Exhibit 4.2
AMENDED
AND RESTATED BYLAWS
of
INNOVUS
PHARMACEUTICALS, INC.
a
Nevada corporation
ARTICLE
I
OFFICES
Section 1.1
Principal Office
.
The principal office and place of business of Innovus
Pharmaceuticals, Inc., a Nevada corporation (the
“
Corporation
”)
shall be established from time to time by resolution of the board
of directors of the Corporation (the “
Board of
Directors
”).
Section
1.2
Other Offices
.
Other offices and places of business either within or without the
State of Nevada may be established from time to time by resolution
of the Board of Directors or as the business of the Corporation may
require. The street address of the Corporation’s registered
agent is the registered office of the Corporation in
Nevada.
ARTICLE
II
STOCKHOLDERS
Section
2.1
Annual Meeting
. The
annual meeting of the stockholders of the Corporation shall be held
on such date and at such time as may be designated from time to
time by the Board of Directors. At the annual meeting, directors
shall be elected and any other business may be transacted as may be
properly brought before the meeting pursuant to these Amended and
Restated Bylaws (as further amended from time to time, these
“
Bylaws
”). Except as
otherwise restricted by the articles of incorporation of the
Corporation (as amended from time to time, the “
Articles of
Incorporation
”) or applicable law, the Board of
Directors may postpone, reschedule or cancel any annual meeting of
stockholders.
Section
2.2
Special
Meetings
.
(a) Subject
to any rights of stockholders set forth in the Articles of
Incorporation, special meetings of the stockholders may be called
only by the chairman of the Board of Directors or the chief
executive officer or, if there be no chairman of the Board of
Directors and no chief executive officer, by the president, and
shall be called by the secretary upon the written request (which
request shall state the purpose or purposes of the meeting) of at
least a majority of the Board of Directors. Stockholders shall have
no right to request or call a special meeting. Except as otherwise
restricted by the Articles of Incorporation or applicable law, the
Board of Directors may postpone, reschedule or cancel any special
meeting of stockholders.
(b) No
business shall be acted upon at a special meeting of stockholders
except as set forth in the notice of the meeting.
Section
2.3
Place of Meetings
.
Any meeting of the stockholders of the Corporation may be held at
the Corporation’s registered office in the State of Nevada or
at such other place in or out of the State of Nevada and the United
States as may be designated in the notice of meeting. A waiver of
notice signed by all stockholders entitled to vote thereat may
designate any place for the holding of such meeting. The Board of
Directors may, in its sole discretion, determine that any meeting
of the stockholders shall be held solely by means of electronic
communications or other available technology in accordance with
Section 2.14
.
Section
2.4
Notice of Meetings; Waiver
of Notice
.
(a) The
chief executive officer, if any, the president, any vice president,
the secretary, an assistant secretary or any other individual
designated by the Board of Directors shall sign and deliver or
cause to be delivered to the stockholders written notice of any
stockholders’ meeting not less than ten (10) days, but not
more than sixty (60) days, before the date of such meeting. The
notice shall state the place, date and time of the meeting, the
means of electronic communication, if any, by which the
stockholders or the proxies thereof shall be deemed to be present
and vote and, in the case of a special meeting, the purpose or
purposes for which the meeting is called. The notice shall be
delivered in accordance with, and shall contain or be accompanied
by such additional information as may be required by, the Nevada
Revised Statutes (as amended from time to time, the
“
NRS
”),
including, without limitation, NRS 78.379, 92A.120 or
92A.410.
(b) In
the case of an annual meeting, subject to
Section
2.13
, any proper business may be presented for action,
except that (i) if a proposed plan of merger, conversion or
exchange is submitted to a vote, the notice of the meeting must
state that the purpose, or one of the purposes, of the meeting is
to consider the plan of merger, conversion or exchange and must
contain or be accompanied by a copy or summary of the plan; and
(ii) if a proposed action creating dissenter’s rights is to
be submitted to a vote, the notice of the meeting must state that
the stockholders are or may be entitled to assert dissenter’s
rights under NRS 92A.300 to 92A.500, inclusive, and be accompanied
by a copy of those sections.
(c) A
copy of the notice shall be personally delivered or mailed postage
prepaid to each stockholder of record at the address appearing on
the records of the Corporation. Upon mailing, service of the notice
is complete, and the time of the notice begins to run from the date
upon which the notice is deposited in the mail. If the address of
any stockholder does not appear upon the records of the Corporation
or is incomplete, it will be sufficient to address any notice to
such stockholder at the registered office of the Corporation.
Notwithstanding the foregoing and in addition thereto, any notice
to stockholders given by the Corporation pursuant to Chapters 78 or
92A of the NRS, the Articles of Incorporation or these Bylaws may
be given pursuant to the forms of electronic transmission listed
herein, if such forms of transmission are consented to in writing
by the stockholder receiving such electronically transmitted notice
and such consent is filed by the secretary in the corporate
records. Notice shall be deemed given (i) by facsimile when
directed to a number consented to by the stockholder to receive
notice, (ii) by e-mail when directed to an e-mail address consented
to by the stockholder to receive notice, (iii) by posting on an
electronic network together with a separate notice to the
stockholder of the specific posting on the later of the specific
posting or the giving of the separate notice or (iv) by any other
electronic transmission as consented to by and when directed to the
stockholder. The stockholder consent necessary to permit electronic
transmission to such stockholder shall be deemed revoked and of no
force and effect if (A) the Corporation is unable to deliver by
electronic transmission two consecutive notices given by the
Corporation in accordance with the stockholder’s consent and
(B) the inability to deliver by electronic transmission becomes
known to the secretary, assistant secretary, transfer agent or
other agent of the Corporation responsible for the giving of
notice.
(d) The
written certificate of an individual signing a notice of meeting,
setting forth the substance of the notice or having a copy thereof
attached thereto, the date the notice was mailed or personally
delivered to the stockholders and the addresses to which the notice
was mailed, shall be prima facie evidence of the manner and fact of
giving such notice and, in the absence of fraud, an affidavit of
the individual signing a notice of a meeting that the notice
thereof has been given by a form of electronic transmission shall
be prima facie evidence of the facts stated in the
affidavit.
(e) Any
stockholder may waive notice of any meeting by a signed writing or
by transmission of an electronic record, either before or after the
meeting. Such waiver of notice shall be deemed the equivalent of
the giving of such notice.
Section
2.5
Determination of
Stockholders of Record
.
(a) For
the purpose of determining the stockholders entitled to (i) notice
of and to vote at any meeting of stockholders or any adjournment
thereof, (ii) receive payment of any distribution or the allotment
of any rights, or (iii) exercise any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a
record date, which shall not be more than sixty (60) days nor less
than ten (10) days before the date of such meeting, if
applicable.
(b) If
stockholder action by written consent is permitted under the
Articles of Incorporation and these Bylaws, the Board of Directors
may adopt a resolution prescribing a date upon which the
stockholders of record entitled to give written consent must be
determined. The date set by the Board of Directors must not precede
or be more than ten (10) days after the date the resolution setting
such date is adopted by the Board of Directors. If the Board of
Directors does not adopt a resolution setting a date upon which the
stockholders of record entitled to give written consent must be
determined, and:
(i)
no prior action by the Board of Directors is required by the NRS,
then the date shall be the first date on which a valid written
consent is delivered to the Corporation in accordance with the NRS,
the Articles of Incorporation and these Bylaws; or
(ii)
prior action by the Board of Directors is required by the NRS, then
the date shall be the close of business on the date that the Board
of Directors adopts the resolution.
(c) If
no record date is fixed, the record date for determining
stockholders: (i) entitled to notice of and to vote at a meeting of
stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is
waived, at the close of business on the day next preceding the day
on which the meeting is held; and (ii) for any other purpose shall
be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto. A determination
of stockholders of record entitled to notice of or to vote at any
meeting of stockholders shall apply to any postponement of any
meeting of stockholders to a date not more than sixty (60) days
after the record date or to any adjournment of the meeting;
provided that the Board of Directors may fix a new record date for
the adjourned meeting and must fix a new record date if the meeting
is adjourned to a date more than sixty (60) days later than the
date set for the original meeting.
Section
2.6
Quorum; Adjourned
Meetings
.
(a) Unless
the Articles of Incorporation provide for a different proportion,
stockholders holding at least a majority of the voting power of the
Corporation’s capital stock, represented in person or by
proxy (regardless of whether the proxy has authority to vote on all
matters), are necessary to constitute a quorum for the transaction
of business at any meeting. If, on any issue, voting by classes or
series is required by the laws of the State of Nevada, the Articles
of Incorporation or these Bylaws, at least a majority of the voting
power, represented in person or by proxy (regardless of whether the
proxy has authority to vote on all matters), within each such class
or series is necessary to constitute a quorum of each such class or
series.
(b) If
a quorum is not represented, a majority of the voting power
represented or the person presiding at the meeting may adjourn the
meeting from time to time until a quorum shall be represented. At
any such adjourned meeting at which a quorum shall be represented,
any business may be transacted which might otherwise have been
transacted at the adjourned meeting as originally called. When a
stockholders’ meeting is adjourned to another time or place
hereunder, notice need not be given of the adjourned meeting if the
time and place thereof are announced at the meeting at which the
adjournment is taken. However, if a new record date is fixed for
the adjourned meeting, notice of the adjourned meeting must be
given to each stockholder of record as of the new record date. The
stockholders present at a duly convened meeting at which a quorum
is present may continue to transact business until adjournment,
notwithstanding the departure of enough stockholders to leave less
than a quorum of the voting power.
Section
2.7
Voting
.
(a) Unless
otherwise provided in the NRS, the Articles of Incorporation, or
any resolution providing for the issuance of preferred stock
adopted by the Board of Directors pursuant to authority expressly
vested in it by the provisions of the Articles of Incorporation,
each stockholder of record, or such stockholder’s duly
authorized proxy, shall be entitled to one (1) vote for each share
of voting stock standing registered in such stockholder’s
name at the close of business on the record date or the date
established by the Board of Directors in connection with
stockholder action by written consent, as applicable.
(b) Except
as otherwise provided in these Bylaws, all votes with respect to
shares (including pledged shares) standing in the name of an
individual at the close of business on the record date, or the date
established by the Board of Directors in connection with
stockholder action by written consent, as applicable, shall be cast
only by that individual or such individual’s duly authorized
proxy. With respect to shares held by a representative of the
estate of a deceased stockholder, or a guardian, conservator,
custodian or trustee, even though the shares do not stand in the
name of such holder, votes may be cast by such holder upon proof of
such representative capacity. In the case of shares under the
control of a receiver, the receiver may vote such shares even
though the shares do not stand of record in the name of the
receiver but only if and to the extent that the order of a court of
competent jurisdiction which appoints the receiver contains the
authority to vote such shares. If shares stand of record in the
name of a minor, votes may be cast by the duly appointed guardian
of the estate of such minor only if such guardian has provided the
Corporation with written proof of such appointment.
(c) With
respect to shares standing of record in the name of another
corporation, partnership, limited liability company or other legal
entity on the record date, votes may be cast: (i) in the case of a
corporation, by such individual as the bylaws of such other
corporation prescribe, by such individual as may be appointed by
resolution of the board of directors of such other corporation or
by such individual (including, without limitation, the officer
making the authorization) authorized in writing to do so by the
chairman of the Board of Directors, if any, the chief executive
officer, if any, the president or any vice president of such
corporation; and (ii) in the case of a partnership, limited
liability company or other legal entity, by an individual
representing such stockholder upon presentation to the Corporation
of satisfactory evidence of his or her authority to do
so.
(d) Notwithstanding
anything to the contrary contained in these Bylaws and except for
the Corporation’s shares held in a fiduciary capacity, the
Corporation shall not vote, directly or indirectly, shares of its
own stock owned or held by it, and such shares shall not be counted
in determining the total number of outstanding shares entitled to
vote.
(e) Any
holder of shares entitled to vote on any matter may cast a portion
of the votes in favor of such matter and refrain from casting the
remaining votes or cast the same against the proposal, except in
the case of elections of directors. If such holder entitled to vote
does vote any of such stockholder’s shares affirmatively and
fails to specify the number of affirmative votes, it will be
conclusively presumed that the holder is casting affirmative votes
with respect to all shares held.
(f) With
respect to shares standing of record in the name of two or more
persons, whether fiduciaries, members of a partnership, joint
tenants, tenants in common, spouses as community property, tenants
by the entirety, voting trustees or otherwise and shares held by
two or more persons (including proxy holders) having the same
fiduciary relationship in respect to the same shares, votes may be
cast in the following manner:
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(i)
|
If only one person
votes, the vote of such person binds all.
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(ii)
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If more than one
person casts votes, the act of the majority so voting binds
all.
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(iii)
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If more than one
person casts votes, but the vote is evenly split on a particular
matter, the votes shall be deemed cast proportionately, as
split.
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(g) If
a quorum is present, unless the Articles of Incorporation, these
Bylaws, the NRS, or other applicable law provide for a different
proportion, action by the stockholders entitled to vote on a
matter, other than the election of directors, is approved by and is
the act of the stockholders if the number of votes cast in favor of
the action exceeds the number of votes cast in opposition to the
action, unless voting by classes or series is required for any
action of the stockholders by the laws of the State of Nevada, the
Articles of Incorporation or these Bylaws, in which case the number
of votes cast in favor of the action by the voting power of each
such class or series must exceed the number of votes cast in
opposition to the action by the voting power of each such class or
series.
(h) If
a quorum is present, directors shall be elected by a plurality of
the votes cast.
Section
2.8
Proxies
. At any
meeting of stockholders, any holder of shares entitled to vote may
designate, in a manner permitted by the laws of the State of
Nevada, another person or persons to act as a proxy or proxies. If
a stockholder designates two or more persons to act as proxies,
then a majority of those persons present at a meeting has and may
exercise all of the powers conferred by the stockholder or, if only
one is present, then that one has and may exercise all of the
powers conferred by the stockholder, unless the stockholder’s
designation of proxy provides otherwise. Every proxy shall continue
in full force and effect until its expiration or revocation in a
manner permitted by the laws of the State of Nevada.
Section
2.9
Stockholder Action by
Written Consent
. Any action required or permitted to be
taken at any annual or special meeting of stockholders of the
Corporation may be taken without a meeting if, before or after the
action, a written consent thereto is (a) signed by stockholders
holding at least a majority of the voting power of the outstanding
capital stock of the Corporation entitled to vote on such action
(except that if a greater proportion of the voting power would be
required for such an action at a meeting, then that proportion of
written consents is required), and (b) delivered to the Corporation
by delivery to its registered office in the State of Nevada, its
principal place of business, or an officer or agent of the
Corporation having custody of the books in which proceedings of
meetings of stockholders are recorded. Any such delivery made to
the Corporation’s registered office shall be made by hand,
overnight courier or by certified or registered mail, return
receipt requested. In no instance where action is duly and properly
authorized by written consent need a meeting of stockholders be
called or, unless otherwise required by applicable law or any
certificate of designation relating to any series of Preferred
Stock, notice given.
Section 2.10
Organization
.
(a) Meetings
of stockholders shall be presided over by the chairman of the Board
of Directors, or, in the absence of the chairman of the Board of
Directors, by the vice chairman of the Board of Directors, if any,
or if there be no vice chairman of the Board or in the absence of
the vice chairman of the Board, by the chief executive officer, if
any, or if there be no chief executive officer or in the absence of
the chief executive officer, by the president, or, in the absence
of the president, or, in the absence of any of the foregoing
persons, by a chairman designated by the Board of Directors, or by
a chairman chosen at the meeting by the stockholders entitled to
cast a majority of the votes which all stockholders present in
person or by proxy are entitled to cast. The individual acting as
chairman of the meeting may delegate any or all of his or her
authority and responsibilities as such to any director or officer
of the Corporation present in person at the meeting. The secretary,
or in the absence of the secretary an assistant secretary, shall
act as secretary of the meeting, but in the absence of the
secretary and any assistant secretary the chairman of the meeting
may appoint any person to act as secretary of the meeting. The
order of business at each such meeting shall be as determined by
the chairman of the meeting. The chairman of the meeting shall have
the right and authority to prescribe such rules, regulations and
procedures and to do all such acts and things as are necessary or
desirable for the proper conduct of the meeting, including, without
limitation, (i) the establishment of procedures for the maintenance
of order and safety, (ii) limitation on participation in the
meeting to stockholders of record of the Corporation, their duly
authorized and constituted proxies and such other persons as the
chairman of the meeting shall permit, (iii) limitation on the time
allotted for consideration of each agenda item and for questions or
comments by meeting participants, (iv) restrictions on entry to
such meeting after the time prescribed for the commencement thereof
and (v) the opening and closing of the voting polls. The Board of
Directors, in its discretion, or the chairman of the meeting, in
his or her discretion, may require that any votes cast at such
meeting shall be cast by written ballot.
