Exhibit 10.01
FREEDOM HOLDING CORP.
2019 EQUITY INCENTIVE PLAN
1.
Purpose;
Eligibility
.
1.1
General
Purpose
. The name of this plan
is the Freedom Holding Corp. 2019 Equity Incentive Plan (the
“
Plan
”). The purposes of the Plan are to (a)
enable Freedom Holding Corp., a Nevada corporation (the
“
Company
”), and any Affiliate to attract and retain
the types of Employees, Consultants and Directors who will
contribute to the Company’s long range success; (b) provide
incentives that align the interests of Employees, Consultants and
Directors with those of the shareholders of the Company; and (c)
promote the success of the Company’s
business.
1.2
Eligible
Award Recipients
. The persons
eligible to receive Awards are the Employees, Consultants and
Directors of the Company and its Affiliates and such other
individuals designated by the Committee who are reasonably expected
to become Employees, Consultants or Directors after the receipt of
Awards.
1.3
Available
Awards
. Awards that may be
granted under the Plan include: (a) Incentive Stock Options, (b)
Non-qualified Stock Options, (c) Stock Appreciation Rights, (d)
Restricted Awards and (e) Other Equity-Based
Awards.
2.
Definitions
.
“
Affiliate
” means a corporation or other entity that,
directly or through one or more intermediaries, controls, is
controlled by or is under common control with, the
Company.
“
Applicable
Laws
” means the
requirements related to or implicated by the administration of the
Plan under applicable state corporate law, United States federal
and state securities laws, the Code, any stock exchange or
quotation system on which the shares of Common Stock are listed or
quoted, state and United States tax law, and the applicable laws of
any foreign country or jurisdiction where Awards are granted under
the Plan.
“
Award
” means any right granted under the Plan,
including an Incentive Stock Option, a Non-qualified Stock Option,
a Stock Appreciation Right, a Restricted Award or an Other
Equity-Based Award.
“
Award
Agreement
” means a
written agreement, contract, certificate or other instrument or
document evidencing the terms and conditions of an individual Award
granted under the Plan which may, in the discretion of the Company,
be transmitted electronically to any Participant. Each Award
Agreement shall be subject to the terms and conditions of the
Plan.
“
Beneficial
Owner
” has the meaning
assigned to such term in Rule 13d-3 and Rule 13d-5 under the
Exchange Act, except that in calculating the beneficial ownership
of any particular Person, such Person shall be deemed to have
beneficial ownership of all securities that such Person has the
right to acquire by conversion or exercise of other securities,
whether such right is currently exercisable or is exercisable only
after the passage of time. The terms “Beneficially
Owns” and “Beneficially Owned” have a
corresponding meaning.
“
Board
” means the Board of Directors of the
Company, as constituted at any time.
“Cash Award”
means an Award denominated in cash
that is granted under Section 7.3 of the Plan.
“
Cause
” means:
With
respect to any Participant, unless the applicable Award Agreement
states otherwise:
(a)
If the Participant is a party to an employment or service agreement
with the Company or its Affiliates and such agreement provides for
a definition of Cause, the definition contained therein;
or
(b)
If no such agreement exists, or if such agreement does not define
Cause: (i) the commission of, or plea of guilty or no contest to, a
felony or a crime involving moral turpitude or the commission of
any other act involving willful malfeasance or material fiduciary
breach with respect to the Company or an Affiliate; (ii) conduct
that results in or is reasonably likely to result in harm to the
reputation or business of the Company or any of its Affiliates;
(iii) gross negligence or willful misconduct with respect to the
Company or an Affiliate; or (iv) material violation of state or
federal securities laws.
The
Committee, in its absolute discretion, shall determine the effect
of all matters and questions relating to whether a Participant has
been discharged for Cause.
“
Change in
Control
”
(a)
The direct or indirect sale, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one
or a series of related transactions, of all or substantially all of
the properties or assets of the Company and its subsidiaries, taken
as a whole, to any Person that is not a subsidiary of the
Company;
(b)
The date which is 10 business days prior to the consummation of a
complete liquidation or dissolution of the Company;
(c) The acquisition, after the Effective Date of
this Plan, by any Person of Beneficial Ownership of 50% or more (on
a fully diluted basis) of either (i) the then outstanding shares of
Common Stock of the Company, taking into account as outstanding for
this purpose such Common Stock issuable upon the exercise of
options or warrants, the conversion of convertible stock or debt,
and the exercise of any similar right to acquire such Common Stock
(the “
Outstanding Company Common
Stock
”) or (ii) the
combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of directors
(the “
Outstanding Company Voting
Securities
”);
provided,
however
, that for purposes of
this Plan, the following acquisitions shall not constitute a Change
in Control: (A) any acquisition by the Company or any Affiliate,
(B) any acquisition by any employee benefit plan sponsored or
maintained by the Company or any subsidiary, (C) any acquisition
which complies with clauses, (i), (ii) and (iii) of subsection (d)
of this definition or (D) in respect of an Award held by a
particular Participant, any acquisition by the Participant or any
group of persons including the Participant (or any entity
controlled by the Participant or any group of persons including the
Participant); or
(d) The consummation of a reorganization, merger,
consolidation, statutory share exchange or similar form of
corporate transaction involving the Company that requires the
approval of the Company’s shareholders, whether for such
transaction or the issuance of securities in the transaction (a
“
Business
Combination
”), unless
immediately following such Business Combination: (i) more than 50%
of the total voting power of (A) the entity resulting from such
Business Combination (the “
Surviving
Company
”), or (B) if
applicable, the ultimate parent entity that directly or indirectly
has beneficial ownership of sufficient voting securities eligible
to elect a majority of the members of the board of directors (or
the analogous governing body) of the Surviving Company (the
“
Parent
Company
”), is represented
by the Outstanding Company Voting Securities that were outstanding
immediately prior to such Business Combination (or, if applicable,
is represented by shares into which the Outstanding Company Voting
Securities were converted pursuant to such Business Combination),
and such voting power among the holders thereof is in substantially
the same proportion as the voting power of the Outstanding Company
Voting Securities among the holders thereof immediately prior to
the Business Combination; (ii) no Person (other than any employee
benefit plan sponsored or maintained by the Surviving Company or
the Parent Company) is or becomes the Beneficial Owner, directly or
indirectly, of 50% or more of the total voting power of the
outstanding voting securities eligible to elect members of the
board of directors of the Parent Company (or the analogous
governing body) (or, if there is no Parent Company, the Surviving
Company); and (iii) at least a majority of the members of the board
of directors (or the analogous governing body) of the Parent
Company (or, if there is no Parent Company, the Surviving Company)
following the consummation of the Business Combination were Board
members at the time of the Board’s approval of the execution
of the initial agreement providing for such Business
Combination.
“
Code
” means the Internal Revenue Code of 1986,
as it may be amended from time to time. Any reference to a section
of the Code shall be deemed to include a reference to any
regulations promulgated thereunder.
“
Committee
” means a committee of one or more members
of the Board appointed by the Board to administer the
Plan.
“
Common Stock
” means the common stock, $0.001 par value
per share, of the Company, or such other securities of the Company
as may be designated by the Committee from time to time in
substitution thereof.
“
Company
” means Freedom Holding Corp., a Nevada
corporation, and any successor thereto.
“
Consultant
” means any individual or entity which
performs bona fide services to the Company or an Affiliate, other
than as an Employee or Director, and who may be offered securities
registerable pursuant to a registration statement on Form S-8 under
the Securities Act.
