Exhibit 10.1
ALPHA AND OMEGA SEMICONDUCTOR INCOPORATED
CONSULTING AGREEMENT
This Consulting Agreement (the “Agreement”) is entered into on February 3, 2014 by and between
Alpha and Omega Semiconductor Limited
, a Bermuda exempted company, and its affiliates (together, the “Company”), and
Mary Dotz
(“Consultant”).
1.
SERVICES.
1.1
The Company hereby retains Consultant and Consultant agrees to perform for the Company the services described in
Exhibit A
(the “Services”) for a period of six months after January 13, 2014. The Company may amend
Exhibit A
at any time to reflect the business, development and/or production needs of the Company. Consultant will keep the Company advised as to Consultant’s progress in performing the Services and will, as requested by the Company from time to time, promptly prepare written notes and/or reports regarding such progress.
1.2
The Company and Consultant agree that the sole and exclusive compensation for the Services shall be set forth in
Exhibit B
.
2.
CONFIDENTIALITY.
2.1
“Confidential Information” means any proprietary information, technical data, trade secrets or know-how, including research, product ideas, product plans, products, services, customers, customer lists, markets, software, developments, inventions, processes, formulas, technology, designs, drawings, hardware configuration information, marketing, finances or other business information disclosed by the Company, either directly or indirectly in writing, orally or by drawings or inspection of parts or equipment, provided that such information is designated as confidential at the time of disclosure. Confidential Information does not include information which (i) has become publicly known and made generally available through no wrongful act or non-act of Consultant, (ii) has been rightfully received by Consultant from a third party who is authorized to make such disclosure, or (iii) is known by Consultant at the time of disclosure without any obligation of confidentiality to Company .
2.2
Consultant recognizes and acknowledges that in the course of performing the Services, Consultant will have access to Confidential Information. Consultant will not use Confidential Information for any purpose whatsoever other than the performance of the Services on behalf of the Company or disclose any Confidential Information to any third party, including but not limited to insider trading. Confidential
Information shall remain the sole property of the Company. Consultant further agrees to take all reasonable precautions to prevent any unauthorized disclosure of Confidential Information. Without the Company’s prior written approval, Consultant will not directly or indirectly disclose to anyone the existence of this Agreement or the fact that Consultant has this arrangement with the Company. The obligations of this Section 2.2 will terminate one year after the term of this Agreement.
2.3
Consultant will not, during the term of this Agreement, (i) improperly use or disclose any proprietary information or trade secrets of any former or current employer or other person or entity which Consultant is obligated to keep confidential; or (ii) improperly use work time or facilities of the current employer to do any work related to the performance of the Services.
2.4
Consultant recognizes that the Company may from time to time receive confidential or proprietary information from third parties. Consultant is obligated to the Company and such third parties, to hold all such confidential or proprietary information in the strictest confidence, and not to disclose it to any person, firm or corporation or to use it except as necessary in carrying out the Services for the Company consistent with the Company’s agreement with such third party. Company will not, however, disclose such third party information to Consultant without Consultant’s prior approval.
2.5
Upon the termination of this Agreement, or upon Company’s earlier request, Consultant will promptly deliver to the Company all of the Company’s property and Confidential Information in tangible form in Consultant’s possession or control.
3.
INVENTION ASSIGNMENT AND OWNERSHIP.
3.1
Consultant agrees that all copyrightable works, notes, records, drawings, designs, compositions, inventions (whether patentable or not), improvements, developments, discoveries and trade secrets (collectively, the “Works”) conceived, made or discovered by Consultant, either solely or in collaboration with others and either on or off the Company’s premises, in the course of performing the Services which relate in any manner to the business of the Company that Consultant may become associated with in performing the Services hereunder, are the sole property of the Company. Any of the Works that constitute copyrightable subject matter shall be considered “works made for hire” as that term is defined in the United States Copyright Act. Consultant further hereby assigns fully to the Company all right, title and interest in the Works and any copyrights, patents, mask work rights or other intellectual property rights relating to the Works.
3.2
Consultant agrees to assist Company or its designee, at the Company’s expense, to secure the Company’s rights in the Works and any copyrights, patents, mask work rights or other intellectual property rights relating to the Works, in any and all countries as elected by the Company or its designee. Consultant’s obligations under this Section may
include disclosing to the Company all pertinent information and data with respect to the Works, executing all applications, specifications, oaths, assignments and all other instruments that the Company deems necessary in order to obtain such rights and to assign to the Company, its successors, assigns and nominees the sole and exclusive rights, title and interest in and to the Works, and any copyrights, patents, mask work rights or other intellectual property rights relating to the Works. In the event that Consultant fails to execute any such instruments within a reasonable time, Consultant hereby irrevocably appoints the Company and its duly authorized officers and agents as Consultant’s agent and attorney in fact to execute any such instruments and take all other action necessary to effectuate the intent of this Section.
3.3
Consultant hereby attaches, as
Exhibit C
hereto, a list describing all inventions, original works of authorship, developments, improvements, trademarks, discoveries, formulae, trade secret and proprietary information that were made by Consultant prior to his or her retention by the Company. Except as set forth on
Exhibit C
, if in the course of performing the Services, Consultant incorporates into any of the Works developed hereunder any invention, improvement, development, concept, discovery or other proprietary information owned by Consultant or in which Consultant has an interest, the Company is hereby granted a nonexclusive, royalty-free, fully paid-up, irrevocable, worldwide, perpetual license to make, have made, modify, use and sell such items as part of or in connection with the Works.
3.4
Even though Consultant is not an employee, Consultant understands that the provisions hereof requiring invention assignment to the Company may not apply to an invention which qualifies fully under the provisions of California Labor Code Section 2870, attached hereto as
Exhibit D
. However, Consultant shall promptly advise the Company in writing of any inventions that Consultant reasonably believes meet the criteria in the aforementioned Labor Code Section.
4.
CONFLICTING OBLIGATIONS.
Consultant represents and certifies that Consultant has no outstanding agreement or obligation that is in conflict with any of the provisions of this Agreement and Consultant will not enter into any such conflicting agreement during the term of this Agreement. Consultant agrees to diligently adhere to the Conflict of Interest Guidelines, attached hereto as
Exhibit E
. Consultant further agrees not to engage in any other consulting or business activity directly related to the business in which the Company is now involved or becomes involved during the term of this Agreement, if such engagement would negatively impact the Company in any manner.
5.
TERM AND TERMINATION.
5.1
The term of this Agreement will commence on the date of this agreement, and will continue until July 13, 2014 unless extended by mutual written agreement, and unless this Agreement is terminated earlier pursuant to Sec. 5.2.
5.2
The Company may terminate this Agreement at any time during the term of this Agreement by giving written notice to Consultant. Consultant may terminate this Agreement by written notice in the event of a material breach by Company that remains uncured for thirty (30) days after a written notice to cure.
5.3
At the end of the term or upon termination of this Agreement, all rights and duties of the parties toward each other shall cease to exist, provided that:
(a)
The Company shall be obligated to pay, within ten (10) days after the term or termination, all amounts owing to Consultant for Services performed and related expenses, if any, up to the end of the term or the date of termination; and
(b)
Sections 2 (Confidentiality), 3 (Ownership), 5.3 (Survival), and 6-12 (General Provisions) shall survive the term or termination of this Agreement.
6.
NOTICES.
Any notices given under this Agreement shall be in writing, addressed as shown below or at such other address specified by written notice. Notices shall be deemed given upon delivery if personally delivered, three days after deposited in the United States mail, postage prepaid, registered or certified mail, return receipt requested or within forty-eight (48) hours after delivery to an overnight courier service.
7.
ASSIGNMENT; SUCCESSORS AND ASSIGNS.
Neither this Agreement nor any rights or obligations under this Agreement may be assigned or transferred by Consultant without the express written consent of the Company. This Agreement shall inure to the benefit of successors and assigns of the Company, and shall be binding upon the heirs, legal representatives, successors and assigns of Consultant.
8.
INDEPENDENT CONTRACTOR.
Consultant is an independent contractor. Nothing in this Agreement shall be construed to constitute Consultant as an agent, employee or representative of the Company. Consultant shall not be entitled to any Company employment rights or benefits. Consultant shall bear all expenses associated with performing the Services except as expressly provided on
Exhibit B
of this Agreement. Consultant is obligated to report as income all compensation received by Consultant pursuant to this Agreement, and to pay all self-employment and other taxes.
9.
ARBITRATION; EQUITABLE RELIEF.
9.1
Except as provided in Section 9.2 below, the Company and Consultant agree that any dispute or controversy arising out of or relating to this Agreement shall be settled by binding arbitration to be held in the Santa Clara County, California, in accordance with the procedural rules then in effect of the American Arbitration Association. The arbitrator may grant injunctions or other relief in such dispute or controversy. The Company and Consultant shall each pay one-half of the costs and expenses of such arbitration, and each shall separately pay its respective counsel fees and expenses.
9.2
Consultant acknowledges that any breach of Sections 2, 3 and 4 will give rise to irreparable harm to the Company, and that it would be impossible or inadequate to measure the Company’s damages from any such breach. Accordingly, Consultant agrees that, if Consultant breaches Section 2, 3 or 4, the Company will have the right to obtain from any court of competent jurisdiction an injunction restraining such breach or threatened breach and specific performance of any such provision. Consultant further agrees that no bond or other security shall be required in obtaining such equitable relief and that Consultant shall submit to the jurisdiction of such court.
10.
GOVERNING LAW.
This Agreement shall be governed by the laws of the State of California without reference to its conflict of laws provisions.
11.
SEVERABILITY.
If any Section of this Agreement is found by competent authority to be invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such Section in every other respect and the remainder of this Agreement shall continue in effect so long as the Agreement still expresses the intent of the parties. If the intent of the parties cannot be preserved, this Agreement shall be either renegotiated or terminated.
12.
ENTIRE AGREEMENT.
Except for
Exhibit A
, which may be amended by the Company in accordance with Section 1, this Agreement together with its exhibits is the entire agreement of the parties and supersedes any prior agreements between them with respect to the subject matter of this Agreement.
13. LIMITATION OF LIABILITY
Neither party shall be liable to the other party for any indirect, special or consequential damages, or for liability of any kind in excess of the amounts that become due and owing to Consultant under this Agreement, which damages arise out of or relate to this Agreement.
IN WITNESS WHEREOF, the Company and Consultant have caused this Agreement to be signed and delivered, all as of the date first above written.