(b) The
chairman of the meeting may appoint one or more inspectors of
elections. The inspector or inspectors may (i) ascertain the number
of shares outstanding and the voting power of each; (ii) determine
the number of shares represented at a meeting and the validity of
proxies or ballots; (iii) count all votes and ballots; (iv)
determine any challenges made to any determination made by the
inspector(s); and (v) certify the determination of the number of
shares represented at the meeting and the count of all votes and
ballots.
(c) Only
such persons who are nominated in accordance with the procedures
set forth in
Section 2.12
shall be
eligible to be elected at any meeting of stockholders of the
Corporation to serve as directors and only such business shall be
conducted at a meeting of stockholders as shall have been brought
before the meeting in accordance with the procedures set forth in
Section 2.12
. If any
proposed nomination or business was not made or proposed in
compliance with
Section 2.12
(including
proper notice under
Section 2.13
and including
whether the stockholder or beneficial owner, if any, on whose
behalf the nomination or proposal is made solicited (or is part of
a group which solicited) or did not so solicit, as the case may be,
proxies in compliance with such stockholder’s representation
pursuant to clause (a)(iv)(D) of
Section
2.13
), then the chairman of the meeting shall have the
power to declare that such nomination shall be disregarded or that
such proposed business shall not be transacted. If the stockholder
(or a qualified representative of the stockholder) does not appear
at the annual or special meeting of stockholders of the Corporation
to present a nomination or proposed business, such nomination shall
be disregarded and such proposed business shall not be transacted,
notwithstanding that proxies in respect of such vote may have been
received by the Corporation. For purposes of this
Section
2.10
, to be considered a qualified representative of the
stockholder, a person must be a duly authorized officer, manager or
partner of such stockholder or authorized by a writing executed by
such stockholder (or a reliable reproduction or electronic
transmission of the writing) delivered to the Corporation prior to
the making of such nomination or proposal at such meeting by such
stockholder stating that such person is authorized to act for such
stockholder as proxy at the meeting of stockholders.
Section
2.11
Consent to
Meetings
. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the
person objects at the beginning of the meeting to the transaction
of any business because the meeting is not lawfully called, noticed
or convened and except that attendance at a meeting is not a waiver
of any right to object to the consideration of matters not included
in the notice, to the extent such notice is required, if such
objection is expressly made at the time any such matters are
presented at the meeting. Neither the business to be transacted at
nor the purpose of any regular or special meeting of stockholders
need be specified in any written waiver of notice or consent,
except as otherwise provided in these Bylaws.
Section 2.12
Director Nominations and
Business Conducted at Meetings of Stockholders
. Nominations
of persons for election to the Board of Directors of the
Corporation and the proposal of business to be considered by the
stockholders may be made at an annual meeting of stockholders only
(i) by or at the direction of the Board of Directors or the
chairman of the Board of Directors or (ii) by any stockholder of
the Corporation who is entitled to vote on such matter at the
meeting, and who (A) has complied with the notice procedures set
forth in
Section 2.13
and (B) was a
stockholder of record at the time such notice is delivered to the
secretary of the Corporation. Nominations of persons for election
to the Board of Directors may be made at a special meeting of
stockholders at which directors are to be elected pursuant to the
Corporation’s notice of meeting (i) by or at the direction of
the Board of Directors or the chairman of the Board of Directors or
(ii) by any stockholder of the Corporation who is entitled to vote
on such matter at the meeting, who complied with the notice
procedures set forth in
Section 2.13
and who was a
stockholder of record at the time such notice is delivered to the
secretary of the Corporation.
Section
2.13
Advance Notice of Director
Nominations and Stockholder Proposals by
Stockholders
.
(a) For
nominations or other business to be properly brought before an
annual meeting by a stockholder and for nominations to be properly
brought before a special meeting by a stockholder in each case
pursuant to
Section 2.12
, the
stockholder of record must have given timely notice thereof in
writing to the secretary of the Corporation, and, in the case of
business other than nominations, such other business must be a
proper matter for stockholder action. To be timely, a
stockholder’s notice shall be delivered to the secretary at
the principal executive offices of the Corporation not later than
the close of business on the 90
th
day nor earlier
than the close of business on the 120
th
day prior to the
first anniversary of the preceding year’s annual meeting;
provided that in the event that the date of the annual meeting is
more than 30 days before or more than 70 days after such
anniversary date, notice by the stockholder to be timely must be so
delivered not earlier than the close of business on the
120
th
day
prior to such annual meeting and not later than the close of
business on the later of the 90
th
day prior to such
annual meeting or the 10th day following the day on which public
announcement (as defined below) of the date of such meeting is
first made by the Corporation. In no event shall the public
announcement of an adjournment or postponement of an annual meeting
commence a new time period (or extend any time period) for the
giving of a stockholder’s notice as described above. The
notice must be provided by a stockholder of record and must set
forth:
(i) as
to each person whom the stockholder proposes to nominate for
election or re-election as a director all information relating to
such person that is required to be disclosed in solicitations of
proxies for election of directors, or is otherwise required, in
each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), including such
person's written consent to being named in the proxy statement as a
nominee and to serving as a director if elected;
(ii) as
to any other business that the stockholder proposes to bring before
the meeting, a brief description of the business desired to be
brought before the meeting, the text of the proposal or business
(including the text of any resolutions proposed for consideration
and in the event that such business includes a proposal to amend
the Bylaws, the language of the proposed amendment), the reasons
for conducting such business at the meeting and any substantial
interest (within the meaning of Item 5 of Schedule 14A under the
Exchange Act) in such business of such stockholder and the
beneficial owner, if any, on whose behalf the proposal is
made;
(iii) as
to the stockholder giving the notice and the beneficial owner, if
any, on whose behalf the nomination is made or the business is
proposed: (A) the name and address of such stockholder, as they
appear on the Corporation's books, and the name and address of such
beneficial owner, (B) the class and number of shares of stock of
the Corporation which are owned of record by such stockholder and
such beneficial owner as of the date of the notice, and a
representation that the stockholder will notify the Corporation in
writing within five (5) business days after the record date for
such meeting of the class and number of shares of stock of the
Corporation owned of record by the stockholder and such beneficial
owner as of the record date for the meeting, and (C) a
representation that the stockholder intends to appear in person or
by proxy at the meeting to propose such nomination or
business;
(iv) as
to the stockholder giving the notice or, if the notice is given on
behalf of a beneficial owner on whose behalf the nomination is made
or the business is proposed, as to such beneficial owner, and if
such stockholder or beneficial owner is an entity, as to each
director, executive, managing member or control person of such
entity (any such person, a “control person”): (A) the
class and number of shares of stock of the Corporation which are
beneficially owned (as defined below) by such stockholder or
beneficial owner and by any control person as of the date of the
notice, and a representation that the stockholder will notify the
Corporation in writing within five (5) business days after the
record date for such meeting of the class and number of shares of
stock of the Corporation beneficially owned by such stockholder or
beneficial owner and by any control person as of the record date
for the meeting, (B) a description of any agreement, arrangement or
understanding with respect to the nomination or other business
between or among such stockholder or beneficial owner or control
person and any other person, including without limitation any
agreements that would be required to be disclosed pursuant to Item
5 or Item 6 of Exchange Act Schedule 13D (regardless of whether the
requirement to file a Schedule 13D is applicable to the
stockholder, beneficial owner or control person) and a
representation that the stockholder will notify the Corporation in
writing within five (5) business days after the record date for
such meeting of any such agreement, arrangement or understanding in
effect as of the record date for the meeting, (C) a description of
any agreement,
arrangement or
understanding (including any derivative or short positions, profit
interests, options, hedging transactions, and borrowed or loaned
shares) that has been entered into as of the date of the
stockholder's notice by, or on behalf of, such stockholder or
beneficial owner and by any control person or any other person
acting in concert with any of the foregoing, the effect or intent
of which is to mitigate loss, manage risk or benefit from changes
in the share price of any class of the Corporation's stock, or
maintain, increase or decrease the voting power of the stockholder
or beneficial owner with respect to shares of stock of the
Corporation, and a representation that the stockholder will notify
the Corporation in writing within five (5) business days after the
record date for such meeting of any such agreement, arrangement or
understanding in effect as of the record date for the meeting, (D)
a representation whether the stockholder or the beneficial owner,
if any, and any control person will engage in a solicitation with
respect to the nomination or business and, if so, the name of each
participant (as defined in Item 4 of Schedule 14A under the
Exchange Act) in such solicitation and whether such person intends
or is part of a group which intends to deliver a proxy statement
and/or form of proxy to holders of at least the percentage of the
Corporation's outstanding stock required to approve or adopt the
business to be proposed (in person or by proxy) by the stockholder;
a
(v) a
certification that the stockholder giving the notice and the
beneficial owner(s), if any, on whose behalf the nomination is made
or the business is proposed, has or have complied with all
applicable federal, state and other legal requirements in
connection with such stockholder’s and/or each such
beneficial owner’s acquisition of shares of capital stock or
other securities of the Corporation and/or such stockholder’s
and/or each such beneficial owner’s acts or omissions as a
stockholder of the Corporation, including, without limitation, in
connection with such nomination or proposal.
(b) The
Corporation may require any proposed nominee to furnish such other
information as may reasonably be required by the Corporation to
determine the eligibility of such proposed nominee to serve as a
director of the Corporation, including information relevant to a
determination whether such proposed nominee can be considered an
independent director.
(c) For
purposes of
Section 2.13(a)
, a
“public announcement” shall mean disclosure in a press
release reported by the Dow Jones News Service, Associated Press or
a comparable national news service or in a document publicly filed
by the Corporation with the Securities and Exchange Commission
pursuant to Sections 13, 14 or 15(d) of the Exchange Act. For
purposes of clause (a)(iv)(A) of this
Section
2.13
, shares shall be treated as “beneficially
owned” by a person if the person beneficially owns such
shares, directly or indirectly, for purposes of Section 13(d) of
the Exchange Act and Regulations 13D and 13G thereunder or has or
shares pursuant to any agreement, arrangement or understanding
(whether or not in writing): (i) the right to acquire such shares
(whether such right is exercisable immediately or only after the
passage of time or the fulfillment of a condition or both), (ii)
the right to vote such shares, alone or in concert with others
and/or (iii) investment power with respect to such shares,
including the power to dispose of, or to direct the disposition of,
such shares.
(d) This
Section 2.13
shall not
apply to notice of a proposal to be made by a stockholder if the
stockholder has notified the Corporation of his or her intention to
present the proposal at an annual or special meeting only pursuant
to and in compliance with Rule 14a-8 under the Exchange Act and
such proposal has been included in a proxy statement that has been
prepared by the Corporation to solicit proxies for such
meeting.
(e) If
the stockholder does not provide the information required under
clause (a)(iii)(B) and clauses (a)(iv)(A)-(C) of this
Section
2.13
to the Corporation within the time frames specified
herein, or if the stockholder (or a qualified representative of the
stockholder) does not appear at the annual or special meeting of
stockholders of the Corporation to present a nomination or proposed
business, such nomination shall be disregarded and such proposed
business shall not be transacted, notwithstanding that proxies in
respect of such vote may have been received by the Corporation. The
chairman of the meeting shall have the power to determine whether
notice of a nomination or of any business proposed to be brought
before the meeting was properly made in accordance with the
procedures set forth in this
Section 2.13
.
Notwithstanding the foregoing provisions hereof, a stockholder
shall also comply with all applicable requirements of the Act, and
the rules and regulations thereunder with respect to the matters
set forth herein.
Section 2.14
Meetings Through
Electronic Communications
. Stockholders may participate in a
meeting of the stockholders by any means of electronic
communications, videoconferencing, teleconferencing or other
available technology permitted under the NRS (including, without
limitation, a telephone conference or similar method of
communication by which all individuals participating in the meeting
can hear each other) and utilized by the Corporation. If any such
means are utilized, the Corporation shall, to the extent required
under the NRS, implement reasonable measures to (a) verify the
identity of each person participating through such means as a
stockholder and (b) provide the stockholders a reasonable
opportunity to participate in the meeting and to vote on matters
submitted to the stockholders, including an opportunity to
communicate, and to read or hear the proceedings of the meeting in
a substantially concurrent manner with such proceedings.
Participation in a meeting pursuant to this
Section
2.14
constitutes presence in person at the
meeting.
ARTICLE
III
DIRECTORS
Section
3.1
General Powers;
Performance of Duties
. The business and affairs of the
Corporation shall be managed by or under the direction of the Board
of Directors, except as otherwise provided in Chapter 78 of the NRS
or the Articles of Incorporation.
Section 3.2
Number, Tenure, and
Qualifications
.
(a) The
Board of Directors shall consist of at least one (1) individual and
not more than nine (9) individuals, with the number of directors
within the foregoing fixed minimum and maximum established and
changed from time to time solely by resolution adopted by the Board
of Directors without amendment to these Bylaws or the Articles of
Incorporation. Each director shall hold office until his or her
successor shall be elected or appointed and qualified or until his
or her earlier death, retirement, disqualification, resignation or
removal. No reduction of the number of directors shall have the
effect of removing any director prior to the expiration of his or
her term of office. No provision of this
Section
3.2
shall restrict the right of the Board of Directors
to fill vacancies or the right of the stockholders to remove
directors, each as provided in these Bylaws.
(b) No
person shall qualify for service as a director of the Corporation
if he or she is a party to any compensatory, payment or other
financial agreement, arrangement or understanding with any person
or entity other than the Corporation, or has received any such
compensation or other payment from any person or entity other than
the Corporation, in each case in connection with candidacy or
service as a director of the Corporation; provided that agreements
providing only for indemnification and/or reimbursement of
out-of-pocket expenses in connection with candidacy as a director
(but not, for the avoidance of doubt, in connection with service as
a director) and any pre-existing employment agreement a candidate
has with his or her employer (not entered into in contemplation of
the employer’s investment in the Corporation or such
employee’s candidacy as a director), shall not be
disqualifying under this provision.
Section
3.3
Chairman of the Board
. The
Board of Directors shall elect a chairman of the Board of Directors
from the members of the Board of Directors, who shall preside at
all meetings of the Board of Directors and stockholders at which he
or she shall be present and shall have and may exercise such powers
as may, from time to time, be assigned to him or her by the Board
of Directors, these Bylaws or as provided by law.
Section
3.4
Vice Chairman of the Board
. The
Board of Directors may elect a vice chairman of the Board of
Directors from the members of the Board of Directors who shall
preside at all meetings of the Board of Directors and stockholders
at which he or she shall be present and the chairman is not present
and shall have and may exercise such powers as may, from time to
time, be assigned to him or her by the Board of Directors, these
Bylaws or as provided by law.
Section
3.5
Removal and Resignation of
Directors
. Subject to any rights of the holders of preferred
stock, if any, and except as otherwise provided in the NRS, any
director may be removed from office with or without cause by the
affirmative vote of the holders of not less than two-thirds (2/3)
of the voting power of the issued and outstanding stock of the
Corporation entitled to vote generally in the election of directors
(voting as a single class) excluding stock entitled to vote only
upon the happening of a fact or event unless such fact or event
shall have occurred. In addition, the Board of Directors of the
Corporation, by majority vote, may declare vacant the office of a
director who has been (a) declared incompetent by an order of a
court of competent jurisdiction, or (b) convicted of a felony. Any
director may resign effective upon giving written notice, unless
the notice specifies a later time for effectiveness of such
resignation, to the chairman of the Board of Directors, if any, the
president or the secretary, or in the absence of all of them, any
other officer of the Corporation.
Section
3.6
Vacancies; Newly Created
Directorships
. Subject to any rights of the holders of
preferred stock, if any, any vacancies on the Board of Directors
resulting from death, resignation, retirement, disqualification,
removal from office, or other cause, and newly created
directorships resulting from any increase in the authorized number
of directors, may be filled by a majority vote of the directors
then in office or by a sole remaining director, in either case
though less than a quorum, and the director(s) so chosen shall hold
office for a term expiring at the next annual meeting of
stockholders and when their successors are elected or appointed, at
which the term of the class to which he or she has been elected
expires, or until his or her earlier resignation or removal. No
decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent
directors.
Section 3.7
Annual and Regular Meetings
.
Within five (5) business days after the adjournment of the annual
or special meeting of the stockholders at which directors are
elected, the Board of Directors, including directors newly elected,
shall hold its annual meeting without call or notice, other than
this provision, to transact such business as is necessary or
appropriate. The Board of Directors may provide by resolution the
place, date, and hour for holding regular meetings between annual
meetings, and if the Board of Directors so provides with respect to
a regular meeting, notice of such regular meeting shall not be
required.
