Exhibit 4.1
SCIENTIFIC INDUSTRIES, INC.
2022 EQUITY INCENTIVE PLAN
1. General.
(a) Eligible Stock Award
Recipients. Employees,
Directors and Consultants are eligible to receive Stock
Awards.
(b) Available Stock
Awards. The Plan provides for
the grant of the following types of Stock Awards: (i) Incentive
Stock Options (“ISO”), (ii) Nonstatutory Stock Options
(“NSO”), (iii) Stock Appreciation Rights
(“SAR”), (iv) Restricted Stock Awards
(“RSA”), (v) RSU Awards (“RSU”) and (vi)
Other Stock Awards.
(c) Purpose. The Plan, through the grant of
Stock Awards, is intended to help the Company secure and retain the
services of eligible award recipients, provide incentives for such
persons to exert maximum efforts for the success of the Company and
any Affiliate and provide a means by which the eligible recipients
may benefit from increases in value of the Common
Stock.
2. Administration.
(a) Administration by the Board. The Board
will administer the Plan. The Board may delegate administration of
the Plan to a Committee or Committees, as provided in Section
2(c).
(b) Powers of the Board. The Board will have
the power, subject to, and within the limitations of, the express
provisions of the Plan:
(i) To determine (A) who will be granted
Stock Awards; (B) when and how each Stock Award will be granted;
(C) what type of Stock Award will be granted; (D) the provisions of
each Stock Award (which need not be identical), including when a
person will be permitted to exercise or otherwise receive cash or
Common Stock under the Stock Award; (E) the number of shares of
Common Stock subject to, or the cash value of, a Stock Award; and
(F) the Fair Market Value applicable to a Stock Award.
(ii) To construe and interpret the Plan
and Stock Awards granted under it, and to establish, amend and
revoke rules and regulations for administration of the Plan and
Stock Awards. The Board, in the exercise of these powers, may
correct any defect, omission or inconsistency in the Plan or in any
Stock Award Agreement, in a manner and to the extent it will deem
necessary or expedient to make the Plan or Stock Award fully
effective.
(iii) To settle all controversies regarding
the Plan and Stock Awards granted under it.
(iv) To accelerate, in whole or in part,
the time at which a Stock Award may be exercised or vest (or the
time at which cash or shares of Common Stock may be issued in
settlement thereof).
(v) To suspend or terminate the Plan at
any time. Except as otherwise provided in the Plan or a Stock Award
Agreement, suspension or termination of the Plan will not impair a
Participant’s rights under the Participant’s
then-outstanding Stock Award without the Participant’s
written consent except as provided in subsection (viii)
below.
(vi) To amend the Plan in any respect the
Board deems necessary or advisable, including, without limitation,
by adopting amendments relating to ISO’s and certain
nonqualified deferred compensation under Section 409A of the Code
and/or bringing the Plan or Stock Awards granted under the Plan
into compliance with the requirements for ISOs or ensuring that
they are exempt from, or compliant with, the requirements for
nonqualified deferred compensation under Section 409A of the Code,
subject to the limitations, if any, of applicable law. If required
by applicable law or listing requirements, and except as provided
in Section 9(a) relating to Capitalization Adjustments, the Company
will seek stockholder approval of any amendment of the Plan that
(A) materially increases the number of shares of Common Stock
available for issuance under the Plan, (B) materially expands the
class of individuals eligible to receive Stock Awards under the
Plan, (C) materially increases the benefits accruing to
Participants under the Plan, (D) materially reduces the price at
which shares of Common Stock may be issued or purchased under the
Plan, (E) materially extends the term of the Plan, or (F)
materially expands the types of Stock Awards available for issuance
under the Plan. Except as otherwise provided in the Plan or a Stock
Award Agreement, no amendment of the Plan will materially impair a
Participant’s rights under an outstanding Stock Award without
the Participant’s written consent.
(vii) To submit any amendment to the Plan
for stockholder approval, including, but not limited to, amendments
to the Plan intended to satisfy the requirements of Section 422 of
the Code regarding Incentive Stock Options.
(viii) To approve forms of Stock Award
Agreements for use under the Plan and to amend the terms of any one
or more Stock Awards, including, but not limited to, amendments to
provide terms more favorable to the Participant than previously
provided in the Stock Award Agreement, subject to any specified
limits in the Plan that are not subject to Board discretion;
provided however, that a
Participant’s rights under any Stock Award will not be
impaired by any such amendment unless (A) the Company requests the
consent of the affected Participant, and (B) such Participant
consents in writing. Notwithstanding the foregoing, (1) a
Participant’s rights will not be deemed to have been impaired
by any such amendment if the Board, in its sole discretion,
determines that the amendment, taken as a whole, does not
materially impair the Participant’s rights, and (2) subject
to the limitations of applicable law, if any, the Board may amend
the terms of any one or more Stock Awards without the affected
Participant’s consent (A) to maintain the qualified status of
the Stock Award as an ISO under Section 422 of the Code; (B) to
change the terms of an ISO, if such change results in impairment of
the Stock Award solely because it impairs the qualified status of
the Stock Award as an ISO under Section 422 of the Code; (C) to
clarify the manner of exemption from, or to bring the Stock Award
into compliance with, Section 409A of the Code; or (D) to comply
with other applicable laws.