CONSULTANT ALPHA AND OMEGA SEMICONDUCTOR LIMITED
By:
By:
Name:
Name:
Title:
Address:
EXHIBIT A
SERVICES
Consultant will perform such financial consulting services as are agreed to from time to time by Consultant and the Company’s representative, Yifan Liang.
EXHIBIT B
COMPENSATION
1.
Services
. Consultant shall perform the Services described in
Exhibit A
and as shall further be described to Consultant by the contact person named on
Exhibit A
, and such contact person shall serve as Consultant’s supervisor with regard to the Services and the Works.
2.
Compensation
. As sole and exclusive consideration for all services to be rendered and performed under the Agreement and for assigning the rights to the Company set forth in Section 3 of the Agreement, Company shall pay Consultant at the rate of $375 per hour.
3.
Expenses
. The Company shall reimburse Consultant for all reasonable travel and living expenses incurred by Consultant in performing the Services pursuant to this Agreement, provided Consultant receives prior written consent from Company Contact prior to incurring such expenses.
Consultant shall submit invoices for expenses in a form prescribed by the Company. Such invoices shall be approved by the contact person named on
Exhibit A
. An invoice shall be rendered monthly promptly after the end of each calendar month in which Consultant has rendered services, and shall be payable in full within 10 days after receipt by Company of such an invoice from Consultant.
EXHIBIT C
LIST OF PRIOR INVENTIONS AND ORIGINAL WORKS OF AUTHORSHIP
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Title
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Date
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Identifying Number
or Brief Description
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_____ No inventions or improvements
_____ Additional sheets attached
Signature of Consultant:
Printed Name of Consultant:
Date:
EXHIBIT D
CALIFORNIA LABOR CODE SECTION 2870
EMPLOYMENT AGREEMENTS; ASSIGNMENT OF RIGHTS
“(a) Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret information except for those inventions that either:
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(1)
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Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer.
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(2) Result from any work performed by the employee for the employer.
(b) To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable.”
EXHIBIT E
CONFLICT OF INTEREST GUIDELINES
It is the policy of Alpha and Omega Semiconductor to conduct its affairs in strict compliance with the letter and spirit of the law and to adhere to the highest principles of business ethics. Accordingly, all officers, employees and independent contractors must avoid activities that are in conflict, or give the appearance of being in conflict, with these principles and with the interests of the Company. The following are potentially compromising situations that must be avoided. Any exceptions must be reported to the CEO of the Company and written approval for continuation must be obtained from the CEO.
1.
Revealing Confidential Information to outsiders or misusing Confidential Information. Unauthorized divulging of Confidential Information is a violation of this policy whether or not for personal gain and whether or not harm to the Company is intended.
2.
Accepting or offering substantial gifts, excessive entertainment, favors or payments that may be deemed to constitute undue influence or otherwise be improper or embarrassing to the Company.
3.
Participating in civic or professional organizations that might involve divulging Confidential Information.
4.
Initiating or approving personnel actions affecting reward or punishment of employees or applicants where there is a family relationship or is or appears to be a personal or social involvement.
5.
Initiating, participating or approving any form of personal, social or sexual harassment of employees or other consultants of the Company.
6.
Investing or holding outside directorships in suppliers, customers or competing companies, including financial speculation, where such investment or directorship might influence in any manner a decision or course of action of the Company.
7.
Borrowing from or lending to employees, customers or suppliers of the Company.
8.
Acquiring real estate of interest to the Company.
9.
Improperly using or disclosing to the Company any proprietary information or trade secrets of any former or concurrent employer or other person or entity with whom obligations of confidentiality exist.
10.
Discussing unlawfully or without proper authorization prices, costs, customers, suppliers, sales or markets of the Company with competing companies or their employees.
11.
Making any unlawful agreements with distributors with respect to prices.
12.
Improperly using or authorizing the use of any invention that is the subject of a patent claim of any other person or entity.
13.
Engaging in any conduct that is not in the best interest of the Company.
Each officer, employee and independent contractor must take every necessary action to ensure compliance with these guidelines and to bring problem areas to the attention of the higher management of the Company for review. Violations of this conflict of interest policy may result in immediate discharge and/or termination of the business relationship.
Exhibit 10.2
ALPHA AND OMEGA SEMICONDUCTOR LIMITED
2009 SHARE OPTION/SHARE ISSUANCE PLAN
(AS AMENDED AND RESTATED ON March 24, 2014)
ARTICLE 1
GENERAL PROVISIONS
This 2009 Share Option/Share Issuance Plan is intended to promote the interests of Alpha and Omega Semiconductor Limited, a company incorporated and existing under the laws of the Islands of Bermuda, by providing eligible persons in the Company’s employ or service with the opportunity to acquire a proprietary interest, or otherwise increase their proprietary interest, in the Company as an incentive for them to continue in such employ or service.
The Plan serves as the successor to the Company’s 2000 Share Plan (the “Predecessor Plan”), and no further awards shall be granted under the Predecessor Plan after the Plan Effective Date. All awards outstanding under the Predecessor Plan on the Plan Effective Date shall continue to be governed solely by the terms of the documents evidencing such award, and no provision of the Plan shall be deemed to affect or otherwise modify the rights or obligations of the holders of such awards.
This amendment and restatement of the Plan shall be effective on the Underwriting Date.
Capitalized terms herein shall have the meanings assigned to such terms in the attached Appendix.
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II.
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STRUCTURE OF THE PLAN
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A.
The Plan shall be divided into three (3) separate equity programs:
(i)
the Discretionary Grant Program under which eligible persons may, at the discretion of the Plan Administrator, be granted options to purchase Common Shares and share appreciation rights tied to the value of such Common Shares,
(ii)
the Share Issuance Program under which eligible persons may, at the discretion of the Plan Administrator, be issued Common Shares directly, either through the immediate purchase of such shares or as a bonus for services rendered the Company (or any Parent or Subsidiary) or pursuant to restricted share units or other share
right awards which vest upon the completion of a designated service period or the attainment of pre-established performance milestones, and
(iii)
the Automatic Grant Program under which eligible non-employee Board members shall automatically receive awards at designated intervals over their period of continued Board service.
B.
The provisions of Articles One and Five shall apply to all equity programs under the Plan and shall accordingly govern the interests of all persons under the Plan.
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III.
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ADMINISTRATION OF THE PLAN
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A.
The Primary Committee shall have sole and exclusive authority to administer the Discretionary Grant and Stock Issuance Programs with respect to executive officers and non-employee Board members. However, any awards for members of the Primary Committee (other than pursuant to the Automatic Grant Program) must be authorized by a disinterested majority of the Board. Administration of the Discretionary Grant and Stock Issuance Programs with respect to all other persons eligible to participate in those programs may, at the Board’s discretion, be vested in the Primary Committee or a Secondary Committee, or the Board may retain the power to administer those programs with respect to all such persons. Members of the Primary Committee or any Secondary Committee shall serve for such period of time as the Board may determine and shall be subject to removal by the Board at any time. The Board may also at any time terminate the functions of any Secondary Committee and reassume all powers and authority previously delegated to such committee.
B.
Each Plan Administrator shall, within the scope of its administrative functions under the Plan, have full power and authority (subject to the provisions of the Plan) to establish such rules and regulations as it may deem appropriate for proper administration of the Discretionary Grant and Stock Issuance Programs and to make such determinations under, and issue such interpretations of, the provisions of those programs and any outstanding awards thereunder as it may deem necessary or advisable. Decisions of the Plan Administrator within the scope of its administrative functions under the Plan shall be final and binding on all parties who have an interest in the Discretionary Grant and Stock Issuance Programs under its jurisdiction or any award thereunder.
C.
Service as a Plan Administrator by the members of the Primary Committee or the Secondary Committee shall constitute service as Board members, and the members of each such committee shall accordingly be entitled to full indemnification and reimbursement as Board members for their service on such committee. No member of the Primary Committee or the Secondary Committee shall be liable for any act or omission made in good faith with respect to the Plan or any award thereunder.
D.
Administration of the Automatic Grant Program shall be self-executing in accordance with the terms of that program, and no Plan Administrator shall exercise any discretionary functions with respect to any awards made under that program.
A.
The persons eligible to participate in the Plan are as follows:
(i)
Employees,
(ii)
non-employee members of the Board or the non-employee members of the board of directors of any Parent or Subsidiary, and
(iii)
consultants and other independent advisors who provide services to the Company (or any Parent or Subsidiary).
B.
The Plan Administrator shall have full authority to determine, (i) with respect to the awards of options or share appreciation rights under the Discretionary Grant Program, which eligible persons are to receive such awards, the time or times when those awards are to be made, the number of shares to be covered by each such award, the exercise or vesting schedule (if any) applicable to the award, the maximum term for which such award is to remain outstanding and the status of a granted option as either an Incentive Option or a Non-Statutory Option and, and (ii) with respect to share issuances or other share-based awards under the Share Issuance Program, which eligible persons are to receive such issuances or awards, the time or times when those issuances or awards are to be made, the number of shares subject to such issuance or award, the applicable vesting schedule and the cash consideration (if any) to be paid by the Participant for such shares.
C.
The Plan Administrator shall have the absolute discretion either to grant options or share appreciation rights in accordance with the Discretionary Grant Program or to effect share issuances and other share-based awards in accordance with the Share Issuance Program.
D.
The individuals who shall be eligible to participate in the Automatic Grant Program shall be limited to (i) those individuals who first become non-employee Board members on or after the Underwriting Date, whether through appointment by the Board or election by the Company’s shareholders, and (ii) those individuals who continue to serve as non-employee Board members on or after the Underwriting Date. A non-employee Board member who has previously been in the employ of the Company (or any Parent or Subsidiary) shall not be eligible to receive a grant under the Automatic Grant Program at the time he or she first becomes a non-employee Board member, but shall be eligible to receive periodic grants under the Automatic Grant Program while he or she continues to serve as a non-employee Board member.
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V.
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SHARES SUBJECT TO THE PLAN
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A.
The shares issuable under the Plan shall be authorized but unissued or reacquired Common Shares. The maximum number of Common Shares which may initially be issued over the term of the Plan shall not exceed one million one hundred and fifty thousand (1,150,000) shares. Such reserve consists of (i) the number of Common Shares remaining available for issuance, as of the Plan Effective Date, under the Predecessor Plan as last approved by the Company’s shareholders (excluding shares subject to outstanding awards under the Predecessor Plan), plus (ii) an additional increase of nine hundred ten thousand five hundred and ninety (910,590)
shares. To the extent any options outstanding under the Predecessor Plan on the Plan Effective Date expire or terminate unexercised or without the issuance of shares thereunder, the number of Common Shares subject to those expired or terminated options at the time of expiration or termination shall be added to the share reserve under this Plan and shall accordingly be available for issuance hereunder, up to a maximum of an additional one hundred thousand (100,000) shares.