Section
3.8
Special Meetings
. Subject to
any rights of the holders of preferred stock, if any, and except as
otherwise required by law, special meetings of the Board of
Directors may be called only by the chairman of the Board of
Directors, if any, or if there be no chairman of the Board of
Directors, by the chief executive officer, if any, or by the
president or the secretary, and shall be called by the chairman of
the Board of Directors, if any, the chief executive officer, if
any, the president, or the secretary upon the request of at least a
majority of the Board of Directors. If the chairman of the Board of
Directors, or if there be no chairman of the Board of Directors,
each of the chief executive officer, the president, and the
secretary, fails for any reason to call such special meeting, a
special meeting may be called by a notice signed by at least a
majority of the Board of Directors.
Section
3.9
Place of Meetings
. Any regular
or special meeting of the Board of Directors may be held at such
place as the Board of Directors, or in the absence of such
designation, as the notice calling such meeting, may designate. A
waiver of notice signed by the directors may designate any place
for the holding of such meeting.
Section
3.10
Notice of Meetings
. Except as
otherwise provided in
Section 3.8
, there shall be
delivered to each director at the address appearing for him or her
on the records of the Corporation, at least twenty-four (24) hours
before the time of such meeting, a copy of a written notice of any
meeting (i) by delivery of such notice personally, (ii) by mailing
such notice postage prepaid, (iii) by facsimile, (iv) by overnight
courier, or (v) by electronic transmission or electronic writing,
including, without limitation, e-mail. If mailed to an address
inside the United States, the notice shall be deemed delivered two
(2) business days following the date the same is deposited in the
United States mail, postage prepaid. If mailed to an address
outside the United States, the notice shall be deemed delivered
four (4) business days following the date the same is deposited in
the United States mail, postage prepaid. If sent via overnight
courier, the notice shall be deemed delivered the business day
following the delivery of such notice to the courier. If sent via
facsimile, the notice shall be deemed delivered upon sender’s
receipt of confirmation of the successful transmission. If sent by
electronic transmission (including, without limitation, e-mail),
the notice shall be deemed delivered when directed to the e-mail
address of the director appearing on the records of the Corporation
and otherwise pursuant to the applicable provisions of NRS Chapter
75. If the address of any director is incomplete or does not appear
upon the records of the Corporation it will be sufficient to
address any notice to such director at the registered office of the
Corporation. Any director may waive notice of any meeting, and the
attendance of a director at a meeting and oral consent entered on
the minutes of such meeting shall constitute waiver of notice of
the meeting unless such director objects, prior to the transaction
of any business, that the meeting was not lawfully called, noticed
or convened. Attendance for the express purpose of objecting to the
transaction of business thereat because the meeting was not
properly called or convened shall not constitute presence or a
waiver of notice for purposes hereof.
Section
3.11
Quorum; Adjourned
Meetings
.
(a) A
majority of the directors in office, at a meeting duly assembled,
is necessary to constitute a quorum for the transaction of
business.
(b) At
any meeting of the Board of Directors where a quorum is not
present, a majority of those present may adjourn, from time to
time, until a quorum is present, and no notice of such adjournment
shall be required. At any adjourned meeting where a quorum is
present, any business may be transacted which could have been
transacted at the meeting originally called.
Section
3.12
Manner of Acting
.
The affirmative vote of a majority of the directors present at a
meeting at which a quorum is present is the act of the Board of
Directors.
Section
3.13
Meetings Through
Electronic Communications
. Members of the Board of Directors
or of any committee designated by the Board of Directors may
participate in a meeting of the Board of Directors or such
committee by any means of electronic communications,
videoconferencing, teleconferencing or other available technology
permitted under the NRS (including, without limitation, a telephone
conference or similar method of communication by which all
individuals participating in the meeting can hear each other) and
utilized by the Corporation. If any such means are utilized, the
Corporation shall, to the extent required under the NRS, implement
reasonable measures to (a) verify the identity of each person
participating through such means as a director or member of the
committee, as the case may be, and (b) provide the directors or
members of the committee a reasonable opportunity to participate in
the meeting and to vote on matters submitted to the directors or
members of the committee, including an opportunity to communicate,
and to read or hear the proceedings of the meeting in a
substantially concurrent manner with such proceedings.
Participation in a meeting pursuant to this
Section
3.15
constitutes presence in person at the
meeting.
Section
3.14
Action Without
Meeting
. Any action required or permitted to be taken at a
meeting of the Board of Directors or of a committee thereof may be
taken without a meeting if, before or after the action, a written
consent thereto is signed by all of the members of the Board of
Directors or the committee. The written consent may be signed
manually or electronically (or by any other means then permitted
under the NRS), and may be so signed in counterparts, including,
without limitation, facsimile or email counterparts, and shall be
filed with the minutes of the proceedings of the Board of Directors
or committee.
Section
3.15
Powers and
Duties
.
(a) Except
as otherwise restricted by Chapter 78 of the NRS or the Articles of
Incorporation, the Board of Directors has full control over the
business and affairs of the Corporation. The Board of Directors may
delegate any of its authority to manage, control or conduct the
business of the Corporation to any standing or special committee,
or to any officer or agent, and to appoint any persons to be agents
of the Corporation with such powers, including the power to
subdelegate, and upon such terms as it deems fit.
(b) The
Board of Directors, in its discretion, or the chairman presiding at
a meeting of stockholders, in his or her discretion, may submit any
contract or act for approval or ratification at any annual meeting
of the stockholders or any special meeting properly called and
noticed for the purpose of considering any such contract or act,
provided a quorum is present.
(c) The
Board of Directors may, by resolution passed by at least a majority
of the Board of Directors, designate one or more committees,
provided that each such committee must have at least one director
of the Corporation as a member. Unless the articles of
incorporation, the charter of the committee, or the resolutions
designating the committee expressly require that all members of
such committee be directors of the Corporation, the Board of
Directors may appoint natural persons who are not directors of the
Corporation to serve on such committee. The Board of Directors may
designate one or more individuals as alternate members of any
committee, who may replace any absent or disqualified member at any
meeting of the committee. In the absence or disqualification of a
member of a committee, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he, she or
they constitute a quorum, may unanimously appoint another
individual to act at the meeting in the place of any such absent or
disqualified member. Subject to applicable law and to the extent
provided in the resolution of the Board of Directors, any such
committee shall have and may exercise all the powers of the Board
of Directors in the management of the business and affairs of the
Corporation. Such committee or committees shall have such name or
names as may be determined from time to time by resolution adopted
by the Board of Directors. The committees shall keep regular
minutes of their proceedings and report the same to the Board of
Directors when required.
Section
3.16
Compensation
. The
Board of Directors, without regard to personal interest, may
establish the compensation of directors for services in any
capacity. If the Board of Directors establishes the compensation of
directors pursuant to this
Section 3.18
, such
compensation is presumed to be fair to the Corporation unless
proven unfair by a preponderance of the evidence.
Section
3.17
Organization
.
Meetings of the Board of Directors shall be presided over by the
chairman of the Board of Directors, or in the absence of the
chairman of the Board of Directors by the vice chairman, if any, or
in his or her absence by a chairman chosen at the meeting. The
secretary, or in the absence, of the secretary an assistant
secretary, shall act as secretary of the meeting, but in the
absence of the secretary and any assistant secretary, the chairman
of the meeting may appoint any person to act as secretary of the
meeting. The order of business at each such meeting shall be as
determined by the chairman of the meeting.
ARTICLE
IV
OFFICERS
Section
4.1
Election
. The Board
of Directors shall elect or appoint a president, a secretary and a
treasurer or the equivalents of such officers. Such officers shall
serve until their respective successors are elected and appointed
and shall qualify or until their earlier resignation or removal.
The Board of Directors may from time to time, by resolution, elect
or appoint such other officers and agents as it may deem advisable,
who shall hold office at the pleasure of the Board of Directors,
and shall have such powers and duties and be paid such compensation
as may be directed by the Board of Directors. Any individual may
hold two or more offices.
Section
4.2
Removal;
Resignation
. Any officer or agent elected or appointed by
the Board of Directors may be removed by the Board of Directors
with or without cause. Any officer may resign at any time upon
written notice to the Corporation. Any such removal or resignation
shall be subject to the rights, if any, of the respective parties
under any contract between the Corporation and such officer or
agent.
Section
4.3
Vacancies
. Any
vacancy in any office because of death, resignation, removal or
otherwise may be filled by the Board of Directors for the unexpired
portion of the term of such office.
Section
4.4
Chief Executive
Officer
. The Board of Directors may elect a chief executive
officer who, subject to the supervision and control of the Board of
Directors, shall have the ultimate responsibility for the
management and control of the business and affairs of the
Corporation, and perform such other duties and have such other
powers which are delegated to him or her by the Board of Directors,
these Bylaws or as provided by law.
Section
4.5
President
.
The president, subject to the supervision and control of the Board
of Directors, shall in general actively supervise and control the
business and affairs of the Corporation. The president shall keep
the Board of Directors fully informed as the Board of Directors may
request and shall consult the Board of Directors concerning the
business of the Corporation. The president shall perform such other
duties and have such other powers which are delegated and assigned
to him or her by the Board of Directors, the chief executive
officer, if any, these Bylaws or as provided by law. The president
shall be the chief executive officer of the Corporation unless the
Board of Directors shall elect or appoint different individuals to
hold such positions.
Section
4.6
Vice Presidents
.
The Board of Directors may elect one or more vice presidents. In
the absence or disability of the president, or at the
president’s request, the vice president or vice presidents,
in order of their rank as fixed by the Board of Directors, and if
not ranked, the vice presidents in the order designated by the
Board of Directors, or in the absence of such designation, in the
order designated by the president, shall perform all of the duties
of the president, and when so acting, shall have all the powers of,
and be subject to all the restrictions on the president. Each vice
president shall perform such other duties and have such other
powers which are delegated and assigned to him or her by the Board
of Directors, the president, these Bylaws or as provided by
law.
Section
4.7
Secretary
. The
secretary shall attend all meetings of the stockholders, the Board
of Directors and any committees thereof, and shall keep, or cause
to be kept, the minutes of proceedings thereof in books provided
for that purpose. He or she shall keep, or cause to be kept, a
register of the stockholders of the Corporation and shall be
responsible for the giving of notice of meetings of the
stockholders, the Board of Directors and any committees, and shall
see that all notices are duly given in accordance with the
provisions of these Bylaws or as required by law. The secretary
shall be custodian of the corporate seal, if any, the records of
the Corporation, the stock certificate books, transfer books and
stock ledgers, and such other books and papers as the Board of
Directors or any appropriate committee may direct. The secretary
shall perform all other duties commonly incident to his or her
office and shall perform such other duties which are assigned to
him or her by the Board of Directors, the chief executive officer,
if any, the president, these Bylaws or as provided by
law.
Section
4.8
Assistant
Secretaries
. An assistant secretary shall, at the request of
the secretary, or in the absence or disability of the secretary,
perform all the duties of the secretary. He or she shall perform
such other duties as are assigned to him or her by the Board of
Directors, the chief executive officer, if any, the president,
these Bylaws or as provided by law.
Section
4.9
Treasurer
. The
treasurer, subject to the order of the Board of Directors, shall
have the care and custody of, and be responsible for, all of the
money, funds, securities, receipts and valuable papers, documents
and instruments of the Corporation, and all books and records
relating thereto. The treasurer shall keep, or cause to be kept,
full and accurate books of accounts of the Corporation’s
transactions, which shall be the property of the Corporation, and
shall render financial reports and statements of condition of the
Corporation when so requested by the Board of Directors, the
chairman of the Board of Directors, if any, the chief executive
officer, if any, or the president. The treasurer shall perform all
other duties commonly incident to his or her office and such other
duties as may, from time to time, be assigned to him or her by the
Board of Directors, the chief executive officer, if any, the
president, these Bylaws or as provided by law. The treasurer shall,
if required by the Board of Directors, give bond to the Corporation
in such sum and with such security as shall be approved by the
Board of Directors for the faithful performance of all the duties
of the treasurer and for restoration to the Corporation, in the
event of the treasurer’s death, resignation, retirement or
removal from office, of all books, records, papers, vouchers, money
and other property in the treasurer’s custody or control and
belonging to the Corporation. The expense of such bond shall be
borne by the Corporation. If a chief financial officer of the
Corporation has not been appointed, the treasurer may be deemed the
chief financial officer of the Corporation.
Section
4.10
Assistant
Treasurers
. An assistant treasurer shall, at the request of
the treasurer, or in the absence or disability of the treasurer,
perform all the duties of the treasurer. He or she shall perform
such other duties which are assigned to him or her by the Board of
Directors, the chief executive officer, if any, the president, the
treasurer, these Bylaws or as provided by law. The Board of
Directors may require an assistant treasurer to give a bond to the
Corporation in such sum and with such security as it may approve,
for the faithful performance of the duties of the assistant
treasurer, and for restoration to the Corporation, in the event of
the assistant treasurer’s death, resignation, retirement or
removal from office, of all books, records, papers, vouchers, money
and other property in the assistant treasurer’s custody or
control and belonging to the Corporation. The expense of such bond
shall be borne by the Corporation.
Section
4.11
Execution of Negotiable
Instruments, Deeds and Contracts
. All (i) checks, drafts,
notes, bonds, bills of exchange, and orders for the payment of
money of the Corporation, (ii) deeds, mortgages, proxies, powers of
attorney and other written contracts, documents, instruments and
agreements to which the Corporation shall be a party and (iii)
assignments or endorsements of stock certificates, registered bonds
or other securities owned by the Corporation shall be signed in the
name of the Corporation by such officers or other persons as the
Board of Directors may from time to time designate. The Board of
Directors may authorize the use of the facsimile signatures of any
such persons. Any officer of the Corporation shall be authorized to
attend, act and vote, or designate another officer or an agent of
the Corporation to attend, act and vote, at any meeting of the
owners of any entity in which the Corporation may own an interest
or to take action by written consent in lieu thereof. Such officer
or agent, at any such meeting or by such written action, shall
possess and may exercise on behalf of the Corporation any and all
rights and powers incident to the ownership of such
interest.
ARTICLE
V
CAPITAL
STOCK
Section
5.1
Issuance
. Shares of
the Corporation’s authorized capital stock shall, subject to
any provisions or limitations of the laws of the State of Nevada,
the Articles of Incorporation or any contracts or agreements to
which the Corporation may be a party, be issued in such manner, at
such times, upon such conditions and for such consideration as
shall be prescribed by the Board of Directors.
Section
5.2
Stock Certificates and
Uncertificated Shares
.
(a) Every
holder of stock in the Corporation shall be entitled to have a
certificate signed by or in the name of the Corporation by (i) the
chief executive officer, if any, the president, or a vice
president, and (ii) the secretary, an assistant secretary, the
treasurer or the chief financial officer, if any, of the
Corporation (or any other two officers or agents so authorized by
the Board of Directors), certifying the number of shares of stock
owned by him, her or it in the Corporation; provided that the Board
of Directors may authorize the issuance of uncertificated shares of
some or all of any or all classes or series of the
Corporation’s stock. Any such issuance of uncertificated
shares shall have no effect on existing certificates for shares
until such certificates are surrendered to the Corporation, or on
the respective rights and obligations of the stockholders. Whenever
any such certificate is countersigned or otherwise authenticated by
a transfer agent or a transfer clerk and by a registrar (other than
the Corporation), then a facsimile of the signatures of any
corporate officers or agents, the transfer agent, transfer clerk or
the registrar of the Corporation may be printed or lithographed
upon the certificate in lieu of the actual signatures. In the event
that any officer or officers who have signed, or whose facsimile
signatures have been used on any certificate or certificates for
stock cease to be an officer or officers because of death,
resignation or other reason, before the certificate or certificates
for stock have been delivered by the Corporation, the certificate
or certificates may nevertheless be adopted by the Corporation and
be issued and delivered as though the person or persons who signed
the certificate or certificates, or whose facsimile signature or
signatures have been used thereon, had not ceased to be an officer
or officers of the Corporation.
(b) Within
a reasonable time after the issuance or transfer of uncertificated
shares, the Corporation shall send to the registered owner thereof
a written statement certifying the number and class (and the
designation of the series, if any) of the shares owned by such
stockholder in the Corporation and any restrictions on the transfer
or registration of such shares imposed by the Articles of
Incorporation, these Bylaws, any agreement among stockholders or
any agreement between the stockholders and the Corporation, and, at
least annually thereafter, the Corporation shall provide to such
stockholders of record holding uncertificated shares, a written
statement confirming the information contained in such written
statement previously sent. Except as otherwise expressly provided
by the NRS, the rights and obligations of the stockholders of the
Corporation shall be identical whether or not their shares of stock
are represented by certificates.
(c) Each
certificate representing shares shall state the following upon the
face thereof: the name of the state of the Corporation’s
organization; the name of the person to whom issued; the number and
class of shares and the designation of the series, if any, which
such certificate represents; the par value of each share, if any,
represented by such certificate or a statement that the shares are
without par value. Certificates of stock shall be in such form
consistent with law as shall be prescribed by the Board of
Directors. No certificate shall be issued until the shares
represented thereby are fully paid. In addition to the foregoing,
all certificates evidencing shares of the Corporation’s stock
or other securities issued by the Corporation shall contain such
legend or legends as may from time to time be required by the NRS
or such other federal, state or local laws or regulations then in
effect.