(ix) Generally, to exercise such powers
and to perform such acts as the Board deems necessary or expedient
to promote the best interests of the Company and that are not in
conflict with the provisions of the Plan or Stock
Awards.
(x) To adopt such procedures and
sub-plans as are necessary or appropriate to permit participation
in the Plan by Employees, Directors or Consultants who are foreign
nationals or employed outside the United States (provided that
Board approval will not be necessary for immaterial modifications
to the Plan or any Stock Award Agreement that are required for
compliance with the laws of the relevant foreign
jurisdiction).
(xi) To effect, with
the consent of any adversely affected Participant, (A) the
reduction of the exercise, purchase or strike price of any
outstanding Stock Award; (B) the cancellation of any outstanding
Stock Award and the grant in substitution therefor of a new (1)
Option or SAR, (2)RSA, (3) RSU Award, (4) Other Stock Award, (5)
cash and/or (6) other valuable consideration determined by the
Board, in its sole discretion, with any such substituted award (x)
covering the same or a different number of shares of Common Stock
as the cancelled Stock Award and (y) granted under the Plan or
another equity or compensatory plan of the Company; or (C) any
other action that is treated as a repricing under generally
accepted accounting principles.
(c) Delegation to
Committee. The Board may
delegate some or all of the administration of the Plan to a
Committee or Committees. If administration of the Plan is delegated
to a Committee, the Committee will have, in connection with the
administration of the Plan, the powers theretofore possessed by the
Board that have been delegated to the Committee, including the
power to delegate to a subcommittee of the Committee any of the
administrative powers the Committee is authorized to exercise (and
references in this Plan to the Board will thereafter be to the
Committee or subcommittee, as applicable). Any delegation of
administrative powers will be reflected in resolutions, not
inconsistent with the provisions of the Plan, adopted from time to
time by the Board or Committee (as applicable). The Committee shall
consist of two or more non-employee directors, each of whom is
intended to be, to the extent required by Rule 16b-3,
a“non-employee director” as defined in Rule 16b-3 and
to satisfy any other independence requirement under the rules of
any national securities exchange on which shares of Common Stock
are listed. The Board may retain the authority to concurrently
administer the Plan with the Committee and may, at any time, revest
in the Board some or all of the powers previously
delegated.
(d) Delegation to an Officer. The Board may
delegate to one or more Officers the authority to do one or both of
the following: (i) designate Employees who are not Officers to be
recipients of Options and SAR’s (and, to the extent permitted
by applicable law, other Stock Awards) and, to the extent permitted
by applicable law, the terms of such Stock Awards, and (ii)
determine the number of shares of Common Stock to be subject to
such Stock Awards granted to such Employees; provided, however, that the Board
resolutions regarding such delegation will specify the total number
of shares of Common Stock that may be subject to the Stock Awards
granted by such Officer and that such Officer may not grant a Stock
Award to himself or herself. Any such Stock Awards will be granted
on the form of Stock Award Agreement most recently approved for use
by the Committee or the Board, unless otherwise provided in the
resolutions approving the delegation authority. The Board may not
delegate authority to an Officer who is acting solely in the
capacity of an Officer (and not also as a Director) to determine
the Fair Market Value pursuant to Section 13(t) below.
(e) Effect of Board’s Decision. All
determinations, interpretations and constructions made by the Board
in good faith will not be subject to review by any person and will
be final, binding and conclusive on all persons.
3. Shares Subject to the Plan.
(a) Share
Reserve.
(i) Subject to Section 9(a) relating to
Capitalization Adjustments, the aggregate number of shares of
Common Stock that may be issued pursuant to Stock Awards from and
after the Effective Date will not exceed the sum of (i) 1,750,000
shares, plus such number of shares, not to exceed 1,184,757, which
are currently subject to the outstanding options granted under the
Company’s 2012 Stock Option Plan, but which are not
subsequently required to be issued thereunder because of the
termination or expiration of such options without their having been
exercised (collectively, the “Share
Reserve”).
(ii) For clarity, the Share Reserve in
this Section 3(a) is a limitation on the number of shares of Common
Stock that may be issued pursuant to the Plan. Accordingly, this
Section 3(a) does not limit the granting of Stock Awards except as
provided in Section 7(a).
(b) Reversion of Shares to the Share
Reserve. If a Stock Award or any portion thereof (i) expires
or otherwise terminates without all of the shares covered by such
Stock Award having been issued or (ii) is settled in cash
(i.e., the Participant
receives cash rather than stock), such expiration, termination or
settlement will not reduce (or otherwise offset) the number of
shares of Common Stock that may be available for issuance under the
Plan. If any shares of Common Stock issued pursuant to a Stock
Award are forfeited back to or repurchased by the Company because
of the failure to meet a contingency or condition required to vest
such shares in the Participant, then the shares that are forfeited
or repurchased will revert to and again become available for
issuance under the Plan. Any shares reacquired by the Company in
satisfaction of tax withholding obligations on a Stock Award or as
consideration for the exercise or purchase price of a Stock Award
will again become available for issuance under the
Plan.
(c) Incentive Stock Option
Limit. Subject
to the Share Reserve and Section 9(a) relating to Capitalization
Adjustments, the aggregate maximum number of shares of Common Stock
that may be issued pursuant to the exercise of ISOs will be
1,750,000.
(d) Source of Shares. The stock issuable
under the Plan will be shares of authorized but unissued or
reacquired Common Stock, including shares repurchased by the
Company on the open market or otherwise.
