guidelines and policies relating to the Plan, or to
adopt supplements to, or alternative versions of, the Plan, including, without limitation, as the
Board deems necessary or desirable to comply with the laws of, or to accommodate the tax policy or
custom of, foreign jurisdictions whose citizens may be granted Options; and
(i) to correct any defect, supply any omission or reconcile any inconsistency in the Plan or
any Option Agreement and to make all other determinations and take such other actions with respect
to the Plan or any Option as the Board may deem advisable to the extent not inconsistent with the
provisions of the Plan or applicable law.
3.4
Administration with Respect to Insiders; Limitations Applicable to Insiders.
With respect
to participation by Insiders in the Plan, at any time that any class of equity security of the
Company is registered pursuant to Section 12 of the Exchange Act, the Plan shall be administered in
compliance with the requirements, if any, of Rule 16b-3. Notwithstanding any other provision of
the Plan, the Plan, and any Option granted or awarded to any individual who is then subject to
Section 16 of the Exchange Act, shall be subject to any additional limitations set forth in any
applicable exemptive rule under Section 16 of the Exchange Act (including Rule 16b-3 of the
Exchange Act and any amendments thereto) that are requirements for the application of such
exemptive rule. To the extent permitted by applicable law, the Plan and Options granted or awarded
hereunder shall be deemed amended to the extent necessary to conform to such applicable exemptive
rule.
3.5
Indemnification.
In addition to such other rights of indemnification as they may have as
members of the Board or officers or employees of the Participating Company Group, members of the
Board and any officers or employees of the Participating Company Group to whom authority to act for
the Board or the Company is delegated shall be indemnified by the Company against all reasonable
expenses, including attorneys fees, actually and necessarily incurred in connection with the
defense of any action, suit or proceeding, or in connection with any appeal therein, to which they
or any of them may be a party by reason of any action taken or failure to act under or in
connection with the Plan, or any right granted hereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by independent legal counsel selected by
the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in such action, suit or proceeding
that such person is liable for gross negligence, bad faith or intentional misconduct in duties;
provided, however, that within sixty (60) days after the institution of such action, suit or
proceeding, such person shall offer to the Company, in writing, the opportunity at its own expense
to handle and defend the same.
3.6
At-Will Employment.
Nothing in the Plan or in any Option Agreement hereunder shall confer
upon any Optionee any right to continue in the employ of, or as a Director or Consultant for, a
Participating Company, or shall interfere with or restrict in any way the rights of a Participating
Company, which rights are hereby expressly reserved, to discharge any Optionee at any time for any
reason whatsoever, with or without cause, except to the extent
expressly provided otherwise in a written agreement between the Optionee and a Participating
Company.
3.7
Repricing.
The Board shall have the authority, without the approval of the shareholders
of the Company, to amend any outstanding Option to increase or reduce the price per share or to
cancel and replace an Option with the grant of an Option having an exercise price per share that is
less than, greater than or equal to the price per share of the original Option.
4.
Shares Subject to Plan
.
4.1
Maximum Number of Shares Issuable.
Subject to adjustment as provided in
Section 4.2
, the maximum aggregate number of shares of Stock that may be issued under the
Plan shall be One Million (1,000,000) and shall consist of authorized but unissued or reacquired
shares of Stock or any combination thereof, and the maximum aggregate number of shares of Stock
that may be issued as Incentive Stock Options under the Plan shall be Two Hundred Thousand
(200,000) (the
ISO Share Issuance Limit
). If an outstanding Option for any reason expires or is
terminated or canceled or if shares of Stock are acquired upon the exercise of an Option subject to
a Company repurchase option and are repurchased by the Company at the Optionees exercise price,
the shares of Stock allocable to the unexercised portion of such Option or such repurchased shares
of Stock shall again be available for issuance under the Plan.
4.2
Adjustments for Changes in Capital Structure
.