B.
The number of Common Shares available for issuance under the Plan shall automatically increase on the first trading day of January each calendar year during the term of the Plan, beginning with the calendar year 2011, by an amount equal to three percent (3%) of the total number of Common Shares outstanding on the last trading day in December of the immediately preceding calendar year, but in no event shall such annual increase exceed seven hundred and fifty thousand (750,000) shares.
C.
No one person participating in the Plan may receive share options, stand-alone share appreciation rights, direct share issuances (whether vested or unvested) or other share-based awards (whether in the form of restricted share units or other share-right awards) for more than two hundred and fifty thousand (250,000) Common Shares in the aggregate per calendar year; provided, however, that the limit shall be four hundred thousand (400,000) Common Shares for the calendar year in which the individual is initially hired.
D.
The maximum number of Common Shares that may be issued pursuant to Incentive Options granted under the Plan shall not exceed one million one hundred and fifty thousand (1,150,000) shares increased, on the first trading day of January each year beginning with the calendar year 2011, by the number of shares by which the share reserve is to automatically increase on such date up to a maximum of seven hundred and fifty thousand (750,000) shares.
E.
Common Shares subject to outstanding options, share appreciation rights, restricted share units or other share right awards shall be available for subsequent issuance under the Plan to the extent (i) those options, rights, units or awards, expire, terminate or are cancelled for any reason prior to the issuance of the underlying Common Shares or (ii) the options are cancelled in accordance with the cancellation-regrant provisions of Article Two. Unvested shares issued under the Plan and subsequently forfeited or repurchased by the Company, at a price per share not greater than the option exercise or direct issue price paid per share, pursuant to the Company’s repurchase rights under the Plan shall be added back to the number of Common Shares reserved for issuance under the Plan and shall accordingly be available for reissuance through one or more subsequent awards under the Plan. Should the exercise price of an option under the Plan be paid with Common Shares, then the authorized reserve of Common Shares under the Plan shall be reduced only by the net number of shares issued under the exercised option and not by the gross number of shares for which that option is exercised. Upon the exercise of any share appreciation right under the Plan, the share reserve shall be reduced only by the net number of shares actually issued by the Company upon such exercise and not by the gross number of shares as to which such right is exercised. If Common Shares otherwise issuable under the Plan are withheld by the Company in satisfaction of the withholding taxes incurred in connection with the issuance, vesting or exercise of an award under the Plan or the issuance of Common Shares thereunder, then the number of Common Shares
available for issuance under the Plan shall be reduced by the net number of shares issued, vested or exercised under such award, calculated in each instance after such share withholding.
F.
In the event of any of the following transactions affecting the outstanding Common Shares as a class without the Company’s receipt of consideration: any share split, share dividend, spin-off transaction, extraordinary distribution (whether in cash, securities or other property), recapitalization, combination of shares, exchange of shares or other similar transaction affecting the outstanding Common Shares without the Company’s receipt of consideration or in the event of a substantial reduction to the value of the outstanding Common Shares by reason of a spin-off transaction or extraordinary distribution, then equitable adjustments shall be made to (i) the maximum number and/or class of securities issuable under the Plan, (ii) the maximum number and/or class of securities by which the share reserve under the Plan may increase by reason of the expiration or termination of options under the Predecessor Plan, (iii) the number and/or class of securities by which the share reserve is to increase each calendar year pursuant to the automatic share increase provisions of the Plan, (iv) the number and/or class of securities that may be issued pursuant to Incentive Options granted under the Plan, (v) the maximum number and/or class of securities for which awards may subsequently be made to new and continuing non-employee Board members under the Automatic Grant Program, (vi) the number and/or class of securities and the exercise or base price per share in effect under each outstanding option or share appreciation right, (vii) the number and/or class of securities subject to each outstanding restricted share unit or other share right award and the cash consideration (if any) payable per share and (vii) the number and/or class of securities for which any one person may be granted options, stand-alone share appreciation rights, direct share issuances and other share-based awards under the Plan per calendar year. The adjustments shall be made by the Plan Administrator in such manner as the Plan Administrator deems appropriate, and those adjustments shall be final, binding and conclusive. In no event shall any such adjustments be made in connection with the conversion of one or more outstanding securities of the Company.
ARTICLE 2
DISCRETIONARY GRANT PROGRAM
Each option shall be evidenced by one or more documents in the form approved by the Plan Administrator; provided, however, that each such document shall comply with the terms specified below. Each document evidencing an Incentive Option shall, in addition, be subject to the provisions of the Plan applicable to such options.
C.
Exercise Price
.
2.
The exercise price per share shall be fixed by the Plan Administrator but shall not be less than one hundred percent (100%) of the Fair Market Value per Common Share on the option grant date.
3.
The exercise price shall become immediately due upon exercise of the option and shall, subject to the provisions of Section I of Article Five and the documents evidencing the option, be payable in one or more of the forms specified below:
(i)
cash or check made payable to the Company,
(ii)
Common Shares (whether delivered in the form of actual share certificates or through attestation of ownership) held for the period (if any) necessary to avoid a charge to the Company’s earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date, or
(iii)
to the extent the option is exercised for vested shares, through a special sale and remittance procedure pursuant to which the Optionee shall concurrently provide irrevocable instructions (A) to a brokerage firm (reasonably satisfactory to the Company for purposes of administering such procedure in compliance with any applicable pre-clearance or pre-notification requirements) to effect the immediate sale of the purchased shares and remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased shares plus all applicable Taxes required to be withheld by the Company by reason of such exercise and (B) to the Company to deliver the certificates for the purchased shares directly to such brokerage firm on the settlement date in order to complete the sale.
Except to the extent such sale and remittance procedure is utilized, payment of the exercise price for the purchased shares must be made on the Exercise Date.
D.
Exercise and Term of Options
. Each option shall be exercisable at such time or times, during such period and for such number of shares as shall be determined by the Plan Administrator and set forth in the documents evidencing the option grant. However, no option shall have a term in excess of ten (10) years measured from the option grant date.
E.
Effect of Termination of Service
.
1.
The following provisions shall govern the exercise of any options held by the Optionee at the time of cessation of Service or death:
(iv)
Any option outstanding at the time of the Optionee’s cessation of Service for any reason shall remain exercisable for such period of time thereafter as shall be determined by the Plan Administrator and set forth in the documents evidencing the option, but no such option shall be exercisable after the expiration of the option term.
(v)
Any option held by the Optionee at the time of the Optionee’s death and exercisable in whole or in part at that time may be subsequently exercised by the personal representative of the Optionee’s estate or by the person or persons to whom the option is transferred pursuant to the Optionee’s will or the laws of inheritance or by the Optionee’s designated beneficiary or beneficiaries of that option.
(vi)
Should the Optionee’s Service be terminated for Misconduct or should the Optionee otherwise engage in Misconduct while holding one or more outstanding options granted under this Article Two, then all of those options shall terminate immediately and cease to be outstanding.
(vii)
Under no circumstances, however, shall any such option be exercisable after the specified expiration of the option term.
(viii)
During the applicable post-Service exercise period, the option may not be exercised in the aggregate for more than the number of vested shares for which the option is exercisable on the date of the Optionee’s cessation of Service. No additional shares shall vest under the option following the Optionee’s cessation of Service, except to the extent (if any) specifically authorized by the Plan Administrator in its sole discretion pursuant to an express written agreement with the Optionee. Upon the expiration of the applicable exercise period or (if earlier) upon the expiration of the option term, the option shall terminate and cease to be outstanding.
2.
The Plan Administrator shall have the discretion, exercisable either at the time an option is granted or at any time while the option remains outstanding, to:
(i)
extend the period of time for which the option is to remain exercisable following the Optionee’s cessation of Service or death from the limited period otherwise in effect for that option to such greater period of time as the Plan Administrator shall deem appropriate, but in no event beyond the expiration of the option term, and/or
(ii)
permit the option to be exercised, during the applicable post-Service exercise period, not only with respect to the number of vested Common Shares for which such option is exercisable at the time of the Optionee’s cessation of Service but also with respect to one or more additional installments in which the Optionee would have vested under the option had the Optionee continued in Service.
F.
Shareholder Rights
. The holder of an option shall have no shareholder rights with respect to the shares subject to the option until such person shall have exercised the option, paid the exercise price and become the recordholder of the purchased shares.
G.
Unvested Shares
. The Plan Administrator shall have the discretion to grant options which are exercisable for unvested Common Shares. Should the Optionee cease Service while holding such unvested shares, the Company shall have the right to repurchase any or all of those unvested shares at a price per share equal to the lower of (i) the exercise price paid per share or (ii) the Fair Market Value per Common Share at the time of Optionee’s cessation of Service. The terms upon which such repurchase right shall be exercisable (including the period and procedure for exercise and the appropriate vesting schedule for the purchased shares) shall be established by the Plan Administrator and set forth in the document evidencing such repurchase right.
H.
Limited Transferability of Options
.
1.
An Incentive Stock Option shall be exercisable only by the Optionee during his or her lifetime, and such Incentive Stock Option, together with the Common Shares subject to that option during the period prior to exercise, shall not be assignable or transferable other than by will or by the laws of inheritance following the Optionee’s death.
2.
A Non-Statutory Option, together with the Common Shares subject to that option during the period prior to exercise, shall be subject to the same transfer restrictions as set forth in subparagraph 1 above, except that a Non-Statutory Option, together with the underlying unexercised Common Shares, may to the extent permitted by the Plan Administrator be assigned in whole or in part during the Optionee’s lifetime by gift or pursuant to a domestic relations order to one or more of the Optionee’s Family Members or to a trust established exclusively for the Optionee and/or one or more such Family Members. The assigned portion may only be exercised by the person or persons who acquire a proprietary interest in the Non-Statutory Option pursuant to the assignment. The terms applicable to the assigned portion shall be the same as those in effect for the option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Plan Administrator may deem appropriate.
3.
Notwithstanding subparagraphs 1 and 2 above, the Optionee may also, to the extent permitted by the Plan Administrator, designate one or more Family Members as the beneficiary or beneficiaries of his or her outstanding options under the Plan, and those options shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon the Optionee’s death while holding those options. Such beneficiary or beneficiaries shall take the transferred options subject to all the terms and conditions of the applicable agreement evidencing each such transferred option, including (without limitation) the limited time period during which the option may be exercised following the Optionee’s death.
