COGNIGEN
NETWORKS, INC.
2008
STOCK INCENTIVE PLAN
Cognigen
Networks, Inc. (the “Company”), a Colorado corporation, hereby establishes and
adopts the following 2008 Stock Incentive Plan (the “Plan”).
1. PURPOSE
OF THE PLAN
The
purpose of the Plan is to assist the Company and its Subsidiaries in attracting
and retaining selected individuals to serve as directors, employees, consultants
and/or advisors of the Company who are expected to contribute to the Company's
success and to achieve long-term objectives which will inure to the benefit of
all stockholders of the Company through the additional incentives inherent in
the Awards hereunder.
2.1.
“
Award
” shall mean any Option,
Stock Appreciation Right, Restricted Stock Award, Performance Award, Other Stock
Unit Award or any other right, interest or option relating to Shares or other
property (including cash) granted pursuant to the provisions of the
Plan.
2.2.
“
Award Agreement
” shall mean
any written agreement, contract or other instrument or document evidencing any
Award granted by the Committee hereunder, including through an electronic
medium.
2.3.
“
Board
” shall mean the board
of directors of the Company.
2.4.
“
Code
” shall mean the Internal
Revenue Code of 1986, as amended from time to time.
2.5.
“
Committee
” shall mean the
Compensation Committee of the Board, consisting of no fewer than two Directors,
each of whom is “Non-Employee Director” within the meaning of Rule 16b-3 of the
Exchange Act. With respect to any Awards granted by the Subcommittee,
references in this Plan to the “Committee” shall mean the
Subcommittee.
2.6.
“
Covered Employee
” shall mean
an employee of the Company who is a “covered employee” within the meaning of
Section 162(m) of the Code.
2.7.
“
Director
” shall mean a
non-employee member of the Board.
2.8.
“
Dividend Equivalents
” shall
have the meaning set forth in Section 12.5.
2.9.
“
Employee
” shall mean any
employee of the Company or any Subsidiary and any prospective employee
conditioned upon, and effective not earlier than, such person’s becoming an
employee of the Company or any Subsidiary. Solely for purposes of the
Plan, an Employee shall also mean any consultant or advisor who provides
services to the Company or any
Subsidiary,
so long as such person (i) renders bona fide services that are not in
connection with the offer and sale of the Company's securities in a
capital-raising transaction and (ii) does not directly or indirectly
promote or maintain a market for the Company's securities.
2.10.
“
Exchange Act
” shall mean the
Securities Exchange Act of 1934, as amended.
2.11.
“
Fair Market Value
” shall
mean, with respect to any property other than Shares, the market value of such
property determined by such methods or procedures as shall be established from
time to time by the Committee. The Fair Market Value of Shares as of
any date shall be the per Share closing price of the Shares as reported on the
Over-The-Counter Electronic Bulletin Board on that date (or if there were no
reported prices on such date, on the last preceding date on which the prices
were reported) or, if the Company is not then listed on the Over-The-Counter
Electronic Bulletin Board, on such other principal securities exchange on which
the Shares are traded, and if the Company is not listed on the Over-The-Counter
Electronic Bulletin Board or any other securities exchange, the Fair Market
Value of Shares shall be determined by the Committee in its sole discretion
using appropriate criteria.
2.12.
“
Freestanding Stock Appreciation
Right
” shall have the meaning set forth in Section 6.1.
2.13.
“
Limitations
” shall have the
meaning set forth in Section 10.5.
2.14.
“
Option
” shall mean any right
granted to a Participant under the Plan allowing such Participant to purchase
Shares at such price or prices and during such period or periods as the
Committee shall determine.
2.15.
“
Other Stock Unit Award
” shall
have the meaning set forth in Section 8.1.
2.16.
“
Participant
” shall mean an
Employee or Director who is selected by the Committee to receive an Award under
the Plan.
2.17.
“
Payee
” shall have the meaning
set forth in Section 13.1.
2.18.
“
Performance Award
” shall mean
any Award of Performance Shares or Performance Units granted pursuant to Article
9.
2.19.
“
Performance Period
” shall
mean that period established by the Committee at the time any Performance Award
is granted or at any time thereafter during which any performance goals
specified by the Committee with respect to such Award are to be
measured.
2.20.
“
Performance Share
” shall mean
any grant pursuant to Article 9 of a unit valued by reference to a
designated number of Shares, which value may be paid to the Participant by
delivery of such property as the Committee shall determine, including
cash,
Shares, other property, or any combination thereof, upon achievement of such
performance goals during the Performance Period as the Committee shall establish
at the time of such grant or thereafter.
2.21.
“
Performance Unit
” shall mean
any grant pursuant to Section 9 of a unit valued by reference to a
designated amount of property other than Shares (or cash), which value may be
paid to the Participant by delivery of such property as the Committee shall
determine, including cash, Shares, other property, or any combination thereof,
upon achievement of such performance goals during the Performance Period as the
Committee shall establish at the time of such grant or thereafter.
2.22.
“
Permitted Assignee
” shall
have the meaning set forth in Section 12.3.
2.23.
“
Restricted Stock
” shall mean
any Share issued with the restriction that the holder may not sell, transfer,
pledge or assign such Share and with such other restrictions as the Committee in
its sole discretion, may impose (including any restriction on the right to vote
such Share and the right to receive any dividends), which restrictions may lapse
separately or in combination at such time or times, in installments or
otherwise, as the Committee may deem appropriate.
2.24.
“
Restricted Stock Award
” shall
have the meaning set forth in Section 7.1.
2.25.
“
Shares
” shall mean the shares
of common stock, no par value, of the Company.
2.26.
“
Stock Appreciation Right
”
shall mean the right granted to a Participant pursuant to Section
6.
2.27.
“
Subcommittee
” shall mean a
subcommittee of the Committee consisting of each member of the Compensation
Committee of the Board who is both: (i) an “outside director” within the meaning
of Section 162(m) of the Code, and (ii) an “independent director” for purpose of
the rules and regulations of The Nasdaq Stock Market (or such other principal
securities market on which the Shares are traded).
2.28.
“
Subsidiary
” shall mean any
corporation (other than the Company) in an unbroken chain of corporations
beginning with the Company if, at the time of the granting of the Award, each of
the corporations other than the last corporation in the unbroken chain owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in the chain.
2.29.
"
Substitute Awards
” shall mean
Awards granted or Shares issued by the Company in assumption of, or in
substitution or exchange for, awards previously granted, or the right or
obligation to make future awards, by a company acquired by the Company or any
Subsidiary or with which the Company or any Subsidiary combines.
2.30.
“
Tandem Stock Appreciation
Right
” shall have the meaning set forth in Section 6.1.
2.31.
“
Vesting Period
” shall have
the meaning set forth in Section 7.1.
3. SHARES
SUBJECT TO THE PLAN
3.1
Number of
Shares
. (a) Subject to adjustment as provided in
Section 12.2, a total of 15,000,000 Shares shall be authorized for grant
under the Plan. Any Shares that are subject to Awards of Options or
Stock Appreciation Rights shall be counted against this limit as one (1) Share
for every one (1) Share granted. Any Shares that are subject to
Awards other than Options
or Stock
Appreciation Rights shall be counted against this limit as two and one half
(2.5)
Shares for
every one (1) Share granted.
(b) If
any Shares subject to an Award are forfeited (other than as a result of
expiration of the Award’s term if the Award is an Option or Stock Appreciation
Right), or any Award is settled for cash, the Shares shall, to the extent of
such forfeiture or cash settlement, again be available for Awards under the
Plan, subject to Section 3.1(d) below. Notwithstanding anything to
the contrary contained herein, the following Shares shall not be added to the
Shares authorized for grant under paragraph (a) of this Section: (i) Shares
subject to an Option or Stock Appreciation Right that expires at the conclusion
of its term without being exercised, (ii) Shares tendered by the Participant or
withheld by the Company in payment of the purchase price of an Option, (iii)
Shares tendered by the Participant or withheld by the Company to satisfy any tax
withholding obligation with respect to an Award, (iv) Shares repurchased by the
Company with Option proceeds, and (v) Shares subject to a Stock Appreciation
Right that are not issued in connection with the stock settlement of the Stock
Appreciation Right on exercise thereof.
(c) Substitute
Awards shall not reduce the Shares authorized for grant under the Plan or
authorized for grant to a Participant in any calendar year.