Section
5.3
Surrendered; Lost or
Destroyed Certificates
. All certificates surrendered to the
Corporation, except those representing shares of treasury stock,
shall be canceled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been
canceled, except that in case of a lost, stolen, destroyed or
mutilated certificate, a new one may be issued therefor. However,
any stockholder applying for the issuance of a stock certificate in
lieu of one alleged to have been lost, stolen, destroyed or
mutilated shall, prior to the issuance of a replacement, provide
the Corporation with his, her or its affidavit of the facts
surrounding the loss, theft, destruction or mutilation and, if
required by the Board of Directors, an indemnity bond in an amount
not less than twice the current market value of the stock, and upon
such terms as the treasurer or the Board of Directors shall require
which shall indemnify the Corporation against any loss, damage,
cost or inconvenience arising as a consequence of the issuance of a
replacement certificate.
Section
5.4
Replacement
Certificate
. When the Articles of Incorporation are amended
in any way affecting the statements contained in the certificates
for outstanding shares of capital stock of the Corporation or it
becomes desirable for any reason, in the discretion of the Board of
Directors, including, without limitation, the merger of the
Corporation with another Corporation or the conversion or
reorganization of the Corporation, to cancel any outstanding
certificate for shares and issue a new certificate therefor
conforming to the rights of the holder, the Board of Directors may
order any holders of outstanding certificates for shares to
surrender and exchange the same for new certificates within a
reasonable time to be fixed by the Board of Directors. The order
may provide that a holder of any certificate(s) ordered to be
surrendered shall not be entitled to vote, receive distributions or
exercise any other rights of stockholders of record until the
holder has complied with the order, but the order operates to
suspend such rights only after notice and until
compliance.
Section
5.5
Transfer of Shares
. No transfer
of stock shall be valid as against the Corporation except on
surrender and cancellation of any certificate(s) therefor
accompanied by an assignment or transfer by the registered owner
made either in person or under assignment. Whenever any transfer
shall be expressly made for collateral security and not absolutely,
the collateral nature of the transfer shall be reflected in the
entry of transfer in the records of the Corporation.
Section
5.6
Transfer Agent; Registrars
. The
Board of Directors may appoint one or more transfer agents,
transfer clerks and registrars of transfer and may require all
certificates for shares of stock to bear the signature of such
transfer agents, transfer clerks and/or registrars of
transfer.
Section
5.7
Miscellaneous
. The Board of
Directors shall have the power and authority to make such rules and
regulations not inconsistent herewith as it may deem expedient
concerning the issue, transfer, and registration of certificates
for shares of the Corporation’s stock.
Section
5.8
Inapplicability of
Controlling Interest Statutes
. Notwithstanding any other
provision in these Bylaws to the contrary, and in accordance with
the provisions of NRS 78.378, the provisions of NRS 78.378 to
78.3793, inclusive, or any successor statutes, relating to
acquisitions of controlling interests in the Corporation shall not
apply to the Corporation or to any acquisition of any shares of the
Corporation’s capital stock.
ARTICLE
VI
DISTRIBUTIONS
Distributions may
be declared, subject to the provisions of the laws of the State of
Nevada and the Articles of Incorporation, by the Board of Directors
and may be paid in money, shares of corporate stock, property or
any other medium permitted under applicable law. The Board of
Directors may fix in advance a record date, in accordance with and
as provided in
Section 2.5
, prior to the
distribution for the purpose of determining stockholders entitled
to receive any distribution.
ARTICLE
VII
RECORDS
AND REPORTS; CORPORATE SEAL; FISCAL YEAR
Section
7.1
Records
. All
original records of the Corporation, shall be kept at the principal
office of the Corporation by or under the direction of the
secretary or at such other place or by such other person as may be
prescribed by these Bylaws or the Board of Directors.
Section
7.2
Corporate Seal
. The
Board of Directors may, by resolution, authorize a seal, and the
seal may be used by causing it, or a facsimile, to be impressed or
affixed or reproduced or otherwise. Except as otherwise
specifically provided in these Bylaws, any officer of the
Corporation shall have the authority to affix the seal to any
document requiring it.
Section
7.3
Fiscal Year-End
.
The fiscal year-end of the Corporation shall be such date as may be
fixed from time to time by resolution of the Board of
Directors.
ARTICLE
VIII
Section
8.1
Indemnification and
Insurance
.
(a)
Indemnification
of Directors and Officers
.
(i) For
purposes of this
Article VIII
, (A)
“
Indemnitee
”
shall mean each director or officer who was or is a party to, or is
threatened to be made a party to, or is otherwise involved in, any
Proceeding (as defined below), by reason of the fact that he or she
is or was a director, officer, employee or agent (including,
without limitation, as a trustee, fiduciary, administrator or
manager) of the Corporation or any predecessor entity thereof, or
is or was serving in any capacity at the request of the Corporation
as a director, officer, employee or agent (including, without
limitation, as a trustee, fiduciary administrator, partner, member
or manager) of, or in any other capacity for, another corporation
or any partnership, joint venture, limited liability company,
trust, or other enterprise; and (B) “
Proceeding
” shall mean any
threatened, pending, or completed action, suit or proceeding
(including, without limitation, an action, suit or proceeding by or
in the right of the Corporation), whether civil, criminal,
administrative, or investigative.
(ii) Each
Indemnitee shall be indemnified and held harmless by the
Corporation to the fullest extent permitted by the laws of the
State of Nevada, against all expense, liability and loss
(including, without limitation, attorneys’ fees, judgments,
fines, taxes, penalties, and amounts paid or to be paid in
settlement) reasonably incurred or suffered by the Indemnitee in
connection with any Proceeding; provided that such Indemnitee
either is not liable pursuant to NRS 78.138 or acted in good faith
and in a manner such Indemnitee reasonably believed to be in or not
opposed to the best interests of the Corporation and, with respect
to any Proceeding that is criminal in nature, had no reasonable
cause to believe that his or her conduct was unlawful. The
termination of any Proceeding by judgment, order, settlement,
conviction or upon a plea of
nolo
contendere
or its equivalent, does not,
of itself, create a
presumption that the Indemnitee is liable pursuant to NRS 78.138 or
did not act in good faith and in a manner in which he or she
reasonably believed to be in or not opposed to the best interests
of the Corporation, or that, with respect to any criminal
proceeding he or she had reasonable cause to believe that his or
her conduct was unlawful. The Corporation shall not indemnify an
Indemnitee for any claim, issue or matter as to which the
Indemnitee has been adjudged by a court of competent jurisdiction,
after exhaustion of all appeals therefrom, to be liable to the
Corporation or for any amounts paid in settlement to the
Corporation, unless and only to the extent that the court in which
the Proceeding was brought or other court of competent jurisdiction
determines upon application that in view of all the circumstances
of the case, the Indemnitee is fairly and reasonably entitled to
indemnity for such amounts as the court deems proper. Except as so
ordered by a court and for advancement of expenses pursuant to this
Section 8.1(a)
,
indemnification may not be made to or on behalf of an Indemnitee if
a final adjudication establishes that his or her acts or omissions
involved intentional misconduct, fraud or a knowing violation of
law and was material to the cause of action. Notwithstanding
anything to the contrary contained in these Bylaws, no director or
officer may be indemnified for expenses incurred in defending any
threatened, pending, or completed action, suit or proceeding
(including without limitation, an action, suit or proceeding by or
in the right of the Corporation), whether civil, criminal,
administrative or investigative, that such director or officer
incurred in his or her capacity as a stockholder
.
(iii) Indemnification
pursuant to this
Section 8.1(a)
shall
continue as to an Indemnitee who has ceased to be a director or
officer of the Corporation or a director, officer, employee, agent,
partner, member, manager or fiduciary of, or to serve in any other
capacity for, another corporation or any partnership, joint
venture, limited liability company, trust, or other enterprise and
shall inure to the benefit of his or her heirs, executors and
administrators.
(iv) The
expenses of Indemnitees must be paid by the Corporation or through
insurance purchased and maintained by the Corporation or through
other financial arrangements made by the Corporation, as such
expenses are incurred and in advance of the final disposition of
the Proceeding, upon receipt of an undertaking by or on behalf of
such Indemnitee to repay the amount if it is ultimately determined
by a court of competent jurisdiction that he or she is not entitled
to be indemnified by the Corporation. To the extent that an
Indemnitee is successful on the merits or otherwise in defense of
any Proceeding, or in the defense of any claim, issue or matter
therein, the Corporation shall indemnify him or her against
expenses, including attorneys’ fees, actually and reasonably
incurred in by him or her in connection with the
defense.
(b)
Indemnification of
Employees and Other Persons
. The Corporation may, by action
of its Board of Directors and to the extent provided in such
action, indemnify employees and other persons as though they were
Indemnitees.
(c)
Non-Exclusivity of
Rights
. The rights to indemnification provided in this
Article VIII
shall not be
exclusive of any other rights that any person may have or hereafter
acquire under any statute, provision of the Articles of
Incorporation or these Bylaws, agreement, vote of stockholders or
directors, or otherwise.
(d)
Insurance
. The
Corporation may purchase and maintain insurance or make other
financial arrangements on behalf of any Indemnitee for any
liability asserted against him or her and liability and expenses
incurred by him or her in his or her capacity as a director,
officer, employee, member, managing member or agent, or arising out
of his or her status as such, whether or not the Corporation has
the authority to indemnify him or her against such liability and
expenses.
(e)
Other
Financial Arrangements
. The other financial arrangements
which may be made by the Corporation may include the following (i)
the creation of a trust fund; (ii) the establishment of a program
of self-insurance; (iii) the securing of its obligation of
indemnification by granting a security interest or other lien on
any assets of the Corporation; and (iv) the establishment of a
letter of credit, guarantee or surety. No financial arrangement
made pursuant to this subsection may provide protection for a
person adjudged by a court of competent jurisdiction, after
exhaustion of all appeals therefrom, to be liable for intentional
misconduct, fraud, or a knowing violation of law, except with
respect to advancement of expenses or indemnification ordered by a
court.
(f)
Other
Matters Relating to Insurance or Financial Arrangements
. Any
insurance or other financial arrangement made on behalf of a person
pursuant to this
Section 8.1
may be provided
by the Corporation or any other person approved by the Board of
Directors, even if all or part of the other person’s stock or
other securities is owned by the Corporation. In the absence of
fraud, (i) the decision of the Board of Directors as to the
propriety of the terms and conditions of any insurance or other
financial arrangement made pursuant to this
Section
8.1
and the choice of the person to provide the
insurance or other financial arrangement is conclusive; and (ii)
the insurance or other financial arrangement is not void or
voidable and does not subject any director approving it to personal
liability for his action; even if a director approving the
insurance or other financial arrangement is a beneficiary of the
insurance or other financial arrangement.
Section
8.2
Amendment
. The
provisions of this
Article VIII
relating to
indemnification shall constitute a contract between the Corporation
and each of its directors and officers which may be modified as to
any director or officer only with that person’s consent or as
specifically provided in this
Section 8.2
.
Notwithstanding any other provision of these Bylaws relating to
their amendment generally, any repeal or amendment of this
Article
VIII
which is adverse to any director or officer shall
apply to such director or officer only on a prospective basis, and
shall not limit the rights of an Indemnitee to indemnification with
respect to any action or failure to act occurring prior to the time
of such repeal or amendment. Notwithstanding any other provision of
these Bylaws (including, without limitation,
Article
X
), no repeal or amendment of these Bylaws shall affect
any or all of this
Article VIII
so as to limit
or reduce the indemnification in any manner unless adopted by (i)
the unanimous vote of the directors of the Corporation then
serving, or (ii) by the stockholders as set forth in
Article
X
; provided that no such amendment shall have a
retroactive effect inconsistent with the preceding
sentence.
ARTICLE
IX
CHANGES
IN NEVADA LAW
References in these
Bylaws to the laws of the State of Nevada or the NRS or to any
provision thereof shall be to such law as it existed on the date
these Bylaws were adopted or as such law thereafter may be changed;
provided that (i) in the case of any change which expands the
liability of directors or officers or limits the indemnification
rights or the rights to advancement of expenses which the
Corporation may provide in
Article VIII
, the rights to
limited liability, to indemnification and to the advancement of
expenses provided in the Articles of Incorporation and/or these
Bylaws shall continue as theretofore to the extent permitted by
law; and (ii) if such change permits the Corporation, without the
requirement of any further action by stockholders or directors, to
limit further the liability of directors or limit the liability of
officers or to provide broader indemnification rights or rights to
the advancement of expenses than the Corporation was permitted to
provide prior to such change, then liability thereupon shall be so
limited and the rights to indemnification and the advancement of
expenses shall be so broadened to the extent permitted by
law.
AMENDMENT OR
REPEAL
In
furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to amend or
repeal these Bylaws or to adopt new bylaws. The Board of Directors
shall have the exclusive authority to adopt, amend or repeal these
Bylaws as set forth in the Articles of Incorporation.
CERTIFICATION
The
undersigned, as the duly elected Secretary of Innovus
Pharmaceuticals, Inc., a Nevada corporation (the
“
Corporation
”),
does hereby certify that the Board of Directors of the Corporation
adopted the foregoing Amended and Restated Bylaws as of October 10,
2016.
/s/Bassam
Damaj
Dr.
Bassam Damaj, Secretary
Exhibit
4.03
INNOVUS
PHARMACEUTICALS, INC.
AMENDED AND RESTATED 2016 EQUITY INCENTIVE
PLAN
EFFECTIVE AS OF OCTOBER 10,
2016
SECTION 1. INTRODUCTION.
The
Company’s Board of Directors adopted this Innovus
Pharmaceuticals, Inc. Amended and Restated 2016 Equity Incentive
Plan (the “Plan”) effective on the Effective
Date.
The
purpose of the Plan is to promote the long-term success of the
Company and the creation of stockholder value by offering Selected
Employees an opportunity to acquire a proprietary interest in the
success of the Company, or to increase such interest, and to
encourage such Selected Employees to continue to provide services
to the Company and to attract new individuals with outstanding
qualifications.
The
Plan seeks to achieve this purpose by providing for Awards in the
form of Options (which may constitute Incentive Stock Options or
Nonstatutory Stock Options), Stock Appreciation Rights, Restricted
Stock Grants, Stock Units, Other Equity Awards and/or Cash Awards.
However, unless and until this Plan is approved by Company
stockholders, no ISOs may be exercised under the Plan.
Capitalized
terms shall have the meaning provided in Section 2 unless otherwise
provided in this Plan or any applicable Award
Agreement.
SECTION 2. DEFINITIONS.
If
a Participant’s employment agreement or Award Agreement (or
other written agreement executed by and between Participant and the
Company) expressly includes defined terms that expressly are
different from and/or conflict with the defined terms contained in
this Plan then the defined terms contained in the employment
agreement or Award Agreement (or other written agreement executed
by and between Participant and the Company) shall govern and shall
supersede the definitions provided in this
Plan.
(a)
“Affiliate” means any entity other than a Subsidiary,
if the Company and/or one or more Subsidiaries own not less than
50% of such entity. For purposes of determining an
individual’s “Service,” this definition shall
include any entity other than a Subsidiary, if the Company, a
Parent and/or one or more Subsidiaries own not less than 50% of
such entity.
(b) “Award”
means any award of an Option, SAR, Restricted Stock Grant, Stock
Unit, Other Equity Award or Cash Award under the Plan.
(c) “Award
Agreement” means an agreement between the Company and a
Selected Employee evidencing the award of an Option, SAR,
Restricted Stock Grant, Stock Unit, Other Equity Award or Cash
Award as applicable.
(d) “Board”
means the Board of Directors of the Company, as constituted from
time to time.
(e) “California
Participant” means a Participant whose Award, when granted,
was issued in reliance either on section 25111, 25112 or 25113 of
the California Corporations Code. Solely to the extent required to
comply with the requirements of the California Corporate Securities
Law of 1968 at the time of grant and thereafter, Awards to
California Participants shall also be subject to the additional
terms specified in Appendix A. The Committee, in its discretion,
may also elect to include some or all of the Appendix A terms in
Awards to Participants who are not California Participants.
Appendix A is a part of this Plan.
(f) “Cash
Award” means a cash incentive opportunity awarded under this
Plan, to a Covered Employee that is (i) payable only in cash, (ii)
not an Option, SAR, Restricted Stock Grant, Stock Unit or Other
Equity Award, (iii) paid based on achievement of Performance
Goal(s) and (iv) intended to qualify as performance-based
compensation under Code Section 162(m).
(g) “Cashless
Exercise” means, to the extent that an Award Agreement so
provides and as permitted by applicable law and in accordance with
any procedures established by the Committee, an arrangement whereby
payment of some or all of the aggregate Exercise Price may be made
all or in part by delivery of an irrevocable direction to a
securities broker to sell Shares and to deliver all or part of the
sale proceeds to the Company. Cashless Exercise may also be
utilized to satisfy an Option’s tax withholding obligations
as provided in Section 16(b).