The terms specified below shall be applicable to all Incentive Options. Except as modified by the provisions of this Section II, all the provisions of Articles One, Two and Four shall
be applicable to Incentive Options. Options which are specifically designated as Non-Statutory Options shall not be subject to the terms of this Section II.
E.
Eligibility
. Incentive Options may only be granted to Employees.
F.
Dollar Limitation
. The aggregate Fair Market Value of the Common Shares (determined as of the respective date or dates of grant) for which one or more options granted to any Employee under the Plan (or any other option plan of the Company or any Parent or Subsidiary) may for the first time become exercisable as Incentive Options during any one (1) calendar year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the Employee holds two (2) or more such options which become exercisable for the first time in the same calendar year, the foregoing limitation on the exercisability of such options as Incentive Options shall be applied on the basis of the order in which such options are granted, except to the extent otherwise provided under applicable law or regulation.
G.
10% Shareholder
. If any Employee to whom an Incentive Option is granted is a 10% Shareholder, then the option term shall not exceed five (5) years measured from the option grant date, and the exercise price per share shall not be less than one hundred ten percent (110%) of the Fair Market Value per Common Share on the option grant date.
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III.
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SHARE APPRECIATION RIGHTS
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E.
Authority
. The Plan Administrator shall have full power and authority, exercisable in its sole discretion, to grant share appreciation rights in accordance with this Section III to selected individuals eligible to participate in the Discretionary Grant Program.
F.
Types
. Two types of share appreciation rights shall be authorized for issuance under this Section III: (i) tandem share appreciation rights (“Tandem Rights”) and (ii) Stand-Alone share appreciation rights (“Stand-Alone Rights”).
G.
Tandem Rights
. The following terms and conditions shall govern the grant and exercise of Tandem Rights.
1.
One or more Optionees may be granted a Tandem Right, exercisable upon such terms and conditions as the Plan Administrator may establish, to elect between the exercise of the underlying option for Common Shares or the surrender of that option in exchange for a distribution from the Company in an amount equal to the excess of (i) the Fair Market Value (on the option surrender date) of the number of shares in which the Optionee is at the time vested under the surrendered option (or surrendered portion thereof) over (ii) the aggregate exercise price payable for such vested shares.
2.
Any distribution to which the Optionee becomes entitled upon the exercise of a Tandem Right may be made in (i) Common Shares valued at Fair Market Value on the option surrender date, (ii) cash or (iii) a combination of cash and Common Shares, as the Plan Administrator shall determine in its sole discretion. Unless otherwise specified in the applicable award agreement, the distribution shall be made in Common Shares.
H.
Stand-Alone Rights
. The following terms and conditions shall govern the grant and exercise of Stand-Alone Rights:
1.
One or more individuals may be granted a Stand-Alone Right not tied to any underlying option under this Discretionary Grant Program. The Stand-Alone Right shall relate to a specified number of Common Shares and shall be exercisable upon such terms and conditions as the Plan Administrator may establish. In no event, however, may the Stand-Alone Right have a maximum term in excess of ten (10) years measured from the grant date.
2.
Upon exercise of the Stand-Alone Right, the holder shall be entitled to receive a distribution from the Company in an amount equal to the excess of (i) the aggregate Fair Market Value (on the exercise date) of the Common Shares underlying the exercised right over (ii) the aggregate base price in effect for those shares.
3.
The number of Common Shares underlying each Stand-Alone Right and the base price in effect for those shares shall be determined by the Plan Administrator in its sole discretion at the time the Stand-Alone Right is granted. In no event, however, may the base price per share be less than the Fair Market Value per Common Share on the grant date.
4.
Stand-Alone Rights shall be subject to the same transferability restrictions applicable to Non-Statutory Options under Section I.F of this Article Two. In addition, one or more beneficiaries may be designated for an outstanding Stand-Alone Right in accordance with substantially the same terms and provisions as set forth in Section I.F of this Article Two.
5.
The distribution with respect to an exercised Stand-Alone Right may be made in (i) Common Shares valued at Fair Market Value on the exercise date, (ii) cash or (iii) a combination of cash and Common Shares, as the Plan Administrator shall determine in its sole discretion. Unless otherwise specified in the applicable Award Agreement, the distribution shall be made in Common Shares.
6.
The holder of a Stand-Alone Right shall have no shareholder rights with respect to the shares subject to the Stand-Alone Right unless and until such person shall have exercised the Stand-Alone Right and become a holder of record of the Common Shares issued upon the exercise of such Stand-Alone Right.
I.
Post-Service Exercise
. The provisions governing the exercise of Tandem and Stand-Alone Rights following the cessation of the recipient’s Service shall be the same as those set forth in Section I.C of this Article Two for the options granted under the Discretionary Grant Program, and the Plan Administrator’s discretionary authority under Section I.C.2 of this Article Two shall also extend to any outstanding Tandem or Stand-Alone Appreciation Rights.
G.
The shares subject to each award outstanding under the Discretionary Grant Program at the time of a Change in Control shall automatically vest in full so that each such award shall, immediately prior to the effective date of the Change in Control, become exercisable for all
of the Common Shares at the time subject to that award and may be exercised for any or all of those shares as fully-vested Common Shares. However, the shares subject to an outstanding award shall not vest on such an accelerated basis if and to the extent: (i) such award is assumed by the successor company (or parent thereof) or otherwise continued in full force and effect pursuant to the terms of the Change in Control transaction and any repurchase rights of the Company with respect to any unvested shares purchasable under the option are concurrently assigned to such successor company (or parent thereof) or otherwise continued in effect or (ii) the acceleration of such award is subject to other limitations imposed by the Plan Administrator at the time of grant.
H.
All outstanding repurchase rights shall also terminate automatically, and the Common Shares subject to those terminated rights shall immediately vest in full, in the event of any Change in Control, except to the extent: (i) those repurchase rights are assigned to the successor company (or parent thereof) or otherwise continued in full force and effect pursuant to the terms of the Change in Control transaction or (ii) such accelerated vesting is precluded by other limitations imposed by the Plan Administrator at the time the repurchase right is issued.
I.
Immediately following the consummation of the Change in Control, all outstanding awards under this Discretionary Grant Program shall terminate and cease to be outstanding, except to the extent assumed by the successor company (or parent thereof) or otherwise continued in effect pursuant to the terms of the Change in Control transaction.
J.
Each award which is assumed in connection with a Change in Control or otherwise continued in effect shall be appropriately adjusted, immediately after such Change in Control, to apply to the number and class of securities which would have been issuable to the Optionee in consummation of such Change in Control, had the award been exercised immediately prior to such Change in Control. Appropriate adjustments shall also be made to (i) the exercise or base price payable per share under each outstanding award, provided the aggregate exercise or base price payable for such securities shall remain the same, (ii) the number and class of securities available for issuance under the Plan following the consummation of such Change in Control, (iii) the number and/or class of securities by which the share reserve under the Plan is to increase automatically each calendar year pursuant to the automatic share increase provisions of the Plan, (iv) the number and/or class of securities that may be issued pursuant to Incentive Options granted under the Plan, (v) the number and/or class of securities for which any one person may be granted awards under the Plan per calendar year, (vi) the number and/or class of securities subject to each outstanding award under the Stock Issuance Program and the cash consideration (if any) payable per share, (vii) the number and/or class of securities subject to each outstanding award under the Automatic Grant Program and the cash consideration (if any) payable per share, (viii) the number and/or class of securities for which awards may subsequently be made to new and continuing non-employee Board members under the Automatic Grant Program and (ix) the number and/or class of securities subject to the Company’s outstanding repurchase rights under the Plan and the repurchase price payable per share. To the extent the actual holders of the Company’s outstanding Common Shares receive cash consideration for their Common Shares in consummation of the Change in Control, the successor company may, in connection with the assumption or continuation of the outstanding awards under this Discretionary Grant Program, substitute one or more shares of its
own common stock with a fair market value equivalent to the cash consideration paid per Common Share in such Change in Control.
K.
The Plan Administrator shall have the discretion, exercisable either at the time the award is granted under the Discretionary Grant Program or at any time while the award remains outstanding, to structure one or more awards so that those awards shall, immediately prior to the effective date of an actual Change in Control transaction, vest and become exercisable as to all the Common Shares at the time subject to those awards and may be exercised as to any or all of those shares as fully vested Common Shares, whether or not those awards are to be assumed in the Change in Control or otherwise continued in effect. In addition, the Plan Administrator shall have the discretionary authority to structure one or more of the Company’s repurchase rights under this Discretionary Grant Program so that those rights shall terminate immediately prior to the effective date of an actual Change in Control transaction, and the shares subject to those terminated rights shall thereupon vest in full.
L.
The Plan Administrator shall also have full power and authority, exercisable either at the time the award is granted or at any time while the award remains outstanding, to structure such award so that the shares subject to that award will automatically vest on an accelerated basis should the Optionee’s Service terminate by reason of an Involuntary Termination within a designated period (not to exceed eighteen (18) months) following the effective date of any Change in Control in which the award is assumed or otherwise continued in effect and the repurchase rights applicable to those shares do not otherwise terminate. Any award so accelerated shall remain exercisable for the fully-vested shares until the expiration or sooner termination of the award term. In addition, the Plan Administrator may provide that one or more of the Company’s outstanding repurchase rights with respect to shares held by the Optionee at the time of such Involuntary Termination shall immediately terminate on an accelerated basis, and the shares subject to those terminated rights shall accordingly vest at that time.
M.
The portion of any Incentive Option accelerated in connection with a Change in Control shall remain exercisable as an Incentive Option only to the extent the applicable One Hundred Thousand Dollar ($100,000) limitation is not exceeded. To the extent such dollar limitation is exceeded, the accelerated portion of such option shall be exercisable as a Non-Statutory Option under the Federal tax laws.
N.
The grant of options and share appreciation rights under the Plan shall in no way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.
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V.
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CANCELLATION AND REGRANT OF OPTIONS AND SHARE APPRECIATION RIGHTS
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A.
The Plan Administrator shall have the authority to effect, at any time and from time to time, with the consent of the affected award holders, the cancellation of any or all outstanding options or share appreciation rights under the Plan and to grant in substitution therefor one or more of the following: (i) new options or share appreciation rights covering the same or
different number of Common Shares but with an exercise or base price per share based on the Fair Market Value per Common Share on the new award grant date or (ii) cash or equity securities of the Company, whether vested or unvested.