Subject to any required action by the
shareholders of the Company, in the event of any change in the Stock effected without receipt of
consideration by the Company, whether through merger, consolidation, reorganization,
reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock
split, split-up, split-off, spin-off, combination of shares, exchange of shares, or similar change
in the capital structure of the Company, or in the event of payment of a dividend or distribution
to the shareholders of the Company in a form other than Stock (excepting normal cash dividends)
that has a material effect on the Fair Market Value of shares of Stock, appropriate and
proportionate adjustments shall be made in the number and class of shares subject to the Plan and
to any outstanding Options, in the ISO Share Issuance Limit set forth in
Section 4.1
, and
in the exercise price per share of any outstanding Options. If a majority of the shares which are
of the same class as the shares that are subject to outstanding Options are exchanged for,
converted into, or otherwise become (whether or not pursuant to an Ownership Change Event, as
defined in
Section 8.1
) shares of another corporation (the
New Shares
), the Board may
unilaterally amend the outstanding Options to provide that such Options are exercisable for New
Shares. In the event of any such amendment, the number of shares subject to, and the exercise
price per share of, the outstanding Options shall be adjusted in a fair and equitable manner as
determined by the Board, in its discretion. Notwithstanding the foregoing, any fractional share
resulting from an adjustment pursuant to this
Section 4.2
shall be rounded down to the
nearest whole number, and in no event may the exercise price of any Option be decreased to an
amount less than the par value, if any, of the stock subject to the Option. The adjustments
determined by the Board pursuant to this
Section 4.2
shall be final, binding and
conclusive.
5.
Eligibility and Option Limitations
.
5.1
Persons Eligible for Options
.
Options may be granted only to Employees, Consultants, and
Directors. For purposes of the foregoing sentence, Employees, Consultants and Directors
shall include prospective Employees, prospective Consultants and prospective Directors to whom
Options are granted in connection with written offers of an employment or other service
relationship with the Participating Company Group. Eligible persons may be granted more than one
(1) Option. However, eligibility in accordance with this Section shall not entitle any person to
be granted an Option, or, having been granted an Option, to be granted an additional Option.
5.2
Option Grant Restrictions
.
Any person who is not an Employee on the effective date of the
grant of an Option to such person may be granted only a Nonstatutory Stock Option. An Incentive
Stock Option granted to a prospective Employee upon the condition that such person become an
Employee shall be deemed granted effective on the date such person commences Service with a
Participating Company, with an exercise price determined as of such date in accordance with
Section 6.1
.
5.3
Fair Market Value Limitation
.
To the extent that options designated as Incentive Stock
Options (granted under all stock option plans of the Participating Company Group, including the
Plan) become exercisable by an Optionee for the first time during any calendar year for stock
having a Fair Market Value greater than One Hundred Thousand Dollars ($100,000.00), the portions of
such options which exceed such amount shall be treated as Nonstatutory Stock Options. For purposes
of this
Section 5.3
, options designated as Incentive Stock Options shall be taken into
account in the order in which they were granted, and the Fair Market Value of stock shall be
determined as of the time the option with respect to such stock is granted. If the Code is amended
to provide for a different limitation from that set forth in this
Section 5.3
, such
different limitation shall be deemed incorporated herein effective as of the date and with respect
to such Options as required or permitted by such amendment to the Code. If an Option is treated as
an Incentive Stock Option in part and as a Nonstatutory Stock Option in part by reason of the
limitation set forth in this
Section 5.3
, the Optionee may designate which portion of such
Option the Optionee is exercising. In the absence of such designation, the Optionee shall be
deemed to have exercised the Incentive Stock Option portion of the Option first. Separate
certificates representing each such portion shall be issued upon the exercise of the Option.
6.
Terms and Conditions of Options
.
Option Agreements specifying the number of shares of Stock covered thereby, in such form as
the Board shall from time to time establish, shall evidence Options. No Option or purported Option
shall be a valid and binding obligation of the Company unless evidenced by a fully executed Option
Agreement. Option Agreements may incorporate all or any of the terms of the Plan by reference and
shall comply with and be subject to the following terms and conditions:
6.1
Exercise Price
.