(d) Any
Shares that again become available for grant pursuant to this Article shall be
added back as one (1) Share if such Shares were subject to Options or Stock
Appreciation Rights granted under the Plan, and as two and one half (2.5) Shares
if such Shares were subject to Awards other than Options or Stock Appreciation
Rights granted under the Plan.
3.2.
Character of
Shares
. Any Shares issued hereunder may consist, in whole or
in part, of authorized and unissued shares, treasury shares or shares purchased
in the open market or otherwise.
4. ELIGIBILITY
AND ADMINISTRATION
4.1.
Eligibility
. Any
Employee or Director shall be eligible to be selected as a
Participant.
4.2.
Administration
. (a)
The Plan shall be administered by the Committee. Subject to Section
4.2(c) below, the other provisions of the Plan and such orders or resolutions
not inconsistent with the provisions of the Plan as may from time to time be
adopted by the Board, the Committee shall have full power and authority to:
(i) select the Employees and Directors to whom Awards may from time to time
be granted hereunder; (ii) determine the type or types of Awards, not
inconsistent with the provisions of the Plan, to be granted to each Participant
hereunder; (iii) determine the number of Shares to be covered by each Award
granted hereunder; (iv) determine the terms and conditions, not
inconsistent with the provisions of the Plan, of any Award granted hereunder;
(v) determine whether, to what extent and under what circumstances Awards
may be settled in cash, Shares or other property; (vi) determine whether,
to what extent, and under what circumstances cash, Shares, other property and
other amounts payable with respect to an Award made under the Plan shall be
deferred either automatically or at the election of the Participant; (vii)
determine whether, to what extent and under what circumstances any Award shall
be canceled or suspended; (viii) interpret and administer the Plan and any
instrument or agreement entered into under or in connection with the Plan,
including any Award
Agreement;
(ix) correct any defect, supply any omission or reconcile any inconsistency in
the Plan or any Award in the manner and to the extent that the Committee shall
deem desirable to carry it into effect; (x) establish such rules and
regulations and appoint such agents as it shall deem appropriate for the proper
administration of the Plan; (xi) determine whether any Award, other than an
Option or Stock Appreciation Right, will have Dividend Equivalents; and
(xii) make any other determination and take any other action that the
Committee deems necessary or desirable for administration of the
Plan.
(b) Decisions
of the Committee shall be final, conclusive and binding on all persons or
entities, including the Company, any Participant, and any
Subsidiary. A Participant or other holder of an Award may
contest a decision or action of the Committee with respect to such person or
Award only on the grounds that such decision is arbitrary and capricious or
unlawful, and any review of such decision or action shall be limited to
determining whether the Committee’s decision or action was arbitrary and
capricious or unlawful. A majority of the members of the Committee
may determine its actions and fix the time and place of its
meetings.
(c) Notwithstanding
Section 4.2(a) above, to the extent required to qualify Awards to officers as
“qualified performance-based compensation” under Section 162(m) of the Code or
comply with applicable securities law or the rules and regulations of The Nasdaq
Stock Market (or such other principal securities market on which the Shares are
traded), the Subcommittee rather than the full Compensation Committee shall have
power and authority to grant Awards to officers and Directors of the Company,
subject to such orders or resolutions not inconsistent with the provisions of
the Plan as may from time to time be adopted by the Board. The
Subcommittee’s authority hereunder with respect to Awards to officers and
Directors of the Company shall include all of the powers set forth in Section
4.2(a)(i) through (xii) above.
(d) The
full Committee may also delegate to the Subcommittee the right to grant Awards
to Employees who are not Directors or officers of the Company and the authority
to take action on behalf of the Committee pursuant to the Plan to cancel or
suspend Awards to Employees who are not Directors or officers of the
Company.
(e) Any
action within the scope of its authority by the Subcommittee under Section
4.2(c) or (d) shall be deemed for all purposes under the Plan to have been taken
by the full Committee and references in the Plan to the Committee shall be
deemed to include the Subcommittee unless the context otherwise
requires.
5. OPTIONS
5.1.
Grant of
Options
. Options may be granted hereunder to Participants
either alone or in addition to other Awards granted under the
Plan. Any Option shall be subject to the terms and conditions of this
Article and to such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee shall deem desirable.
5.2.
Award
Agreements
. All Options granted pursuant to this Article shall
be evidenced by a written Award Agreement in such form and containing such terms
and conditions as the Committee shall determine which are not inconsistent with
the provisions of the Plan. The terms of Options need not be the same
with respect to each Participant. Granting an Option pursuant to the
Plan shall impose no obligation on the recipient to exercise such
Option. Any
individual
who is granted an Option pursuant to this Article may hold more than one Option
granted pursuant to the Plan at the same time.
5.3.
Option
Price
. Other than in connection with Substitute Awards, the
option price per each Share purchasable under any Option granted pursuant to
this Article shall not be less than 100% of the Fair Market Value of such Share
on the date of grant of such Option. Other than pursuant to Section
12.2, the Committee shall not without the approval of the Company’s stockholders
(a) lower the option price per Share of an Option after it is granted, (b)
cancel an Option when the option price per Share exceeds the Fair Market Value
of the underlying Shares in exchange for another Award (other than in connection
with Substitute Awards), and (c) take any other action with respect
to an Option that may be treated as a repricing under the rules and regulations
of The Nasdaq Stock Market (or such other principal securities market on which
the Shares are traded).
5.4.
Option Term
. The
term of each Option shall be fixed by the Committee in its sole discretion;
provided that no Option shall be exercisable after the expiration of seven (7)
years from the date the Option is granted, except in the event of death or
disability.
5.5.
Exercise of
Options
. Vested Options granted under the Plan shall be
exercised by the Participant or by a Permitted Assignee thereof (or by the
Participant’s executors, administrators, guardian or legal representative, as
may be provided in an Award Agreement) as to all or part of the Shares covered
thereby, by the giving of written notice of exercise to the Company or its
designated agent, specifying the number of Shares to be purchased, accompanied
by payment of the full purchase price for the Shares being
purchased. Unless otherwise provided in an Award Agreement, full
payment of such purchase price shall be made at the time of exercise and shall
be made (a) in cash or cash equivalents (including certified check or bank check
or wire transfer of immediately available funds), (b) by tendering previously
acquired Shares (either actually or by attestation, valued at their then Fair
Market Value), (c) with the consent of the Committee, by delivery of other
consideration (including, where permitted by law and the Committee, other
Awards) having a Fair Market Value on the exercise date equal to the total
purchase price, (d) with the consent of the Committee, by withholding Shares
otherwise issuable in connection with the exercise of the Option, (e) through
any other method specified in an Award Agreement, or (f) any combination of any
of the foregoing. The notice of exercise, accompanied by such
payment, shall be delivered to the Company at its principal business office or
such other office as the Committee may from time to time direct, and shall be in
such form, containing such further provisions consistent with the provisions of
the Plan, as the Committee may from time to time prescribe. In no
event may any Option granted hereunder be exercised for a fraction of a
Share. No adjustment shall be made for cash dividends or other rights
for which the record date is prior to the date of such issuance.
5.6.
Form of
Settlement
. In its sole discretion, the Committee may provide,
at the time of grant, that the Shares to be issued upon an Option's exercise
shall be in the form of Restricted Stock or other similar securities, or may
reserve the right so to provide after the time of grant.
5.7.
Incentive Stock
Options.
The Committee may grant Options intended to qualify
as “incentive stock options” as defined in Section 422 of the Code, to any
employee of the Company or any Subsidiary, subject to the requirements of
Section 422 of the Code. Solely for the purposes of determining
whether Shares are available for the grant of “incentive stock options” under
the Plan, the maximum aggregate number of Shares with respect to which
“incentive stock
options”
may be issued under the Plan shall be 15,000,000 Shares.
6. STOCK
APPRECIATION RIGHTS
6.1.
Grant and
Exercise
. The Committee may provide Stock Appreciation Rights
(a) in conjunction with all or part of any Option granted under the Plan or at
any subsequent time during the term of such Option (“Tandem Stock Appreciation
Right”), (b) in conjunction with all or part of any Award (other than an Option)
granted under the Plan or at any subsequent time during the term of such Award,
or (c) without regard to any Option or other Award (a “Freestanding Stock
Appreciation Right”), in each case upon such terms and conditions as the
Committee may establish in its sole discretion.
6.2.