B.
The Plan Administrator shall also have the authority, exercisable at any time and from time to time, with the consent of the affected holders, to reduce the exercise or base price of one or more outstanding options or share appreciation rights to a price not less than the then current Fair Market Value per Common Share or issue new options or share appreciation rights with a lower exercise or base price in immediate cancellation of outstanding options or share appreciation rights with a higher exercise or base price
ARTICLE 3
SHARE ISSUANCE PROGRAM
Common Shares may be issued under the Share Issuance Program through direct and immediate issuances. Each such share issuance shall be evidenced by a Share Issuance Agreement which complies with the terms specified below. Common Shares may also be issued under the Share Issuance Program pursuant to share right awards or restricted share units.
H.
Issue Price
.
3.
The issue price per share shall be fixed by the Plan Administrator but shall not be less than one hundred percent (100%) of the Fair Market Value per Common Share on the issue date.
4.
Subject to the provisions of Section I of Article Four, Common Shares may be issued under the Share Issuance Program for any of the following items of consideration which the Plan Administrator may deem appropriate in each individual instance:
(i)
cash or check made payable to the Company,
(ii)
services rendered or to be rendered to the Company (or any Parent or Subsidiary), or
(iii)
any other valid consideration under the Companies Act 1981 (Bermuda), as amended.
I.
Vesting Provisions
.
7.
Common Shares issued under the Share Issuance Program may, in the discretion of the Plan Administrator, be fully and immediately vested upon issuance or may vest in one or more installments over the Participant’s period of Service or upon attainment of specified performance objectives. Common Shares may also be issued under the Share Issuance Program pursuant to share right awards or restricted share units which entitle the recipients to receive the shares underlying those awards or units upon the attainment of designated performance goals or the satisfaction of specified Service requirements or upon the expiration of a designated time period following the vesting of those awards or units, including (without limitation) a deferred distribution date following the termination of the Participant’s Service.
8.
Any new, substituted or additional securities or other property (including money paid other than as a regular cash dividend) which the Participant may have the right to receive with respect to the Participant’s unvested Common Shares by reason of any share dividend, share split, spin-off transaction, extraordinary distribution (whether in cash, securities or other property), recapitalization, combination of shares, exchange of shares or other similar change
affecting the outstanding Common Shares as a class without the Company’s receipt of consideration shall be issued subject to (i) the same vesting requirements applicable to the Participant’s unvested Common Shares and (ii) such escrow arrangements as the Plan Administrator shall deem appropriate. Equitable adjustments to reflect each such transaction shall also be made by the Plan Administrator to the repurchase price payable per share by the Company for any unvested securities subject to its existing repurchase rights under the Plan; provided the aggregate repurchase price shall in each instance remain the same.
9.
The Participant shall have full shareholder rights with respect to any Common Shares issued to the Participant under the Share Issuance Program, whether or not the Participant’s interest in those shares is vested. Accordingly, the Participant shall have the right to vote such shares and to receive any regular cash dividends paid on such shares. The Participant shall not have any shareholder rights with respect to the Common Shares subject to a share right award or restricted share unit until that award or unit vests and the Common Shares are actually issued thereunder. However, dividend-equivalent units may be paid or credited, either in cash or in actual or phantom Common Shares, on outstanding share right awards or restricted share unit, subject to such terms and conditions as the Plan Administrator may deem appropriate.
10.
Should the Participant cease to remain in Service while holding one or more unvested Common Shares issued under the Share Issuance Program or should the performance objectives not be attained with respect to one or more such unvested Common Shares, then those shares shall be immediately surrendered to the Company for cancellation, and the Participant shall have no further shareholder rights with respect to those shares. To the extent the surrendered shares were previously issued to the Participant for consideration paid in cash or cash equivalent (including the Participant’s purchase-money indebtedness), the Company shall repay to the Participant the lower of (i) the cash consideration paid for the surrendered shares or (ii) the Fair Market Value of those shares at the time of Participant’s cessation of Service and shall cancel the unpaid principal balance of any outstanding purchase-money note of the Participant attributable to such surrendered shares by the applicable clause (i) or (ii) amount.
11.
The Plan Administrator may in its discretion waive the surrender and cancellation of one or more unvested Common Shares (or other assets attributable thereto) which would otherwise occur upon the non-completion of the vesting schedule applicable to those shares. Such waiver shall result in the immediate vesting of the Participant’s interest in the Common Shares as to which the waiver applies. Such waiver may be effected at any time, whether before or after the Participant’s cessation of Service or the attainment or non-attainment of the applicable performance objectives.
12.
Outstanding share right awards or restricted share units shall automatically terminate, and Common Shares shall not be issued in satisfaction of those awards or units, if the performance goals or Service requirements established for such awards or units are not attained or satisfied. The Plan Administrator, however, shall have the discretionary authority to issue vested Common Shares under one or more outstanding share right awards or restricted share units as to which the designated performance goals or Service requirements have not been attained or satisfied.
J.
Upon the occurrence of a Change in Control, all outstanding repurchase rights under the Share Issuance Program shall terminate automatically, and the Common Shares subject to those terminated rights shall immediately vest in full, except to the extent: (i) those repurchase rights are assigned to the successor company (or parent thereof) or otherwise continued in full force and effect pursuant to the terms of the Change in Control transaction or (ii) such accelerated vesting is precluded by other limitations imposed by the Plan Administrator at the time the repurchase right is issued.
K.
Each share right award or restricted share unit outstanding at the time of a Change in Control shall be assumable by the successor company (or parent thereof) or may otherwise be continued in effect pursuant to the terms of such Change in Control transaction. Each share right award or restricted share unit which is so assumed or otherwise continued in effect shall be adjusted immediately after the consummation of that Change in Control so as to apply to the number and class of securities into which the Common Shares subject to the award immediately prior to the Change in Control would have been converted in consummation of such Change in Control had those shares actually been outstanding at that time. Appropriate adjustments shall also be made to the cash consideration (if any) price payable per share under each outstanding share right award or restricted share unit, provided the aggregate cash consideration payable for such securities shall remain the same. To the extent the actual holders of the Company’s outstanding Common Shares receive cash consideration for their Common Shares in consummation of the Change in Control, the successor company may, in connection with the assumption or continuation of the outstanding share right awards or restricted share units, substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per Common Share in such Change in Control transaction. If any such share right award or restricted share unit is not so assumed or otherwise continued in effect,
then such award or unit shall vest, and the Common Shares subject to such award or unit shall become issuable, immediately prior to the consummation of the Change in Control.
L.
The Plan Administrator shall have the discretionary authority to structure one or more unvested share issuances or one or more share right awards or restricted share units under the Share Issuance Program so that the Common Shares subject to those issuances or awards or units shall automatically vest (or vest and become issuable) in whole or in part immediately upon the occurrence of a Change in Control or upon the subsequent termination of the Participant’s Service by reason of an Involuntary Termination within a designated period (not to exceed eighteen (18) months) following the effective date of that Change in Control transaction.
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III.
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SHARE ESCROW/LEGENDS
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Unvested shares may, in the Plan Administrator’s discretion, be held in escrow by the Company until the Participant’s interest in such shares vests or may be issued directly to the Participant with restrictive legends on the certificates evidencing those unvested shares.
ARTICLE 4
AUTOMATIC GRANT PROGRAM
M.
Automatic Grants.
1.
Grants On or After
________
, 2014
. The awards to be made pursuant to the Automatic Grant Program on or after
____________
, 2014 shall be as follows:
(i)
On the date of each annual shareholders meeting, beginning with the 2014 Annual Shareholders Meeting, each individual who commences service as a non-employee Board member by reason of his or her election to the Board at such annual meeting and each individual who is to continue to serve as a non-employee Board member, whether or not that individual is standing for re-election to the Board at that particular annual meeting, shall automatically be granted an award in the form of restricted share units covering that number of Common Shares (rounded up to the next whole share) determined by dividing Forty-Two Thousand Dollars ($42,000.00) by the average Fair Market Value per share for the ninety (90)-day period preceding the grant date (the “Annual RSU Grant”).
(ii)
Each individual who is first elected or appointed as a non‑employee Board member at any time on or after
___________
, 2014 and other than as a result of his or her initial election to the Board at an annual shareholders meeting shall automatically be granted, on the date of such initial election or appointment, an award in the form of restricted share units covering that number of Common Shares (rounded up to the next whole share) determined by dividing the Applicable Dollar Amount by the average Fair Market Value per share for the ninety (90)-day period immediately preceding the grant date, provided that individual has not previously been in the employ of the Company or any Parent or Subsidiary (the “Initial RSU Grant”). The Applicable Dollar Amount shall be determined by multiplying Forty-Two Thousand Dollars ($42,000.00) by a fraction, the numerator of which is the number of months (rounded up to the next whole month) that will elapse between the date of the award recipient’s election or appointment and the anticipated date of the next annual shareholders meeting and the denominator of which is twelve (12).
(iii)
Notwithstanding anything to the contrary in subsection (i) or (ii) above, in no event will the number of Common Shares subject to any Initial or Annual RSU Grant exceed ten thousand (10,000) Common Shares.
(iv)
The Primary Committee shall have the discretionary authority to provide that one or more non-employee Board members will receive an option in lieu of any award of restricted share units authorized under this Article Four; provided, that any such option grant shall have an aggregate value on the date of grant that is approximately
equal to the aggregate value of the restricted share units that otherwise would have been granted to such non-employee Board member.
2.
Grants Prior to
__________
, 2014
. Awards made pursuant to the Automatic Grant Program prior to
__________
, 2014 were as follows:
(i)
Each individual who was serving as a non-employee Board member on the Underwriting Date was automatically granted on such date, an award in the form of an option to purchase seven thousand and five hundred (7,500) Common Shares (the “Underwriting Date Grant”).
(ii)
Each individual who was first elected or appointed as a non‑employee Board member at any time after the Underwriting Date and other than as a result of his or her initial election to the Board at an annual shareholders meeting was automatically granted, on the date of such initial election or appointment, an award in the form of an option to purchase that number of Common Shares determined by multiplying seven thousand and five hundred (7,500) by a fraction, the numerator of which was the number of months (rounded up to the next whole month) that were expected to elapse between the date of such election or appointment and the anticipated date of the next annual shareholders meeting and the denominator of which was twelve (12), provided that individual was not previously in the employ of the Company or any Parent or Subsidiary (the “Initial Option Grant”).