The exercise price for each Option shall be established in the discretion
of the Board, subject to compliance with Section 409A of the Code; provided, however, that (a) the
exercise price per share for an Incentive Stock Option shall be not less than the Fair Market Value
of a share of Stock on the effective date of grant of the Option and (b) no
Incentive Stock Option granted to a Ten Percent Owner Optionee shall have an exercise price
per share less than one hundred ten percent (110%) of the Fair Market Value of a share of Stock on
the effective date of grant of the Option. Notwithstanding the foregoing, an Option may be granted
with an exercise price lower than the Fair Market Value of a share of stock on the effective date
of the grant if the option is a Nonstatutory Stock Option.
6.2
Exercisability and Term of Options
.
Options shall be exercisable at such time or times,
or upon such event or events, and subject to such terms, conditions, performance criteria and
restrictions as shall be determined by the Board and set forth in the Option Agreement evidencing
such Option; provided, however, that (a) no Incentive Stock Option shall be exercisable after the
expiration of ten (10) years after the effective date of grant of such Option, (b) no Incentive
Stock Option granted to a Ten Percent Owner Optionee shall be exercisable after the expiration of
five (5) years after the effective date of grant of such Option, and (c) no Option granted to a
prospective Employee, prospective Consultant or prospective Director may become exercisable prior
to the date on which such person commences Service with a Participating Company. Subject to the
foregoing, unless otherwise specified by the Board in the grant of an Option, any Option granted
hereunder shall terminate ten (10) years after the effective date of grant of the Option, unless
earlier terminated in accordance with its provisions.
6.3
Payment of Exercise Price.
(a)
Forms of Consideration Authorized.
Except as otherwise provided below, payment of the
exercise price for the number of shares of Stock being purchased pursuant to any Option shall be
made (i) in cash, by check or cash equivalent, (ii) by tender to the Company, or attestation to the
ownership, of shares of Stock owned by the Optionee having a Fair Market Value not less than the
exercise price, (iii) by delivery of a properly executed notice together with irrevocable
instructions to a broker providing for the assignment to the Company of the proceeds of a sale or
loan with respect to some or all of the shares being acquired upon the exercise of the Option
(including, without limitation, through an exercise complying with the provisions of Regulation T
as promulgated from time to time by the Board of Governors of the Federal Reserve System) (a
Cashless Exercise
), (iv) provided that the Optionee is an Employee (unless otherwise not
prohibited by law, including, without limitation, any regulation promulgated by the Board of
Governors of the Federal Reserve System) and in the Companys sole discretion at the time the
Option is exercised, by delivery of the Optionees promissory note in a form approved by the
Company for the aggregate exercise price, provided that, if the Company is incorporated in the
State of Delaware, the Optionee shall pay in cash that portion of the aggregate exercise price not
less than the par value of the shares being acquired, (v) by such other consideration as may be
approved by the Board from time to time to the extent permitted by applicable law, or (vi) by any
combination thereof. The Board may at any time or from time to time, by approval of or by
amendment to the standard forms of Option Agreement described in
Section 7
, or by other
means, grant Options which do not permit all of the foregoing forms of consideration to be used in
payment of the exercise price or which otherwise restrict one or more forms of consideration.
Notwithstanding any other provision of the Plan to the contrary, no Optionee who is a Director or
an executive officer of the Company within the meaning of Section 13(k) of the Exchange Act shall
be permitted to make payment with respect to any Options granted under the Plan, or continue any
extension of credit with respect to such payment
with a loan from the Company or a loan arranged by the Company in violation of Section 13(k)
of the Exchange Act.
(b)
Limitations on Forms of Consideration
.
(i)
Tender of Stock.
Notwithstanding the foregoing, an Option may not be exercised by tender
to the Company, or attestation to the ownership, of shares of Stock to the extent such tender or
attestation would constitute a violation of the provisions of any law, regulation or agreement
restricting the redemption of the Companys stock. Unless otherwise provided by the Board, an
Option may not be exercised by tender to the Company, or attestation to the ownership, of shares of
Stock unless such shares either have been owned by the Optionee for more than six (6) months (and
not used for another Option exercise by attestation during such period) or were not acquired,
directly or indirectly, from the Company.