Terms and
Conditions
. Stock Appreciation Rights shall be subject to such
terms and conditions, not inconsistent with the provisions of the Plan, as shall
be determined from time to time by the Committee, including the
following:
(a)
Upon the
exercise of a Stock Appreciation Right, the holder shall have the right to
receive the excess of (i) the Fair Market Value of one Share on the date of
exercise, over (ii) the designated based value per Share (the “Base
Amount”) with respect to the right on the date of grant (or in the case of a
Tandem Stock Appreciation Right on the date of grant of the related Option) as
specified by the Committee in its sole discretion, which Base Amount per Share,
except in the case of Substitute Awards or in connection with an adjustment
provided in Section 12.2, shall not be less than the Fair Market Value of
one Share on such date of grant of the right or the related Option, as the case
may be.
(b)
Upon the
exercise of a Stock Appreciation Right, the Committee shall determine in its
sole discretion whether payment shall be made in cash, in whole Shares or other
property, or any combination thereof.
(c)
Any
Tandem Stock Appreciation Right may be granted at the same time as the related
Option is granted or at any time thereafter before exercise or expiration of
such Option.
(d)
Any
Tandem Stock Appreciation Right related to an Option may be exercised only when
the related Option would be exercisable and the Fair Market Value of the Shares
subject to the related Option exceeds the option price at which Shares can be
acquired pursuant to the Option. In addition, (i) if a Tandem Stock
Appreciation Right exists with respect to less than the full number of Shares
covered by a related Option, then an exercise or termination of such Option
shall not reduce the number of Shares to which the Tandem Stock Appreciation
Right applies until the number of Shares then exercisable under such Option
equals the number of Shares to which the Tandem Stock Appreciation Right
applies, and (ii) no Tandem Stock Appreciation Right granted under the Plan to a
person then subject to Section 16 of the Exchange Act shall be exercised during
the first six (6) months of its term for cash, except as provided in Article
11.
(e)
Any
Option related to a Tandem Stock Appreciation Right shall no longer be
exercisable to the extent the Tandem Stock Appreciation Right has been
exercised.
(f)
The
provisions of Stock Appreciation Rights need not be the same with respect to
each recipient.
(g)
The
Committee may impose such other conditions or restrictions on the terms of
exercise and the exercise price of any Stock Appreciation Right, as it shall
deem appropriate. Notwithstanding the foregoing provisions of this
Section 6.2(g), but subject to Section 12.2, a Freestanding Stock
Appreciation Right shall have the same terms and conditions as Options,
including (i) a Base Amount per Share not less than Fair Market Value of a Share
on the date of grant to an employee of the Company or a Subsidiary, and (ii) a
term not greater than seven (7) years. In addition to the foregoing,
but subject to Section 12.2, the Committee shall not without approval of the
Company’s stock holders (a) reduce the Base Amount per Share under any Stock
Appreciation Right after it is granted, (b) cancel a Stock Appreciation Right
when the Base Amount per Share exceeds the Fair Market Value of the underlying
Shares in exchange for another Award (other than in connection with Substitute
Awards), and (c) take any other action with respect to a Stock Appreciation
Right that may be treated as a repricing under the rules and regulations of The
Nasdaq Stock Market (or such other principal securities market on which the
Shares are traded).
(h)
The
Committee may impose such terms and conditions on Stock Appreciation Rights
granted in conjunction with any Award (other than an Option) as the Committee
shall determine in its sole discretion.
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7.
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RESTRICTED
STOCK AWARDS
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7.1.
Grants
. Awards of
Restricted Stock may be issued hereunder to Participants either alone or in
addition to other Awards granted under the Plan (a “Restricted Stock Award”),
and such Restricted Stock Awards shall also be available as a form of payment of
Performance Awards and other earned cash-based incentive
compensation. A Restricted Stock Award shall be subject to vesting
restrictions imposed by the Committee covering a period of time specified by the
Committee (the “Vesting Period”). The Committee has absolute
discretion to determine whether any consideration (other than services) is to be
received by the Company or any Subsidiary as a condition precedent to the
issuance of Restricted Stock.
7.2.
Award
Agreements
. The terms of any Restricted Stock Award granted
under the Plan shall be set forth in a written Award Agreement which shall
contain provisions determined by the Committee and not inconsistent with the
Plan. The terms of Restricted Stock Awards need not be the same with
respect to each Participant
7.3.
Rights of Holders of Restricted
Stock.
Beginning on the date of grant of the Restricted Stock
Award and subject to execution of the Award Agreement, the Participant shall
become a shareholder of the Company with respect to all Shares subject to the
Award Agreement and shall have all of the rights of a shareholder, including the
right to vote such Shares and the right to receive distributions made with
respect to such Shares; provided, however
,
that except as otherwise
provided in an Award Agreement any Shares or any other property (other than
cash) distributed as a dividend or otherwise with respect to any Restricted
Stock as to which the restrictions have not yet lapsed shall be subject to the
same restrictions as such Restricted Stock.
7.4
.
Minimum Vesting
Period.
The Vesting Period for any Restricted Stock Awards
shall be set forth in the applicable Award Agreement. The Committee
may, in its sole discretion and subject to the limitations imposed under Section
162(m) of the Code and the regulations thereunder in the case of a Restricted
Stock Award intended to comply with the performance-based exception under Code
Section 162(m), waive the forfeiture period and any other conditions set forth
in any Award Agreement subject to such terms and conditions as the Committee
shall deem appropriate.
8. OTHER
STOCK UNIT AWARDS
8.1.
Grants
. Other
Awards of units having a value equal to an identical number of Shares (“Other
Stock Unit Awards”) may be granted hereunder to Participants, in addition to
other Awards granted under the Plan. Other Stock Unit Awards shall
also be available as a form of payment of other Awards granted under the Plan
and other earned cash-based incentive compensation.
8.2.
Award
Agreements
. The terms of Other Stock Unit Award granted under
the Plan shall be set forth in a written Award Agreement which shall contain
provisions determined by the Committee and not inconsistent with the
Plan. The terms of such Awards need not be the same with respect to
each Participant.
8.3.
Vesting
. The
Vesting Period for any Other Stock Unit Awards shall be set forth in the
applicable Award Agreement. The Committee may, in its sole discretion
and subject to the limitations imposed under Section 162(m) of the Code and the
regulations thereunder in the case of a Other Stock Unit Award intended to
comply with the performance-based exception under Code Section 162(m), waive the
forfeiture period and any other conditions set forth in any Award Agreement
subject to such terms and conditions as the Committee shall deem
appropriate.
8.4.
Payment.
Except as
provided in Article 10 or as maybe provided in an Award Agreement, Other Stock
Unit Awards may be paid in cash, Shares, other property, or any combination
thereof, in the sole discretion of the Committee at the time of
payment. Other Stock Unit Awards may be paid in a lump sum or in
installments or, in accordance with procedures established by the Committee, on
a deferred basis subject to the requirements of Section 409A of the
Code.
9. PERFORMANCE
AWARDS
9.1.
Grants
. Performance
Awards in the form of Performance Shares or Performance Units, as determined by
the Committee in its sole discretion, may be granted hereunder to Participants,
for no consideration or for such minimum consideration as may be required by
applicable law, either alone or in addition to other Awards granted under the
Plan. The performance goals to be achieved for each Performance Period shall be
conclusively determined by the Committee and may be based upon the criteria set
forth in Section 10.2.
9.2.
Award
Agreements.
The terms of any Performance Award granted under
the Plan shall be set forth in a written Award Agreement which shall contain
provisions determined by the Committee and not inconsistent with the Plan,
including whether such Awards
shall
have Dividend Equivalents. The terms of Performance Awards need not be the same
with respect to each Participant.
9.3.
Terms and
Conditions.
The performance criteria to be achieved during any
Performance Period and the length of the Performance Period shall be determined
by the Committee upon the grant of each Performance Award. The amount
of the Award to be distributed shall be conclusively determined by the
Committee.
9.4.
Payment.
Except as
provided in Article 11 or as may be provided in an Award Agreement, Performance
Awards will be distributed only after the end of the relevant Performance
Period. Performance Awards may be paid in cash, Shares, other
property, or any combination thereof, in the sole discretion of the Committee at
the time of payment. Performance Awards may be paid in a lump sum or
in installments following the close of the Performance Period or, in accordance
with procedures established by the Committee, on a deferred basis subject to the
requirements of Section 409A of the Code.