(iii)
On the date of each annual shareholders meeting, beginning with the 2010 Annual Shareholders Meeting and ending with the 2013 Annual Shareholders Meeting, each individual who commenced service as a non-employee Board member by reason of his or her election to the Board at such annual meeting and each individual who was to continue to serve as a non-employee Board member, whether or not that individual was standing for re-election to the Board at that particular annual meeting, was automatically granted an award in the form of an option to purchase seven thousand and five hundred (7,500) Common Shares (the “Annual Option Grant”).
N.
Terms of Automatic Restricted Share Unit Grants
1.
Vesting of Awards
.
(iv)
Each Annual RSU Grant made under this Article Four shall vest in a series of four (4) successive equal quarterly installments upon the Participant’s completion of each three (3)-month period of Board service over the one (1)-year period measured from the award grant date. Notwithstanding the foregoing, any portion of an Annual RSU Grant that has not vested prior to the date of the regular annual shareholders meeting for the year following the year in which the award was granted shall automatically vest at such time, but only if the Participant continues in Board service through the date of such annual meeting.
(v)
Each Initial RSU Grant made under this Article Four shall vest in quarterly installments upon the Participant’s completion of Board Service through each of the quarterly vesting dates in effect for the most recent Annual RSU Grant made in accordance with Section I.A.1(i) of this Article Four. The number of restricted share units eligible to vest on each quarterly vesting date shall be equal to (a) the total number of restricted share units subject to the Initial RSU Grant divided by the number of months (rounded up to the next whole month) between the grant date of such Initial RSU Grant and the anticipated date of the next annual shareholders meeting used to calculate the Applicable Dollar Amount for such Initial RSU Grant, multiplied by (b) the total number of months of Board service completed by the Participant (rounded up to the next whole month) since the grant date of the most recent Annual RSU Grant (or, if later, the most recent quarterly vesting date for such Annual RSU Grant). Notwithstanding the foregoing, any portion of an Initial RSU Grant that has not vested prior to the date of the first annual shareholders meeting following the award grant date shall automatically vest at such time, but only if the Participant continues in Board service through the date of such annual meeting.
2.
Death or Disability
. In the event a Participant ceases to serve as a Board member by reason of his or her death or Permanent Disability, then each outstanding restricted share unit award granted to such Participant under this Article Four that has not otherwise vested shall, immediately upon the Participant’s cessation of Board service, automatically vest in full.
3.
Issuance of Shares
. The Common Shares underlying the portion of each Initial or Annual RSU Grant that vests in accordance with the provisions of Sections I.B.1 or I.B.2 of this Article Four shall be issued upon the earlier to occur of (i) the date of the regular annual shareholders meeting (or, if earlier, December 15) for the calendar year following the calendar year in which the most recent Annual RSU Grant was made or (ii) the date of the Participant’s cessation of Board service;
provided, however
, that the Plan Administrator may allow one or more non-employee Board members to defer the issuance of the shares in accordance with the applicable requirements of Code Section 409A and the regulations thereunder.
O.
Terms of Automatic Option Grants
1.
Exercise Price
.
(i)
The exercise price per share is equal to one hundred percent (100%) of the Fair Market Value per Common Share on the option grant date.
(ii)
The exercise price is payable in one or more of the alternative forms authorized under the Discretionary Grant Program. Except to the extent the sale and remittance procedure specified thereunder is utilized, payment of the exercise price for the purchased shares must be made on the Exercise Date.
2.
Option Term
. Each option has a maximum term of ten (10) years measured from the option grant date, subject to earlier termination following the non‑employee Board member’s cessation of Board service.
3.
Exercise and Vesting of Options
. Each option is immediately exercisable for any or all of the option shares. However, any unvested shares purchased under the option shall be subject to repurchase by the Company, at the
lower
of (i) the exercise price paid per share or (ii) the Fair Market Value per Common Share at the time of repurchase, upon the non-employee Board member’s cessation of Board service prior to vesting in those shares. The shares subject to each Underwriting Date Grant vested, and the Company’s repurchase right lapsed, on the date of the 2010 Annual Shareholders Meeting provided the individual continued in Board service through such date. The shares subject to each Initial Option Grant vested (or will vest), and the Company’s repurchase right lapsed (or will lapse), on the date of the next succeeding regular annual shareholders meeting following the award grant date provided the individual continued (or continues) in Board service through such date. The shares subject to each Annual Option Grant vested (or will vest), and the Company’s repurchase right lapsed (or will lapse), upon the earlier of (i) the Participant’s completion of one (1) year of Board service measured from the award grant date or (ii) the date of the regular annual shareholders meeting for the year following the year in which the award was granted, provided the individual continued (or continues) in Board service through such date.
4.
Termination of Board Service
. The following provisions shall govern the exercise of any options held by the Optionee at the time of the Optionee’s cessation of Board service:
(i)
The Optionee (or, in the event of Optionee’s death while holding the option, the personal representative of the Optionee’s estate or the person or persons to whom the option is transferred pursuant to the Optionee’s will or the laws of inheritance or the designated beneficiary or beneficiaries of such option) shall have a twelve (12)-month period following the date of such cessation of Board service in which to exercise such option.
(ii)
During the twelve (12)-month exercise period, the option may not be exercised in the aggregate for more than the number of vested Common Shares for which the option is exercisable at the time of the Optionee’s cessation of Board service. However, should the Optionee cease to serve as a Board member by reason of death or Permanent Disability, then all shares at the time subject to the option shall immediately vest so that such option may, during the twelve (12)-month exercise period following such cessation of Board service, be exercised for any or all of those shares as fully vested Common Shares.
(iii)
In no event shall the option remain exercisable after the expiration of the option term. Upon the expiration of the twelve (12)-month exercise period or (if earlier) upon the expiration of the option term, the option shall terminate and cease to be outstanding for any vested shares for which the option has not been exercised. However, the option shall, immediately upon the Optionee’s cessation of Board service for any reason
(other than cessation of Board service by reason of death or Permanent Disability), terminate and cease to be outstanding to the extent the option is not otherwise at that time exercisable for vested shares.
O.
In the event of any Change in Control, each outstanding Award granted under this Article Four but not otherwise vested shall, immediately prior to the effective date of that Change in Control transaction, automatically vest in full.
P.
Any option that vests on an accelerated basis in accordance with Section II.A of this Article Four shall, immediately following the consummation of the Change in Control, terminate and cease to be outstanding, except and to the extent assumed by the successor corporation (or parent thereof) or otherwise continued in effect pursuant to the terms of the Change in Control transaction.
Q.
The shares subject to any restricted share units granted under this Article Four that vest pursuant to Sections I.B.1, I.B.2 or II.A shall be issued to the Participant as soon as practicable following the effective date of the Change in Control but in no event more than fifteen (15) business days after such effective date, except to the extent such issuance is subject to a deferred distribution date under Code Section 409A.
The remaining terms of each award granted under the Automatic Grant Program shall be as set forth in the award agreement approved by the Primary Committee to evidence the awards made under this Article Four.
ARTICLE 5
MISCELLANEOUS
The Plan Administrator may permit any Optionee or Participant to pay the option exercise price under the Discretionary Grant Program or the purchase price for shares issued under the Share Issuance Program by delivering a full-recourse promissory note payable in one or more installments which bears interest at a market rate and is secured by the purchased shares and is subject to such other terms and conditions deemed appropriate by the Plan Administrator. In no event, however, may the maximum credit available to the Optionee or Participant exceed the sum of (i) the aggregate option exercise price or purchase price payable for the purchased shares plus (ii) any applicable Tax liability incurred by the Optionee or the Participant in connection with the option exercise or share purchase.
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II.
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EFFECTIVE DATE AND TERM OF PLAN
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C.
The Plan became effective on the Plan Effective Date.
D.
The Plan was amended and restated by the Board on February 10, 2010 to be effective on the Underwriting Date, subject to shareholder approval, to (i) provide for an automatic annual increase to the share reserve, (ii) limit the number of shares for which any one individual may receive awards under the Plan in any one year, (iii) provide for the grant of share appreciation rights, (iv) add the Automatic Grant Program, and (v) effect technical revisions to facilitate plan administration.
E.
One or more provisions of the Plan, including (without limitation) the vesting acceleration provisions of the Plan relating to Changes in Control, may, in the Plan Administrator’s discretion, be extended to one or more awards incorporated from the Predecessor Plan which do not otherwise contain such provisions.
F.
The Plan shall terminate upon the earliest of (i) the expiration of the ten (10)-year period measured from the Plan Effective Date, (ii) the date on which all shares available for issuance under the Plan shall have been issued as vested shares or (iii) the termination of all outstanding awards under the Plan in connection with a Change in Control. All awards and unvested share issuances outstanding at the time of a clause (i) termination event shall continue to have full force and effect in accordance with the provisions of the documents evidencing those awards or issuances.
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III.
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AMENDMENT OF THE PLAN
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A.
The Board shall have complete and exclusive power and authority to amend or modify the Plan in any or all respects. However, no such amendment or modification shall adversely affect the rights and obligations with respect to awards or unvested share issuances at the
time outstanding under the Plan unless the Optionee or the Participant consents to such amendment or modification. In addition, certain amendments may require shareholder approval pursuant to applicable laws and regulations.
B.
Awards may be granted under the Plan which involve Common Shares in excess of the number of Common Shares then available for issuance under the Plan, provided no shares shall actually be issued pursuant to those awards until there is obtained shareholder approval of an amendment sufficiently increasing the number of Common Shares available for issuance under the Plan. If such shareholder approval is not obtained within twelve (12) months after the date the first such excess grants are made, then all awards granted on the basis of such excess shares shall terminate and cease to be outstanding.
Any cash proceeds received by the Company from the sale of Common Shares under the Plan shall be used for general corporate purposes.
The Company’s obligation to deliver Common Shares upon the exercise of any options or share appreciation rights granted under the Plan or upon the issuance or vesting of any shares issued under the Plan shall be subject to the satisfaction of all Tax withholding requirements. The Plan Administrator may, in its discretion, provide Optionees and Participants to whom awards are made under the Plan (other than the awards made under the Automatic Grant Program) with the right to use Common Shares in satisfaction of all or part of the Taxes to which such holders may become subject in connection with the exercise, issuance or vesting of those awards or the issuance Common Shares thereunder. Such right may be provided to any such holder in either or both of the following formats:
4.