“
Continuous
Service
” means that the
Participant’s service with the Company or an Affiliate,
whether as an Employee, Consultant or Director, is not interrupted
or terminated. The Participant’s Continuous Service shall not
be deemed to have terminated merely because of a change in the
capacity in which the Participant renders service to the Company or
an Affiliate as an Employee, Consultant or Director or a change in
the entity for which the Participant renders such service,
provided
that
there is no interruption
or termination of the Participant’s Continuous
Service;
provided further that
if any Award is subject to Section
409A of the Code, this sentence shall only be given effect to the
extent consistent with Section 409A of the Code. For example, a
change in status from an Employee of the Company to a Director of
an Affiliate will not constitute an interruption of Continuous
Service. The Committee or its delegate, in its sole discretion, may
determine whether Continuous Service shall be considered
interrupted in the case of any leave of absence approved by that
party, including sick leave, military leave or any other personal
or family leave of absence. The Committee or its delegate, in its
sole discretion, may determine whether a Company transaction, such
as a sale or spin-off of a division or subsidiary that employs a
Participant, shall be deemed to result in a termination of
Continuous Service for purposes of affected Awards, and such
decision shall be final, conclusive and
binding.
“
Deferred Stock Units
(DSUs)
” has the meaning
set forth in Section
7.2
hereof.
“
Director
” means a member of the
Board.
“
Disability
” means, unless the applicable Award
Agreement says otherwise, that the Participant is unable to engage
in any substantial gainful activity by reason of any medically
determinable physical or mental impairment;
provided, however,
for purposes of determining the term
of an Incentive Stock Option pursuant to Section
6.10
hereof, the term Disability shall have the meaning
ascribed to it under Section 22(e)(3) of the Code. The
determination of whether an individual has a Disability shall be
determined under procedures established by the Committee. Except in
situations where the Committee is determining Disability for
purposes of the term of an Incentive Stock Option pursuant to
Section
6.10
hereof within the meaning of Section
22(e)(3) of the Code, the Committee may rely on any determination
that a Participant is disabled for purposes of benefits under any
long-term disability plan maintained by the Company or any
Affiliate in which a Participant participates.
“
Disqualifying
Disposition
” has the
meaning set forth in Section
14.12
.
“
Effective
Date
” shall mean
September 20, 2018.
“
Employee
” means any person, including an Officer or
Director, employed by the Company or an Affiliate;
provided,
that,
for purposes of
determining eligibility to receive Incentive Stock Options, an
Employee shall mean an employee of the Company or a parent or
subsidiary corporation within the meaning of Section 424 of the
Code. Mere service as a Director or payment of a director’s
fee by the Company or an Affiliate shall not be sufficient to
constitute “employment” by the Company or an
Affiliate.
“
Exchange Act
” means the Securities Exchange Act of 1934,
as amended.
“
Fair Market
Value
” means, as of any
date, the value of the Common Stock as determined below. If the
Common Stock is listed on any established stock exchange or a
national market system, including without limitation, the New York
Stock Exchange or the NASDAQ Stock Market, the Fair Market Value
shall be the closing price of a share of Common Stock (or if no
sales were reported the closing price on the date immediately
preceding such date) as quoted on such exchange or system on the
day of determination, as reported on
Google
Finance
. If the Common Stock is
not then listed on any nationally recognized securities exchange
but is traded over the counter at the time determination of its
Fair Market Value is required to be made hereunder, its Fair Market
Value shall be deemed to be equal to the average between the
reported high and low sales prices of Common Stock on the most
recent date on which Common Stock was publicly traded, as reported
by the OTC Markets Group. In the absence of an established market
for the Common Stock, the Fair Market Value shall be determined in
good faith by the Committee and such determination shall be
conclusive and binding on all persons.
“Fiscal
Year”
means the
Company’s fiscal year.
“
Free Standing
Rights
” has the meaning
set forth in Section
7.1(a)
.
“
Good Reason
” means, unless the applicable Award
Agreement states otherwise:
(a)
If an Employee or Consultant is a party to an employment or service
agreement with the Company or its Affiliates and such agreement
provides for a definition of Good Reason, the definition contained
therein; or
(b) If no such agreement exists or if such
agreement does not define Good Reason, the occurrence of one or
more of the following without the Participant’s express
written consent, which circumstances are not remedied by the
Company within thirty (30) days of its receipt of a written notice
from the Participant describing the applicable circumstances (which
notice must be provided by the Participant within ninety (90) days
of the Participant’s knowledge of the applicable
circumstances): (i) any material, adverse change in the
Participant’s duties, responsibilities, authority, title,
status or reporting structure; (ii) a material reduction in the
Participant’s base salary or bonus opportunity; or (iii) a
geographical relocation of the Participant’s principal office
location by more than fifty (50) miles.
“
Grant Date
” means the date on which the Committee
adopts a resolution, or takes other appropriate action, expressly
granting an Award to a Participant that specifies the key terms and
conditions of the Award or, if a later date is set forth in such
resolution, then such date as is set forth in such
resolution.
“
Incentive Stock
Option
” means an Option
that is designated by the Committee as an incentive stock option
within the meaning of Section 422 of the Code and that meets the
requirements set out in the Plan.
“
Non-Employee
Director
” means a
Director who is a “non-employee director” within the
meaning of Rule 16b-3.
“
Non-qualified Stock
Option
” means an Option
that by its terms does not qualify or is not intended to qualify as
an Incentive Stock Option.
“
Officer
” means a person who is an officer of the
Company within the meaning of Section 16 of the Exchange Act and
the rules and regulations promulgated
thereunder.
“
Option
” means an Incentive Stock Option or a
Non-qualified Stock Option granted pursuant to the
Plan.
“
Optionholder
” means a person to whom an Option is
granted pursuant to the Plan or, if applicable, such other person
who holds an outstanding Option.
“
Option Exercise
Price
” means the price at
which a share of Common Stock may be purchased upon the exercise of
an Option.
“Other Equity-Based
Award”
means an Award
that is not an Option, Stock Appreciation Right, Restricted Stock
or Restricted Stock Unit that is payable by delivery of Common
Stock and/or which is measured by reference to the value of Common
Stock.
“
Participant
” means an eligible person to whom an Award
is granted pursuant to the Plan or, if applicable, such other
person who holds an outstanding Award.
“
Permitted
Transferee
” means: (a) a
member of the Optionholder’s immediate family (child,
stepchild, grandchild, parent, stepparent, grandparent, spouse,
former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships), any person
sharing the Optionholder’s household (other than a tenant or
employee), a trust in which these persons have more than 50% of the
beneficial interest, a foundation in which these persons (or the
Optionholder) control the management of assets, and any other
entity in which these persons (or the Optionholder) own more than
50% of the voting interests; (b) third parties designated by the
Committee in connection with a program established and approved by
the Committee pursuant to which Participants may receive a cash
payment or other consideration in consideration for the transfer of
a Non-qualified Stock Option; and (c) such other transferees as may
be permitted by the Committee in its sole
discretion.
“Person”
means a person as defined in Section
13(d)(3) of the Exchange Act.
“
Plan
” means this Freedom Holding Corp. 2019
Equity Incentive Plan, as amended and/or amended and restated from
time to time.
“
Related
Rights
” has the meaning
set forth in Section
7.1(a)
.
“
Restricted
Award
” means any Award
granted pursuant to Section
7.2(a)
.
“
Restricted
Period
” has the meaning
set forth in Section
7.2(a)
.
“
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.
“
Securities
Act
” means the Securities
Act of 1933, as amended.
“
Stock Appreciation
Right
” means the right
pursuant to an Award granted under Section
7.1
to
receive, upon exercise, an amount payable in cash or shares equal
to the number of shares subject to the Stock Appreciation Right
that is being exercised multiplied by the excess of (a) the Fair
Market Value of a share of Common Stock on the date the Award is
exercised, over (b) the exercise price specified in the Stock
Appreciation Right Award Agreement.
“
Stock for Stock
Exchange
” has the meaning
set forth in Section
6.4
.
“Substitute
Award”
has the meaning
set forth in Section 4.5.
“
Ten Percent
Shareholder
” means a
person who owns (or is deemed to own pursuant to Section 424(d) of
the Code) stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or of any of
its Affiliates.