4. Eligibility.
(a) Eligibility for Specific Stock Awards.
ISOs may be granted only to employees of the Company or a
“parent corporation” or “subsidiary
corporation” thereof (as such terms are defined in Sections
424(e) and 424(f) of the Code). Stock Awards other than ISOs may be
granted to Employees, Directors and Consultants; provided, however, that Stock Awards
may not be granted to Employees, Directors and Consultants who are
providing Continuous Service only to any “parent” of
the Company, as such term is defined in Rule 405, unless (i) the
stock underlying such Stock Awards is treated as “service
recipient stock” under Section 409A of the Code (for example,
because the Stock Awards are granted pursuant to a corporate
transaction such as a spin off transaction), (ii) the Company, in
consultation with its legal counsel, has determined that such Stock
Awards are otherwise exempt from Section 409A of the Code, or (iii)
the Company, in consultation with its legal counsel, has determined
that such Stock Awards comply with the distribution requirements of
Section 409A of the Code.
(b) Ten
Percent Stockholders. A Ten Percent Stockholder will not be
granted an ISO unless the exercise price of such Option is at least
110% of the Fair Market Value on the date of grant and the Option
is not exercisable after the expiration of five years from the date
of grant.
(c) Consultants. A Consultant will
not be eligible for the grant of a Stock Award if, at the time of
grant, either the offer or sale of the Company’s securities
to such Consultant is not exempt under Rule 701 because of the
nature of the services that the Consultant is providing to the
Company, because the Consultant is not a natural person, or because
of any other provision of Rule 701, unless the Company determines
that such grant need not comply with the requirements of Rule 701
and will satisfy another exemption under the Securities Act as well
as comply with the securities laws of all other relevant
jurisdictions.
5. Provisions Relating to Options and Stock
Appreciation Rights.
Each
Stock Option or SAR will be in such form and will contain such
terms and conditions as the Board deems appropriate. All Options
will be separately designated ISOs or NSO 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. If an Option is not specifically
designated as an ISO, or if an Option is designated as an ISO but
some portion or all of the Option fails to qualify as an ISO under
the applicable rules, then the Option (or portion thereof) will be
a NSO. The provisions of separate Options or SARs need not be
identical; provided,
however, that each Stock Award Agreement will conform to
(through incorporation of provisions hereof by reference in the
applicable Stock Award Agreement or otherwise) the substance of
each of the following provisions:
(a) Term. Subject to the provisions of
Section 4(b) regarding Ten Percent Stockholders, no Option or SAR
will be exercisable after the expiration of 10 years from the date
of its grant or such shorter period specified in the Stock Award
Agreement.
(b) Exercise Price. Subject to the
provisions of Section 4(b) regarding Ten Percent Stockholders, the
exercise or strike price of each Option or SAR will be not less
than 100% of the Fair Market Value of the Common Stock subject to
the Option or SAR on the date the Stock Award is granted.
Notwithstanding the foregoing, an Option or SAR may be granted with
an exercise or strike price lower than 100% of the Fair Market
Value of the Common Stock subject to the Stock Award if such Stock
Award is granted pursuant to an assumption of or substitution for
another option or stock appreciation right pursuant to a Corporate
Transaction and in a manner consistent with the provisions of
Section 409A of the Code and, if applicable, Section 424(a) of the
Code. Each SAR will be denominated in shares of Common Stock
equivalents.
(c) Purchase Price for Options. The purchase
price of Common Stock acquired pursuant to the exercise of an
Option may be paid, to the extent permitted by applicable law and
as determined by the Board in its sole discretion, by any
combination of the methods of payment set forth below. The Board
will have the authority to grant Options that do not permit all of
the following methods of payment (or otherwise restrict the ability
to use certain methods) and to grant Options that require the
consent of the Company to use a particular method of payment. The
permitted methods of payment are as follows:
(i) by cash, check, bank draft,
electronic funds transfer or money order payable to the
Company;
(ii) subject to Company and/or Board
consent at the time of exercise and provided that at the time of
exercise the Common Stock is publicly traded, pursuant to a program
developed under Regulation T as promulgated by the Federal Reserve
Board that, prior to the issuance of Common Stock, results in
either the receipt of cash (or check) by the Company or the receipt
of irrevocable instructions to pay the aggregate exercise price to
the Company from the sales proceeds. This manner of payment is also
known as a “broker-assisted exercise”, “same day
sale”, or “sell to cover”;
(iii) subject to Company and/or Board
consent at the time of exercise and provided that at the time of
exercise the Common Stock is publicly traded, by delivery to the
Company (either by actual delivery or attestation) of already-owned
shares of Common Stock that are owned free and clear of any liens,
claims, encumbrances or security interests, and that are valued at
Fair Market Value on the date of exercise. “Delivery”
for these purposes, in the sole discretion of the Company and/or
the Board, at the time Participant exercises their Option, will
include delivery to the Company of Participant’s attestation
of ownership of such shares of Common Stock in a form approved by
the Company. Participant may not exercise their option by delivery
to the Company of Common Stock if doing so would violate the
provisions of any law, regulation or agreement restricting the
redemption of the Company’s stock;
(iv) subject to Company and/or Board consent at the
time of exercise, and provided that the Option is a NSO, by a
“net exercise” arrangement pursuant to which the
Company will reduce the number of shares of Common Stock issued
upon exercise of the Option by the largest whole number of shares
with a Fair Market Value that does not exceed the aggregate
exercise price plus, to the extent permitted by the Company
and/or Board at the time of exercise, the aggregate withholding
obligations in respect of the Option exercise; provided,
further that Participant must pay any remaining balance of the
aggregate exercise price not satisfied by the “net
exercise” in cash or other permitted form of payment. Shares
of Common Stock will no longer be subject to the Option and will
not be exercisable thereafter to the extent that (A) shares
issuable upon exercise are used to pay the exercise price pursuant
to the “net exercise,” (B) shares are delivered to the
Participant as a result of such exercise, and (C) shares are
withheld to satisfy tax withholding
obligations;
(v) according to a deferred payment or
similar arrangement with the Optionholder; provided, however, that interest will
compound at least annually and will be charged at the minimum rate
of interest necessary to avoid (A) the imputation of interest
income to the Company and compensation income to the Optionholder
under any applicable provisions of the Code, and (B) the
classification of the Option as a liability for financial
accounting purposes; or
(vi) in any other form of legal
consideration that may be acceptable to the Board.