10. CODE
SECTION 162(m) PROVISIONS
10.1.
Covered
Employees
. Notwithstanding any other provision of the Plan, if
the Committee determines at the time a Restricted Stock Award, a Performance
Award or an Other Stock Unit Award is granted to a Participant who is, or is
likely to be, as of the end of the tax year in which the Company would claim a
tax deduction in connection with such Award, a Covered Employee, then the
Committee may provide that this Article 10 is applicable to such
Award.
10.2.
Performance Criteria.
If
the Committee determines that a Restricted Stock Award, a Performance Award or
an Other Stock Unit Award is subject to this Article 10, the lapsing of
restrictions thereon and the distribution of cash, Shares or other property
pursuant thereto, as applicable, shall be subject to the achievement of one or
more objective performance goals established by the Committee, which shall be
based on the attainment of specified levels of one or any combination of the
following: net sales; revenue; revenue growth; operating income; pre- or
after-tax income (before or after allocation of corporate overhead and bonus);
net earnings; earnings per share; net income; division, group or corporate
financial goals; return on equity; total shareholder return; return on assets or
net assets; attainment of strategic and operational initiatives; appreciation in
and/or maintenance of the price of the Shares or any other publicly-traded
securities of the Company; market share; gross profits; earnings (including
earnings before taxes, earnings before interest and taxes or earnings before
interest, taxes, depreciation and amortization); economic value-added models;
comparisons with various stock market indices; reductions in costs; cash flow
(before or after dividends) cash flow per share (before or after dividends);
return on capital (including return on total capital or return on invested
capital; cash flow return on investment; improvement in or attainment of expense
levels or working capital levels; cash margins; operating margin adjusted for
total interest expense; and revenue per employee. Such performance
goals also may be based solely by reference to the Company’s performance or the
performance of a Subsidiary, division, business segment or business unit of the
Company, or based upon the relative performance of other companies or upon
comparisons of any of the indicators of performance relative to other
companies. The Committee may also exclude charges related to an event
or occurrence which the Committee determines should appropriately be excluded,
including (a) reorganizations, restructurings and
discontinued
operations, (b) other extraordinary non-recurring items, (c) an event either not
directly related to the operations of the Company or not within the reasonable
control of the Company’s management, or (d) the cumulative effects of tax or
accounting changes in accordance with generally accepted accounting
principles. Such performance goals shall be set by the Committee
within the time period prescribed by, and shall otherwise comply with the
requirements of, Section 162(m) of the Code, and the regulations
thereunder.
10.3.
Adjustments
. Notwithstanding
any provision of the Plan (other than Article 11), with respect to any
Restricted Stock, Performance Award or Other Stock Unit Award that is subject to
this Section 10, the Committee may adjust downwards, but not upwards, the
amount payable pursuant to such Award, and the Committee may not waive the
achievement of the applicable performance goals, except in the case of the death
or disability of the Participant or as otherwise determined by the Committee in
special circumstances.
10.4.
Restrictions
. The
Committee shall have the power to impose such other restrictions on Awards
subject to this Article as it may deem necessary or appropriate to ensure
that such Awards satisfy all requirements for “performance-based compensation”
within the meaning of Section 162(m) of the Code.
10.5.
Limitations on Grants to Individual
Participants
. Subject to adjustment as provided in Section
12.2, no Participant may be granted (i) Options or Stock Appreciation Rights
during any rolling 36-month period with respect to more than 5,000,000 Shares or
(ii) Restricted Stock, Performance Awards and/or Other Stock Unit Awards that
are denominated in Shares in any rolling 36-month period with respect to more
than 2,500,000 Shares (the “Limitations”). In addition to the
foregoing, the maximum dollar value payable to any Participant in any rolling
12-month period with respect to Performance Awards is $500,000. If an
Award is cancelled, the cancelled Award shall continue to be counted toward the
applicable Limitations.
11. CHANGE
IN CONTROL PROVISIONS
11.1.
Impact on Certain
Awards.
Award Agreements may provide that in the event of a
Change in Control of the Company (as defined in Section 11.3): (i) Options and
Stock Appreciation Rights outstanding as of the date of the Change in Control
shall be cancelled and terminated without payment therefore if the Fair Market
Value of one Share as of the date of the Change in Control is less than the per
Share Option exercise price or the Base Amount per Share of the Stock
Appreciation Right, and (ii) all Performance Awards shall be considered to be
earned and payable (either in full or pro rata based on the portion of
Performance Period completed as of the date of the Change in Control), and any
deferral or other restriction shall lapse and such Performance Awards shall be
immediately settled or distributed.
11.2.
Assumption or Substitution of
Certain Awards.
(a) Unless otherwise provided in an
Award Agreement, in the event of a Change in Control of the
Company in which the successor company assumes or substitutes for an
Option, Stock Appreciation Right, Restricted Stock Award or Other Stock Unit
Award, if a Participant’s employment with such successor company (or a
subsidiary thereof) terminates within the time period following such Change in
Control set forth in the Award Agreement and under the circumstances specified
in the Award Agreement: (i) Options and Stock Appreciation Rights
outstanding as of the date of such termination of employment will immediately
vest, become fully exercisable, and may thereafter
be
exercised for a period of time set forth in the Award Agreement, (ii)
restrictions and deferral limitations on Restricted Stock shall lapse and the
Restricted Stock shall become free of all restrictions and limitations and
become fully vested, and (iii) the restrictions and deferral limitations and
other conditions applicable to any Other Stock Unit Awards or any other Awards
shall lapse, and such Other Stock Unit Awards or such other Awards shall become
free of all restrictions, limitations or conditions and become fully vested and
transferable to the full extent of the original grant. For the
purposes of this Section 11.1, an Option, Stock Appreciation Right,
Restricted Stock Award or Other Stock Unit Award shall be considered assumed or
substituted for if following the Change in Control the Award confers the right
to purchase or receive, for each Share subject to the Option, Stock Appreciation
Right, Restricted Stock Award or Other Stock Unit Award immediately prior to the
Change in Control, the consideration (whether stock, cash or other securities or
property) received in the transaction constituting a Change in Control by
holders of Shares for each Share held on the effective date of such transaction
(and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding shares);
provided, however, that if such consideration received in the transaction
constituting a Change in Control is not solely common stock of the successor
company, the Committee may, with the consent of the successor company, provide
that the consideration to be received upon the exercise or vesting of an Option,
Stock Appreciation Right, Restricted Stock Award or Other Stock Unit Award, for
each Share subject thereto, will be solely common stock of the successor company
substantially equal in fair market value to the per share consideration received
by holders of Shares in the transaction constituting a Change in
Control. The determination of such substantial equality of value of
consideration shall be made by the Committee in its sole discretion and its
determination shall be conclusive and binding.
(b) Unless
otherwise provided in an Award Agreement, in the event of a Change in Control of
the Company in which the successor company does not assume or substitute for an
Option, Stock Appreciation Right, Restricted Stock Award or Other Stock Unit
Award: (i) Options and Stock Appreciation Rights outstanding as of the date of
the Change in Control shall immediately vest and become fully exercisable, (ii)
restrictions and deferral limitations on Restricted Stock shall lapse and the
Restricted Stock shall become free of all restrictions and limitations and
become fully vested, and (iii) the restrictions and deferral limitations and
other conditions applicable to any Other Stock Unit Awards or any other Awards
shall lapse, and such Other Stock Unit Awards or such other Awards shall become
free of all restrictions, limitations or conditions and become fully vested and
transferable to the full extent of the original grant.
(c) Notwithstanding
any other provision of the Plan, the Committee, in its discretion, may determine
that, upon the occurrence of a Change in Control of the Company, each Option and
Stock Appreciation Right outstanding shall terminate within a specified number
of days after notice to the Participant, and/or that each Participant shall
receive, with respect to each Share subject to such Option or Stock Appreciation
Right, an amount equal to the excess of the Fair Market Value of such Share
immediately prior to the occurrence of such Change in Control over the exercise
price per share of such Option and/or Stock Appreciation Right; such amount to
be payable in cash, in one or more kinds of stock or property (including the
stock or property, if any, payable in the transaction) or in a combination
thereof, as the Committee, in its discretion, shall determine.
11.3.
Change in
Control.