“Total Share
Reserve
” has the meaning
set forth in Section 4.1.
3.
Administration
.
3.1
Authority
of Committee
. The Plan shall be
administered by the Committee or, in the Board’s sole
discretion, by the Board. Subject to the terms of the Plan, the
Committee’s charter and Applicable Laws, and in addition to
other express powers and authorization conferred by the Plan, the
Committee shall have the authority:
(a)
to
construe and interpret the Plan and apply its
provisions;
(b)
to
promulgate, amend, and rescind rules and regulations relating to
the administration of the Plan;
(c)
to
authorize any person to execute, on behalf of the Company, any
instrument required to carry out the purposes of the
Plan;
(d)
to
delegate its authority to one or more Officers of the Company with
respect to Awards that do not involve “insiders” within
the meaning of Section 16 of the Exchange Act;
(e)
to
determine when Awards are to be granted under the Plan and the
applicable Grant Date;
(f)
from
time to time to select, subject to the limitations set forth in
this Plan, those Participants to whom Awards shall be
granted;
(g)
to
determine the number of shares of Common Stock to be made subject
to each Award;
(h)
to
determine whether each Option is to be an Incentive Stock Option or
a Non-qualified Stock Option;
(i)
to
prescribe the terms and conditions of each Award, including,
without limitation, the exercise price and medium of payment and
vesting provisions, and to specify the provisions of the Award
Agreement relating to such grant;
(j)
to
amend any outstanding Awards, including for the purpose of
modifying the time or manner of vesting, or the term of any
outstanding Award;
provided,
however
, that if any such
amendment impairs a Participant’s rights or increases a
Participant’s obligations under his or her Award or creates
or increases a Participant’s federal income tax liability
with respect to an Award, such amendment shall also be subject to
the Participant’s consent;
(k)
to
determine the duration and purpose of leaves of absences which may
be granted to a Participant without constituting termination of
their employment for purposes of the Plan, which periods shall be
no shorter than the periods generally applicable to Employees under
the Company’s employment policies;
(l)
to
make decisions with respect to outstanding Awards that may become
necessary upon a change in corporate control or an event that
triggers anti-dilution adjustments;
(m)
to
interpret, administer, reconcile any inconsistency in, correct any
defect in and/or supply any omission in the Plan and any instrument
or agreement relating to, or Award granted under, the Plan;
and
(n)
to
exercise discretion to make any and all other determinations which
it determines to be necessary or advisable for the administration
of the Plan.
The Committee also may modify the purchase price
or the exercise price of any outstanding Award,
provided that
if the modification effects a
repricing, shareholder approval shall be required before the
repricing is effective.
3.2
Committee
Decisions Final
. All decisions
made by the Committee pursuant to the provisions of the Plan shall
be final and binding on the Company and the Participants, unless
such decisions are determined by a court having jurisdiction to be
arbitrary and capricious.
3.3
Delegation
.
The Committee or, if no Committee has been appointed, the Board may
delegate administration of the Plan to a committee or committees of
one or more members of the Board, and the term
“
Committee
” shall apply to any person or persons to
whom such authority has been delegated. The Committee shall have
the power to delegate to a subcommittee any of the administrative
powers the Committee is authorized to exercise (and references in
this Plan to the Board or the Committee shall thereafter be to the
committee or subcommittee), subject, however, to such resolutions,
not inconsistent with the provisions of the Plan, as may be adopted
from time to time by the Board. The Board may abolish the Committee
at any time and revest in the Board the administration of the Plan.
The members of the Committee shall be appointed by and serve at the
pleasure of the Board. From time to time, the Board may increase or
decrease the size of the Committee, add additional members to,
remove members (with or without cause) from, appoint new members in
substitution therefor, and fill vacancies, however caused, in the
Committee. The Committee shall act pursuant to a vote of the
majority of its members or, in the case of a Committee comprised of
only two members, the unanimous consent of its members, whether
present or not, or by the written consent of the majority of its
members and minutes shall be kept of all of its meetings and copies
thereof shall be provided to the Board. Subject to the limitations
prescribed by the Plan and the Board, the Committee may establish
and follow such rules and regulations for the conduct of its
business as it may determine to be advisable.
3.4
Committee
Composition
. Except as
otherwise determined by the Board, the Committee shall consist
solely of two or more Non-Employee Directors. The Board shall have
discretion to determine whether or not it intends to comply with
the exemption requirements of Rule 16b-3. However, if the Board
intends to satisfy such exemption requirements, with respect to any
insider subject to Section 16 of the Exchange Act, the Committee
shall be the full Board or a compensation committee of the Board
that at all times consists solely of two or more Non-Employee
Directors. Within the scope of such authority, the Board or the
Committee may delegate to a committee of one or more members of the
Board who are not Non-Employee Directors the authority to grant
Awards to eligible persons who are not then subject to Section 16
of the Exchange Act. Nothing herein shall create an inference that
an Award is not validly granted under the Plan in the event Awards
are granted under the Plan by a compensation committee of the Board
that does not at all times consist solely of two or more
Non-Employee Directors.
3.5
Indemnification
.
In addition to such other rights of indemnification as they may
have as Directors or members of the Committee, and to the extent
allowed by Applicable Laws, the Committee shall be indemnified by
the Company against the reasonable expenses, including
attorney’s fees, actually incurred in connection with any
action, suit or proceeding or in connection with any appeal
therein, to which the Committee may be party by reason of any
action taken or failure to act under or in connection with the Plan
or any Award granted under the Plan, and against all amounts paid
by the Committee in settlement thereof (
provided,
however
, that the settlement
has been approved by the Company, which approval shall not be
unreasonably withheld) or paid by the Committee in satisfaction of
a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such
action, suit or proceeding that such Committee did not act in good
faith and in a manner which such person reasonably believed to be
in the best interests of the Company, or in the case of a criminal
proceeding, had no reason to believe that the conduct complained of
was unlawful;
provided,
however
, that within 60 days
after the institution of any such action, suit or proceeding, such
Committee shall, in writing, offer the Company the opportunity at
its own expense to handle and defend such action, suit or
proceeding.
4.
Shares
Subject to the Plan
.
4.1
Subject
to adjustment in accordance with Section
11
, no more
than 3,740,000 shares of Common Stock shall be available for the
grant of Awards under the Plan (the “
Total Share
Reserve
”). Any shares of
Common Stock granted in connection with Options and Stock
Appreciation Rights shall be counted against this limit as one (1)
share for every one (1) Option or Stock Appreciation Right awarded.
During the terms of the Awards, the Company shall keep available at
all times the number of shares of Common Stock required to satisfy
such Awards.
4.2
Shares
of Common Stock available for distribution under the Plan may
consist, in whole or in part, of authorized and unissued shares,
treasury shares or shares reacquired by the Company in any
manner.
4.3
Subject
to adjustment in accordance with Section
11
, all of the
shares of Common Stock may be issued in the aggregate pursuant to
the exercise of Incentive Stock Options (the
“ISO
Limit”
).
4.4
Any
shares of Common Stock subject to an Award that expire or are
canceled, forfeited, or terminated without issuance of the full
number of shares of Common Stock to which the Award related will
again be available for issuance under the Plan. Notwithstanding
anything to the contrary contained herein: shares subject to an
Award under the Plan shall not again be made available for issuance
or delivery under the Plan if such shares are (a) shares tendered
in payment of an Option, (b) shares delivered or withheld by the
Company to satisfy any tax withholding obligation, or (c) shares
covered by a stock-settled Stock Appreciation Right or other Awards
that were not issued upon the settlement of the
Award.