(h) “Cause”
means, with respect to a Participant, the occurrence of any of the
following: (i) a conviction of a Participant for a felony crime or
the failure of a Participant to contest prosecution for a felony
crime, or (ii) a Participant’s misconduct, fraud, disloyalty
or dishonesty (as such terms may be defined by the Committee in its
sole discretion), or (iii) any unauthorized use or disclosure of
confidential information or trade secrets by a Participant, or (iv)
a Participant’s negligence, malfeasance, breach of fiduciary
duties, neglect of duties, or (v) any material violation by a
Participant of a written Company or Subsidiary or Affiliate policy
or any material breach by a Participant of a written agreement with
the Company or Subsidiary or Affiliate, or (vi) any other act or
omission by a Participant that, in the opinion of the Committee,
could reasonably be expected to adversely affect the
Company’s or a Subsidiary’s or an Affiliate’s
business, financial condition, prospects and/or reputation. In each
of the foregoing subclauses (i) through (vi), whether or not a
“Cause” event has occurred will be determined by the
Committee in its sole discretion or, in the case of Participants
who are directors or Officers or Section 16 Persons, the Board,
each of whose determination shall be final, conclusive and binding.
A Participant’s Service shall be deemed to have terminated
for Cause if, after the Participant’s Service has terminated,
facts and circumstances are discovered that would have justified a
termination for Cause, including, without limitation, violation of
material Company policies or breach of noncompetition,
confidentiality or other restrictive covenants that may apply to
the Participant.
(i) “Change
in Control” means the consummation of any one or more of
the following:
(i)
Any “person” (as such term is used in Section 13(d) and
14(d) of the Exchange Act), other than a trustee or other fiduciary
holding securities of the Company under an employee benefit plan of
the Company, becomes the “beneficial owner” (as defined
in Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly, of securities of the Company representing fifty percent
(50%) or more of (A) the outstanding shares of common stock of the
Company or (B) the combined voting power of the Company’s
then-outstanding securities;
(ii)
The Company is party to a merger or consolidation, or series of
related transactions, which results in the voting securities of the
Company outstanding immediately prior thereto failing to continue
to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least fifty
percent (50%) of the combined voting power of the voting securities
of the Company or such surviving entity outstanding immediately
after such merger or consolidation;
(iii)
The sale or disposition of all or substantially all of the
Company’s assets (or consummation of any transaction, or
series of related transactions, having similar
effect);
(iv)
The dissolution or liquidation of the Company; or
(v)
Any transaction or series of related transactions that has the
substantial effect of any one or more of the
foregoing.
A
transaction shall not constitute a Change in Control if its sole
purpose is to change the state of the Company’s incorporation
or to create a holding company that will be owned in substantially
the same proportions by the persons who held the Company’s
securities immediately before such transactions. In addition, an
IPO shall not constitute a Change in Control.
(j) “Code”
means the Internal Revenue Code of 1986, as amended, and the
regulations and interpretations promulgated
thereunder.
(k) “Committee”
means a committee described in Section 3.
(l) “Common
Stock” means the Company’s common stock, $0.001 par
value per Share, and any other securities into which such shares
are changed, for which such shares are exchanged or which may be
issued in respect thereof.
(m) “Company”
means Innovus Pharmaceuticals, Inc., a Nevada
corporation.
(n) “Consultant”
means an individual or entity which performs bona fide services to
the Company, a Parent, a Subsidiary or an Affiliate, other than as
an Employee or Non-Employee Director.
(o) “Covered
Employees” means those individuals whose compensation is (or
may be) subject to the deduction limitations of Code Section
162(m).
(p) “Disability”
means the following:
(i)
For all ISOs, the permanent and total disability of a Participant
within the meaning of Section 22(e)(3) of the Code;
(ii)
For all Awards which are considered nonqualified deferred
compensation under Code Section 409A and for which payment can be
made on account of the Participant’s disability, the
disability of a Participant within the meaning of Section 409A of
the Code; or
(iii)
For all other Awards, the Participant’s medically
determinable physical or mental incapacitation such that for a
continuous period of not less than twelve (12) months, a person is
unable to engage in any substantial gainful activity or which can
be expected to result in death.
Any question as to the existence of that person’s physical or
mental incapacitation as to which the person or person’s
representative and the Company cannot agree shall be determined in
writing by a qualified independent physician mutually acceptable to
the person and the Company. If the person and the Company cannot
agree as to a qualified independent physician, each shall appoint
such a physician and those two (2) physicians shall select a third
(3rd) who shall make such determination in writing. The
determination of Disability made in writing to the Company and the
person shall be final and conclusive for all purposes of the
Awards.
(q) “Effective
Date” means October 10, 2016
(r) “Employee”
means any individual who is a common-law employee of the Company,
or of a Parent, or of a Subsidiary or of an Affiliate. An employee
who is also serving as a member of the Board is an Employee for
purposes of this Plan.
(s) “Exchange
Act” means the Securities Exchange Act of 1934, as
amended.
(t) “Exercise
Price” means, in the case of an Option, the amount for which
a Share may be purchased upon exercise of such Option, as specified
in the applicable Award Agreement. “Exercise Price,” in
the case of a SAR, means an amount, as specified in the applicable
Award Agreement, which is subtracted from the Fair Market Value in
determining the amount payable to a Participant upon exercise of
such SAR.
(u) “Fair
Market Value” means the market price of a Share, determined
by the Committee as follows:
(i)
If the Shares were traded on a stock exchange (such as the NYSE,
NYSE MKT, NASDAQ Global Select Market, NASDAQ Global Market or
NASDAQ Capital Market) at the time of determination, then the Fair
Market Value shall be equal to the regular session closing price
for such stock as reported by such exchange (or the exchange or
market with the greatest volume of trading in the Shares) on the
date of determination, or if there were no sales on such date, on
the last date preceding such date on which a closing price was
reported;
(ii)
If the Shares were traded on the OTC Markets (such as the OTCQX,
OTCQB, OTCPK or the OTC Bulletin Board) at the time of
determination, then the Fair Market Value shall be equal to the
last-sale price reported by the OTC Markets for such date, or if
there were no sales on such date, on the last date preceding such
date on which a sale was reported; and
(iii)
If neither of the foregoing provisions is applicable, then the Fair
Market Value shall be determined by the Committee in good faith
using a reasonable application of a reasonable valuation method as
the Committee deems appropriate.
Whenever
possible, the determination of Fair Market Value by the Committee
shall be based on the prices reported by the applicable exchange or
the OTC Markets, as applicable, or a nationally recognized
publisher of stock prices or quotations (including an electronic
on-line publication). Such determination shall be conclusive and
binding on all persons.
(v) “Fiscal
Year” means the Company’s fiscal year.
(w)
“GAAP” means United States generally accepted
accounting principles as established by the Financial Accounting
Standards Board.
(x) “Incentive
Stock Option” or “ISO” means an incentive stock
option described in Code Section 422.
(y) “IPO”
means an initial public offering by the Company of its equity
securities pursuant to an effective registration statement filed
with the SEC.
(z)
“ISO Limit” means the maximum aggregate number of
Shares that are permitted to be issued pursuant to the exercise of
ISOs granted under the Plan as described in Section
5(a).
(aa) “Net
Exercise” means, to the extent that an Award Agreement so
provides and as permitted by applicable law, an arrangement
pursuant to which the number of Shares issued to the Optionee in
connection with the Optionee’s exercise of the Option will be
reduced by the Company’s retention of a portion of such
Shares. Upon such a net exercise of an Option, the Optionee will
receive a net number of Shares that is equal to (i) the number of
Shares as to which the Option is being exercised minus (ii) the
quotient (rounded down to the nearest whole number) of the
aggregate Exercise Price of the Shares being exercised divided by
the Fair Market Value of a Share on the Option exercise date. The
number of Shares covered by clause (ii) will be retained by the
Company and not delivered to the Optionee. No fractional Shares
will be created as a result of a Net Exercise and the Optionee must
contemporaneously pay for any portion of the aggregate Exercise
Price that is not covered by the Shares retained by the Company
under clause (ii). The number of Shares delivered to the Optionee
may be further reduced if Net Exercise is utilized under Section
16(b) to satisfy applicable tax withholding
obligations.
(bb)
“Non-Employee Director” means a member of the Board who
is not an Employee.
(cc) “Nonstatutory
Stock Option” or “NSO” means a stock option that
is not an ISO.
(dd)
“NYSE” means the New York Stock Exchange.
(ee)
“Officer” means an individual who is an officer of the
Company within the meaning of Rule 16a-1(f) of the Exchange
Act.
(ff)
“Option” means an ISO or NSO granted under the Plan
entitling the Optionee to purchase a specified number of Shares, at
such times and applying a specified Exercise Price, as provided in
the applicable Award Agreement.
(gg) “Optionee”
means an individual, estate or other entity that holds an
Option.
(hh) “Other
Equity Award” means an award (other than an Option, SAR,
Stock Unit, Restricted Stock Grant or Cash Award) which derives its
value from the value of Shares and/or from increases in the value
of Shares.
(ii)
“Outside Director” means a Non-Employee Director who is
considered an “outside director” for purposes of
Section 162(m) of the Code.
(jj)
“Parent” means any corporation (other than the Company)
in an unbroken chain of corporations ending with the Company, if
each of the corporations other than the Company owns 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.
A
corporation that attains the status of a Parent on a date after the
Effective Date shall be considered a Parent commencing as of such
date.
(kk) “Participant”
means an individual or estate or other entity that holds an
Award.
(ll)
“Performance Criteria” means the criteria (and
adjustments) that the Committee selects for an Award for purposes
of establishing the Performance Goal or Performance Goals for a
Performance Period, determined as follows:
(A) The Performance Criteria that shall be used to establish
Performance Goals are limited to the following: (i) annual revenue,
(ii) earnings before interest, taxes, depreciation and
amortization, or EBITDA, (iii) earnings per share, (iv) stock
price, (v) operating cash flow, (vi) net income, (vii) profit
margins, operating margins, gross margins or cash margins, (viii)
revenue growth, (ix) pre- or after-tax income (before or after
allocations of corporate overhead and bonuses), (x) return on
equity, (xi) total shareholder return, (xii) return on assets or
net assets, (xiii) appreciation in and/or maintenance of the price
of the Common Stock, (xiv) market share, (xv) gross profits, (xvi)
economic value-added models or equivalent metrics, (xvii)
comparisons with various stock market indices, (xviii) reductions
in costs, (xix) cash flow or cash flow per share, (xx) return on
capital (including return on total capital or return on invested
capital), (xxi) cash flow return on investment, (xxii) improvement
in or attainment of expense levels or working capital levels,
(xxiii) year-end cash, (xxiv) debt reductions, (xxv) stockholder
equity, (xxvi) regulatory or litigation achievements, (xxvii)
implementation, completion or attainment of measurable objectives
with respect to business development, new products or services,
budgets, regulatory or business risks, acquisitions, divestitures
or recruiting and maintaining personnel, (xxviii) earnings, (xxix)
expenses, (xxx) cost of goods sold, (xxxi) working capital, (xxxii)
price/earnings ratio, (xxxiii) debt or debt-to-equity, (xxxiv)
accounts receivable, (xxxv) writeoffs, (xxxvi) assets, (xxxvii)
liquidity, (xxxviii) operations, (xxxix) research or related
milestones, (xl) intellectual property (e.g., patents), (xli)
product development, (xlii) information technology, (xliii)
financings, (xliv) product quality control, (xlv) management,
(xlvi) human resources, (xlvii) corporate governance,(xlviii)
compliance program, (xlix) internal controls, (xlxi) policies and
procedures, (xlxii) accounting and reporting, (xlxiii) strategic
alliances, (xlxiv) licensing and partnering, and (xlxv) site, plant
or building development, or (xlxvi) any combination of the
foregoing, any of which may be measured either in absolute terms or
as compared to any incremental increase or decrease or as compared
to results of a peer group or index. Such Performance Goals also
may be based solely by reference to the Company’s performance
or the performance of a Parent, Subsidiary, Affiliate, 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.
Financial performance targets are approved by the Company’s
Chief Executive Officer and the Committee at or near the beginning
of each year; and
(B) The Committee may, in its sole discretion, provide that one or
more objectively determinable adjustments shall be made to one or
more of the Performance Goals. Such adjustments may include one or
more of the following: (i) items related to a change in or
provisions under tax law, accounting principles or other such laws
or provisions affecting reported results; (ii) items relating to
financing activities; (iii) expenses for restructuring or
productivity initiatives; (iv) other non-operating items; (v) items
related to reorganizations or restructuring programs or
divestitures or acquisitions; (vi) items attributable to the
business operations of any entity acquired by the Company during
the Performance Period; (vii) items related to asset write-downs or
the disposal of a business or segment of a business; (viii) items
related to discontinued operations that do not qualify as a segment
of a business under GAAP; (ix) items attributable to any stock
dividend, stock split, combination or exchange of shares occurring
during the Performance Period; (x) any other items of significant
income or expense which are determined to be appropriate
adjustments; (xi) items relating to unusual or extraordinary
corporate transactions, events or developments, (xii) items related
to amortization of acquired intangible assets; (xiii) items that
are outside the scope of the Company’s core, on-going
business activities; (xiv) items relating to any other unusual or
nonrecurring events or changes in applicable laws, accounting
principles or business conditions and/or items of gain, loss or
expense determined to be extraordinary or unusual in nature or
infrequent in occurrence; or (xv) litigation or claim judgments or
settlements. For all Awards intended to qualify as
performance-based compensation, such determinations shall be made
within the time prescribed by, and otherwise in compliance with,
Section 162(m) of the Code.
(mm) “Performance
Goals” means for a Performance Period, one or more goals
established in writing by the Committee for the Performance Period
based upon one or more Performance Criteria. Depending on the
Performance Criteria used to establish such Performance Goals, the
Performance Goals may be expressed in terms of overall Company
performance or the performance of a Parent, Subsidiary, Affiliate,
division, business unit, or an individual. The achievement of each
Performance Goal shall be determined in accordance with GAAP to the
extent applicable.
(nn)
“Performance Period” means one or more periods of time,
which may be of varying and overlapping durations, as the Committee
may select, over which the attainment of one or more Performance
Goals will be measured for the purpose of determining a
Participant’s right to, and the payment of, an
Award.
(oo) “Plan”
means this Innovus Pharmaceuticals, Inc. 2016 Equity Incentive Plan
as it may be amended from time to time.
(pp)
“Re-Price” means that the Company has lowered or
reduced the Exercise Price of outstanding Options and/or
outstanding SARs and/or outstanding Other Equity Awards for any
Participant(s) in a manner described by SEC Regulation S-K Item
402(d)(2)(viii) (or as described in any successor provision(s) or
definition(s)). For avoidance of doubt, Re-Price also includes any
exchange of Options or SARs for other Awards or cash.
(qq) “Restricted
Stock Grant” means Shares awarded under the Plan as provided
in the applicable Award Agreement.
(rr)
“Rule 16b-3” means Rule 16b-3 promulgated under the
Exchange Act or any successor to Rule 16b-3, as in effect from time
to time.
(ss) “SEC”
means the Securities and Exchange Commission.
(tt)
“Section 16 Persons” means those Officers, directors or
other persons who are subject to Section 16 of the Exchange
Act.
(uu) “Securities
Act” means the Securities Act of 1933, as
amended.
(vv)
“Selected
Employee” means an Employee, Consultant, or Non-Employee
Director who has been selected by the Committee to receive an Award
under the Plan.
(ww)
“Separation From Service” has the meaning provided to
such term under Code Section 409A and the regulations promulgated
thereunder.
(xx) “Service”
means uninterrupted service as an Employee, Non-Employee Director
or Consultant. Service will be deemed terminated as soon as the
entity to which Service is being provided is no longer either (i)
the Company, (ii) a Parent, (iii) a Subsidiary or (iv) an
Affiliate. A Participant’s Service does not terminate if he
or she is a common-law employee and goes on a bona fide leave of
absence that was approved by the Company in writing and the terms
of the leave provide for continued service crediting, or when
continued service crediting is required by applicable law. However,
for purposes of determining whether an Employee’s outstanding
ISOs are eligible to continue to qualify as ISOs (and not become
NSOs), an Employee’s Service will be treated as terminating
three (3) months after such Employee went on leave, unless such
Employee’s right to return to active work is guaranteed by
law or by a contract. Service terminates in any event when the
approved leave ends, unless such Employee immediately returns to
active work. The Committee determines which leaves count toward
Service, and when Service commences and terminates for all purposes
under the Plan. For avoidance of doubt, a Participant’s
Service shall not be deemed terminated if the Committee determines
that (i) a transition of employment to service with a partnership,
joint venture or corporation not meeting the requirements of a
Subsidiary or Parent or Affiliate in which the Company or a
Subsidiary or Parent or Affiliate is a party is not considered a
termination of Service, (ii) the Participant transfers between
service as an Employee and service as a Consultant or other
personal service provider (or vice versa), or (iii) the Participant
transfers between service as an Employee and that of a Non-Employee
Director (or vice versa). The Committee may determine whether any
Company transaction, such as a sale or spin-off of a division or
subsidiary that employs a Participant, shall be deemed to result in
termination of Service for purposes of any affected Awards, and the
Committee’s decision shall be final, conclusive and
binding.