(d) Exercise and Payment of a SAR. To
exercise any outstanding SAR, the Participant must provide written
notice of exercise to the Company in compliance with the provisions
of the SAR Agreement evidencing such SAR. The appreciation
distribution payable on the exercise of a SAR will be not greater
than an amount equal to the excess of (A) the aggregate Fair Market
Value (on the date of the exercise of the SAR) of a number of
shares of Common Stock equal to the number of Common Stock
equivalents in which the Participant is vested under such SAR, and
with respect to which the Participant is exercising the SAR on such
date, over (B) the aggregate strike price of the number of Common
Stock equivalents with respect to which the Participant is
exercising the SAR on such date. The appreciation distribution may
be paid in Common Stock, in cash, in any combination of the two or
in any other form of consideration, as determined by the Board and
contained in the Stock Award Agreement evidencing such
SAR.
(e) Transferability of Options and SARs. The
Board may, in its sole discretion, impose such limitations on the
transferability of Options and SARs as the Board will determine. In
the absence of such a determination by the Board to the contrary,
the following restrictions on the transferability of Options and
SARs will apply:
(i) Restrictions on Transfer. An Option or
SAR will not be transferable except by will or by the laws of
descent and distribution (or pursuant to subsections (ii) and (iii)
below), and will be exercisable during the lifetime of the
Participant only by the Participant. The Board may permit transfer
of the Option or SAR in a manner that is not prohibited by
applicable tax and securities laws. Except as explicitly provided
in the Plan, neither an Option nor a SAR may be transferred for
consideration.
(ii) Domestic Relations Orders. Subject to
the approval of the Board or a duly authorized Officer, an Option
or SAR may be transferred pursuant to the terms of a domestic
relations order, official marital settlement agreement or other
divorce or separation instrument as permitted by Treasury
Regulation 1.421-1(b)(2). If an Option is an ISO, such Option may
be deemed to be a NSO as a result of such transfer.
(iii) Beneficiary Designation. Subject to the
approval of the Board or a duly authorized Officer, a Participant
may, by delivering written notice to the Company, in a form
approved by the Company (or the designated broker), designate a
third party who, upon the death of the Participant, will thereafter
be entitled to exercise the Option or SAR and receive the Common
Stock or other consideration resulting from such exercise. In the
absence of such a designation, upon the death of the Participant,
the executor or administrator of the Participant’s estate
will be entitled to exercise the Option or SAR and receive the
Common Stock or other consideration resulting from such exercise.
However, the Company may prohibit designation of a beneficiary at
any time, including due to any conclusion by the Company that such
designation would be inconsistent with the provisions of applicable
laws.
(f) Vesting Generally. The total number of
shares of Common Stock subject to an Option or SAR may vest and
therefore become exercisable in periodic installments that may or
may not be equal. The Option or SAR may be subject to such other
terms and conditions on the time or times when it may or may not be
exercised (which may be based on the satisfaction of performance
goals or other criteria) as the Board may deem appropriate. The
vesting provisions of individual Options or SARs may vary. The
provisions of this Section 5(f) are subject to any Option or SAR
provisions governing the minimum number of shares of Common Stock
as to which an Option or SAR may be exercised.
(g) Termination of Continuous
Service. Except as
otherwise provided in the applicable Stock Award Agreement or other
agreement between the Participant and the Company, if a
Participant’s Continuous Service terminates (other than for
Cause and other than upon the Participant’s death or
Disability), the Participant may exercise his or her Option or SAR
(to the extent that the Participant was entitled to exercise such
Stock Award as of the date of termination of Continuous Service)
within the period of time ending on the earlier of (i) the date
three months following the termination of the Participant’s
Continuous Service (or such longer or shorter period specified in
the applicable Stock Award Agreement, which period will not be less
than 30 days if necessary to comply with applicable laws unless
such termination is for Cause) and (ii) the expiration of the term
of the Option or SAR as set forth in the Stock Award Agreement. If,
after termination of Continuous Service, the Participant does not
exercise his or her Option or SAR (as applicable) within the
applicable time frame, the Option or SAR will
terminate.