(ii)
Cashless Exercise.
The Company reserves, at any and all times, the right, in the
Companys sole and absolute discretion, to establish, decline to approve or terminate any program
or procedures for the exercise of Options by means of a Cashless Exercise.
(iii)
Payment by Promissory Note.
No promissory note shall be permitted if the exercise of an
Option using a promissory note would be a violation of any law. Any permitted promissory note
shall be on such terms as the Board shall determine. The Board shall have the authority to permit
or require the Optionee to secure any promissory note used to exercise an Option with the shares of
Stock acquired upon the exercise of the Option or with other collateral acceptable to the Company.
Unless otherwise provided by the Board, if the Company at any time is subject to the regulations
promulgated by the Board of Governors of the Federal Reserve System or any other governmental
entity affecting the extension of credit in connection with the Companys securities, any
promissory note shall comply with such applicable regulations, and the Optionee shall pay the
unpaid principal and accrued interest, if any, to the extent necessary to comply with such
applicable regulations.
6.4
Tax Withholding
.
The Company shall have the right, but not the obligation, to deduct from
the shares of Stock issuable upon the exercise of an Option, or to accept from the Optionee the
tender of, a number of whole shares of Stock having a Fair Market Value, as determined by the
Company, equal to all or any part of the federal, state, local and foreign taxes, if any, required
by law to be withheld by the Participating Company Group with respect to such Option or the shares
acquired upon the exercise thereof. Alternatively or in addition, in its discretion, the Company
shall have the right to require the Optionee, through payroll withholding, cash payment or
otherwise, including by means of a Cashless Exercise, to make adequate provision for any such tax
withholding obligations of the Participating Company Group arising in connection with the Option or
the shares acquired upon the exercise thereof. The Fair Market Value of any shares of Stock
withheld or tendered to satisfy any such tax withholding obligations shall not exceed the amount
determined by the applicable minimum statutory withholding rates. The Company shall have no
obligation to deliver shares of Stock or to release shares of Stock from an escrow established
pursuant to the Option Agreement until the Optionee has satisfied the Participating Company Groups
tax withholding obligations.
6.5
Repurchase Rights
.
Shares issued under the Plan may be subject to a right of first
refusal, one or more repurchase options, or other conditions and restrictions as determined by the
Board in its discretion at the time the Option is granted. The Company shall have the right to
assign at any time any repurchase right it may have, whether or not such right is then exercisable,
to one or more persons as may be selected by the Company. Upon request by the Company, each
Optionee shall execute any agreement evidencing such transfer restrictions prior to the receipt of
shares of Stock hereunder and shall promptly present to the Company any and all certificates
representing shares of Stock acquired hereunder for the placement on such certificates of
appropriate legends evidencing any such transfer restrictions.
6.6
Effect of Termination of Service.
(a)
Option Exercisability
.
Subject to earlier termination of the Option as otherwise provided
herein and unless otherwise provided by the Board in the grant of an Option and set forth in the
Option Agreement, an Option shall be exercisable after an Optionees termination of Service only
during the applicable time period determined in accordance with this
Section 6.6
and
thereafter shall terminate:
(i)
Disability.
If the Optionees Service terminates because of the Disability of the
Optionee, the Option, to the extent unexercised and exercisable on the date on which the Optionees
Service terminated, may be exercised by the Optionee (or the Optionees guardian or legal
representative) at any time prior to the expiration of twelve (12) months (or such longer period of
time as determined by the Board, in its discretion) after the date on which the Optionees Service
terminated, but in any event no later than the date of expiration of the Options term as set forth
in the Option Agreement evidencing such Option (the
Option Expiration Date
).
(ii)
Death.