For purposes of the Plan, unless otherwise provided
in an Award Agreement, Change in Control means the occurrence of any one of the
following events:
(a) During
any twenty-four (24) month period, individuals who, as of the beginning of such
period, constitute the Board (the “Incumbent Directors”) cease for any reason to
constitute at least a majority of the Board, provided that any person becoming a
director subsequent to the beginning of such period whose election or nomination
for election was approved by a vote of at least a majority of the Incumbent
Directors then on the Board (either by a specific vote or by approval of the
proxy statement of the Company in which such person is named as a nominee for
director, without written objection to such nomination) shall be an Incumbent
Director;
provided
,
however
, that no
individual initially elected or nominated as a director of the Company as a
result of an actual or threatened election contest with respect to directors or
as a result of any other actual or threatened solicitation of proxies by or on
behalf of any person other than the Board shall be deemed to be an Incumbent
Director;
(b) any
“person” (as such term is defined in the Exchange Act and as used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 50% or more of
the combined voting power of the Company’s then outstanding securities eligible
to vote for the election of the Board (the “Company Voting Securities”);
provided
,
however
, that the
event described in this paragraph (b) shall not be deemed to be a Change in
Control by virtue of any of the following acquisitions: (i) by
the Company or any subsidiary, (ii) by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any subsidiary, (iii) by any
underwriter temporarily holding securities pursuant to an offering of such
securities, (iv) pursuant to a Non-Qualifying Transaction, as defined in
paragraph (c) below, or (v) by any person of Voting Securities from the Company,
if a majority of the Incumbent Board approves in advance the acquisition of
beneficial ownership of 50% or more of Company Voting Securities by such
person;
(c) the
consummation of a merger, consolidation, statutory share exchange or similar
form of corporate transaction involving the Company or any of its subsidiaries
that requires the approval of the Company’s stockholders, whether for such
transaction or the issuance of securities in the transaction (a “Business
Combination”), unless
immediately following such Business Combination: (i) more than
60% of the total voting power of (A) the corporation resulting from such
Business Combination (the “Surviving
Corporation”), or
(B) if applicable, the ultimate parent corporation that directly or
indirectly has beneficial ownership of 100% of the voting securities eligible to
elect directors of the Surviving Corporation (the “Parent
Corporation”), is
represented by Company Voting Securities that were outstanding immediately prior
to such Business Combination (or, if applicable, is represented by shares into
which such Company Voting Securities were converted pursuant to such Business
Combination), and such voting power among the holders thereof is in
substantially the same proportion as the voting power of such Company Voting
Securities among the holders thereof immediately prior to the Business
Combination; (ii) no person (other than any employee benefit plan (or
related trust) sponsored or maintained by the Surviving Corporation or the
Parent Corporation), is or becomes the beneficial owner, directly or indirectly,
of 50% or more of the total voting power of the outstanding voting securities
eligible to elect directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation); and (iii) at least a majority of
the members of
the board
of directors of the Parent Corporation (or, if there is no Parent Corporation,
the Surviving Corporation) following the consummation of the Business
Combination were Incumbent Directors at the time of the Board’s approval of the
execution of the initial agreement providing for such Business Combination (any
Business Combination which satisfies all of the criteria specified in (i), (ii)
and (iii) above shall be deemed to be a “Non
-
Qualifying
Transaction”);
(d) the
stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company or the consummation of a sale of all or substantially
all of the Company’s assets; or
(e) the
occurrence of any other event that the Board determines by a duly approved
resolution constitutes a Change in Control.
Notwithstanding
the foregoing, a Change in Control shall not be deemed to occur solely because
any person acquires beneficial ownership of more than 50% of the Company Voting
Securities as a result of the acquisition of Company Voting Securities by the
Company which reduces the number of Company Voting Securities outstanding;
provided
,
that
if after such
acquisition by the Company such person becomes the beneficial owner of
additional Company Voting Securities that increases the percentage of
outstanding Company Voting Securities beneficially owned by such person, a
Change in Control of the Company shall then occur.
12. GENERALLY
APPLICABLE PROVISIONS
12.1.
Amendment and Termination of the
Plan
. The Board may, from time to time, alter, amend, suspend
or terminate the Plan as it shall deem advisable, subject to any requirement for
stockholder approval imposed by applicable law, including the rules and
regulations of The Nasdaq Stock Market (or such other principal securities
market on which the Shares are traded) provided that the Board may not amend the
Plan in any manner that would result in noncompliance with Rule 16b-3 of the
Exchange Act; and further provided that the Board may not, without the approval
of the Company's stockholders, amend the Plan to (a) increase the number of
Shares that may be the subject of Awards under the Plan (except for adjustments
pursuant to Section 12.2), (b) expand the types of Awards available under the
Plan, (c) materially expand the class of persons eligible to participate in the
Plan, (d) amend any provision of Section 5.3, (e) increase the maximum
permissible term of any Option specified by Section 5.4 or the maximum
permissible term of a Freestanding Stock Appreciation Right specified by Section
5.5(g), (f) amend any provision of Section 10.5, or (g) take any action with
respect to an Option or Stock Appreciation Right that may be treated as a
repricing under the rules and regulations of The Nasdaq Stock Market (or such
other principal securities market on which the Shares are traded), including
reducing the exercise price or Base Amount (as applicable) or exchanging an
Option or Stock Appreciation Right for cash or another Award. In
addition, no amendments to, or termination of, the Plan shall in any way impair
the rights of a Participant under any Award previously granted without such
Participant's consent.
12.2.
Adjustments
. If
the outstanding Shares or other securities of the Company subject to Awards
shall at any time be changed or exchanged by declaration of a stock dividend,
stock split, reverse stock split, combination of shares, extraordinary dividend
of cash or assets, recapitalization, reorganization or any similar equity
restructuring transaction (as that term is
used in
Statement of Financial Accounting Standards No. 123(R)) affecting the Shares or
such securities, the Committee shall equitably adjust the number and kind of
Shares or other securities issuable under the Plan, the Limitations, the
remaining maximum number of Shares or other securities that may be issued as
"incentive stock options" under the Plan, and the number of Shares or other
securities underlying, and exercise price of, all outstanding Awards so as to
maintain the proportionate number of Shares or other securities subject to such
outstanding Awards without changing the aggregate exercise or settlement price
of such Awards, if any. No right to acquire a fractional share shall
result, however, from any adjustment of Options or Stock Appreciation
Rights. In the case of any such adjustment, the number of shares
subject to Options or Stock Appreciation Rights shall be rounded down to the
nearest whole share. In applying any Limitation adjusted hereunder,
Shares and Awards issued prior to the adjustment shall count against the
adjusted Limitation on a post-split adjusted basis.
12.3.
Transferability of
Awards
. Except as provided below, and except as otherwise
authorized by the Committee in an Award Agreement, no Award and no Shares
subject to Awards described in Article 8 that have not been issued or as to
which any applicable restriction, performance or deferral period has not lapsed,
may be sold, assigned, transferred, pledged or otherwise encumbered, other than
by will or the laws of descent and distribution, and such Award may be exercised
during the life of the Participant only by the Participant or the Participant’s
guardian or legal representative. Notwithstanding the foregoing if
provided for in an Award Agreement, a Participant may assign or transfer an
Award with the consent of the Committee (each transferee thereof, a “Permitted
Assignee”) (a) to the Participant’s spouse, children, or grandchildren
(including any adopted step children and grandchildren); (b) to a trust or
partnership for the benefit of one or more person referred to in clause (a); or
(c) for charitable donations; provided that such Permitted Assignee
shall be bound by and subject to all of the terms and conditions of the Plan and
the Award Agreement relating to the transferred Award and shall execute an
agreement satisfactory to the Company evidencing such obligations; and provided
further that such Participant shall remain bound by the terms and conditions of
the Plan. The Company shall cooperate with any Permitted Assignee and
the Company’s transfer agent in effectuating any transfer permitted under this
Section. Any transfer of an Award or Shares in violation of this Section 12.3
shall be null and void.
12.4.
Termination of
Employment
. The Committee shall determine and set forth in
each Award Agreement whether any Awards granted in such Award Agreement will
continue to be exercisable, and the terms of such exercise, on and after the
date that a Participant ceases to be employed by or to provide services to the
Company or any Subsidiary (including as a Director), whether by reason of death,
disability, voluntary or involuntary termination of employment or services, or
otherwise. The date of termination of a Participant’s employment or
services will be determined by the Committee, which determination will be
final.
12.5.