(h) Extension of Termination
Date. If the exercise of
an Option or SAR following the termination of the
Participant’s Continuous Service (other than for Cause and
other than upon the Participant’s death or Disability) would
be prohibited at any time solely because the issuance of shares of
Common Stock would violate the registration requirements under the
Securities Act, then the Option or SAR will terminate on the
earlier of (i) the expiration of a total period of time (that need
not be consecutive) equal to the applicable post-termination
exercise period after the termination of the Participant’s
Continuous Service during which the exercise of the Option or SAR
would not be in violation of such registration requirements, and
(ii) the expiration of the term of the Option or SAR as set forth
in the applicable Stock Award Agreement. In addition, unless otherwise provided in a
Participant’s Stock Award Agreement, if the sale of any
Common Stock received upon exercise of an Option or SAR following
the termination of the Participant’s Continuous Service
(other than for Cause) would violate the Company’s insider
trading policy, then the Option or SAR will terminate on the
earlier of (i) the expiration of the period of time (that need not
be consecutive) equal to the applicable post-termination exercise
period after the termination of the Participant’s Continuous
Service during which the sale of the Common Stock received upon
exercise of the Option or SAR would not be in violation of the
Company’s insider trading policy, and (ii) the expiration of
the term of the Option or SAR as set forth in the applicable Stock
Award Agreement.
(i) Disability of Participant. Except as
otherwise provided in the applicable Stock Award Agreement or other
agreement between the Participant and the Company, if a
Participant’s Continuous Service terminates as a result of
the Participant’s Disability, the Participant may exercise
his or her Option or SAR (to the extent that the Participant was
entitled to exercise such Option or SAR as of the date of
termination of Continuous Service), but only within such period of
time ending on the earlier of (i) the date 12 months following such
termination of Continuous Service (or such longer or shorter period
specified in the Stock Award Agreement, which period will not be
less than six months if necessary to comply with applicable laws
unless such termination is for Cause), and (ii) the expiration of
the term of the Option or SAR as set forth in the Stock Award
Agreement. If, after termination of Continuous Service, the
Participant does not exercise his or her Option or SAR within the
applicable time frame, the Option or SAR (as applicable) will
terminate.
(j) Death
of Participant. Except as otherwise provided in the
applicable Stock Award Agreement or other agreement between the
Participant and the Company, if (i) a Participant’s
Continuous Service terminates as a result of the
Participant’s death, or (ii) the Participant dies within the
period (if any) specified in the Stock Award Agreement for
exercisability after the termination of the Participant’s
Continuous Service (for a reason other than death), then the Option
or SAR may be exercised (to the extent the Participant was entitled
to exercise such Option or SAR as of the date of death) by the
Participant’s estate, by a person who acquired the right to
exercise the Option or SAR by bequest or inheritance or by a person
designated to exercise the Option or SAR upon the
Participant’s death, but only within the period ending on the
earlier of (i) the date 18 months following the date of death
(or such longer or shorter period specified in the Stock Award
Agreement, which period will not be less than six months if
necessary to comply with applicable laws unless such termination is
for Cause), and (ii) the expiration of the term of such Option or
SAR as set forth in the Stock Award Agreement. If, after the
Participant’s death, the Option or SAR is not exercised
within the applicable time frame, the Option or SAR (as applicable)
will terminate.
(k) Termination for
Cause. Except as explicitly
provided otherwise in a Participant’s Stock Award Agreement
or other individual written agreement between the Company or any
Affiliate and the Participant, if a Participant’s Continuous
Service is terminated for Cause, the Option or SAR will terminate
immediately upon such Participant’s termination of Continuous
Service, and the Participant will be prohibited from exercising his
or her Option or SAR (whether vested or unvested) from and after
the date of such termination of Continuous
Service.
(l) Non-Exempt Employees. If an Option or
SAR is granted to an Employee who is a non-exempt employee for
purposes of the Fair Labor Standards Act of 1938, as amended, the
Option or SAR will not be first exercisable for any shares of
Common Stock until at least six months following the date of grant
of the Option or SAR (although the Stock Award may vest prior to
such date). Consistent with the provisions of the Worker Economic
Opportunity Act, (i) if such non-exempt Employee dies or suffers a
Disability, (ii) upon a Corporate Transaction in which such Option
or SAR is not assumed, continued, or substituted, (iii) upon a
Change in Control, or (iv) upon the Participant’s retirement
(as such term may be defined in the Participant’s Stock Award
Agreement, in another agreement between the Participant and the
Company, or, if no such definition, in accordance with the
Company's then current employment policies and guidelines), the
vested portion of any Options and SARs may be exercised earlier
than six months following the date of grant. The foregoing
provision is intended to operate so that any income derived by a
non-exempt employee in connection with the exercise or vesting of
an Option or SAR will be exempt from his or her regular rate of
pay. To the extent permitted and/or required for compliance with
the Worker Economic Opportunity Act to ensure that any income
derived by a non-exempt employee in connection with the exercise,
vesting or issuance of any shares under any other Stock Award will
be exempt from the employee’s regular rate of pay, the
provisions of this Section 5(l) will apply to all Stock Awards and
are hereby incorporated by reference into such Stock Award
Agreements.