Share Withholding
: The election to have the Company withhold, from the Common Shares otherwise issuable upon the issuance, exercise or vesting of such award or the Common Shares thereunder, a portion of those shares with an aggregate Fair Market Value equal to the percentage of the Taxes (not to exceed one hundred percent (100%)) designated by such individual. The Common Shares so withheld shall not reduce the number of Common Shares authorized for issuance under the Plan.
5.
Share Delivery
: The election to deliver to the Company, at the time of the issuance, exercise or vesting of such award or the issuance of Common Shares thereunder, one or more Common Shares previously acquired by such individual (other than in connection with the exercise, share issuance or share vesting triggering the Taxes) with an aggregate Fair Market Value equal to the percentage of the Taxes (not to exceed one hundred percent (100%)) designated by the individual. The Common Shares so delivered shall neither reduce the number of Common Shares authorized for issuance under the Plan nor be added to the number of Common Shares authorized for issuance under the Plan.
A.
The implementation of the Plan, the granting of any awards under the Plan and the issuance of any Common Shares (i) upon the exercise of any option or share appreciation right or (ii) under the Share Issuance Program shall be subject to the Company’s procurement of all approvals and permits required by regulatory authorities having jurisdiction over the Plan, the options and rights granted under it and the Common Shares issued pursuant to it.
B.
No Common Shares or other assets shall be issued or delivered under the Plan unless and until there shall have been compliance with all applicable requirements of applicable securities laws, including the filing and effectiveness of the Form S-8 registration statement for the Common Shares issuable under the Plan, and all applicable listing requirements of any Stock Exchange on which Common Shares are then listed for trading
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VII.
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NO EMPLOYMENT OR SERVICE RIGHTS
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Nothing in the Plan shall confer upon the Optionee or the Participant any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company (or any Parent or Subsidiary employing or retaining such person) or of the Optionee or Participant, which rights are hereby expressly reserved by each, to terminate such person’s Service at any time for any reason, with or without cause, subject to compliance with local law and the terms of any employment agreement.
APPENDIX
The following definitions shall be in effect under the Plan:
A.
Automatic Grant Program
shall mean the Automatic Grant Program in effect under the Plan.
B.
Board
shall mean the Company’s Board of Directors.
C.
Change in Control
shall mean a change in ownership or control of the Company effected through any of the following transactions:
(i)
a merger, consolidation or other reorganization approved by the Company’s shareholders, unless securities representing more than fifty percent (50%) of the total combined voting power of the voting securities of the successor company are immediately thereafter beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Company’s outstanding voting securities immediately prior to such transaction, or
(ii)
a shareholder-approved sale, transfer or other disposition of all or substantially all of the Company’s assets in liquidation or dissolution of the Company, or
(iii)
the acquisition, directly or indirectly by any person or related group of persons (other than the Company or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company), of beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities pursuant to a tender or exchange offer made directly to the Company’s shareholders.
In no event shall any public offering of the Company’s securities be deemed to constitute a Change in Control.
D.
Code
shall mean the U.S. Internal Revenue Code of 1986, as amended.
E.
Common Shares
shall mean the Company’s common shares.
F.
Company
shall mean Alpha and Omega Semiconductor Limited, a company incorporated and existing under the laws of the Islands of Bermuda, and any successor company to all or substantially all of the assets or voting stock of Alpha and Omega Semiconductor Limited which shall by appropriate action adopt the Plan.
G.
Discretionary Grant Program
shall mean the discretionary grant program in effect under Article Two of the Plan pursuant to which options and share appreciation rights may be granted to one or more eligible individuals.
H.
Employee
shall mean an individual who is in the employ of the Company (or any Parent or Subsidiary), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance.
I.
Exercise Date
shall mean the date on which the Company shall have received written notice of the option exercise.
J.
Fair Market Value
per Common Share on any relevant date shall be determined in accordance with the following provisions:
(i)
If the Common Shares are at the time traded on the Nasdaq Global or Global Select Market, then the Fair Market Value shall be the closing selling price per Common Share on the date in question, as such price is reported by the National Association of Securities Dealers for that particular Stock Exchange and published in
The Wall Street Journal
. If there is no closing selling price for the Common Share on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.
(ii)
If the Common Shares are at the time listed on any other Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Share on the date in question on the Stock Exchange determined by the Plan Administrator to be the primary market for the Common Shares, as such price is officially quoted in the composite tape of transactions on such exchange. If there is no closing selling price for the Common Shares on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.
(iii)
If the Common Shares are not at the time listed on any Stock Exchange, then the Fair Market Value shall be determined by the Plan Administrator through the reasonable application of a reasonable valuation method that takes into account the applicable valuation factors set forth in the Treasury Regulations issued under Section 409A of the Code; provided, however, that with respect to an Incentive Option, such Fair Market Value shall be determined in accordance with the standards of Section 422 of the Code and the applicable Treasury Regulations thereunder.
K.
Family Member
shall mean, with respect to a particular Optionee or Participant, 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.
L.
Incentive Option
shall mean an option which satisfies the requirements of Code Section 422.
M.
Involuntary Termination
shall mean the termination of the Service of any individual which occurs by reason of:
(i)
such individual’s involuntary dismissal or discharge by the Company for reasons other than Misconduct, or
(ii)
such individual’s voluntary resignation following (A) a change in his or her position with the Company which materially reduces his or her duties and responsibilities or the level of management to which he or she reports, (B) a reduction in his or her level of compensation (including base salary, fringe benefits and target bonus under any corporate-performance based bonus or incentive programs) by more than fifteen percent (15%) or (C) a relocation of such individual’s place of employment by more than fifty (50) miles, provided and only if such change, reduction or relocation is effected without the individual’s consent.
N.
Misconduct
shall mean the commission of any act of fraud, embezzlement or dishonesty by the Optionee or Participant, any unauthorized use or disclosure by such person of confidential information or trade secrets of the Company (or any Parent or Subsidiary), or any other intentional misconduct by such person adversely affecting the business or affairs of the Company (or any Parent or Subsidiary) in a material manner. The foregoing definition shall not in any way preclude or restrict the right of the Company (or any Parent or Subsidiary) to discharge or dismiss any Optionee, Participant or other person in the Service of the Company (or any Parent or Subsidiary) for any other acts or omissions, but such other acts or omissions shall not be deemed, for purposes of the Plan, to constitute grounds for termination for Misconduct.
O.
1934 Act
shall mean the U.S. Securities Exchange Act of 1934, as amended.
P.
Non-Statutory Option
shall mean an option not intended to satisfy the requirements of Code Section 422.
Q.
Optionee
shall mean any person to whom an option or share appreciation right is granted under the Plan.
R.
Parent
shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, provided each corporation in the unbroken chain (other than the Company) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
S.
Participant
shall mean any person who is issued Common Shares under the Share Issuance Program or to whom restricted share units for share rights are awarded under such program.
T.
Permanent Disability or Permanently Disabled
shall mean the inability of the Optionee or the Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment expected to result in death or to be of continuous duration of twelve (12) months or more. However, solely for purposes of the Automatic Grant Program, Permanent Disability or Permanently Disabled shall mean the inability of the non-employee Board member to perform his or her usual duties as a Board member by reason of any medically determinable physical or mental impairment expected to result in death or to be of continuous duration of twelve (12) months or more.
U.
Plan
shall mean the Company’s 2009 Share Option/Share Issuance Plan, as set forth in this document.
V.
Plan Administrator
shall mean the particular entity, whether the Primary Committee, the Board or the Secondary Committee, which is authorized to administer the Plan with respect to one or more classes of eligible persons, to the extent such entity is carrying out its administrative functions under those programs with respect to the persons under its jurisdiction.
W.
Plan Effective Date
shall mean September 18, 2009.
X.
Primary Committee
shall mean the committee of two (2) or more non-employee Board members appointed by the Board to administer the Discretionary Grant and Stock Issuance Programs with respect to executive officers and non-employee directors.
Y.
Secondary Committee
shall mean a committee of one (1) or more Board members appointed by the Board to administer the Discretionary Grant and Share Issuance Programs with respect to eligible persons other than executive officers and non-employee directors.
Z.
Service
shall mean the performance of services for the Company (or any Parent or Subsidiary, whether now existing or subsequently established) by a person in the capacity of an Employee, a non-employee member of the board of directors or a consultant or independent advisor, except to the extent otherwise specifically provided in the documents evidencing the option grant or share issuance. For purposes of the Plan, an Optionee or Participant shall be deemed to cease Service immediately upon the occurrence of the either of the following events: (i) the Optionee or Participant no longer performs services in any of the foregoing capacities for the Company or any Parent or Subsidiary or (ii) the entity for which the Optionee or Participant is performing such services ceases to remain a Parent or Subsidiary of the Company, even though the Optionee or Participant may subsequently continue to perform services for that entity. Service shall not be deemed to cease during a period of military leave, sick leave or other personal leave approved by the Company; provided,
however
, that for a leave which exceeds three (3) months, Service shall be deemed, for purposes of determining the period within which any outstanding option held by the Optionee in question may be exercised as an Incentive Option, to cease on the first day immediately following the expiration of such three (3)-month period, unless that Optionee is provided with the right to return to Service following such leave either by statute or by written contract. Except to the extent otherwise required by law or expressly authorized by the Plan Administrator or by the Company’s written policy on leaves of absence, no Service credit shall be given for vesting purposes for any period the Optionee or Participant is on a leave of absence.
AA.
Share Issuance Agreement
shall mean the agreement entered into by the Company and the Participant at the time of issuance of Common Shares under the Share Issuance Program.
BB.
Share Issuance Program
shall mean the share issuance program in effect under the Plan.
CC.
Stock Exchange
shall mean the American Stock Exchange, the Nasdaq Global or Global Select Market, the New York Stock Exchange, the Stock Exchange of Hong Kong Limited or any internationally recognized stock exchange (as determined by the Plan Administrator).
DD.
Subsidiary
shall mean any company (other than the Company) in an unbroken chain of corporations beginning with the Company, provided each corporation (other than the last company) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
EE.
10% Shareholder
shall mean the owner of stock (as determined under Code Section 424(d)) possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company (or any Parent or Subsidiary).
FF.
Taxes
shall mean shall mean the income tax, employment tax, social insurance, payroll tax, contributions, payment on account obligations or other amounts required to be paid in connection with the exercise of an option or issuance or vesting of the Common Shares.
GG.
Underwriting Agreement
shall mean the agreement between the Company and the underwriter or underwriters managing the initial public offering of the Common Shares.
HH.
Underwriting Date
shall mean the date on which the Underwriting Agreement is executed and priced in connection with an initial public offering of the Common Shares.