4.5
Awards
may, in the sole discretion of the Committee, be granted under the
Plan in assumption of, or in substitution for, outstanding awards
previously granted by an entity acquired by the Company or with
which the Company combines (“
Substitute
Awards
”). Substitute
Awards shall not be counted against the Total Share Reserve;
provided, that, Substitute Awards issued in connection with the
assumption of, or in substitution for, outstanding options intended
to qualify as Incentive Stock Options shall be counted against the
ISO limit. Subject to applicable stock exchange requirements,
available shares under a shareholder-approved plan of an entity
directly or indirectly acquired by the Company or with which the
Company combines (as appropriately adjusted to reflect such
acquisition or transaction) may be used for Awards under the Plan
and shall not count toward the Total Share
Limit.
5.
Eligibility
.
5.1
Eligibility
for Specific Awards
. Incentive
Stock Options may be granted only to Employees. Awards other than
Incentive Stock Options may be granted to Employees, Consultants
and Directors and those individuals whom the Committee determines
are reasonably expected to become Employees, Consultants or
Directors following the Grant Date.
5.2
Ten
Percent Shareholders
. A Ten
Percent Shareholder shall not be granted an Incentive Stock Option
unless the Option Exercise Price is at least 110% of the Fair
Market Value of the Common Stock at the Grant Date and the Option
is not exercisable after the expiration of five years from the
Grant Date.
6.
Option
Provisions
. Each Option granted
under the Plan shall be evidenced by an Award Agreement. Each
Option so granted shall be subject to the conditions set forth in
this Section 6, and to such other conditions not inconsistent with
the Plan as may be reflected in the applicable Award Agreement. All
Options shall be separately designated Incentive Stock Options or
Non-qualified Stock Options at the time of grant, and, if
certificates are issued, a separate certificate or certificates
will be issued for shares of Common Stock purchased on exercise of
each type of Option. Notwithstanding the foregoing, the Company
shall have no liability to any Participant or any other person if
an Option designated as an Incentive Stock Option fails to qualify
as such at any time or if an Option is determined to constitute
“nonqualified deferred compensation” within the meaning
of Section 409A of the Code and the terms of such Option do not
satisfy the requirements of Section 409A of the Code. The
provisions of separate Options need not be identical, but each
Option shall include (through incorporation of provisions hereof by
reference in the Option or otherwise) the substance of each of the
following provisions:
6.1
Term
.
Subject to the provisions of Section
5.2
regarding
Ten Percent Shareholders, no Incentive Stock Option shall be
exercisable after the expiration of 10 years from the Grant Date.
The term of a Non-qualified Stock Option granted under the Plan
shall be determined by the Committee;
provided,
however
, no Non-qualified Stock
Option shall be exercisable after the expiration of 10 years from
the Grant Date.
6.2
Exercise
Price of an Incentive Stock Option
. Subject to the provisions of Section
5.2
regarding Ten Percent Shareholders, the Option
Exercise Price of each Incentive Stock Option shall be not less
than 100% of the Fair Market Value of the Common Stock subject to
the Option on the Grant Date. Notwithstanding the foregoing, an
Incentive Stock Option may be granted with an Option Exercise Price
lower than that set forth in the preceding sentence if such Option
is granted pursuant to an assumption or substitution for another
option in a manner satisfying the provisions of Section 424(a) of
the Code.
6.3
Exercise
Price of a Non-qualified Stock Option
. The Option Exercise Price of each Non-qualified
Stock Option shall be not less than 100% of the Fair Market Value
of the Common Stock subject to the Option on the Grant Date.
Notwithstanding the foregoing, a Non-qualified Stock Option may be
granted with an Option Exercise Price lower than that set forth in
the preceding sentence if such Option is granted pursuant to an
assumption or substitution for another option in a manner
satisfying the provisions of Section 409A of the
Code.
6.4
Consideration
.
The Option Exercise Price of Common Stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable
statutes and regulations, either (a) in cash or by certified or
bank check at the time the Option is exercised or (b) in the
discretion of the Committee, upon such terms as the Committee shall
approve, the Option Exercise Price may be paid: (i) by delivery to
the Company of other Common Stock, duly endorsed for transfer to
the Company, with a Fair Market Value on the date of delivery equal
to the Option Exercise Price (or portion thereof) due for the
number of shares being acquired, or by means of attestation whereby
the Participant identifies for delivery specific shares of Common
Stock that have an aggregate Fair Market Value on the date of
attestation equal to the Option Exercise Price (or portion thereof)
and receives a number of shares of Common Stock equal to the
difference between the number of shares thereby purchased and the
number of identified attestation shares of Common Stock (a
“
Stock
for Stock Exchange
”);
(ii) a “cashless” exercise program established with a
broker; (iii) by reduction in the number of shares of Common Stock
otherwise deliverable upon exercise of such Option with a Fair
Market Value equal to the aggregate Option Exercise Price at the
time of exercise; (iv) by any combination of the foregoing methods;
or (v) in any other form of legal consideration that may be
acceptable to the Committee. Unless otherwise specifically provided
in the Option, the exercise price of Common Stock acquired pursuant
to an Option that is paid by delivery (or attestation) to the
Company of other Common Stock acquired, directly or indirectly from
the Company, shall be paid only by shares of the Common Stock of
the Company that have been held for more than six months (or such
longer or shorter period of time required to avoid a charge to
earnings for financial accounting purposes). Notwithstanding the
foregoing, during any period for which the Common Stock is publicly
traded (i.e., the Common Stock is listed on any established stock
exchange or a national market system) an exercise by an Officer
that involves or may involve a direct or indirect extension of
credit or arrangement of an extension of credit by the Company,
directly or indirectly, in violation of Section 402(a) of the
Sarbanes-Oxley Act of 2002 shall be prohibited with respect to any
Award under this Plan.
6.5
Transferability
of an Incentive Stock Option
.
An Incentive Stock Option shall not be transferable except by will
or by the laws of descent and distribution and shall be exercisable
during the lifetime of the Optionholder only by the Optionholder.
Notwithstanding the foregoing, the Optionholder may, by delivering
written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of
the Optionholder, shall thereafter be entitled to exercise the
Option.
6.6
Transferability
of a Non-qualified Stock Option
. A Non-qualified Stock Option may, in the sole
discretion of the Committee, be transferable to a Permitted
Transferee, upon written approval by the Committee to the extent
provided in the Award Agreement. If the Non-qualified Stock Option
does not provide for transferability, then the Non-qualified Stock
Option shall not be transferable except by will or by the laws of
descent and distribution and shall be exercisable during the
lifetime of the Optionholder only by the Optionholder.
Notwithstanding the foregoing, the Optionholder may, by delivering
written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of
the Optionholder, shall thereafter be entitled to exercise the
Option.
6.7
Vesting
of Options
. Each Option may,
but need not, vest and therefore become exercisable in periodic
installments that may, but need not, be equal. The Option may be
subject to such other terms and conditions on the time or times
when it may be exercised (which may be based on performance or
other criteria) as the Committee may deem appropriate. The vesting
provisions of individual Options may vary. No Option may be
exercised for a fraction of a share of Common Stock. The Committee
may, but shall not be required to, provide for an acceleration of
vesting and exercisability in the terms of any Award Agreement upon
the occurrence of a specified event.
6.8
Termination
of Continuous Service
. Unless
otherwise provided in an Award Agreement or in an employment
agreement the terms of which have been approved by the Committee,
in the event an Optionholder’s Continuous Service terminates
(other than upon the Optionholder’s death or Disability), the
Optionholder may exercise his or her Option (to the extent that the
Optionholder was entitled to exercise such Option as of the date of
termination) but only within such period of time ending on the
earlier of (a) the date three months following the termination of
the Optionholder’s Continuous Service or (b) the expiration
of the term of the Option as set forth in the Award
Agreement;
provided
that
, if the termination of
Continuous Service is by the Company for Cause, all outstanding
Options (whether or not vested) shall immediately terminate and
cease to be exercisable. If, after termination, the Optionholder
does not exercise his or her Option within the time specified in
the Award Agreement, the Option shall
terminate.