(yy) “Share”
means one share of Common Stock.
(zz)
“Share Limit” means the maximum aggregate number of
Shares that are permitted to be issued under the Plan as described
in Section 5(a) plus any increases authorized by Section
5(a)(i).
(aaa) “Specified
Employee” means a Participant who is considered a
“specified employee” within the meaning of Code Section
409A.
(bbb) “Stock
Appreciation Right” or “SAR” means a stock
appreciation right awarded under the Plan which provides the holder
with a right to potentially receive, in cash and/or Shares, value
with respect to a specific number of Shares, as provided in the
applicable Award Agreement.
(ccc) “Stock
Unit” means a bookkeeping entry representing the equivalent
of one Share, as awarded under the Plan, as provided in the
applicable Award Agreement.
(ddd)
“Subsidiary” means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the
Company, if each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 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. A
corporation that attains the status of a Subsidiary on a date after
the Effective Date shall be considered a Subsidiary commencing as
of such date.
(eee)
“Substitute Awards” means 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, in each case by a company acquired by the
Company or any Parent or any Subsidiary or any Affiliate or with
which the Company or any Parent or any Subsidiary or any Affiliate
combines.
(fff) “Termination
Date” means the date on which a Participant’s Service
terminates.
(ggg) “10-Percent
Shareholder” means an individual who owns more than ten
percent (10%) of the total combined voting power of all classes of
outstanding stock of the Company, its Parent or any of its
Subsidiaries. In determining stock ownership, the attribution rules
of Section 424(d) of the Code shall be applied.
SECTION 3. ADMINISTRATION.
(a)
Committee
Composition
. A Committee (or
Committees) appointed by the Board (or its Compensation Committee)
shall administer the Plan. Unless the Board provides otherwise, the
Board’s Compensation Committee (or a comparable committee of
the Board, or if the Board has no committees, then the Board) shall
be the Committee. The Board may also at any time terminate the
functions of the Committee and reassume all powers and authority
previously delegated to the Committee.
To
the extent required to enable Awards to be exempt from liability
under Section 16(b) of the Exchange Act or to qualify as
performance-based compensation under Code Section 162(m), the
Committee shall have membership composition which enables (i)
Awards to Section 16 Persons to qualify as exempt from liability
under Section 16(b) of the Exchange Act and (ii) Awards to Covered
Employees to qualify as performance-based compensation as provided
under Code Section 162(m).
The
Board or the Committee may also appoint one or more separate
committees of the Board, each composed of directors of the Company
who need not qualify under Rule 16b-3 or Code Section 162(m),
that may administer the Plan with respect to Selected Employees who
are not Section 16 Persons or Covered Employees, respectively, may
grant Awards under the Plan to such Selected Employees and may
determine all terms of such Awards. To the extent permitted by
applicable law, the Board may also appoint a committee, composed of
one or more officers of the Company, that may authorize Awards to
Employees (who are not Section 16 Persons or Covered Employees)
within parameters specified by the Board and consistent with any
limitations imposed by applicable law.
Notwithstanding
the foregoing, the Board shall constitute the Committee and shall
administer the Plan with respect to all Awards granted to
Non-Employee Directors.
(b)
Authority
of the Committee
. Subject to
the provisions of the Plan, the Committee shall have full authority
and discretion to take any actions it deems necessary or advisable
for the administration of the Plan. Such actions shall include
without limitation:
(i)
determining Selected Employees who are to receive Awards under the
Plan;
(ii)
determining the type, number, vesting requirements, Performance
Goals (or other objective/subjective goals (if any)) and their
degree of satisfaction, and other features and conditions of such
Awards and amending such Awards;
(iii)
correcting any defect, supplying any omission, or reconciling or
clarifying any inconsistency in the Plan or any Award
Agreement;
(iv)
accelerating the vesting or extending the post-termination exercise
term, or waiving restrictions, of Awards at any time and under such
terms and conditions as it deems appropriate;
(v)
permitting or denying, in its discretion, a Participant’s
request to transfer an Award;
(vi)
permitting or requiring, in its discretion, a Participant to use
Cashless Exercise, Net Exercise and/or Share withholding with
respect to the payment of any Exercise Price and/or applicable tax
withholding;
(vii)
Re-Pricing outstanding Awards;
(viii)
interpreting the Plan and any Award Agreements;
(ix)
making all other decisions relating to the operation of the Plan;
and
(x)
granting Awards to Selected Employees who are foreign nationals on
such terms and conditions different from those specified in the
Plan, which may be necessary or desirable to foster and promote
achievement of the purposes of the Plan, and adopting such
modifications, procedures, and/or subplans (with any such subplans
attached as appendices to the Plan) and the like as may be
necessary or desirable to comply with provisionsof the laws or
regulations of other countries or jurisdictions to ensure the
viability of the benefits from Awards granted to Participants
employed in such countries or jurisdictions, or to meet the
requirements that permit the Plan to operate in a qualified or tax
efficient manner, and/or comply with applicable foreign laws or
regulations.
The
Committee may adopt such rules or guidelines, as it deems
appropriate to implement the Plan. The Committee’s
determinations under the Plan shall be final, conclusive and
binding on all persons. The Committee’s decisions and
determinations need not be uniform and may be made selectively
among Participants in the Committee’s sole discretion. The
Committee’s decisions and determinations will be afforded the
maximum deference provided by applicable law.
(c)
Indemnification
.
To the maximum extent permitted by applicable law, each member of
the Committee, or of the Board, or any persons (including without
limitation Employees and Officers) who are delegated by the Board
or Committee to perform administrative functions in connection with
the Plan, shall be indemnified and held harmless by the Company
against and from (i) any loss, cost, liability, or expense that may
be imposed upon or reasonably incurred by him or her in connection
with or resulting from any claim, action, suit, or proceeding to
which he or she may be a party or in which he or she may be
involved by reason of any action taken or failure to act under the
Plan or any Award Agreement, and (ii) from any and all amounts paid
by him or her in settlement thereof, with the Company’s
approval, or paid by him or her in satisfaction of any judgment in
any such claim, action, suit, or proceeding against him or her,
provided he or she shall give the Company an opportunity, at its
own expense, to handle and defend the same before he or she
undertakes to handle and defend it on his or her own behalf. The
foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be
entitled under the Company’s Articles of Incorporation or
Bylaws, by contract, as a matter of law, or otherwise, or under any
power that the Company may have to indemnify them or hold them
harmless.
SECTION 4. GENERAL.
(a)
General
Eligibility
. Only Employees,
Consultants, and Non-Employee Directors shall be eligible for
designation as Selected Employees by the
Committee.
(b)
Incentive
Stock Options
. Only Selected
Employees who are common-law employees of the Company, a Parent or
a Subsidiary shall be eligible for the grant of ISOs. In addition,
a Selected Employee who is a 10-Percent Shareholder shall not be
eligible for the grant of an ISO unless the requirements set forth
in Section 422(c)(5) of the Code are satisfied. If and to the
extent that any Shares are issued under a portion of any Option
that exceeds the $100,000 limitation of Section 422 of the Code,
such Shares shall not be treated as issued under an ISO
notwithstanding any designation otherwise. Certain decisions,
amendments, interpretations and actions by the Company or Committee
and certain actions by a Participant may cause an Option to cease
to qualify as an ISO pursuant to the Code and by accepting an
Option Award, the Participant agrees in advance to such
disqualifying action(s).
(c)
Buyout
of Awards
. The Committee may at
any time (i) offer to buy out for a payment in cash or cash
equivalents (including without limitation Shares valued at Fair
Market Value that may or may not be issued from this Plan) an Award
previously granted or (ii) authorize a Participant to elect to cash
out an Award previously granted, in either case at such time and
based upon such terms and conditions as the Committee shall
establish.
(d)
Restrictions
on Shares
. Any Shares issued
pursuant to an Award shall be subject to such Company policies,
rights of repurchase, rights of first refusal and other transfer
restrictions as the Committee may determine. Such restrictions
shall apply in addition to any restrictions that may apply to
holders of Shares generally and shall also comply to the extent
necessary with applicable law. In no event shall the Company be
required to issue fractional Shares under this
Plan.
(e)
No
Rights as a Stockholder
. A
Participant, or a transferee of a Participant, shall have no rights
as a stockholder (including without limitation voting rights or
dividend or distribution rights) with respect to any Common Stock
covered by an Award until such person becomes entitled to receive
such Common Stock, has satisfied any applicable withholding or tax
obligations relating to the Award and the Common Stock has been
issued to the Participant. No adjustment shall be made for cash or
stock dividends or other rights for which the record date is prior
to the date when such Common Stock is issued, except as expressly
provided in Section 13.
(f)
Termination
of Service
. Unless the
applicable Award Agreement or employment agreement provides
otherwise (and in such case, the Award or employment agreement
shall govern as to the consequences of a termination of Service for
such Awards), the following rules shall govern the vesting,
exercisability and term of outstanding Awards held by a Participant
in the event of termination of such Participant’s Service (in
all cases subject to the term of the Option or SAR or Other Equity
Award as applicable):
(i)
if the Service of a Participant is terminated for Cause, then all
of his/her then-outstanding Options, SARs, and unvested portions of
all other Awards shall terminate and be forfeited immediately
without consideration as of the Termination Date (except for
repayment of any amounts the Participant had paid to the Company to
acquire unvested Shares underlying the forfeited
Awards);
(ii)
if the Service of Participant is terminated due to
Participant’s death or Disability, then the vested portions
of his/her then-outstanding Options/SARs/Other Equity Awards may be
exercised by such Participant or his or her personal representative
within twelve months after the Termination Date and all unvested
portions of all then-outstanding Awards shall be forfeited without
consideration as of the Termination Date (except for repayment of
any amounts the Participant had paid to the Company to acquire
unvested Shares underlying the forfeited Awards); and
(iii)
if the Service of Participant is terminated for any reason other
than for Cause or death or Disability, then the vested portion of
his/her then-outstanding Options/SARs/Other Equity Awards may be
exercised by such Participant or his or her personal representative
within three months after the Termination Date and all unvested
portions of all then-outstanding Awards shall be forfeited without
consideration as of the Termination Date (except for repayment of
any amounts the Participant had paid to the Company to acquire
unvested Shares underlying the forfeited Awards).
(g)
Code
Section 409A
. Notwithstanding
anything in the Plan to the contrary, the Plan and Awards granted
hereunder are intended to be exempt from or comply with the
requirements of Code Section 409A and shall be interpreted in a
manner consistent with such intention. In the event that any
provision of the Plan or an Award Agreement is determined by the
Committee to not comply with the applicable requirements of Code
Section 409A or the applicable regulations and other guidance
issued thereunder, the Committee shall have the authority to take
such actions and to make such changes to the Plan or an Award
Agreement as the Committee deems necessary to comply with such
requirements. Any payment made pursuant to any Award shall be
considered a separate payment and not one of a series of payments
for purposes of Code Section 409A. Notwithstanding the foregoing or
anything elsewhere in the Plan or an Award Agreement to the
contrary, if upon a Participant’s Separation From Service
he/she is then a Specified Employee, then solely to the extent
necessary to comply with Code Section 409A and avoid the imposition
of taxes under Code Section 409A, the Company shall defer payment
of “nonqualified deferred compensation” subject to Code
Section 409A payable as a result of and within six (6) months
following such Separation From Service under this Plan until the
earlier of (i) the first business day of the seventh month
following the Participant’s Separation From Service, or (ii)
ten (10) days after the Company receives written confirmation of
the Participant’s death. Any such delayed payments shall be
made without interest. While it is intended that all payments and
benefits provided under the Plan or an Award will be exempt from or
comply with Code Section 409A, the Company makes no representation
or covenant to ensure that the payments under the Plan or anAward
are exempt from or compliant with Code Section 409A. In no event
whatsoever shall the Company be liable if a payment or benefit
under the Plan or an Award is challenged by any taxing authority or
for any additional tax, interest or penalties that may be imposed
on a Participant by Code Section 409A or any damages for failing to
comply with Code Section 409A. The Participant will be entirely
responsible for any and all taxes on any benefits payable to such
Participant as a result of the Plan or an Award. If the applicable
Award Agreement or Participant’s employment agreement
provides for Code Section 409A related provisions other than what
is specified above in this Section 4(g), then such provisions in
the Award or employment agreement shall govern.
(h)
Suspension
or Termination of Awards
. To
the extent provided in an Award Agreement, if at any time
(including after a notice of exercise has been delivered) the
Committee (or the Board), reasonably believes that a Participant
has committed an act of Cause (which includes a failure to act),
the Committee (or Board) may suspend the Participant’s right
to exercise any Award (or vesting or settlement of any Award)
pending a determination of whether there was in fact an act of
Cause. If the Committee (or the Board) determines a Participant has
committed an act of Cause, neither the Participant nor his or her
estate shall be entitled to exercise any outstanding Award
whatsoever and all of Participant’s outstanding Awards shall
then terminate without consideration. Any determination by the
Committee (or the Board) with respect to the foregoing shall be
final, conclusive and binding on all interested
parties.
(i)
Electronic
Communications
. Subject to
compliance with applicable law and/or regulations, an Award
Agreement or other documentation or notices relating to the Plan
and/or Awards may be communicated to Participants (and executed by
Participants) by electronic media.
(j)
Unfunded
Plan
. The Plan shall be
unfunded. Although bookkeeping accounts may be established with
respect to Participants who are granted Awards under this Plan, any
such accounts will be used merely as a bookkeeping convenience. The
Company shall not be required to segregate any assets which may at
any time be represented by Awards, nor shall this Plan be construed
as providing for such segregation, nor shall the Company or the
Committee be deemed to be a trustee of stock or cash to be awarded
under the Plan.
(k)
Liability
of Company
. The Company (or
members of the Board or Committee) shall not be liable to a
Participant or other persons as to: (a) the non-issuance or sale of
Shares as to which the Company has been unable to obtain from any
regulatory body having jurisdiction the authority deemed by the
Company’s counsel to be necessary to the lawful issuance and
sale of any Shares hereunder; and (b) any unexpected or adverse tax
consequence or any tax consequence expected, but not realized, by
any Participant or other person due to the grant, receipt, exercise
or settlement of any Award granted hereunder.
(l)
Reformation
.
In the event any provision of this Plan shall be held illegal or
invalid for any reason, such provisions will be reformed by the
Board if possible and to the extent needed in order to be held
legal and valid. If it is not possible to reform the illegal or
invalid provisions then the illegality or invalidity shall not
affect the remaining parts of this Plan, and this Plan shall be
construed and enforced as if the illegal or invalid provision had
not been included.
(m)
Payment
of Non-Employee Director Cash Fees with Equity
Awards
. If the Board
affirmatively decides to authorize such a process, each
Non-Employee Director may elect to receive a Restricted Stock Grant
(or Stock Units) issued under the Plan in lieu of payment of all or
a portion of his or her annual cash retainer and/or any other cash
fees including without limitation meeting fees, committee service
fees and participation fees. Any such elections made by a
Non-Employee Director shall be effected no later than the time
permitted by applicable law and in accordance with the
Company’s insider trading policies and/or other policies. The
aggregate grant date fair market value of any Restricted Stock
Grants or Stock Units issued pursuant to this Section 4(m) is
intended to be equivalent to the value of the foregone cash fees.
Any cash fees not elected to be received as a Restricted Stock
Grant or Stock Units shall be payable in cash in accordance with
the Company’s standard payment procedures. The Board in its
discretion shall determine the terms, conditions and procedures for
implementing this Section 4(m) and may also modify or terminate its
operation at any time.
(n)
Successor
Provision
. Any reference to a
statute, rule or regulation, or to a section of a statute, rule or
regulation, is a reference to that statute, rule, regulation, or
section as amended from time to time, both before and after the
Effective Date and including any successor
provisions.
(o)
Governing
Law
. This Plan and (unless
otherwise provided in the Award Agreement) all Awards shall be
construed in accordance with and governed by the laws of the State
of Nevada, but without regard to its conflict of law provisions.
The Committee may provide that any dispute as to any Award shall be
presented and determined in such forum as the Committee may
specify, including through binding arbitration. Unless otherwise
provided in the Award Agreement, recipients of an Award under the
Plan are deemed to submit to the exclusive jurisdiction and venue
of the federal or state courts of California to resolve any and all
issues that may arise out of or relate to the Plan or any related
Award Agreement.