Exhibit 10.3
Non-Employee Director
FORM OF ALPHA AND OMEGA SEMICONDUCTOR LIMITED
RESTRICTED SHARE UNIT ISSUANCE AGREEMENT
[FIRST NAME – LAST NAME] Option Number: [OPTION NUMBER]
[ADDRESS LINE 1] ID: [EMPLOYEE IDENTIFIER]
[ADDRESS LINE 2] Plan: Alpha and Omega Semiconductor Limited
[CITY – STATE – ZIP CODE] 2009 Share Option/Share Issuance Plan
[COUNTRY]
A. The Company has implemented an automatic grant program under the Plan pursuant to which eligible non-employee members of the Board will automatically receive awards of restricted share units at periodic intervals over their period of Board service in order to provide such individuals with a meaningful incentive to continue to serve as members of the Board.
B. Participant is an eligible non-employee Board member, and this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in connection with the automatic grant of restricted share units to Participant.
C. All capitalized terms in this Agreement shall have the meaning assigned to them in the attached Appendix A.
a.
Grant of Restricted Share Units
.
Alpha and Omega Semiconductor Limited (the “Company”
) hereby awards to [FIRST NAME – LAST NAME], as of the Award Date, Restricted Share Units under the 2009 Share Option/Share Issuance Plan. Each Restricted Share Unit represents the right to receive one Common Share in accordance with the express provisions of this Agreement. The number of Common Shares subject to the awarded Restricted Share Units, the applicable vesting schedule for those shares, the dates on which those vested shares shall become issuable to Participant and the remaining terms and conditions governing the award (the “Award”) shall be as set forth in this Agreement.
AWARD SUMMARY
Award Date:
[OPTION DATE, Month DD, YYYY]
Number of Shares
Subject to Award:
[TOTAL SHARES GRANTED] – Common Shares (the “Shares”)
Vesting Schedule:
The Restricted Share Units shall vest with respect to the Shares in a series of four (4) successive equal quarterly installments upon the Participant’s completion of each three (3)-month period of Board service over the one (1)-year period measured from the Award Date. Notwithstanding the foregoing, if the Company’s regular annual shareholders meeting for the calendar year immediately following the Award Date occurs prior to the one (1)-year period measured from the Award Date, then the last quarterly installment shall automatically vest on the date of such annual shareholders meeting, but only if the Participant continues in Board service through the date of such meeting. The Shares shall also be subject to accelerated vesting in accordance with the provisions of Paragraphs 3 and 5.
Issuance Schedule
:
Except as otherwise provided in Paragraph 5, each Share in which the Participant vests in accordance with the terms of this Agreement shall be issued, subject to the Company’s collection of all applicable Withholding Taxes, on the earlier to occur of (a) the date of the regular annual shareholders meeting (or, if earlier, December 15) for the calendar year following the Award Date or (b) the date of the Participant’s cessation of Board service, or as soon thereafter as administratively practicable (the “Issuance Date”).
2.
Limited Transferability
. Prior to actual receipt of the Shares which vest hereunder, the Participant may not transfer any interest in the Award or the underlying Shares. Any Shares which vest hereunder but which otherwise remain unissued at the time of the Participant’s death may be transferred pursuant to the provisions of the Participant’s will or the laws of inheritance.
2.
Cessation of Service
.
(a)
Should the Participant cease Board service for any reason, other than death or Permanent Disability, prior to vesting in one or more Shares subject to this Award, then the Award will be immediately cancelled with respect to those unvested Shares, and the number of Restricted Share Units will be reduced accordingly. The Participant shall thereupon cease to have any right or entitlement to receive any Shares under those cancelled units.
(b)
Should the Participant cease Board service by reason of death or Permanent Disability, then any Shares at the time subject to this Award but not otherwise vested shall automatically vest in full.
3.
Shareholder Rights
.
The holder of this Award shall not have any shareholder rights, including voting or dividend rights, with respect to the Shares subject to the Award until the Participant becomes the record holder of those Shares upon their actual issuance.
4.
Change of Control
.
(a)
Should Participant continue in Board service until the effective date of a Change in Control, then any Shares at the time subject to this Award but not otherwise vested shall automatically vest in full immediately prior to the effective date of that Change in Control. All vested Shares shall be issued to the Participant as soon as practicable following the effective date of the Change in Control but in no event more than fifteen (15) business days after such effective date.
(b)
This Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.
5.
Adjustment in Shares
. In the event of any of the following transactions affecting the outstanding Common Shares as a class without the Company’s receipt of consideration: any share split, share dividend, recapitalization, combination of shares, exchange of shares, spin-off transaction or other change affecting the outstanding Common Shares as a class without the Company’s receipt of consideration, or in the event of a substantial reduction to the value of the outstanding Common Shares as a result of a spin-off transaction or extraordinary distribution, then equitable and proportional adjustments shall be made by the Plan Administrator to the total number and/or class of securities issuable pursuant to this Award in order to reflect such change.
6.
Issuance of Shares
. On the Issuance Date for the Shares which vest in accordance with the provisions of this Agreement, the Company shall issue to or on behalf of the Participant a certificate (which may be in electronic form) for the vested Common Shares to be issued on such date, subject to the Company’s collection of the applicable Withholding Taxes.
7.
Compliance with Laws and Regulations
. The issuance of Common Shares pursuant to the Award shall be subject to compliance by the Company and the Participant with all applicable requirements of law relating thereto and with all applicable regulations of the Stock Exchange on which the Common Shares are listed for trading at the time of such issuance.
8.
Notices.
Any notice required to be given or delivered to the Company under the terms of this Agreement shall be in writing and addressed to the Company at its principal corporate offices, and directed to the attention of Stock Plan Administrator. Any notice required to be given or delivered to the Participant shall be in writing and addressed to the Participant at the most current address then on record with the Company or shall be delivered electronically to the Participant through the Company’s electronic mail system. All notices shall be deemed effective upon personal delivery, upon sending of an email or upon deposit in the mail, postage prepaid and properly addressed to the party to be notified.
9.
Successors and Assigns
. Except to the extent otherwise provided in this Agreement, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Company and its successors and assigns and the Participants, and the Participant’s assigns, the legal representatives, heirs and legatees of the Participant’s estate.
10.
Construction
. This Agreement and the Award evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. All decisions of the Plan Administrator with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in the Award.
11.
Governing Law
. The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of California without resort to that State’s conflict-of-laws rules.
12.
No Impairment of Rights
. This Agreement shall not in any way be construed or interpreted so as to affect adversely or otherwise impair the right of the Company or the shareholders to remove Participant from the Board at any time in accordance with the provisions of applicable law.
13.
Code Section 409A
.
It is the intention of the parties that the provisions of this Agreement comply with the requirements of the short-term deferral exception of Section 409A of the Code and Treasury Regulations Section 1.409A-1(b)(4). Accordingly, to the extent there is any ambiguity as to whether one or more provisions of this Agreement would otherwise contravene the requirements or limitations of Code Section 409A applicable to such short-term deferral exception, then those provisions shall be interpreted and applied in a manner that does not result in a violation of the requirements or limitations of Code Section 409A and the Treasury Regulations thereunder that apply to such exception.
BY ACCEPTING THIS AWARD, THE PARTICIPANT AGREES TO ALL OF THE TERMS AND CONDITIONS DESCRIBED IN THIS AGREEMENT AND IN THE PLAN.
ALPHA AND OMEGA
SEMICONDUCTOR LIMITED PARTICIPANT
Mike Chang [FIRST NAME – LAST NAME]
Chief Executive Officer [
OPTION DATE, Month DD, YYYY]
APPENDIX A
DEFINITIONS
The following definitions shall be in effect under the Agreement:
A.
Agreement
shall mean this Restricted Share Unit Issuance Agreement.
B.
Award
shall mean the award of restricted share units made to the Participant pursuant to the terms of this Agreement.
C.
Award Date
shall mean the date the restricted share units are awarded to the Participant pursuant to the Agreement and shall be the date indicated in Paragraph 1.
D.
Board
shall mean the Company’s Board of Directors.
E.
Change in Control
shall mean a change in ownership or control of the Company effected through any of the following transactions:
(i)
a merger, consolidation or other reorganization approved by the Company’s shareholders, unless securities representing more than fifty percent (50%) of the total combined voting power of the voting securities of the successor corporation are immediately thereafter beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Company’s outstanding voting securities immediately prior to such transaction, or
(i)
a shareholder-approved sale, transfer or other disposition of all or substantially all of the Company’s assets in liquidation or dissolution of the Company, or
(ii)
the acquisition, directly or indirectly by any person or related group of persons (other than the Company or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company), of beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities pursuant to a tender or exchange offer made directly to the Company’s shareholders.
F.
Code
shall mean the Internal Revenue Code of 1986, as amended.
G.
Common Shares
shall mean the Company’s common shares.
H.
Company
shall mean Alpha and Omega Semiconductor Limited, a company incorporated and existing under the laws of the Islands of Bermuda, and any successor corporation to all or substantially all of the assets or voting stock of Alpha and Omega Semiconductor Limited which shall by appropriate action assume this option
I.
Fair Market Value
per Common Share on any relevant date shall be the closing price per Common Share on the date in question, as such price is reported by the Financial Industry Regulatory Authority (if traded at the time on the Nasdaq Global or Global Select Market) or as officially quoted in the composite tape of transactions on any other Stock Exchange on which the Common Shares are then traded. If there is no closing selling price for the Common Shares on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.
J.
1934 Act
shall mean the Securities Exchange Act of 1934, as amended from time to time.
K.
Participant
shall mean the person to whom the Award is made pursuant to the Agreement.
L.
Permanent Disability or Permanently Disabled
shall mean the inability of the Participant to perform his or her usual duties as a Board member by reason of any medically determinable physical or mental impairment expected to result in death or to be of continuous duration of twelve (12) months or more.
M.
Plan
shall mean the Company’s 2009 Share Option/Share Issuance Plan, as amended and restated from time to time.
N.
Plan Administrator
shall mean either the Board or a committee of the Board acting in its capacity as administrator of the Plan.
O.
Stock Exchange
shall mean the American Stock Exchange the American Stock Exchange, the Nasdaq Global or Global Select Market or the New York Stock Exchange.
P.
Withholding Taxes
shall mean the federal, state, local and foreign income taxes and the employee portion of the federal, state, local and foreign employment (or equivalent) taxes required to be withheld by the Company in connection with the issuance of the Common Shares which vest under the Award.