If the Optionees Service terminates because of the death of the Optionee, the
Option, to the extent unexercised and exercisable on the date on which the Optionees Service
terminated, may be exercised by the Optionees legal representative or other person who acquired
the right to exercise the Option by reason of the Optionees death at any time prior to the
expiration of twelve (12) months (or such longer period of time as determined by the Board, in its
discretion) after the date on which the Optionees Service terminated, but in any event no later
than the Option Expiration Date. The Optionees Service shall be deemed to have terminated on
account of death if the Optionee dies within three (3) months (or such longer period of time as
determined by the Board, in its discretion) after the Optionees termination of Service.
(iii)
Termination for Cause.
Notwithstanding any other provision of this Option Agreement, if
the Optionees Service is terminated for Cause, the Option shall terminate and cease to be
exercisable on the effective date of such termination of Service. Unless otherwise defined in a
contract of employment or service between the Optionee and a Participating Company, for purposes of
this Option Agreement
Cause
shall mean any of the following: (1) the Optionees theft,
dishonesty, willful misconduct, breach of fiduciary duty for personal profit, or falsification of
any Participating Company documents or records; (2) the Optionees material failure to abide by a
Participating Companys code of conduct or other policies
(including, without limitation, policies
relating to confidentiality and reasonable workplace conduct); (3) the Optionees unauthorized use, misappropriation, destruction, or
diversion of any tangible or intangible asset or corporate opportunity of a Participating Company
(including, without limitation, the Optionees improper use or disclosure of a Participating
Companys confidential or proprietary information); (4) any intentional act by the Optionee which
has a material detrimental effect on a Participating Companys reputation or business; (5) the
Optionees failure or inability to perform any reasonable assigned duties after written notice from
a Participating Company of, and a reasonable opportunity to cure, such failure or inability;
(6) any material breach by the Optionee of any employment or service agreement between the Optionee
and a Participating Company, which breach is not cured pursuant to the terms of such agreement; or
(7) the Optionees conviction (including any plea of guilty or nolo contendere) of any criminal act
involving fraud, dishonesty, misappropriation, or moral turpitude, or which impairs the Optionees
ability to perform his or her duties with a Participating Company.
(iv)
Other Termination of Service.
If the Optionees Service terminates for any reason,
except Disability, death or Cause, the Option, to the extent unexercised and exercisable by the
Optionee on the date on which the Optionees Service terminated, may be exercised by the Optionee
at any time prior to the expiration of three (3) months (or such longer period of time as
determined by the Board, in its discretion) after the date on which the Optionees Service
terminated, but in any event no later than the Option Expiration Date.
(b)
Extension if Exercise Prevented by Law
.
Notwithstanding the foregoing (except Termination
for Cause), if the exercise of an Option within the applicable time periods set forth in
Section 6.6(a)
is prevented by the provisions of
Section 9
below, the Option shall
remain exercisable until three (3) months (or such longer period of time as determined by the
Board, in its discretion) after the date the Optionee is notified by the Company that the Option is
exercisable, but in any event no later than the Option Expiration Date.
(c)
Extension if Optionee Subject to Section 16(b
).
Notwithstanding the foregoing, if a sale
within the applicable time periods set forth in
Section 6.6(a)
of shares acquired upon the
exercise of the Option would subject the Optionee to suit under Section 16(b) of the Exchange Act,
the Option shall remain exercisable until the earliest to occur of (i) the tenth (10th) day
following the date on which a sale of such shares by the Optionee would no longer be subject to
such suit, (ii) the one hundred and ninetieth (190th) day after the Optionees termination of
Service, or (iii) the Option Expiration Date.
6.7
Transferability of Options.
During the lifetime of the Optionee, an Option shall be
exercisable only by the Optionee or the Optionees guardian or legal representative. No Option
shall be assignable or transferable by the Optionee, except by will or by the laws of descent and
distribution. No Option or interest or right therein shall be liable for the debts, contracts or
engagements of the Optionee or his successors in interest or shall be subject to disposition by
transfer, alienation, anticipation, pledge, hypothecation, encumbrance, assignment or any other
means whether such disposition be voluntary or involuntary or by operation of law by judgment,
levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy),
and any attempted disposition thereof shall be null and void and of no effect. Notwithstanding the
foregoing, to the extent permitted by the Board, in its
discretion, and set forth in the Option Agreement evidencing such Option, a Nonstatutory Stock
Option shall be assignable or transferable subject to Rule 701 under the Securities Act and the
General Instructions to Form S-8 Registration Statement under the Securities Act.