(m) Early
Exercise of Options. An Option may, but need not, include a
provision whereby the Optionholder may elect at any time before the
Optionholder’s Continuous Service terminates to exercise the
Option as to any part or all of the shares of Common Stock subject
to the Option prior to the full vesting of the Option. Subject to
the “Repurchase Limitation” in Section 8(l), any
unvested shares of Common Stock so purchased may be subject to a
repurchase right in favor of the Company or to any other
restriction the Board determines to be appropriate. Provided that
the “Repurchase Limitation” in Section 8(l) is not
violated, the Company will not be required to exercise its
repurchase right until at least six months (or such longer or
shorter period of time required to avoid classification of the
Option as a liability for financial accounting purposes) have
elapsed following exercise of the Option unless the Board otherwise
specifically provides in the Option Agreement.
(n) Right
of Repurchase. Subject to the “Repurchase
Limitation” in Section 8(l), the Option or SAR may include a
provision whereby the Company may elect to repurchase all or any
part of the vested shares of Common Stock acquired by the
Participant pursuant to the exercise of the Option or
SAR.
(o) Right
of First Refusal. The Option or SAR may include a provision
whereby the Company may elect to exercise a right of first refusal
following receipt of notice from the Participant of the intent to
transfer all or any part of the shares of Common Stock received
upon the exercise of the Option or SAR. Such right of first refusal
will be subject to the “Repurchase Limitation” in
Section 8(l). Except as expressly provided in this Section 5(o) or
in the Stock Award Agreement, such right of first refusal will
otherwise comply with any applicable provisions of the bylaws of
the Company.
6. Provisions of Stock Awards Other than Options
and SARs.
(a) Restricted Stock Awards. Each Restricted
Stock Award Agreement will be in such form and will contain such
terms and conditions as the Board will deem appropriate.
To the extent consistent with the
Company’s bylaws, at the Board’s election,
shares of Common Stock underlying a Restricted Stock Award may be
(i) held in book entry form subject to the Company’s
instructions until any restrictions relating to the Restricted
Stock Award lapse; or (ii) evidenced by a certificate, which
certificate will be held in such form and manner as determined by
the Board. The terms and conditions of Restricted Stock Award
Agreements may change from time to time, and the terms and
conditions of separate Restricted Stock Award Agreements need not
be identical. Each Restricted Stock Award Agreement will conform to
(through incorporation of the provisions hereof by reference in the
agreement or otherwise) the substance of each of the following
provisions:
(i) Consideration. A Restricted Stock Award
may be awarded in consideration for (A) cash, check, bank draft or
money order payable to the Company, (B) past services to the
Company or an Affiliate, or (C) any other form of legal
consideration (including future
services) that may be acceptable to the Board, in its sole
discretion, and permissible under applicable law.
(ii) Vesting. Subject to the
“Repurchase Limitation” in Section 8(l), shares of
Common Stock awarded under the Restricted Stock Award Agreement may
be subject to forfeiture to the Company in accordance with a
vesting schedule to be determined by the Board.
(iii) Termination of Participant’s Continuous
Service. If a Participant’s Continuous Service
terminates, the Company may receive through a forfeiture condition
or a repurchase right, any or all of the shares of Common Stock
held by the Participant that have not vested as of the date of
termination of Continuous Service under the terms of the Restricted
Stock Award Agreement.
(iv) Transferability. Rights to acquire
shares of Common Stock under the Restricted Stock Award Agreement
will be transferable by the Participant only upon such terms and
conditions as are set forth in the Restricted Stock Award
Agreement, as the Board will determine in its sole discretion, so
long as Common Stock awarded under the Restricted Stock Award
Agreement remains subject to the terms of the Restricted Stock
Award Agreement.
(v) Dividends. A Restricted Stock Award Agreement
may provide that any dividends paid on Restricted Stock will be
subject to the same vesting and forfeiture restrictions as apply to
the shares subject to the Restricted Stock Award to which they
relate.
(b) Restricted Stock Unit
Awards. Each RSU Award Agreement will be in such form and
will contain such terms and conditions as the Board will deem
appropriate. The terms and conditions of RSU Award Agreements may
change from time to time, and the terms and conditions of separate
RSU Award Agreements need not be identical. Each RSU Award
Agreement will conform to (through incorporation of the provisions
hereof by reference in the Agreement or otherwise) the substance of
each of the following provisions:
(i) Consideration.
At the time of grant of a RSU Award, the Board will determine the
consideration, if any, to be paid by the Participant upon delivery
of each share of Common Stock subject to the RSU Award. The
consideration to be paid (if any) by the Participant for each share
of Common Stock subject to a RSU Award may be paid in any form of
legal consideration that may be acceptable to the Board, in its
sole discretion, and permissible under applicable
law.
(ii) Vesting. At the time of the grant of a RSU Award, the Board
may impose such restrictions on or conditions to the vesting of the
RSU Award as it, in its sole discretion, deems
appropriate.
(iii) Payment. A RSU Award may be settled by the delivery of
shares of Common Stock, their cash equivalent, any combination
thereof or in any other form of consideration, as determined by the
Board and contained in the RSU Award Agreement.
(iv) Additional
Restrictions. At
the time of the grant of a RSU Award, the Board, as it deems
appropriate, may impose such restrictions or conditions that delay
the delivery of the shares of Common Stock (or their cash
equivalent) subject to a RSU Award to a time after the vesting of
such RSU Award.