6.9
Extension
of Termination Date
. An
Optionholder’s Award Agreement may also provide that if the
exercise of the Option following the termination of the
Optionholder’s Continuous Service for any reason would be
prohibited at any time because the issuance of shares of Common
Stock would violate the registration requirements under the
Securities Act or any other state or federal securities law or the
rules of any securities exchange or interdealer quotation system,
then the Option shall terminate on the earlier of (a) the
expiration of the term of the Option in accordance with
Section
6.1
or (b) the expiration of a period after
termination of the Participant’s Continuous Service that is
three months after the end of the period during which the exercise
of the Option would be in violation of such registration or other
securities law requirements.
6.10
Disability
of Optionholder
. Unless
otherwise provided in an Award Agreement, in the event that an
Optionholder’s Continuous Service terminates as a result of
the Optionholder’s Disability, the Optionholder may exercise
his or her Option (to the extent that the Optionholder was entitled
to exercise such Option as of the date of termination), but only
within such period of time ending on the earlier of (a) the date 12
months following such termination or (b) the expiration of the term
of the Option as set forth in the Award Agreement. If, after
termination, the Optionholder does not exercise his or her Option
within the time specified herein or in the Award Agreement, the
Option shall terminate.
6.11
Death
of Optionholder
. Unless
otherwise provided in an Award Agreement, in the event an
Optionholder’s Continuous Service terminates as a result of
the Optionholder’s death, then the Option may be exercised
(to the extent the Optionholder was entitled to exercise such
Option as of the date of death) by the Optionholder’s estate,
by a person who acquired the right to exercise the Option by
bequest or inheritance or by a person designated to exercise the
Option upon the Optionholder’s death, but only within the
period ending on the earlier of (a) the date 12 months following
the date of death or (b) the expiration of the term of such Option
as set forth in the Award Agreement. If, after the
Optionholder’s death, the Option is not exercised within the
time specified herein or in the Award Agreement, the Option shall
terminate.
6.12
Incentive
Stock Option $100,000 Limitation
. To the extent that the aggregate Fair Market
Value (determined at the time of grant) of Common Stock with
respect to which Incentive Stock Options are exercisable for the
first time by any Optionholder during any calendar year (under all
plans of the Company and its Affiliates) exceeds $100,000, the
Options or portions thereof which exceed such limit (according to
the order in which they were granted) shall be treated as
Non-qualified Stock Options.
7.
Provisions
of Awards Other Than Options
.
7.1
Stock
Appreciation Rights
.
Each Stock Appreciation Right granted under the
Plan shall be evidenced by an Award Agreement. Each Stock
Appreciation Right so granted shall be subject to the conditions
set forth in this Section 7.1, and to such other conditions not
inconsistent with the Plan as may be reflected in the applicable
Award Agreement. Stock Appreciation Rights may be granted alone
(“
Free
Standing Rights
”) or in
tandem with an Option granted under the Plan
(“
Related
Rights
”).
(b)
Grant
Requirements
Any
Related Right that relates to a Non-qualified Stock Option may be
granted at the same time the Option is granted or at any time
thereafter but before the exercise or expiration of the Option. Any
Related Right that relates to an Incentive Stock Option must be
granted at the same time the Incentive Stock Option is
granted.
(c)
Term
of Stock Appreciation Rights
The term of a Stock Appreciation Right granted
under the Plan shall be determined by the Committee;
provided,
however
, no Stock Appreciation
Right shall be exercisable later than the tenth anniversary of the
Grant Date.
(d)
Vesting
of Stock Appreciation Rights
Each
Stock Appreciation Right may, but need not, vest and therefore
become exercisable in periodic installments that may, but need not,
be equal. The Stock Appreciation Right may be subject to such other
terms and conditions on the time or times when it may be exercised
as the Committee may deem appropriate. The vesting provisions of
individual Stock Appreciation Rights may vary. No Stock
Appreciation Right may be exercised for a fraction of a share of
Common Stock. The Committee may, but shall not be required to,
provide for an acceleration of vesting and exercisability in the
terms of any Stock Appreciation Right upon the occurrence of a
specified event.
(e)
Exercise
and Payment
Upon
exercise of a Stock Appreciation Right, the holder shall be
entitled to receive from the Company an amount equal to the number
of shares of Common Stock subject to the Stock Appreciation Right
that is being exercised multiplied by the excess of (i) the Fair
Market Value of a share of Common Stock on the date the Award is
exercised, over (ii) the exercise price specified in the Stock
Appreciation Right or related Option. Payment with respect to the
exercise of a Stock Appreciation Right shall be made on the date of
exercise. Payment shall be made in the form of shares of Common
Stock (with or without restrictions as to substantial risk of
forfeiture and transferability, as determined by the Committee in
its sole discretion), cash or a combination thereof, as determined
by the Committee.
(f)
Exercise
Price
The exercise price of a Free Standing Right shall
be determined by the Committee, but shall not be less than 100% of
the Fair Market Value of one share of Common Stock on the Grant
Date of such Stock Appreciation Right. A Related Right granted
simultaneously with or subsequent to the grant of an Option and in
conjunction therewith or in the alternative thereto shall have the
same exercise price as the related Option, shall be transferable
only upon the same terms and conditions as the related Option, and
shall be exercisable only to the same extent as the related
Option;
provided,
however
, that a Stock
Appreciation Right, by its terms, shall be exercisable only when
the Fair Market Value per share of Common Stock subject to the
Stock Appreciation Right and related Option exceeds the exercise
price per share thereof and no Stock Appreciation Rights may be
granted in tandem with an Option unless the Committee determines
that the requirements of Section 7.1(b) are
satisfied.
(g)
Reduction
in the Underlying Option Shares
Upon
any exercise of a Related Right, the number of shares of Common
Stock for which any related Option shall be exercisable shall be
reduced by the number of shares for which the Stock Appreciation
Right has been exercised. The number of shares of Common Stock for
which a Related Right shall be exercisable shall be reduced upon
any exercise of any related Option by the number of shares of
Common Stock for which such Option has been exercised.
7.2
Restricted
Awards
.
A Restricted Award is an Award of actual shares of
Common Stock (“
Restricted
Stock
”) or hypothetical
Common Stock units (“
Restricted Stock
Units
”) having a value
equal to the Fair Market Value of an identical number of shares of
Common Stock, which may, but need not, provide that such Restricted
Award may not be sold, assigned, transferred or otherwise disposed
of, pledged or hypothecated as collateral for a loan or as security
for the performance of any obligation or for any other purpose for
such period (the “
Restricted
Period
”) as the Committee
shall determine. Each Restricted Award granted under the Plan shall
be evidenced by an Award Agreement. Each Restricted Award so
granted shall be subject to the conditions set forth in this
Section 7.2, and to such other conditions not inconsistent with the
Plan as may be reflected in the applicable Award
Agreement.
(b)
Restricted
Stock and Restricted Stock Units
(i)
Each
Participant granted Restricted Stock shall execute and deliver to
the Company an Award Agreement with respect to the Restricted Stock
setting forth the restrictions and other terms and conditions
applicable to such Restricted Stock. Restricted Stock shall be held
by the Company rather than delivered to the Participant pending the
release of the applicable restrictions. As the Committee deems
appropriate, it may require the Participant to additionally execute
and deliver to the Company an appropriate blank stock power with
respect to the Restricted Stock covered by such agreement. If a
Participant fails to execute an agreement evidencing an Award of
Restricted Stock and, if applicable, a stock power, the Award shall
be null and void. Subject to the restrictions set forth in the
Award, the Participant generally shall have the rights and
privileges of a shareholder as to such Restricted Stock, including
the right to vote such Restricted Stock and the right to receive
dividends;
provided
that
, any cash dividends and
stock dividends with respect to the Restricted Stock shall be
withheld by the Company for the Participant’s account, and
interest may be credited on the amount of the cash dividends
withheld at a rate and subject to such terms as determined by the
Committee. The cash dividends or stock dividends so withheld by the
Committee and attributable to any particular share of Restricted
Stock (and earnings thereon, if applicable) shall be distributed to
the Participant in cash or, at the discretion of the Committee, in
shares of Common Stock having a Fair Market Value equal to the
amount of such dividends, if applicable, upon the release of
restrictions on such share and, if such share is forfeited, the
Participant shall have no right to such
dividends.