(p)
Assignment
or Transfer of Awards
. Except
as otherwise provided under the applicable Award Agreement and then
only to the extent permitted by applicable law, no Award shall be
transferable by the Participant other than by will or by the laws
of descent and distribution. No Award or interest therein may be
transferred, assigned, pledged or hypothecated by the Participant
during his or her lifetime, whether by operation of law or
otherwise, nor may an Award be anticipated, assigned, attached,
garnished, optioned, transferred or made subject to any
creditor’s process, whether voluntarily, involuntarily or by
operation of law, nor may an Award be made subject to execution,
attachment or similar process. Any act in violation of this Section
4(p) shall be null and void.
SECTION 5. SHARES SUBJECT TO PLAN AND SHARE LIMITS.
(a)
Basic
Limitations
. The Common Stock
issuable under the Plan shall be authorized but unissued Shares or
treasury Shares or reacquired shares, bought on the market or
otherwise. The maximum number of Shares that are issued under this
Plan cannot exceed the Share Limit as may be adjusted under Section
13. For purposes of the Plan and subject to adjustment as provided
in Section 13, the Share Limit is 20,000,000
Shares.
(i)
The number of shares of Common Stock authorized for issuance and
available for future grants under the Plan will be increased each
January 1 after the effective date of the Plan by a number of
shares of Common Stock equal to the lesser of: (a) 4% of the number
of shares of Common Stock issued and outstanding on a fully-diluted
basis as of the close of business on the immediately preceding
December 31, or (b) a number of shares of Common Stock set by our
Board.
(b)
Share
Accounting
. This Section 5(b)
describes the Share accounting process under the Plan for Awards
which are not entirely settled with the maximum number of Shares
originally subject to the Award and describes how many of such
Shares do not count toward the Share Limit and therefore become
available again for future issuance under the Plan. If Awards are
forfeited or are terminated for any reason (including the
Company’s repurchase of unvested Shares from either an Option
that was early exercised or from a Restricted Stock Grant), then
the forfeited/terminated/repurchased Shares underlying such Awards
shall not be counted toward the Share Limit. If exercised SARs or
Stock Units are settled in Shares, then only the number of Shares
actually issued in settlement of such SARs or Stock Units shall be
counted toward the Share Limit. If a Participant pays the Exercise
Price by Net Exercise or by surrendering previously owned Shares
(or by stock attestation) and/or, as permitted or required by the
Committee, pays any withholding tax obligation with respect to an
Award by Net Exercise or by electing to have Shares withheld or
surrendering previously owned Shares (or by stock attestation), the
surrendered Shares and the Shares withheld to pay taxes shall not
be counted toward the Share Limit. Any Substitute Awards including
without limitation any Shares that are delivered and any Awards
that are granted by, or become obligations of, the Company, as a
result of the assumption by the Company of, or in substitution for,
outstanding awards previously granted by another entity (as
provided in Sections 6(e), 8(f), 9(e) or 10(e)) shall not be
counted toward the Share Limit or ISO Limit.
(c)
Substitute
Awards
. Substitute Awards shall
not count toward the Share Limit, nor shall Shares subject to a
Substitute Award again be available for Awards under the Plan as
provided in Section 5(b) above. Additionally, in the event that a
company acquired by the Company or any Parent or any Subsidiary or
any Affiliate or with which the Company or any Parent or any
Subsidiary or any Affiliate combines has shares available under a
pre-existing plan approved by stockholders and not adopted in
contemplation of such acquisition or combination, the shares
available for grant pursuant to the terms of such pre-existing plan
(as adjusted, to the extent appropriate, using the exchange ratio
or other adjustment or valuation ratio or formula used in such
acquisition or combination to determine the consideration payable
to the holders of common stock of the entities party to such
acquisition or combination) may be used for Awards under the Plan
and shall not count toward the Share Limit; provided that Awards
using such available shares shall not be made after the date awards
or grants could have been made under the terms of the pre-existing
plan, absent the acquisition or combination, and shall only be made
to individuals who were not Employees or Board members prior to
such acquisition or combination.
(d)
Dividend
Equivalents
. Any dividend
equivalents distributed under the Plan shall not be counted against
the Share Limit. Dividend equivalents will not be paid (or accrue)
on unexercised Options or unexercised SARs.
SECTION 6. TERMS AND CONDITIONS OF OPTIONS.
(a)
Award
Agreement
. Each Award of an
Option under the Plan shall be evidenced by an Award Agreement
between the Optionee and the Company. Such Option shall be subject
to all applicable terms and conditions of the Plan and may be
subject to any other terms and conditions that are not inconsistent
with the Plan (including without limitation any Performance Goals).
The provisions of the various Award Agreements entered into under
the Plan need not be identical. The Award Agreement shall also
specify whether the Option is an ISO and if not specified then the
Option shall be an NSO.
(b)
Number
of Shares
. An Award Agreement
shall specify the number of Shares that are subject to the Option
and shall provide for adjustment of such number in accordance with
Section 13.
(c)
Exercise
Price
. An Option’s
Exercise Price shall be established by the Committee and set forth
in an Award Agreement. Except with respect to outstanding stock
options being assumed or Options being granted in exchange for
cancellation of options granted by another issuer as provided under
Section 6(e), the Exercise Price of an Option shall not be less
than 100% of the Fair Market Value (110% for 10-Percent
Shareholders in the case of ISOs) of a Share on the date of grant
of the Option.
(d)
Exercisability
and Term
. Subject to Section
3(b)(v), an Option may be exercised during the lifetime of the
Participant only by the Participant or by the guardian or legal
representative of the Participant. An Award Agreement shall specify
the date when all or any installment of the Option is to become
vested and/or exercisable. The Award Agreement shall also specify
the term of the Option; provided that the term of an Option shall
in no event exceed ten years from its date of grant (and may be for
a shorter period of time than ten years). No Option can be
exercised after the expiration date specified in the applicable
Award Agreement. An Award Agreement may provide for accelerated
vesting in the event of the Participant’s death, or
Disability or other events. Notwithstanding anything to the
contrary, an ISO that is granted to a 10-Percent Shareholder shall
have a maximum term of five years. Notwithstanding any other
provision of the Plan, no Option can be exercised after the
expiration date provided in the applicable Award Agreement. An
Award Agreement may permit an Optionee to exercise an Option before
it is vested (an “early exercise”), subject to the
Company’s right of repurchase at the original Exercise Price
of any Shares acquired under the unvested portion of the Option
which right of repurchase shall lapse at the same rate the Option
would have vested had there been no early exercise. An Award
Agreement may also provide that the Company may determine to issue
an equivalent value of cash in lieu of issuing some or all of the
Shares that are being purchased upon an Option’s exercise. In
no event shall the Company be required to issue fractional Shares
upon the exercise of an Option and the Committee may specify a
minimum number of Shares that must be purchased in any one Option
exercise.
(e)
Modifications
or Assumption of Options
.
Within the limitations of the Plan, the Committee may modify,
extend or assume outstanding Options or may accept the cancellation
of outstanding stock options (whether granted by the Company or by
another issuer) in return for the grant of new Options for the same
or a different number of Shares and at the same or a different
Exercise Price. For avoidance of doubt, the Committee may Re-Price
outstanding Options. No modification of an Option shall,
without the consent of the Optionee, impair his or her rights or
increase his or her obligations under such
Option.
SECTION 7. PAYMENT FOR OPTION SHARES.
(a)
General
Rule
. The entire Exercise Price
of Shares issued upon exercise of Options shall be payable in cash
(or check) at the time when such Shares are purchased by the
Optionee, except as follows and if so provided for in an applicable
Award Agreement:
(i) In
the case of an ISO granted under the Plan, payment shall be made
only pursuant to the express provisions of the applicable Award
Agreement. The Award Agreement may specify that payment may be made
in any form(s) described in this Section 7; and
(ii) In
the case of an NSO granted under the Plan, the Committee may, in
its discretion at any time, accept payment in any form(s) described
in this Section 7.
(b)
Surrender
of Stock
. To the extent that
the Committee makes this Section 7(b) applicable to an Option in an
Award Agreement, payment for all or a part of the Exercise Price
may be made with Shares which have already been owned by the
Optionee for such duration as shall be specified by the Committee.
Such Shares shall be valued at their Fair Market Value on the date
when the new Shares are purchased under the
Plan.
(c)
Cashless
Exercise
. To the extent that
the Committee makes this Section 7(c) applicable to an Option in an
Award Agreement, payment for all or a part of the Exercise Price
may be made through Cashless Exercise.
(d)
Net
Exercise
. To the extent that
the Committee makes this Section 7(d) applicable to an Option in an
Award Agreement, payment for all or a part of the Exercise Price
may be made through Net Exercise.
(e)
Other
Forms of Payment
. To the extent
that the Committee makes this Section 7(e) applicable to an Option
in an Award Agreement, payment may be made in any other form that
is consistent with applicable laws, regulations and rules and
approved by the Committee.
SECTION 8. TERMS AND CONDITIONS OF STOCK APPRECIATION
RIGHTS.
(a)
Award
Agreement
. Each Award of a SAR
under the Plan shall be evidenced by a Award Agreement between the
Participant and the Company. Such SAR shall be subject to all
applicable terms of the Plan and may be subject to any other terms
that are not inconsistent with the Plan (including without
limitation any Performance Goals). An Award Agreement may provide
for a maximum limit on the amount of any payout notwithstanding the
Fair Market Value on the date of exercise of the SAR. The
provisions of the various Award Agreements entered into under the
Plan need not be identical. SARs may be granted in consideration of
a reduction in the Participant’s other
compensation.
(b)
Number
of Shares
. An Award Agreement
shall specify the number of Shares to which the SAR pertains and is
subject to adjustment of such number in accordance with Section
13.
(c)
Exercise
Price
. An Award Agreement shall
specify the Exercise Price. Except with respect to outstanding
stock appreciation rights being assumed or SARs being granted in
exchange for cancellation of stock appreciation rights granted by
another issuer as provided under Section 8(f), the Exercise Price
of a SAR shall not be less than 100% of the Fair Market Value on
the date of grant of the SAR.
(d)
Exercisability
and Term
. Subject to Section
3(b)(v), a SAR may be exercised during the lifetime of the
Participant only by the Participant or by the guardian or legal
representative of the Participant. An Award Agreement shall specify
the date when all or any installment of the SAR is to become
exercisable. The Award Agreement shall also specify the term of the
SAR which shall not exceed ten years from the date of grant of the
SAR (and may be for a shorter period of time than ten years). No
SAR can be exercised after the expiration date specified in the
applicable Award Agreement. An Award Agreement may provide for
accelerated exercisability in the event of the Participant’s
death, or Disability or other events and may provide for expiration
prior to the end of its term in the event of the termination of the
Participant’s Service. A SAR granted under the Plan may
provide that it will be exercisable only in the event of a Change
in Control.
(e)
Exercise
of SARs
. If, on the date when a
SAR expires, the Exercise Price under such SAR is less than the
Fair Market Value on such date but any portion of such SAR has not
been exercised or surrendered, then such SAR may automatically be
deemed to be exercised as of such date with respect to such portion
to the extent so provided in the applicable Award Agreement. Upon
exercise of a SAR, the Participant (or any person having the right
to exercise the SAR after Participant’s death) shall receive
from the Company (i) Shares, (ii) cash or (iii) any combination of
Shares and cash, as the Committee shall determine. The amount of
cash and/or the Fair Market Value of Shares received upon exercise
of SARs shall, in the aggregate, be equal to the amount by which
the Fair Market Value (on the date of surrender) of the Shares
subject to the SARs exceeds the Exercise Price of the
Shares.
(f)
Modification
or Assumption of SARs
. Within
the limitations of the Plan, the Committee may modify, extend or
assume outstanding SARs or may accept the cancellation of
outstanding SARs (including stock appreciation rights granted by
another issuer) in return for the grant of new SARs for the same or
a different number of Shares and at the same or a different
Exercise Price. For avoidance of doubt, the Committee may Re-Price
outstanding SARs. No modification of a SAR shall, without the
consent of the Participant, impair his or her rights or increase
his or her obligations under such SAR.
SECTION 9. TERMS AND CONDITIONS FOR RESTRICTED STOCK
GRANTS.
(a)
Award
Agreement
. Each Restricted
Stock Grant awarded under the Plan shall be evidenced by an Award
Agreement between the Participant and the Company. Each Restricted
Stock Grant shall be subject to all applicable terms and conditions
of the Plan and may be subject to any other terms and conditions
that are not inconsistent with the Plan (including without
limitation any Performance Goals). The provisions of the Award
Agreements entered into under the Plan need not be
identical.
(b)
Number
of Shares and Payment
. An Award
Agreement shall specify the number of Shares to which the
Restricted Stock Grant pertains and is subject to adjustment of
such number in accordance with Section 13. Restricted Stock Grants
may be issued with or without cash consideration under the
Plan.
(c)
Vesting
Conditions
. Each Restricted
Stock Grant may or may not be subject to vesting. Vesting shall
occur, in full or in installments, upon satisfaction of the
conditions specified in the Award Agreement. An Award Agreement may
provide for accelerated vesting in the event of the
Participant’s death, or Disability or other
events.
(d)
Voting
and Dividend Rights
. The holder
of a Restricted Stock Grant (irrespective of whether the Shares
subject to the Restricted Stock Grant are vested or unvested)
awarded under the Plan shall have the same voting, dividend and
other rights as the Company’s other stockholders. However,
any dividends received on Shares that are unvested (whether such
dividends are in the form of cash or Shares) shall be subject to
the same vesting conditions and restrictions as the Restricted
Stock Grant with respect to which the dividends were paid. Such
additional Shares issued as dividends that are subject to the
Restricted Stock Grant shall not count toward the Share
Limit.
(e)
Modification
or Assumption of Restricted Stock Grants
. Within the limitations of the Plan, the
Committee may modify or assume outstanding Restricted Stock Grants
or may accept the cancellation of outstanding Restricted Stock
Grants (including stock granted by another issuer) in return for
the grant of new Restricted Stock Grants for the same or a
different number of Shares. No modification of a Restricted Stock
Grant shall, without the consent of the Participant, impair his or
her rights or increase his or her obligations under such Restricted
Stock Grant.
SECTION 10. TERMS AND CONDITIONS OF STOCK UNITS.
(a)
Award
Agreement
. Each grant of Stock
Units under the Plan shall be evidenced by an Award Agreement
between the Participant and the Company. Such Stock Units shall be
subject to all applicable terms of the Plan and may be subject to
any other terms that are not inconsistent with the Plan (including
without limitation any Performance Goals). The provisions of the
various Award Agreements entered into under the Plan need not be
identical. Stock Units may be granted in consideration of a
reduction in the Participant’s other
compensation.
(b)
Number
of Shares and Payment
. An Award
Agreement shall specify the number of Shares to which the Stock
Unit Award pertains and is subject to adjustment of such number in
accordance with Section 13. To the extent that an Award is granted
in the form of Stock Units, no cash consideration shall be required
of the Award recipients.
(c)
Vesting
Conditions
. Each Award of Stock
Units may or may not be subject to vesting. Vesting shall occur, in
full or in installments, upon satisfaction of the conditions
specified in the Award Agreement. An Award Agreement may provide
for accelerated vesting in the event of the Participant’s
death, or Disability or other events.
(d)
Voting
and Dividend Rights
. The
holders of Stock Units shall have no voting rights. Prior to
settlement or forfeiture, any Stock Unit awarded under the Plan
may, at the Committee’s discretion, carry with it a right to
dividend equivalents. Such right entitles the holder to be credited
with an amount equal to all cash or Common Stock dividends paid on
one Share while the Stock Unit is outstanding. Dividend equivalents
may be converted into additional Stock Units. Settlement of
dividend equivalents may be made in the form of cash, in the form
of Shares, or in a combination of both. Prior to vesting of the
Stock Units, any dividend equivalents accrued on such unvested
Stock Units shall be subject to the same vesting conditions and
restrictions as the Stock Units to which they
attach.
(e)
Modification
or Assumption of Stock Units
.
Within the limitations of the Plan, the Committee may modify or
assume outstanding Stock Units or may accept the cancellation of
outstanding Stock Units (including stock units granted by another
issuer) in return for the grant of new Stock Units for the same or
a different number of Shares. No modification of a Stock Unit
shall, without the consent of the Participant, impair his or her
rights or increase his or her obligations under such Stock
Unit.
(f)
Form
and Time of Settlement of Stock Units
. Settlement of vested Stock Units may be made in
the form of (a) cash, (b) Shares or (c) any combination of both, as
determined by the Committee. The actual number of Stock Units
eligible for settlement may be larger or smaller than the number
included in the original Award. Methods of converting Stock Units
into cash may include (without limitation) a method based on the
average Fair Market Value of Shares over a series of trading days.