7.
Standard Forms of Option Agreement
.
7.1
Option Agreement
.
Unless otherwise provided by the Board at the time the Option is
granted, an Option shall comply with and be subject to the terms and conditions set forth in the
form of Option Agreement approved by the Board concurrently with its adoption of the Plan and as
amended from time to time.
7.2
Authority to Vary Terms
.
The Board shall have the authority from time to time to vary the
terms of any standard form of Option Agreement described in this
Section 7
either in
connection with the grant or amendment of an individual Option or in connection with the
authorization of a new standard form or forms; provided, however, that the terms and conditions of
any such new, revised or amended standard form or forms of Option Agreement are not inconsistent
with the terms of the Plan.
8.
Change in Control
.
8.1
Definitions.
(a) An
Ownership Change Event
shall be deemed to have occurred if any of the following
occurs with respect to the Company: (i) a transaction or series of transactions (other than an
offering of Stock to the general public through a registration statement filed with the Securities
and Exchange Commission) whereby any person or related group of persons (as such terms are
used in Sections 13(d) and 14(d)(2) of the Exchange Act) (other than the Company, any of its
subsidiaries, an employee benefit plan maintained by the Company or any of its subsidiaries or a
person that, prior to such transaction, directly or indirectly controls, is controlled by, or is
under common control with, the Company) directly or indirectly acquires beneficial ownership
(within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company possessing
more than 50% of the total combined voting power of the Companys securities outstanding
immediately after such acquisition; (ii) during any period of two consecutive years, individuals
who, at the beginning of such period, constitute the Board together with any new director(s) (other
than a director designated by a person who shall have entered into an agreement with the Company to
effect a transaction described in
Section 8.1(a)(i)
or
Section 8.1(a)(iii)
) whose
election by the Board or nomination for election by the Companys shareholders was approved by a
vote of at least two-thirds of the directors then still in office who either were directors at the
beginning of the two-year period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof; (iii) the consummation by the
Company (whether directly involving the Company or indirectly involving the Company through one or
more intermediaries) of (x) a merger, consolidation, reorganization, or business combination or (y)
a sale or other disposition of all or substantially all of the Companys assets in any single
transaction or series of related transactions or (z) the acquisition of assets or stock of another
entity, in each case other than a transaction: which results in the Companys voting securities
outstanding immediately before the
transaction continuing to represent (either by remaining
outstanding or by being converted into voting
securities of the Company or the person that, as a result of the transaction, controls,
directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of
the Companys assets or otherwise succeeds to the business of the Company (the Company or such
person, the
Successor Entity
)) directly or indirectly, at least a majority of the combined voting
power of the Successor Entitys outstanding voting securities immediately after the transaction,
and after which no person or group beneficially owns voting securities representing 50% or more of
the combined voting power of the Successor Entity;
provided, however,
that no person or group shall
be treated for purposes of this
Section 8.1(a)(iii)
as beneficially owning 50% or more of
combined voting power of the Successor Entity solely as a result of the voting power held in the
Company prior to the consummation of the transaction; or (iv) the Companys shareholders approve a
liquidation or dissolution of the Company.
(b) A
Change in Control
shall mean an Ownership Change Event or a series of related
Ownership Change Events (collectively, a
Transaction
). The Board shall have the right to
determine whether multiple Ownership Change Events are related, and its determination shall be
final, binding and conclusive. The Board shall furthermore have full and final authority, which
shall be exercised in its discretion, to determine conclusively whether a Change in Control of the
Company has occurred pursuant to the above definition, and the date of the occurrence of such
Change in Control and any incidental matters relating thereto. In addition, if a Change in Control
constitutes a payment event with respect to any Option which provides for the deferral of
compensation and is subject to Section 409A of the Code, the transaction or event described in this
Section 8.1
with respect to such Option must also constitute a change in control event,
as defined in Treasury Regulation §1.409A-3(i)(5) to the extent required by Section 409A.