(ii)
The
terms and conditions of a grant of Restricted Stock Units shall be
reflected in an Award Agreement. No shares of Common Stock shall be
issued at the time a Restricted Stock Unit is granted, and the
Company will not be required to set aside funds for the payment of
any such Award. A Participant shall have no voting rights with
respect to any Restricted Stock Units granted hereunder. The
Committee may also grant Restricted Stock Units with a deferral
feature, whereby settlement is deferred beyond the vesting date
until the occurrence of a future payment date or event set forth in
an Award Agreement (“
Deferred Stock
Units
”). At the
discretion of the Committee, each Restricted Stock Unit or Deferred
Stock Unit (representing one share of Common Stock) may be credited
with cash and stock dividends paid by the Company in respect of one
share of Common Stock (“
Dividend
Equivalents
”). Dividend
Equivalents shall be paid currently (and in no case later than the
end of the calendar year in which the dividend is paid to the
holders of the Common Stock or, if later, the 15th day of the third
month following the date the dividend is paid to holders of the
Common Stock). Dividend Equivalents shall be withheld by the
Company and credited to the Participant’s account, and
interest may be credited on the amount of cash Dividend Equivalents
credited to the Participant’s account at a rate and subject
to such terms as determined by the Committee. Dividend Equivalents
credited to a Participant’s account and attributable to any
particular Restricted Stock Unit or Deferred Stock Unit (and
earnings thereon, if applicable) shall be distributed in cash or,
at the discretion of the Committee, in shares of Common Stock
having a Fair Market Value equal to the amount of such Dividend
Equivalents and earnings, if applicable, to the Participant upon
settlement of such Restricted Stock Unit or Deferred Stock Unit
and, if such Restricted Stock Unit or Deferred Stock Unit is
forfeited, the Participant shall have no right to such Dividend
Equivalents. Dividend Equivalents will be deemed re-invested in
additional Restricted Stock Units or Deferred Stock Units based on
the Fair Market Value of a share of Common Stock on the applicable
dividend payment date and rounded down to the nearest whole
share.
(i)
Restricted
Stock awarded to a Participant shall be subject to the following
restrictions until the expiration of the Restricted Period, and to
such other terms and conditions as may be set forth in the
applicable Award Agreement: (A) the Participant shall not be
entitled to delivery of the stock certificate; (B) the shares shall
be subject to the restrictions on transferability set forth in the
Award Agreement; (C) the shares shall be subject to forfeiture to
the extent provided in the applicable Award Agreement; and (D) to
the extent such shares are forfeited, the stock certificates shall
be returned to the Company, and all rights of the Participant to
such shares and as a shareholder with respect to such shares shall
terminate without further obligation on the part of the
Company.
(ii)
Restricted
Stock Units and Deferred Stock Units awarded to any Participant
shall be subject to (A) forfeiture until the expiration of the
Restricted Period, and satisfaction of any applicable performance
goals during such period, to the extent provided in the applicable
Award Agreement, and to the extent such Restricted Stock Units or
Deferred Stock Units are forfeited, all rights of the Participant
to such Restricted Stock Units or Deferred Stock Units shall
terminate without further obligation on the part of the Company and
(B) such other terms and conditions as may be set forth in the
applicable Award Agreement.
(iii)
The
Committee shall have the authority to remove any or all of the
restrictions on the Restricted Stock, Restricted Stock Units and
Deferred Stock Units whenever it may determine that, by reason of
changes in Applicable Laws or other changes in circumstances
arising after the date the Restricted Stock or Restricted Stock
Units or Deferred Stock Units are granted, such action is
appropriate.
(d)
Restricted
Period
With
respect to Restricted Awards, the Restricted Period shall commence
on the Grant Date and end at the time or times set forth on a
schedule established by the Committee in the applicable Award
Agreement.
No
Restricted Award may be granted or settled for a fraction of a
share of Common Stock. The Committee may, but shall not be required
to, provide for an acceleration of vesting in the terms of any
Award Agreement upon the occurrence of a specified
event.
(e)
Delivery
of Restricted Stock and Settlement of Restricted Stock
Units
Upon the expiration of the Restricted Period with
respect to any shares of Restricted Stock, the restrictions set
forth in Section
7.2(c)
and the applicable Award Agreement
shall be of no further force or effect with respect to such shares,
except as set forth in the applicable Award Agreement. Upon such
expiration, the Company shall deliver to the Participant, or his or
her beneficiary, without charge, the stock certificate evidencing
the shares of Restricted Stock which have not then been forfeited
and with respect to which the Restricted Period has expired (to the
nearest full share) and any cash dividends or stock dividends
credited to the Participant’s account with respect to such
Restricted Stock and the interest thereon, if any. Upon the
expiration of the Restricted Period with respect to any outstanding
Restricted Stock Units, or at the expiration of the deferral period
with respect to any outstanding Deferred Stock Units, the Company
shall deliver to the Participant, or his or her beneficiary,
without charge, one share of Common Stock for each such outstanding
vested Restricted Stock Unit or Deferred Stock Unit
(“
Vested Unit
”) and cash equal to any Dividend
Equivalents credited with respect to each such Vested Unit in
accordance with Section
7.2(b)(ii)
hereof and the interest thereon or, at the
discretion of the Committee, in shares of Common Stock having a
Fair Market Value equal to such Dividend Equivalents and the
interest thereon, if any;
provided,
however
, that, if explicitly
provided in the applicable Award Agreement, the Committee may, in
its sole discretion, elect to pay cash or part cash and part Common
Stock in lieu of delivering only shares of Common Stock for Vested
Units. If a cash payment is made in lieu of delivering shares of
Common Stock, the amount of such payment shall be equal to the Fair
Market Value of the Common Stock as of the date on which the
Restricted Period lapsed in the case of Restricted Stock Units, or
the delivery date in the case of Deferred Stock Units, with respect
to each Vested Unit.
(f)
Stock
Restrictions
Each
certificate representing Restricted Stock awarded under the Plan
shall bear a legend in such form as the Company deems
appropriate.
7.3
Other
Equity-Based and Cash Awards
. The Committee may grant Other
Equity-Based Awards, either alone or in tandem with other Awards,
in such amounts and subject to such conditions as the Committee
shall determine in its sole discretion. Each Equity-Based Award
shall be evidenced by an Award Agreement and shall be subject to
such conditions, not inconsistent with the Plan, as may be
reflected in the applicable Award Agreement. The Committee may also
grant Cash Awards. Cash Awards shall be evidenced in such form as
the Committee may determine.
8.
Securities
Law Compliance
. Each Award
Agreement shall provide that no shares of Common Stock shall be
purchased or sold thereunder unless and until (a) any then
applicable requirements of state or federal laws and regulatory
agencies have been fully complied with to the satisfaction of the
Company and its counsel and (b) if required to do so by the
Company, the Participant has executed and delivered to the Company
a letter of investment intent in such form and containing such
provisions as the Committee may require. The Company shall use
reasonable efforts to seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such
authority as may be required to grant Awards and to issue and sell
shares of Common Stock upon exercise of the Awards;
provided,
however
, that this undertaking
shall not require the Company to register under the Securities Act
the Plan, any Award or any Common Stock issued or issuable pursuant
to any such Award. If, after reasonable efforts, the Company is
unable to obtain from any such regulatory commission or agency the
authority which counsel for the Company deems necessary for the
lawful issuance and sale of Common Stock under the Plan, the
Company shall be relieved from any liability for failure to issue
and sell Common Stock upon exercise of such Awards unless and until
such authority is obtained.