Except as otherwise provided in an Award Agreement or a timely
completed deferral election, vested Stock Units shall be settled
within thirty days after vesting. The Award Agreement may provide
that distribution may occur or commence when all vesting conditions
applicable to the Stock Units have been satisfied or have lapsed,
or it may be deferred, in accordance with applicable law, to a
later specified date. The amount of a deferred distribution may be
increased by an interest factor or by dividend equivalents. Until
an Award of Stock Units is settled, the number of such Stock Units
shall be subject to adjustment pursuant to Section
13.
(g)
Creditors’
Rights
. A holder of Stock Units
shall have no rights other than those of a general creditor of the
Company. Stock Units represent an unfunded and unsecured obligation
of the Company, subject to the terms and conditions of the
applicable Award Agreement.
SECTION 11. OTHER AWARDS
The Committee may in its discretion issue Other Equity Awards to
Selected Employees and/or Cash Awards to Covered Employees. The
terms and conditions of any such Awards shall be evidenced by an
Award Agreement between the Participant and the Company. Settlement
of Other Equity Awards may be in the form of Shares and/or cash as
determined by the Committee.
SECTION 12. CODE SECTION 162(M).
(a)
Applicability
.
The provisions of Sections 12(b) and 12(c) shall apply to an Award
if and only if all of the following items (i) through (iv) in this
Section 12(a) are true as of the date of grant of such
Award:
(i)
the Company is a “publicly held corporation” within the
meaning of Code Section 162(m);
(ii)
the deduction limitations of Code Section 162(m) are applicable to
Awards granted to Covered Employees under this Plan;
(iii)
this Plan has previously been approved by Company stockholders;
and
(iv)
the Award is intended to qualify as “performance-based
compensation” under Code Section 162(m).
(b)
Administration
.
Awards issued in accordance with this Section 12 shall be granted
by and administered by a Committee whose composition satisfies the
“outside director” requirements under Code Section
162(m) with respect to performance-based compensation. If
Performance Goals are included in Awards in order to enable such
Awards to qualify as performance-based compensation under Code
Section 162(m), then such Awards will be subject to the achievement
of such Performance Goals that will be established and administered
pursuant to the requirements of Code Section 162(m) and as
described in this Section 12(b). To the extent required by Code
Section 162(m), the Committee shall certify in writing the degree
to which the Performance Goals have been satisfied before any
Shares underlying an Award or any Award payments are released to a
Covered Employee with respect to a Performance Period. Without
limitation, the approved minutes of a Committee meeting shall
constitute such written certification.
Notwithstanding satisfaction of any completion of any Performance
Goal, to the extent specified at the time of grant of an Award, the
number of Shares, Options, SARs, Restricted Stock Units, or Other
Equity Awards or the value of a Cash Award or any other benefits
granted, issued, retainable and/or vested under an Award on account
of satisfaction of such Performance Goals may be reduced by the
Committee on the basis of such further considerations as the
Committee in its sole discretion shall determine. For avoidance of
doubt, Awards with Performance Goals or performance objectives (if
any) that are granted to Selected Employees who are not Covered
Employees or any Awards to Covered Employees which are not intended
to qualify as performance-based compensation under Code Section
162(m) need not comply with the requirements of Code Section 162(m)
or this Section 12.
(c)
Limits
.
Awards intended to qualify as performance-based compensation under
Code Section 162(m) will be limited to the following
amounts.
(i)
Limits on Options and
SARs
. No Selected Employee
shall receive Options and/or SARs to purchase Shares during any
Fiscal Year that in the aggregate cover in excess of 3,000,000
Shares.
(ii)
Limits on Restricted
Stock Grants and Stock Units
.
No Selected Employee shall receive Restricted Stock Grants and/or
Stock Units during any Fiscal Year that in the aggregate cover in
excess of 3,000,000 Shares.
(iii)
Limits on Other Equity
Awards
. No Selected Employee
shall receive Other Equity Awards during any Fiscal Year that in
the aggregate cover in excess of 3,000,000
Shares.
(iv)
Limit on Total Amount
of All Awards Other than Cash Awards
. No Selected Employee shall receive Awards
(excluding Cash Awards) during any Fiscal Year in excess of the
aggregate amount of 3,000,000 Shares, whether such Awards are in
the form of Options, SARs, Restricted Stock Grants, Stock Units
and/or Other Equity Awards.
(v)
Increased
Limits
. The numerical limits
expressed in the foregoing subparts (i) through (iv) shall in each
case be increased to 4,000,000 Shares with respect to Awards (other
than Cash Awards) granted to a Selected Employee during the Fiscal
Year of the Selected Employee’s commencement of employment
with the Company or during the first Fiscal Year that the Selected
Employee becomes a Covered Employee.
(vi)
Limit on Cash
Awards
. The maximum aggregate
value of Cash Awards that may be received by any one Covered
Employee with respect to any Fiscal Year is
$5,000,000.
SECTION 13. ADJUSTMENTS.
(a)
Adjustments
.
In the event of a subdivision of the outstanding Shares, a
declaration of a dividend payable in Shares, a declaration of a
dividend payable in a form other than Shares in an amount that has
a material effect on the value of Shares, a combination or
consolidation of the outstanding Shares (by reclassification or
otherwise) into a lesser number of Shares, a stock split, a reverse
stock split, a reclassification or other distribution of the Shares
without the receipt of consideration by the Company, of or on the
Common Stock, a recapitalization, a combination, a spin-off or a
similar occurrence, the Committee shall make equitable and
proportionate adjustments, taking into consideration the accounting
and tax consequences, to:
(1) the
Share Limit and ISO Limit and the various Share numbers referenced
in Section 5(a) and the Code Section 162(m) Share limits specified
in Section 12(c);
(2) the
number and kind of securities available for Awards (and which can
be issued as ISOs) under Section 5;
(3) the
number and kind of securities covered by each outstanding
Award;
(4) the
Exercise Price under each outstanding Option and SAR;
and
(5) the
number and kind of outstanding securities issued under the
Plan.
(b)
Participant
Rights
. Except as provided in
this Section 13, a Participant shall have no rights by reason of
any issue by the Company of stock of any class or securities
convertible into stock of any class, any subdivision or
consolidation of shares of stock of any class, the payment of any
stock dividend or any other increase or decrease in the number of
shares of stock of any class. If by reason of an adjustment
pursuant to this Section 13, a Participant’s Award covers
additional or different shares of stock or securities, then such
additional or different shares and the Award in respect thereof
shall be subject to all of the terms, conditions and restrictions
which were applicable to the Award and the Shares subject to the
Award prior to such adjustment.
(c)
Fractional
Shares
. Any adjustment of
Shares pursuant to this Section 13 shall be rounded down to the
nearest whole number of Shares. Under no circumstances shall the
Company be required to authorize or issue fractional shares. To the
extent permitted by applicable law, no consideration shall be
provided as a result of any fractional shares not being issued or
authorized.
SECTION 14. EFFECT OF A CHANGE IN CONTROL.
(a)
Merger
or Reorganization
. In the event
that there is a Change in Control and/or the Company is a party to
a merger or acquisition or reorganization or similar transaction,
outstanding Awards shall be subject to the merger agreement or
other applicable transaction agreement. Such agreement may provide,
without limitation, that subject to the consummation of the
applicable transaction, for the assumption (or substitution) of
outstanding Awards by the surviving corporation or its parent, for
their continuation by the Company (if the Company is a surviving
corporation), for accelerated vesting or for their cancellation
with or without consideration, in all cases without the consent of
the Participant and outstanding Awards do not have to all be
uniformly treated the same way.
(b)
Acceleration
of Vesting
. Except as otherwise
provided in the applicable Award Agreement (and in such case the
applicable Award Agreement shall govern), in the event that a
Change in Control occurs and there is no assumption, substitution
or continuation of Awards pursuant to Section 14(a), the Committee
in its discretion may provide that some or all Awards shall vest
and become exercisable as of immediately before such Change in
Control. For avoidance of doubt, “substitution”
includes, without limitation, an Award being replaced by a cash
award that provides an equivalent intrinsic value (wherein
intrinsic value equals the difference between the market value of a
share and any exercise price).
SECTION 15. LIMITATIONS ON RIGHTS.
(a)
Retention
Rights
. Neither the Plan nor
any Award granted under the Plan shall be deemed to give any
individual a right to remain in Service as an Employee, Consultant,
or Non-Employee Director or to receive any other Awards under the
Plan. The Company and its Parents and Subsidiaries and Affiliates
reserve the right to terminate the Service of any person at any
time, and for any reason, subject to applicable laws, the
Company’s Articles of Incorporation and Bylaws and a written
employment agreement (if any).
(b)
Regulatory
Requirements
. Any other
provision of the Plan notwithstanding, the obligation of the
Company to issue Shares or other securities under the Plan shall be
subject to all applicable laws, rules and regulations and such
approval by any regulatory body as may be required. The Company
reserves the right to restrict, in whole or in part, the delivery
of Shares or other securities pursuant to any Award prior to the
satisfaction of all legal requirements relating to the issuance of
such Shares or other securities, to their registration,
qualification or listing or to an exemption from registration,
qualification or listing.
(c)
Dissolution
.
To the extent not previously exercised or settled, Options, SARs,
unvested Stock Units and unvested Restricted Stock Grants shall
terminate immediately prior to the dissolution or liquidation of
the Company and shall be forfeited to the Company (except for
repayment of any amounts a Participant had paid to the Company to
acquire unvested Shares underlying the forfeited
Awards).
SECTION 16. TAXES.
(a)
General
.
A Participant shall make arrangements satisfactory to the Company
for the satisfaction of any withholding tax obligations (including
without limitation federal, state, local and foreign taxes) that
arise in connection with his or her Award. The Company shall not be
required to issue any Shares or make any cash payment under the
Plan until such obligations are satisfied and the Company shall, to
the maximum extent permitted by law, have the right to deduct any
such taxes from any payment of any kind otherwise due to the
Participant.
(b)
Share
Withholding
. The Committee in
its discretion may permit or require a Participant to satisfy all
or part of his or her withholding or income tax obligations by
having the Company withhold all or a portion of any Shares that
otherwise would be issued to him or her or by surrendering all or a
portion of any Shares that he or she previously acquired (or by
stock attestation). Such Shares shall be valued based on the value
of the actual trade or, if there is none, the Fair Market Value as
of the previous day. Any payment of taxes by assigning Shares to
the Company may be subject to restrictions, including, but not
limited to, any restrictions required by rules of the SEC. The
Committee may also, in its discretion, permit or require a
Participant to satisfy withholding tax obligations related to an
Award through a sale of Shares underlying the Award or, in the case
of Options, through Net Exercise or Cashless Exercise. The number
of Shares that are withheld from an Award pursuant to this section
may also be limited by the Committee, to the extent necessary, to
avoid liability-classification of the Award (or other adverse
accounting treatment) under applicable financial accounting rules
including without limitation by requiring that no amount may be
withheld which is in excess of minimum statutory withholding rates.
The Committee, in its discretion, may permit or require other forms
of payment of applicable tax withholding.
SECTION 17. DURATION AND AMENDMENTS.
(a)
Term
of the Plan
. The Plan is
effective on the Effective Date and may be terminated by the Board
on any date pursuant to Section 17(b). This Plan will not in any
way affect outstanding awards that were issued under any other
Company equity compensation plans. No Awards may be granted under
the Plan after the earlier of the Board’s termination of the
Plan under Section 17(b) or the day before the tenth anniversary of
the Effective Date.
(b)
Right
to Amend or Terminate the Plan
.
The Board may amend or terminate the Plan at any time and for any
reason. An amendment of the Plan shall be subject to the approval
of the Company’s stockholders only to the extent required by
applicable laws, regulations or rules. In addition, no such
amendment or termination shall be made which would impair the
rights of any Participant, without such Participant’s written
consent, under any then-outstanding Award, provided that no such
Participant consent shall be required with respect to any amendment
or alteration if the Committee determines in its sole discretion
that such amendment or alteration either (i) is required or
advisable in order for the Company, the Plan or the Award to
satisfy or conform to any law or regulation or to meet the
requirements of any accounting standard, or (ii) is not reasonably
likely to significantly diminish the benefits provided under such
Award, or that any such diminishment has been adequately
compensated. In the event of any conflict in terms between the Plan
and any Award Agreement, the terms of the Plan shall prevail and
govern.
SECTION 18. EXECUTION.
To
record the adoption of this Plan by the Board, the Company has
caused its duly authorized Officer to execute this Plan on behalf
of the Company.
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INNOVUS PHARMACEUTICALS, INC.
/s/ Bassam Damaj
By:
Bassam Damaj
Title:
Chief Executive Officer
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APPENDIX A
Additional Terms of Awards to California Participants
Solely
to the extent necessary to comply with the California
Corporate Securities Law of 1968 as amended, the following
additional terms listed under items 1 through 6 below shall apply
to any Award that is granted to a California Participant
("California Award"):
1. With
respect to a California Award issued to any California Participant
who is not an officer, director, Outside Director or Consultant,
such California Award shall become exercisable, or any repurchase
right in favor of the Company shall lapse, at the rate of at least
20% per year over five years from the date of grant subject to
continuous Service status.
2. The
following rules shall apply to any California Award in the event of
termination of the California Participant’s
Service:
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(a)
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If such
termination was for reasons other than death or Total and Permanent
Disability or cause, the California Participant shall have at least
30 days after the date of such termination to exercise any of
his/her vested outstanding Options or SARs (but in no event later
than the expiration of the term of such Option or SAR established
by the Committee as of the grant date).
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(b)
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If such
termination was due to death or Total and Permanent Disability, the
California Participant shall have at least six months after the
date of such termination to exercise any of his/her vested
outstanding Options or SARs (but in no event later than the
expiration of the term of such Option or SAR established by the
Committee as of the grant date).
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(c)
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Post-termination,
the Company’s right to repurchase from the California
Participant any vested Shares that the California Participant has
acquired from a California Award shall include the following terms:
(A) the Company’s right to repurchase must be exercised
within the later of six months after (i) termination of the
California Participant’s Service or (ii) the date that such
Shares were purchased pursuant to an Option or SAR exercise, (B)
the repurchase price shall not be less than the Fair Market Value
of the Shares as of the date of termination, and
(C) consideration for the repurchase shall consist of cash or
cancellation of purchase money indebtedness, and (D) such
repurchase right shall lapse when no longer required under
California state securities laws.
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(d)
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Post-termination,
the Company’s right to repurchase from the California
Participant any unvested Shares that the California Participant has
acquired from a California Award shall include the following terms:
(A) the Company’s right to repurchase must be exercised
within the later of six months after: (i) termination of the
California Participant’s Service or (ii) the date that such
Shares were purchased pursuant to an Option or SAR exercise, (B)
the repurchase price shall not be less than the original purchase
price of the Shares, (C) consideration for the repurchase
shall consist of cash or cancellation of purchase money
indebtedness and (D) such repurchase right shall lapse at the rate
of at least 20% of the total Shares subject to the Award over the
five year period following the date of grant subject to the
California Participant's continuous Service
status.
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3. In
the event of a stock split, reverse stock split, stock dividend,
recapitalization, combination, reclassification or other
distribution of the Company’s securities without the receipt
of consideration by the Company, then there shall be a
proportionate adjustment of (i) the number of Shares purchasable
under each outstanding Option or SAR, (ii) the Exercise Price of
each outstanding Option and SAR and (iii) the number of outstanding
Shares issued under the Plan.
4. Shares
acquired under a California Award shall carry equal voting rights
as similar equity securities on all matters where such vote is
permitted by applicable law.
5. The
Company shall furnish summary financial information of the
Company’s financial condition and results of operations,
consistent with the requirements of applicable California
regulations, at least annually to each California Participant
during the period such California Participant has one or more
California Awards outstanding, and in the case of a California
Participant who acquired Shares from a California Award, during the
period such California Participant owns such Shares. The Company
shall not be required to provide such information to those
California Participants whose duties in connection with the Company
assure their access to equivalent information. The information
provided does not need to be audited financial
information.
6. Except
if the requisite super-majority approval of at least two-thirds of
outstanding Company securities entitled to vote as provided in
section 260.140.45(a) of Title 10 of the California Code of
Regulations is obtained, at no time shall the total number of
securities issuable under this Plan exceed 30% of the Company's
then outstanding securities (measured on an as if converted basis
with respect to securities convertible into Shares) as calculated
under section 260.140.45 of Title 10 of the California Code of
Regulations.
In addition to the above items in this Appendix A, with respect to
any California Participant who at one time was holding one or more
California Awards but no longer has any such outstanding California
Awards, such California Participant shall be required to promptly
provide the Company with written notice as soon as such California
Participant no longer is holding any Shares that were issued under
a California Award. For avoidance of doubt, the obligation to
provide this notice to the Company shall apply even if the
California Participant is no longer providing Service and/or is no
longer holding outstanding California Awards (but is holding Shares
that were issued under a California Award). The requirements of
this paragraph shall no longer be applicable once the Company's
obligations under item 5 in this Appendix A are no longer
applicable.
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