8.2
Effect of Change in Control on Options
.
(a) In the event of a Change in Control, the surviving, continuing, successor, or purchasing
corporation or other business entity or parent thereof, as the case may be (the
Acquiror
), may,
without the consent of the Optionee, either assume the Companys rights and obligations under
outstanding Options or substitute for outstanding Options substantially equivalent options for the
Acquirors stock. Any Options which are neither assumed or substituted for by the Acquiror in
connection with the Change in Control nor exercised as of the date of the Change in Control shall
terminate and cease to be outstanding effective as of the date of the Change in Control,
provided
,
that
, notwithstanding any other provision of the Plan to the contrary,
the Board may, in its sole discretion, provide in any Option Agreement or, in the event of a Change
in Control, may take such actions as it deems appropriate, to provide for the acceleration of the
exercisability and vesting in connection with such Change in Control of any or all of the
outstanding Options and any shares acquired upon the exercise of such Options, subject to
compliance with Section 409A of the Code. Notwithstanding the foregoing, shares acquired upon
exercise of an Option prior to the Change in Control and any consideration received pursuant to the
Change in Control with respect to such shares shall continue to be subject to all applicable
provisions of the Option Agreement evidencing such Option except as otherwise provided in such
Option Agreement. Furthermore, notwithstanding the foregoing, if the corporation the stock of
which is subject to the outstanding Options immediately prior to an Ownership Change Event
described in
Section 8.1(a)(i)
constituting a Change in Control is the surviving or
continuing corporation and immediately after
such Ownership Change Event less than fifty percent (50%) of the total combined voting power
of its voting stock is held by another corporation or by other corporations that are members of an
affiliated group within the meaning of Section 1504(a) of the Code without regard to the provisions
of Section 1504(b) of the Code, the outstanding Options shall not terminate unless the Board
otherwise provides in its discretion.
(b) The Board may, in its sole discretion and without the consent of any Optionee, determine
that, upon the occurrence of a Change in Control, each or any Option outstanding immediately prior
to the Change in Control shall be canceled in exchange for a payment with respect to each vested
share of Stock subject to such canceled Option in (i) cash, (ii) stock of the Company, the Acquiror
or of a corporation or other business entity a party to the Change in Control, or (iii) other
property which, in any such case, shall be in an amount having a Fair Market Value equal to the
excess of the Fair Market Value of the consideration to be paid per share of Stock in the Change in
Control over the exercise price per share under the Option (the
Spread
). In the event such
determination is made by the Board, the Spread (reduced by applicable withholding taxes, if any)
shall be paid to Optionees in respect of their canceled Options as soon as practicable following
the date of the Change in Control.
9.
Compliance with Securities Law
.
The grant of Options and the issuance of shares of Stock upon exercise of Options shall be
subject to compliance with all applicable requirements of federal, state and foreign law with
respect to such securities. Options may not be exercised if the issuance of shares of Stock upon
exercise would constitute a violation of any applicable federal, state or foreign securities laws
or other law or regulations or the requirements of any stock exchange or market system upon which
the Stock may then be listed. In addition, no Option may be exercised unless (a) a registration
statement under the Securities Act shall at the time of exercise of the Option be in effect with
respect to the shares issuable upon exercise of the Option or (b) in the opinion of legal counsel
to the Company, the shares issuable upon exercise of the Option may be issued in accordance with
the terms of an applicable exemption from the registration requirements of the Securities Act. The
inability of the Company to obtain from any regulatory body having jurisdiction the authority, if
any, deemed by the Companys legal 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. As a condition
to the exercise of any Option, the Company may require the Optionee to satisfy any qualifications
that may be necessary or appropriate, to evidence compliance with any applicable law or regulation
and to make any representation or warranty with respect thereto as may be requested by the Company.
10.