(v) Dividend
Equivalents. Dividend equivalents may be credited in respect of
shares of Common Stock covered by a RSU Award, as determined by the
Board and contained in the RSU Award Agreement. At the sole
discretion of the Board, such dividend equivalents may be converted
into additional shares of Common Stock covered by the RSU Award in
such manner as determined by the Board. Any additional shares
covered by the RSU Award credited by reason of such dividend
equivalents will be subject to all of the same terms and conditions
of the underlying RSU Award Agreement to which they
relate.
(vi) Termination of
Participant’s Continuous Service. Except as otherwise provided in the applicable RSU
Award Agreement, such portion of the RSU Award that has not vested
will be forfeited upon the Participant’s termination of
Continuous Service.
(vii) Compliance with Section 409A of the
Code. Notwithstanding anything to the contrary set forth
herein, any RSU Award granted under the Plan that is not exempt
from the requirements of Section 409A of the Code will contain such
provisions so that such RSU Award will comply with the requirements
of Section 409A of the Code. Such restrictions, if any, will be
determined by the Board and contained in the RSU Award Agreement
evidencing such RSU Award. For example, such restrictions may
include, without limitation, a requirement that any Common Stock
that is to be issued in a year following the year in which the RSU
Award vests must be issued in accordance with a fixed
pre-determined schedule.
(c) Other Stock
Awards. Other forms of
Stock Awards valued in whole or in part by reference to, or
otherwise based on, Common Stock, including the appreciation in
value thereof (e.g., options or stock rights with an exercise price
or strike price less than 100% of the Fair Market Value of the
Common Stock at the time of grant) may be granted either alone or
in addition to Stock Awards provided for under Section 5 and the
preceding provisions of this Section 6. Subject
to the provisions of the Plan, the Board will have sole and
complete authority to determine the persons to whom and the time or
times at which such Other Stock Awards will be granted, the number
of shares of Common Stock (or the cash equivalent thereof) to be
granted pursuant to such Other Stock Awards and all other terms and
conditions of such Other Stock Awards.
7. Covenants of the Company.
(a) Availability of Shares. The Company will
keep available at all times the number of shares of Common Stock
reasonably required to satisfy then-outstanding Stock
Awards.
(b) Securities Law Compliance. The Company
will seek to obtain from each regulatory commission or agency
having jurisdiction over the Plan such authority as may be required
to grant Stock Awards and to issue and sell shares of Common Stock
upon exercise of the Stock Awards; provided, however, that this
undertaking will not require the Company to register under the
Securities Act the Plan, any Stock Award or any Common Stock issued
or issuable pursuant to any such Stock Award. If, after reasonable
efforts and at a reasonable cost, the Company is unable to obtain
from any such regulatory commission or agency the authority that
counsel for the Company deems necessary for the lawful issuance and
sale of Common Stock under the Plan, the Company will be relieved
from any liability for failure to issue and sell Common Stock upon
exercise of such Stock Awards unless and until such authority is
obtained. A Participant will not be eligible for the grant of a
Stock Award or the subsequent issuance of cash or Common Stock
pursuant to the Stock Award if such grant or issuance would be in
violation of any applicable securities law.
(c) No
Obligation to Notify or Minimize Taxes. The Company will have no duty or
obligation to any Participant to advise such holder as to the time
or manner of exercising such Stock Award. Furthermore, the Company
will have no duty or obligation to warn or otherwise advise such
holder of a pending termination or expiration of a Stock Award or a
possible period in which the Stock Award may not be exercised. The
Company has no duty or obligation to minimize the tax consequences
of a Stock Award to the holder of such Stock Award.
8. Miscellaneous.
(a) Use
of Proceeds from Sales of Common Stock. Proceeds from the sale of shares
of Common Stock pursuant to Stock Awards will constitute general
funds of the Company.
(b) Corporate Action Constituting Grant of Stock
Awards. Corporate action constituting a grant by the Company
of a Stock Award to any Participant will be deemed completed as of
the date of such corporate action, unless otherwise determined by
the Board, regardless of when the instrument, certificate, or
letter evidencing the Stock Award is communicated to, or actually
received or accepted by, the Participant. In the event that the
corporate records (e.g., Board consents, resolutions or minutes)
documenting the corporate action constituting the grant contain
terms (e.g., exercise price, vesting schedule or number of shares)
that are inconsistent with those in the Stock Award Agreement or
related grant documents as a result of a clerical error in the
papering of the Stock Award Agreement or related grant documents,
the corporate records will control and the Participant will have no
legally binding right to the incorrect term in the Stock Award
Agreement or related grant documents.
(c) Stockholder Rights. No Participant will
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 a
Stock Award unless and until (i) such Participant has satisfied all
requirements for exercise of, or the issuance of shares of Common
Stock under, the Stock Award pursuant to its terms, and (ii) the
issuance of the Common Stock subject to the Stock Award has been
entered into the books and records of the Company.
(d) No
Employment or Other Service Rights. Nothing in the Plan, any Stock Award Agreement or
any other instrument executed thereunder or in connection with
any Stock Award granted
pursuant thereto will confer upon any Participant any right
to continue to serve the Company or an Affiliate in the capacity in
effect at the time the Stock Award was granted or will affect the
right of the Company or an Affiliate to terminate (i) the
employment of an Employee with or without notice and with or
without cause, (ii) the service of a Consultant pursuant to the
terms of such Consultant’s agreement with the Company or an
Affiliate, or (iii) the service of a Director pursuant to the
bylaws of the Company or an Affiliate, and any applicable
provisions of the corporate law of the state in which the Company
or the Affiliate is incorporated, as the case may be.