Deferral
;
Dividend
Equivalents
. The Committee shall be authorized to establish
procedures pursuant to which the payment of any Award may be
deferred. Subject to the provisions of the Plan and any Award
Agreement, the recipient of an Award (including any deferred Award) other than
an Option or Stock Appreciation Right may, if so determined by the Committee, be
entitled to receive, currently or on a deferred basis, cash, stock or other
property dividends, or cash payments in amounts equivalent to cash, stock or
other property dividends on Shares (“Dividend Equivalents”) with respect to the
number of Shares covered by the Award, as
determined
by the Committee, in its sole discretion. The Committee may provide
that such amounts and Dividend Equivalents (if any) shall be deemed to have been
reinvested in additional Shares or otherwise reinvested and may provide that
such amounts and Dividend Equivalents are subject to the same vesting or
performance conditions as the underlying Award.
13. MISCELLANEOUS
13.1.
Tax
Withholding
. The Company shall have the right to make all
payments or distributions pursuant to the Plan to a Participant (or a Permitted
Assignee thereof) (any such person, a “Payee”) net of any applicable federal,
state and local taxes required to be paid or withheld as a result of (a) the
grant of any Award, (b) the exercise of an Option or Stock Appreciation Right,
(c) the delivery of Shares or cash, (d) the lapse of any restrictions in
connection with any Award or (e) any other event occurring pursuant to the
Plan. The Company or any Subsidiary shall have the right to withhold
from wages or other amounts otherwise payable to such Payee such withholding
taxes as may be required by law, or to otherwise require the Payee to pay such
withholding taxes. If the Payee shall fail to make such tax payments
as are required, the Company or its Subsidiaries shall, to the extent permitted
by law, have the right to deduct any such taxes from any payment of any kind
otherwise due to such Payee or to take such other action as may be necessary to
satisfy such withholding obligations. The Committee shall be
authorized to establish procedures for election by Participants to satisfy such
obligation for the payment of such taxes by tendering previously acquired Shares
(either actually or by attestation, valued at their then Fair Market Value) that
have been owned for a period of at least six months (or such other period to
avoid accounting charges against the Company’s earnings), or by directing the
Company to retain Shares (up to the Participant’s minimum required tax
withholding rate or such other rate that will not trigger a negative accounting
impact) otherwise deliverable in connection with the Award.
13.2.
Right of Discharge Reserved; Claims
to Awards
. Nothing in the Plan nor the grant of an Award
hereunder shall confer upon any Employee or Director the right to continue in
the employment or service of the Company or any Subsidiary or affect any right
that the Company or any Subsidiary may have to terminate the employment or
service of (or to demote or to exclude from future Awards under the Plan) any
such Employee or Director at any time for any reason “at
will.” Except as specifically provided by the Committee, the Company
shall not be liable for the loss of existing or potential profit from an Award
granted in the event of termination of an employment or other
relationship. No Employee or Participant shall have any claim to be
granted any Award under the Plan, and there is no obligation for uniformity of
treatment of Employees or Participants under the Plan.
13.3.
Prospective
Recipient
. The prospective recipient of any Award under the
Plan shall not, with respect to such Award, be deemed to have become a
Participant, or to have any rights with respect to such Award, until and unless
such recipient shall have executed an agreement or other instrument evidencing
the Award and delivered a copy thereof to the Company, and otherwise complied
with the then applicable terms and conditions of the Plan and Award
Agreement.
13.4.
Substitute
Awards
. Notwithstanding any other provision of the Plan, the
terms of Substitute Awards may vary from the terms set forth in the Plan to the
extent the Committee
deems
appropriate to conform, in whole or in part, to the provisions of the awards in
substitution for which they are granted.
13.5.
Cancellation of
Award
. Notwithstanding anything to the contrary contained
herein, all outstanding Awards granted to any Participant shall be canceled if
the Participant, without the consent of the Company, while employed by the
Company or any Subsidiary or after termination of such employment or service,
establishes a relationship with a competitor of the Company or any Subsidiary or
engages in activity that is in conflict with or adverse to the interest of the
Company or any Subsidiary, as determined by the Committee in its sole
discretion. The Committee may provide in an Award Agreement that if
within the time period specified in the Agreement the Participant establishes a
relationship with a competitor or engages in an activity referred to in the
preceding sentence, the Participant will forfeit any gain realized on the
vesting or exercise of the Award and must repay such gain to the
Company.
13.6.
Stop Transfer
Orders
. All certificates for Shares delivered under the Plan
pursuant to any Award shall be subject to such stop-transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations
and other requirements of the Securities and Exchange Commission, any stock
exchange upon which the Shares are then listed, and any applicable federal or
state securities law, and the Committee may cause a legend or legends to be put
on any such certificates to make appropriate reference to such
restrictions. Any provision herein to the contrary notwithstanding,
the Company shall have no obligation to issue any Shares pursuant to an Award if
the Committee determines in good faith that such issuance would violate
applicable federal, state or foreign securities laws.
13.7.
Nature of
Payments
. All Awards made pursuant to the Plan are in
consideration of services performed or to be performed for the Company or any
Subsidiary, division or business unit of the Company. Any income or
gain realized pursuant to Awards under the Plan and any Stock Appreciation
Rights constitute a special incentive payment to the Participant and shall not
be taken into account, to the extent permissible under applicable law, as
compensation for purposes of any of the employee benefit plans of the Company or
any Subsidiary except as may be determined by the Committee or by the Board or
board of directors of the applicable Subsidiary.
13.8.
Other
Plans
. Nothing contained in the Plan shall prevent the Board
from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases.
13.9.
Severability
. If
any provision of the Plan shall be held unlawful or otherwise invalid or
unenforceable in whole or in part by a court of competent jurisdiction, such
provision shall (a) be deemed limited to the extent that such court of competent
jurisdiction deems it lawful, valid and/or enforceable and as so limited shall
remain in full force and effect, and (b) not affect any other provision of the
Plan or part thereof, each of which shall remain in full force and
effect. If the making of any payment or the provision of any other
benefit required under the Plan shall be held unlawful or otherwise invalid or
unenforceable by a court of competent jurisdiction, such unlawfulness,
invalidity or unenforceability shall not prevent any other payment or benefit
from being made or provided under the Plan, and if the making of any payment in
full or the provision of any other benefit required under the Plan in full would
be
unlawful
or otherwise invalid or unenforceable, then such unlawfulness, invalidity or
unenforceability shall not prevent such payment or benefit from being made or
provided in part, to the extent that it would not be unlawful, invalid or
unenforceable, and the maximum payment or benefit that would not be unlawful,
invalid or unenforceable shall be made or provided under the Plan.
13.10.
Construction
. As
used in the Plan, the words “
include
” and “
including
,” and variations
thereof, shall not be deemed to be terms of limitation, but rather shall be
deemed to be followed by the words “
without
limitation
.”
13.11.
Unfunded Status of the
Plan.
The Plan is intended to constitute an “unfunded” plan
for incentive compensation. With respect to any payments not yet made
to a Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general creditor of the
Company. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver the Shares or payments in lieu of or with respect to Awards
hereunder; provided, however, that the existence of such trusts or other
arrangements is consistent with the unfunded status of the Plan.
13.12.
Governing Law
. The
Plan and all determinations made and actions taken thereunder, to the extent not
otherwise governed by the Code or the laws of the United States, shall be
governed by the laws of the State of Delaware, without reference to principles
of conflict of laws, and construed accordingly.
13.13.
Effective Date of Plan; Termination
of Plan
. The Plan shall be effective on the date of the
approval of the Plan by the holders of a majority the shares voted at a duly
constituted meeting of the stockholders of the Company. The Plan
shall be null and void and of no effect if the foregoing condition is not
fulfilled, and no Award shall be granted until the stockholders of the Company
approve the Plan. Awards may be granted under the Plan at any time
and from time to time following stockholder approval of the Plan until the tenth
anniversary of the effective date of the Plan, on which date the Plan will
expire except as to Awards then outstanding under the Plan. Such
outstanding Awards shall remain in effect until they have been exercised or
terminated, or have expired.
13.14.
Foreign
Employees
. Awards may be granted to Participants who are
foreign nationals or employed outside the United States, or both, on such terms
and conditions different from those applicable to Awards to Employees employed
in the United States as may, in the judgment of the Committee, be necessary or
desirable in order to recognize differences in local law or tax
policy. The Committee also may impose conditions on the exercise or
vesting of Awards in order to minimize the Company's obligation with respect to
tax equalization for Employees on assignments outside their home
country.