Termination or Amendment of Plan
.
The Board may terminate or amend the Plan at any time. No termination or amendment of the
Plan shall affect any then outstanding Option unless expressly provided by the Board. In any
event, no termination or amendment of the Plan may adversely affect any then outstanding Option
without the consent of the Optionee, unless such termination or amendment is required to enable an
Option designated as an Incentive Stock Option to qualify as an Incentive Stock Option or is
necessary to comply with any applicable law, regulation or rule.
11.
Approval of Plan by Shareholders
.
The Plan may be submitted for the approval of the Companys shareholders within twelve (12)
months of the date of the Boards initial adoption of the Plan. Options requiring shareholder
approval may be granted or awarded prior to such shareholder approval, provided that such Options
shall not be exercisable, shall not vest and the restrictions thereon shall not lapse and no shares
of Stock shall be issued pursuant thereto prior to the time when the Plan is approved by the
shareholders, and provided further that if such approval has not been obtained at the end of said
twelve (12) month period, all Options that require shareholder approval and were previously granted
or awarded under the Plan shall thereupon be canceled and become null and void.
12.
No Shareholders Rights
.
Except as otherwise provided herein, an Optionee shall have none of the rights of a
shareholder with respect to shares of Stock covered by any Option until the Optionee becomes the
record owner of such shares of Stock.
13.
Effect of Plans on Other Compensation Plans
.
The adoption of the Plan shall not affect any other compensation or incentive plans in effect
for any Participating Company. Nothing in the Plan shall be construed to limit the right of any
Participating Company: (a) to establish any other forms of incentives or compensation for
Employees, Directors or Consultants of any Participating Company, or (b) to grant or assume options
or other rights or awards otherwise than under the Plan in connection with any proper corporate
purpose including without limitation, the grant or assumption of options in connection with the
acquisition by purchase, lease, merger, consolidation or otherwise, of the business, stock or
assets of any corporation, partnership, limited liability company, firm or association.
14.
Governing Law
.
The Plan and any agreements hereunder shall be administered, interpreted and enforced under
the internal laws of the State of Nevada without regard to conflicts of laws thereof.
15.
Section 409A
.
To the extent that the Board determines that any Option granted under the Plan is subject to
Section 409A of the Code, the Option Agreement evidencing such Option shall incorporate the terms
and conditions required by Section 409A of the Code. To the extent applicable, the Plan and Option
Agreements shall be interpreted in accordance with Section 409A of the Code and Department of
Treasury regulations and other interpretive guidance issued thereunder, including without
limitation any such regulations or other guidance that may be issued after the Effective Date.
Notwithstanding any provision of the Plan to the contrary, in the event that following the
Effective Date the Board determines that any Option may be subject to Section 409A of the Code and
related Department of Treasury guidance (including such Department of Treasury guidance as may be
issued after the Effective Date), the Board may adopt such amendments to the Plan and the
applicable Option Agreement or adopt other policies and procedures (including amendments, policies
and procedures with retroactive effect), or take any
other actions, that the Board determines are necessary or appropriate to (a) exempt the Option
from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided
with respect to the Option, or (b) comply with the requirements of Section 409A of the Code and
related Department of Treasury guidance and thereby avoid the application of any penalty taxes
under such Section.
16.
No Rights to Options
.
No Employee, Director, Consultant or other person shall have any claim to be granted any
Option pursuant to the Plan, and neither the Company nor the Board is obligated to treat Employees,
Directors, Consultants, Optionees or any other persons uniformly.
17.
Relationship to Other Benefits
.
No payment pursuant to the Plan shall be taken into account in determining any benefits under
any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of
any Participating Company except to the extent otherwise expressly provided in writing in such
other plan or an agreement thereunder.
18.
Expenses
.
The expenses of administering the Plan shall be borne by the Participating Companies.
IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that the foregoing sets
forth the Iveda Corporation 2010 Stock Option Plan as duly adopted by the Board on January 18,
2010.
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/s/ Luz Berg
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Luz Berg, Secretary
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