9.
Use
of Proceeds from Stock
.
Proceeds from the sale of Common Stock pursuant to Awards, or upon
exercise thereof, shall constitute general funds of the
Company.
10.
Miscellaneous
.
10.1
Acceleration
of Exercisability and Vesting
.
The Committee shall have the power to accelerate the time at which
an Award may first be exercised or the time during which an Award
or any part thereof will vest in accordance with the Plan,
notwithstanding the provisions in the Award stating the time at
which it may first be exercised or the time during which it will
vest.
10.2
Shareholder
Rights
. Except as provided in
the Plan or an Award Agreement, no Participant shall be deemed to
be the holder of, or to have any of the rights of a holder with
respect to, any shares of Common Stock subject to such Award unless
and until such Participant has satisfied all requirements for
exercise of the Award pursuant to its terms and no adjustment shall
be made for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions of other rights for
which the record date is prior to the date such Common Stock
certificate is issued, except as provided in Section
11
hereof.
10.3
No
Employment or Other Service Rights
. Nothing in the Plan or any instrument executed
or Award granted pursuant thereto shall confer upon any Participant
any right to continue to serve the Company or an Affiliate in the
capacity in effect at the time the Award was granted or shall
affect the right of the Company or an Affiliate to terminate the
employment of an Employee with or without notice and with or
without Cause.
10.4
Transfer;
Approved Leave of Absence
. For
purposes of the Plan, no termination of employment by an Employee
shall be deemed to result from either (a) a transfer of employment
to the Company from an Affiliate or from the Company to an
Affiliate, or from one Affiliate to another, or (b) an approved
leave of absence for military service or sickness, or for any other
purpose approved by the Company, if the Employee’s right to
reemployment is guaranteed either by a statute or by contract or
under the policy pursuant to which the leave of absence was granted
or if the Committee otherwise so provides in writing, in either
case, except to the extent inconsistent with Section 409A of the
Code if the applicable Award is subject
thereto.
10.5
Withholding
Obligations
. To the extent
provided by the terms of an Award Agreement and subject to the
discretion of the Committee, the Participant may satisfy any
federal, state or local tax withholding obligation relating to the
exercise or acquisition of Common Stock under an Award by any of
the following means (in addition to the Company’s right to
withhold from any compensation paid to the Participant by the
Company) or by a combination of such means: (a) tendering a cash
payment; (b) authorizing the Company to withhold shares of Common
Stock from the shares of Common Stock otherwise issuable to the
Participant as a result of the exercise or acquisition of Common
Stock under the Award,
provided,
however
, that no shares of
Common Stock are withheld with a value exceeding the maximum amount
of tax required to be withheld by law; or (c) delivering to the
Company previously owned and unencumbered shares of Common Stock of
the Company.
11.
Adjustments
Upon Changes in Stock
. In the
event of changes in the outstanding Common Stock or in the capital
structure of the Company by reason of any stock or extraordinary
cash dividend, stock split, reverse stock split, an extraordinary
corporate transaction such as any recapitalization, reorganization,
merger, consolidation, combination, exchange, or other relevant
change in capitalization occurring after the Grant Date of any
Award, Awards granted under the Plan and any Award Agreements, the
exercise price of Options and Stock Appreciation Rights, the
maximum number of shares of Common Stock subject to all Awards
stated in Section
4
and the maximum number of shares of
Common Stock with respect to which any one person may be granted
Awards during any period stated in Section
4
and Section
7.5(d)(vi) will be equitably adjusted or substituted, as to the
number, price or kind of a share of Common Stock or other
consideration subject to such Awards to the extent necessary to
preserve the economic intent of such Award. In the case of
adjustments made pursuant to this Section 11, unless the Committee
specifically determines that such adjustment is in the best
interests of the Company or its Affiliates, the Committee shall, in
the case of Incentive Stock Options, ensure that any adjustments
under this Section 11 will not constitute a modification, extension
or renewal of the Incentive Stock Options within the meaning of
Section 424(h)(3) of the Code and in the case of Non-qualified
Stock Options, ensure that any adjustments under this Section 11
will not constitute a modification of such Non-qualified Stock
Options within the meaning of Section 409A of the Code. Any
adjustments made under this Section 11 shall be made in a manner
which does not adversely affect the exemption provided pursuant to
Rule 16b-3 under the Exchange Act. The Company shall give each
Participant notice of an adjustment hereunder and, upon notice,
such adjustment shall be conclusive and binding for all
purposes.
12.
Effect
of Change in Control
.
12.1
Unless
otherwise provided in an Award Agreement, notwithstanding any
provision of the Plan to the contrary,
in the event of a Change in Control, all
outstanding Options and Stock Appreciation Rights shall become
immediately exercisable with respect to 100% of the shares subject
to such Options or Stock Appreciation Rights, and/or the Restricted
Period shall expire immediately with respect to 100% of the
outstanding shares of Restricted Stock or Restricted Stock
Units.
To
the extent practicable, any actions taken by the Committee under
the immediately preceding clause shall occur in a manner and at a
time which allows affected Participants the ability to participate
in the Change in Control with respect to the shares of Common Stock
subject to their Awards.
12.2
In
addition, in the event of a Change in Control, the Committee may in
its discretion and upon at least 10 days’ advance notice to
the affected persons, cancel any outstanding Awards and pay to the
holders thereof, in cash or stock, or any combination thereof, the
value of such Awards based upon the price per share of Common Stock
received or to be received by other shareholders of the Company in
the event. In the case of any Option or Stock Appreciation Right
with an exercise price (or SAR Exercise Price in the case of a
Stock Appreciation Right) that equals or exceeds the price paid for
a share of Common Stock in connection with the Change in Control,
the Committee may cancel the Option or Stock Appreciation Right
without the payment of consideration therefor.
12.3
The
obligations of the Company under the Plan shall be binding upon any
successor corporation or organization resulting from the merger,
consolidation or other reorganization of the Company, or upon any
successor corporation or organization succeeding to all or
substantially all of the assets and business of the Company and its
Affiliates, taken as a whole.
13.
Amendment
of the Plan and Awards
.
13.1
Amendment
of Plan
. The Board at any time,
and from time to time, may amend or terminate the Plan. However,
except as provided in Section
11
relating to
adjustments upon changes in Common Stock and Section
13.3
, no amendment shall be effective unless approved
by the shareholders of the Company to the extent shareholder
approval is necessary to satisfy any Applicable Laws. At the time
of such amendment, the Board shall determine, upon advice from
counsel, whether such amendment will be contingent on shareholder
approval.
13.2
Shareholder
Approval
. The Board may, in its
sole discretion, submit any other amendment to the Plan for
shareholder approval.
13.3
Contemplated
Amendments
. It is expressly
contemplated that the Board may amend the Plan in any respect the
Board deems necessary or advisable to provide eligible Employees,
Consultants and Directors with the maximum benefits provided or to
be provided under the provisions of the Code and the regulations
promulgated thereunder relating to Incentive Stock Options or to
the nonqualified deferred compensation provisions of Section 409A
of the Code and/or to bring the Plan and/or Awards granted under it
into compliance therewith.
13.4
No
Impairment of Rights
. Rights
under any Award granted before amendment of the Plan shall not be
impaired by any amendment of the Plan unless (a) the Company
requests the consent of the Participant and (b) the Participant
consents in writing.
13.5
Amendment
of Awards
. The Committee at any
time, and from time to time, may amend the terms of any one or more
Awards;
provided,
however
, that the Committee may
not affect any amendment which would otherwise constitute an
impairment of the rights under any Award unless (a) the Company
requests the consent of the Participant and (b) the Participant
consents in writing.
14.
General
Provisions
.