13.15.
Compliance with Section 409A of the
Code.
This Plan is intended to comply and shall be administered in a
manner that is intended to comply with Section 409A of the Code and shall be
construed and interpreted in accordance with such intent. To the
extent that an Award or the payment, settlement or deferral thereof is subject
to Section 409A of the Code, the Award shall be granted, paid, settled or
deferred in a manner that will comply with Section 409A of the Code, including
regulations or other guidance issued with respect thereto, except as otherwise
determined
by the Committee. Any provision of this Plan that would cause the
grant of an Award or the payment, settlement or deferral thereof to fail to
satisfy Section 409A of the Code shall be amended to comply with Section 409A of
the Code on a timely basis, which may be made on a retroactive basis, in
accordance with regulations and other guidance issued under Section 409A of the
Code.
13.16.
Captions
. The
captions in the Plan are for convenience of reference only, and are not intended
to narrow, limit or affect the substance or interpretation of the provisions
contained herein.
IN
TESTIMONY WHEREOF, the Company has caused this Plan document to be executed by
its duly authorized officer to be effective as of the 23rd day of April,
2008.
COGNIGNEN NETWORKS, INC.
By:
________________________________
Name: _____________________________
Its:
________________________________
AMENDED
AND RESTATED ARTICLES OF INCORPORATION
OF
COGNIGEN
NETWORKS, INC.
(Including
change of name to BayHill Capital Corporation)
Pursuant
to the provisions of the Colorado Business Corporations Act (the “
CBCA
”), Cognigen
Networks, Inc., a Colorado corporation (the “
Company
”), hereby
declares and certifies as follows:
1. The
name of the Company is Cognigen Networks, Inc.
2. The
Articles of Incorporation of the Company are hereby amended and restated in
their entirety as set forth on
Exhibit A
hereto (the
“
Restated
Articles
”).
3. The
Restated Articles were approved on March 31, 2008, by a majority of holders
(collectively, the “
Shareholders
”) of all
of the outstanding shares of common stock of the Company in accordance with the
provisions of the CBCA and the Articles of Incorporation of the
Company.
IN
WITNESS WHEREOF, these Amended and Restated Articles of Incorporation were
executed by the Company on the 21
st
day
of April, 2008 and effective as of April 23, 2008 (the “Effective
Date”).
COGNIGEN
NETWORKS, INC.
a
Colorado corporation
By:
____________________________________
EXHIBIT
A
TO
Amended
and Restated Articles of Incorporation
of
Cognigen
Networks, Inc.
____________________________________________________________________
Amended
and Restated Articles of Incorporation
of
Cognigen
Networks, Inc.
(now
known as BayHill Capital Corporation)
Pursuant
to the provisions of the Colorado Business Corporations Act (the “
CBCA
”), Cognigen
Networks, Inc., a Colorado corporation, hereby declares and certifies as
follows:
FIRST
: The
name of the corporation is
BayHill Capital Corporation
(the “Corporation”).
SECOND:
The
Articles of Incorporation of the Corporation are hereby amended and restated in
their entirety.
THIRD:
The
Corporation shall have and may exercise all of the rights, powers and privileges
now or hereafter conferred upon corporations organized under the laws of
Colorado. In addition, the Corporation may do everything necessary,
suitable or proper for the accomplishment of any of its corporate
purposes. The Corporation may conduct part or all of its business in
any part of Colorado, the United States or the world and may hold, purchase,
mortgage, lease and convey real and personal property in any of such
places.
FOURTH
:
(a) The
aggregate number of shares that the Corporation shall have authority to issue
is: (i) one hundred million (100,000,000) shares of common stock, having a par
value of $.0001; and (ii) four hundred thousand (400,000) shares of preferred
stock, having a par value of $.0001.
(b) The
number of outstanding shares of common stock will be reduced at a ratio of 50
shares to 1 share, whereby each 50 shares of the Corporation's pre-split common
stock issued and outstanding immediately prior to the Effective Date will
be exchanged for one share of the Corporation's post-split common
stock on the Effective Date.
(c) Each
holder of Common Stock of record shall have one vote for each share of Common
Stock standing in the shareholder’s name on the books of the corporation and
entitled to vote, except that in the election of directors each holder of Common
Stock shall have as many votes for each share of Common Stock held by the
shareholder as there are directors to be elected and for
whose
election the shareholder has a right to vote. Cumulative voting shall
not be permitted in the election of directors or otherwise. All
holders of Common Stock shall vote together as a single class on all matters as
to which holders of common Stock shall be entitled to vote.
(d) Shares
of Preferred Stock may be issued from time to time in one or more series as the
Board of Directors may determine, without shareholder approval, as hereinafter
provided. The Board of Directors is hereby authorized, by resolution
or resolutions, to provide from time to time, out of the unissued shares of
Preferred Stock not then allocated to any series of Preferred Stock, for a
series of Preferred Stock. Before any shares of any such series of
Preferred Stock are issued, the Board of Directors shall (i) fix and determine,
and is hereby expressly empowered to fix and determine, by resolution, or
resolutions, the designations, powers, preferences, relative participating,
optional, and other special rights, qualifications, limitations, and
restrictions, of the shares of such series and (ii) make such filings and
recordings with respect thereto as required by the CBCA. Each series
of Preferred Stock shall be given a distinguishing designation.
The Board of Directors is expressly
authorized to vary the provisions relating to the foregoing matters between the
various series of Preferred Stock. All shares of Preferred Stock of
any one series shall be identical in all respects with all shares of such
series, except that shares of any one series issued at different times may
differ as to the dates from which any dividends thereon shall be payable and, if
cumulative, shall cumulate.
Unless otherwise provided in the
resolution, or resolutions, of the Board of Directors providing for the issuance
thereof, the number of authorized shares of any series of Preferred Stock may be
increased or decreased (but not below the number of shares thereof then
outstanding) by resolution, or resolutions, by the Board of Directors and
appropriate filing and recording to the extent required by the
CBCA. In case the number of shares of any such series of Preferred
Stock shall be decreased, the shares representing such decrease shall, unless
otherwise provided in the resolution, or resolutions, of the Board of Directors
providing for the issuance thereof, resume the status of authorized but unissued
shares of Preferred Stock, undesignated as to series, and may be reissued as
part of such series or as part of any other series of Preferred
Stock.
Unless otherwise provided in the
resolution, or resolutions, of the Board of Directors providing for the issuance
thereof, shares of any series of Preferred Stock that shall be issued and
thereafter acquired by the corporation through purchase, redemption (whether
through the operation of a sinking fund or otherwise), conversion, exchange, or
otherwise shall have the status of authorized and unissued shares of Preferred
Stock, undesignated as to series, and may be reissued as part of such series or
as part of any other series of Preferred Stock.
(e) No
holder of any shares of the corporation, whether now or hereafter unauthorized,
shall have any preemptive or preferential right to acquire any shares or
securities of the corporation, including shares of securities held in the
treasury of the corporation.
FIFTH:
Five
directors shall constitute the initial board, their names and addresses being as
follows:
|
Robert
K. Bench
|
James
U. Jensen
|
|
10757
S. River Front Pkwy., Ste. 125
|
10757
S. River Front Pkwy., Ste. 125
|
|
South
Jordan, Utah 84095
|
South
Jordan, Utah 84095
|
|
|
|
|
Roy
Banks
|
John
M. Knab
|
|
10757
S. River Front Pkwy., Ste. 125
|
10757
S. River Front Pkwy. , Ste. 125
|
|
South
Jordan, Utah 84095
|
South
Jordan, Utah 84095
|
|
|
|
|
John
D. Thomas
|
|
|
10757
S. River Front Pkwy., Ste. 125
|
|
|
South
Jordan, Utah 84095
|
|
SIXTH:
The
address of the registered office of the corporation is 10219 Bluffmont Drive,
Lone Tree, Colorado 80124. The name of its initial registered agent
at such address is Thomas S. Smith. The corporation may conduct part
or all of its business in any other part of Colorado, or of the United States or
of the World. It may hold, purchase, mortgage, lease and convey real
and personal property in any of such places.
SEVENTH:
The
corporation shall be entitled to treat the registered holder of any shares of
the corporation as the owner thereof for all purposes, including all rights
deriving from such shares, and shall not be bound to recognize any equitable or
other claim to, or interest in, such shares or rights deriving from such shares,
unless and until such purchaser, assignee, transferee or other person becomes
the registered holder of such shares, whether or not the corporation shall have
either actual or constructive notice of the interests of such purchaser,
assignee, or transferee or other person. The purchaser, assignee, or
transferee of any of the shares of the corporation shall not be entitled: to
receive notice of the meetings of the shareholders; to vote at such meetings; to
examine a list of the shareholders; to be paid dividends or other sums payable
to shareholders; or to own, enjoy and exercise any other property or rights
deriving from such shares against the corporation, until such purchaser,
assignee, or transferee has become the registered holder of such
shares.
EIGHTH:
The
following provisions are inserted for the management of the new business and for
the conduct of the affairs of the corporation, and the same are in furtherance
of and not in limitation or exclusion of the powers conferred by
law.
(a)
Right of Directors to
Contract with Corporation
. No contract or other transaction
between the corporation and one or more of its directors or any other
corporation, firm, association, or entity in which one or more of its directors
are directors or officers or are financially interested shall be either void or
voidable solely because of such relationship or interest or solely because such
directors are present at the meeting of the board of directors or a committee
thereof which authorizes approves, or ratifies such contract or transaction or
solely because their votes are counted for such purpose if:
(i)
The fact
of such relationship of interest is disclosed or known to the board of directors
or committee which authorizes, approves, or ratifies the contract or transaction
by a vote or consent sufficient for the purpose without counting the votes or
consents of such interested directors; or
(ii)
The fact
of such relationship or interest is disclosed or known to the shareholders
entitle to vote and they authorize, approve, or ratify such contract or
transaction by vote or written consent; or
(iii) The contract or
transaction is fair and reasonable to the corporation.
Common or
interested directors may be counted in determining the presence of a quorum at a
meeting of the board of directors or a committee thereof which authorizes,
approves, or ratifies such contract or transaction.
(b)
Corporation
Opportunity
. The officers, directors and other members of
management of this corporation shall be subject to the doctrine of “corporate
opportunities” only insofar as it applies to business opportunities in which
this corporation has expressed an interest as determined from time to time by
this corporation’s board of directors as evidenced by resolutions appearing in
the corporation’s minutes. Once such areas of interest are
delineated, all such business opportunities within such areas of interest which
come to the attention of the officers, directors, and other members of
management of this corporation shall be disclosed promptly to this corporation
and made available to it. The board of directors may reject any
business opportunity presented to it and thereafter any officer, director or
other member of management may avail himself of such
opportunity. Until such time as this corporation, through its board
of directors, has designated an area of interest, the officers, directors and
other members of management of this corporation shall be free to engage in such
areas of interest on their own and this doctrine shall not limit the rights of
any officer, director or other member of management of this corporation to
continue a business existing prior to the time that such area of interest is
designated by the corporation. This provision shall not be construed
to release any employee of this corporation (other than an officer, director or
member of management) from any duties which he may have to this
corporation.
(c)
Indemnification of Directors
and Others
.
(i)
The
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit, or
proceeding, whether civil, criminal, administrative, or investigative (other
than an action by or in the right of the corporation) by reason of the fact that
he is or was a director, officer, employee or agent of the corporation or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys’ fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interest of the
Corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The
termination
of any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of
nolocontendere
or its
equivalent, shall not of itself create a presumption that the person did not act
in good faith and in a manner which he reasonably believed to be in the best
interest of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that his conduct was
unlawful.
(ii)
The
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee or agent of the Corporation
or is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against expenses (including attorneys’ fees) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably believed
to be in the best interest of the Corporation; but no indemnification shall be
made in respect of any claim, issue or matter as to which such person has been
adjudged to be liable for negligence or misconduct in the performance of his
duty to the Corporation unless and only to the extent that the court in which
such action or suit was brought determines upon application that, despite the
adjudication of liability, but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnification for such
expenses which such court deems proper.
(iii)
To the
extent that a director, officer, employee or agent of the Corporation has been
successful on the merits in defense of any action, suit, or proceeding referred
to in this section, or in defense of any claim, issue, or matter therein, he
shall be indemnified against expenses (including attorneys’ fees) actually and
reasonably incurred by him in connection therewith.
(iv)
Any
indemnification under (i) or (ii) of this section (unless ordered by a court)
shall be made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or agent
is proper in the circumstances because he has met the applicable standard of
conduct set forth in said paragraphs (i) and (ii) of these Articles of
Incorporation. Such determination shall be made by the board of
directors by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or, if such a quorum is not
obtainable or even if obtainable a quorum of disinterested directors so directs,
by independent legal counsel in a written opinion, or by the
shareholders.
(v)
Expenses
(including attorneys’ fees) incurred in defending a civil or criminal action,
suit, or proceeding may be paid by the corporation in advance of the final
disposition of such action, suit or proceeding as authorized by the board of
directors as provided in paragraph (iv) of this section upon receipt of an
undertaking by or on behalf of the director, officer, employee or agent to repay
such amount unless it is ultimately determined that he is entitled to be
indemnified by the corporation as authorized in this section.
(vi)
The
indemnification provided by this section shall not be deemed exclusive of any
other rights to which those indemnified may be entitled under the Articles of
Incorporation, and bylaw, agreement, vote of shareholders or disinterested
directors, or otherwise, and any procedure provided for by any of the foregoing,
both as to action in his official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of
heirs, executors, and administrators of such a person.
(vii)
The
Corporation may purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by him in any
such capacity or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
the provisions of this section.
(viii)
A
unanimous vote of all shares entitled to vote thereon shall be required to amend
this section.
(d)
Shareholder
Voting
.
(i)
One-third
of the shares entitled to vote represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders.
(ii)
Except as
bylaws adopted by the shareholders may provide for a greater voting requirement
and except as is otherwise provided by the CBCA with respect to action on a plan
of merger or share exchange, on the disposition of substantially all of the
property of the corporation, on the granting of consent to the disposition of
property by an entity controlled by the corporation and on the dissolution of
the corporation, action on a matter other than the election of directors is
approved if a quorum exists and if the votes cast favoring the action exceed the
votes cast opposing the action. Any bylaw adding, changing or
deleting a greater quorum or voting requirement for shareholders shall meet the
same quorum requirement and be adopted by the same vote required to take action
under the quorum and voting requirements then in effect or proposed to be
adopted, whichever are greater.
(e)
Adoption and Amendment of
Bylaws
. The initial bylaws of the Corporation shall be adopted
by its board of directors. The power to alter, amend or repeal the
bylaws or adopt new bylaws shall be vested in the board of directors, but the
holders of common stock may also alter, amend or repeal the bylaws or adopt new
bylaws. The bylaws may contain any provisions for the regulation and
management of the affairs of the corporation not inconsistent with law or these
Articles of Incorporation.
NINTH:
A
director of the Corporation shall not be personally liable to the corporation or
to its shareholders for monetary damages for breach of fiduciary duty as a
director. However, this
provision
shall not eliminate or limit the liability of a director to the corporation or
to its shareholders for monetary damages otherwise existing for (i) any breach
of the director’s duty of loyalty to the corporation or to its shareholders;
(ii) acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law; (iii) acts specified in Section 7-108-403 of the
CBCA, as it may be amended from time to time; or (iv) any transaction from which
the director directly or indirectly derived any improper personal
benefit. If the CBCA is hereafter amended to eliminate or limit
further the liability of a director, then, in addition to the elimination and
limitation of liability provided by the preceding sentence, the liability of
each director shall be eliminated or limited to the fullest extent permitted by
the CBCA as so amended. Any repeal or modification of this Article
NINTH shall not adversely affect any right or protection of a director of the
Corporation under this Article NINTH, as in effect immediately prior to such
repeal or modification, with respect to any liability that would have accrued,
but for this Article NINTH, prior to such repeal or
modification. Nothing contained herein will be construed to deprive
any director of the director’s right to all defenses ordinarily available to a
director nor will anything herein be construed to deprive any director of any
right the director may have for contribution from any other director or other
person.
[Remainder
of page left blank intentionally – Signature page follows]
DATED this 23rd day of April,
2008.
BAYHILL CAPITAL
CORPORATION
,
a
Colorado corporation
By: _____________________________
(Signature)
_____________________________
(Typed/Printed
Name and Title)