14.1
Forfeiture
Events
. The Committee may
specify in an Award Agreement that the Participant’s rights,
payments and benefits with respect to an Award shall be subject to
reduction, cancellation, forfeiture or recoupment upon the
occurrence of certain events, in addition to applicable vesting
conditions of an Award. Such events may include, without
limitation, breach of non-competition, non-solicitation,
confidentiality, or other restrictive covenants that are contained
in the Award Agreement or otherwise applicable to the Participant,
a termination of the Participant’s Continuous Service for
Cause, or other conduct by the Participant that is detrimental to
the business or reputation of the Company and/or its
Affiliates.
14.2
Clawback
.
Notwithstanding any other provisions in this Plan, the Company may
cancel any Award, require reimbursement of any Award by a
Participant, and effect any other right of recoupment of equity or
other compensation provided under the Plan in accordance with any
Company policies that may be adopted and/or modified from time to
time (
“Clawback
Policy”
). In addition, a
Participant may be required to repay to the Company previously paid
compensation, whether provided pursuant to the Plan or an Award
Agreement, in accordance with the Clawback Policy. By accepting an
Award, the Participant is agreeing to be bound by the Clawback
Policy, as in effect or as may be adopted and/or modified from time
to time by the Company in its discretion (including, without
limitation, to comply with applicable law or stock exchange listing
requirements).
14.3
Other
Compensation Arrangements
.
Nothing contained in this Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to
shareholder approval if such approval is required; and such
arrangements may be either generally applicable or applicable only
in specific cases.
14.4
Sub-plans
.
The Committee may from time to time establish sub-plans under the
Plan for purposes of satisfying blue sky, securities, tax or other
laws of various jurisdictions in which the Company intends to grant
Awards. Any sub-plans shall contain such limitations and other
terms and conditions as the Committee determines are necessary or
desirable. All sub-plans shall be deemed a part of the Plan, but
each sub-plan shall apply only to the Participants in the
jurisdiction for which the sub-plan was
designed.
14.5
Deferral
of Awards
. The Committee may
establish one or more programs under the Plan to permit selected
Participants the opportunity to elect to defer receipt of
consideration upon exercise of an Award, satisfaction of
performance criteria, or other event that absent the election would
entitle the Participant to payment or receipt of shares of Common
Stock or other consideration under an Award. The Committee may
establish the election procedures, the timing of such elections,
the mechanisms for payments of, and accrual of interest or other
earnings, if any, on amounts, shares or other consideration so
deferred, and such other terms, conditions, rules and procedures
that the Committee deems advisable for the administration of any
such deferral program.
14.6
Unfunded
Plan
. The Plan shall be
unfunded. None of the Company, the Board or the Committee shall be
required to establish any special or separate fund or to segregate
any assets to assure the performance of its obligations under the
Plan.
14.7
Recapitalizations
.
Each Award Agreement shall contain provisions required to reflect
the provisions of Section
11
.
14.8
Delivery
.
Upon exercise of a right granted under this Plan, the Company shall
issue Common Stock or pay any amounts due within a reasonable
period of time thereafter. Subject to any statutory or regulatory
obligations the Company may otherwise have, for purposes of this
Plan, 30 days shall be considered a reasonable period of
time.
14.9
No
Fractional Shares
. No
fractional shares of Common Stock shall be issued or delivered
pursuant to the Plan. The Committee shall determine whether cash,
additional Awards or other securities or property shall be issued
or paid in lieu of fractional shares of Common Stock or whether any
fractional shares should be rounded, forfeited or otherwise
eliminated.
14.10
Other
Provisions
. The Award
Agreements authorized under the Plan may contain such other
provisions not inconsistent with this Plan, including, without
limitation, restrictions upon the exercise of the Awards, as the
Committee may deem advisable.
14.11
Section
409A
. The Plan is intended to
comply with Section 409A of the Code to the extent subject thereto,
and, accordingly, to the maximum extent permitted, the Plan shall
be interpreted and administered to be in compliance therewith. Any
payments described in the Plan that are due within the
“short-term deferral period” as defined in Section 409A
of the Code shall not be treated as deferred compensation unless
Applicable Laws require otherwise. Notwithstanding anything to the
contrary in the Plan, to the extent required to avoid accelerated
taxation and tax penalties under Section 409A of the Code, amounts
that would otherwise be payable and benefits that would otherwise
be provided pursuant to the Plan during the six (6) month period
immediately following the Participant’s termination of
Continuous Service shall instead be paid on the first payroll date
after the six-month anniversary of the Participant’s
separation from service (or the Participant’s death, if
earlier). Notwithstanding the foregoing, neither the Company nor
the Committee shall have any obligation to take any action to
prevent the assessment of any excise tax or penalty on any
Participant under Section 409A of the Code and neither the Company
nor the Committee will have any liability to any Participant for
such tax or penalty.
14.12
Disqualifying
Dispositions
. Any Participant
who shall make a “disposition” (as defined in Section
424 of the Code) of all or any portion of shares of Common Stock
acquired upon exercise of an Incentive Stock Option within two
years from the Grant Date of such Incentive Stock Option or within
one year after the issuance of the shares of Common Stock acquired
upon exercise of such Incentive Stock Option (a
“
Disqualifying
Disposition
”) shall be
required to immediately advise the Company in writing as to the
occurrence of the sale and the price realized upon the sale of such
shares of Common Stock.
14.13
Section
16
. It is the intent of the
Company that the Plan satisfy, and be interpreted in a manner that
satisfies, the applicable requirements of Rule 16b-3 as promulgated
under Section 16 of the Exchange Act so that Participants will be
entitled to the benefit of Rule 16b-3, or any other rule
promulgated under Section 16 of the Exchange Act, and will not be
subject to short-swing liability under Section 16 of the Exchange
Act. Accordingly, if the operation of any provision of the Plan
would conflict with the intent expressed in this Section 14.13,
such provision to the extent possible shall be interpreted and/or
deemed amended so as to avoid such conflict.
14.14
Beneficiary
Designation
. Each Participant
under the Plan may from time to time name any beneficiary or
beneficiaries by whom any right under the Plan is to be exercised
in case of such Participant’s death. Each designation will
revoke all prior designations by the same Participant, shall be in
a form reasonably prescribed by the Committee and shall be
effective only when filed by the Participant in writing with the
Company during the Participant’s
lifetime.
14.15
Expenses
.
The costs of administering the Plan shall be paid by the
Company.
14.16
Severability
.
If any of the provisions of the Plan or any Award Agreement is held
to be invalid, illegal or unenforceable, whether in whole or in
part, such provision shall be deemed modified to the extent, but
only to the extent, of such invalidity, illegality or
unenforceability and the remaining provisions shall not be affected
thereby.
14.17
Plan
Headings
. The headings in the
Plan are for purposes of convenience only and are not intended to
define or limit the construction of the provisions
hereof.
14.18
Non-Uniform
Treatment
. The
Committee’s determinations under the Plan need not be uniform
and may be made by it selectively among persons who are eligible to
receive, or actually receive, Awards. Without limiting the
generality of the foregoing, the Committee shall be entitled to
make non-uniform and selective determinations, amendments and
adjustments, and to enter into non-uniform and selective Award
Agreements.
15.
Effective
Date of Plan
. The Plan shall
become effective as of the Effective Date.
16.
Termination
or Suspension of the Plan
. The
Plan shall terminate automatically on the tenth anniversary of the
Effective Date. No Award shall be granted pursuant to the Plan
after such date, but Awards theretofore granted may extend beyond
that date. The Board may suspend or terminate the Plan at any
earlier date pursuant to Section
13.1
hereof.
No Awards may be granted under the Plan while the Plan is suspended
or after it is terminated.
17.
Choice
of Law
. The law of the State of
Nevada shall govern all questions concerning the construction,
validity and interpretation of this Plan, without regard to such
state’s conflict of law rules.
As
adopted by the Board of Directors of Freedom Holding Corp. on July
25, 2018.
As
approved by the shareholders of Freedom Holding Corp. on September
20, 2018.