(e) Change in Time Commitment. In the event
a Participant’s regular level of time commitment in the
performance of his or her services for the Company and any
Affiliates is reduced (for example, and without limitation, if the
Participant is an Employee of the Company and the Employee has a
change in status from a full-time Employee to a part-time Employee
or takes an extended leave of absence) after the date of grant of
any Stock Award to the Participant, the Board has the right in its
sole discretion to (x) make a corresponding reduction in the number
of shares subject to any portion of such Stock Award that is
scheduled to vest or become payable after the date of such change
in time commitment, and (y) in lieu of or in combination with such
a reduction, extend the vesting or payment schedule applicable to
such Stock Award. In the event of any such reduction, the
Participant will have no right with respect to any portion of the
Stock Award that is so reduced or extended.
(f) Incentive Stock Option Limitations. To
the extent that the aggregate Fair Market Value (determined at the
time of grant) of Common Stock with respect to which ISOs are
exercisable for the first time by any Optionholder during any
calendar year (under all plans of the Company and any Affiliates)
exceeds $100,000 (or such other limit established in the Code) or
otherwise does not comply with the rules governing ISOs, the
Options or portions thereof that exceed such limit (according to
the order in which they were granted) or otherwise do not comply
with such rules will be treated as Nonstatutory Stock Options,
notwithstanding any contrary provision of the applicable Option
Agreement(s).
(g) Investment Assurances. The Company may
require a Participant, as a condition of exercising or acquiring
Common Stock under any Stock Award, (i) to give written assurances
satisfactory to the Company as to the Participant’s knowledge
and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who
is knowledgeable and experienced in financial and business matters
and that the Participant is capable of evaluating, alone or
together with the purchaser representative, the merits and risks of
exercising the Stock Award; and (ii) to give written assurances
satisfactory to the Company stating that the Participant is
acquiring Common Stock subject to the Stock Award for the
Participant’s own account and not with any present intention
of selling or otherwise distributing the Common Stock. The
foregoing requirements, and any assurances given pursuant to such
requirements, will be inoperative if (A) the issuance of the shares
upon the exercise or acquisition of Common Stock under the Stock
Award has been registered under a then currently effective
registration statement under the Securities Act, or (B) as to any
particular requirement, a determination is made by counsel for the
Company that such requirement need not be met in the circumstances
under the then applicable securities laws. The Company may, upon
advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary
or appropriate in order to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer of
the Common Stock.
(h) Withholding Obligations. Unless
prohibited by the terms of a Stock
Award Agreement, the Company may, in its sole discretion, satisfy
any federal, state or local tax withholding obligation relating to
a Stock Award by any of the
following means or by a combination of such means: (i) causing the
Participant to tender a cash payment; (ii) withholding shares of
Common Stock from the shares of Common Stock issued or otherwise
issuable to the Participant in connection with the Stock
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 such lesser amount as may
be necessary to avoid classification of the Stock Award as a
liability for financial accounting purposes); (iii) withholding
cash from a Stock Award settled in cash; (iv) withholding payment
from any amounts otherwise payable to the Participant; or (v) by
such other method as may be set forth in the Stock Award
Agreement.
(i) Electronic Delivery. Any reference
herein to a “written” agreement or document will
include any agreement or document delivered electronically or
posted on the Company’s intranet (or other shared electronic
medium controlled by the Company to which the Participant has
access).
(j) Deferrals. To the extent permitted by
applicable law, the Board, in its sole discretion, may determine
that the delivery of Common Stock or the payment of cash, upon the
exercise, vesting or settlement of all or a portion of any Stock
Award may be deferred and may establish programs and procedures for
deferral elections to be made by Participants. Deferrals by
Participants will be made in accordance with Section 409A of the
Code. Consistent with Section 409A of the Code, the Board may
provide for distributions while a Participant is still an employee
or otherwise providing services to the Company. The Board is
authorized to make deferrals of Stock Awards and determine when,
and in what annual percentages, Participants may receive payments,
including lump sum payments, following the Participant’s
termination of Continuous Service, and implement such other terms
and conditions consistent with the provisions of the Plan and in
accordance with applicable law.
(k) Compliance with Section 409A of the
Code. To the
extent that the Board determines that any Stock Award granted
hereunder is subject to Section 409A of the Code, the Stock Award
Agreement evidencing such Stock Award will incorporate the terms
and conditions necessary to avoid the consequences specified in
Section 409A(a)(1) of the Code. To the extent applicable, the Plan
and Stock Award Agreements will be interpreted in accordance with
Section 409A of the Code. Notwithstanding anything to the contrary
in the Plan (and unless the Stock Award Agreement specifically
provides otherwise), if the shares of Common Stock are publicly
traded, and if a Participant holding a Stock Award that constitutes
“deferred compensation” under Section 409A of the Code
is a “specified employee” for purposes of Section 409A
of the Code, no distribution or payment of any amount that is due
because of a “separation from service” (as defined in
Section 409A of the Code without regard to alternative definitions
thereunder) will be issued or paid before the date that is six
months following the date of such Participant’s
“separation from service” (as defined in Section 409A
of the Code without regard to alternative definitions thereunder)
or, if earlier, the date of the Participant’s death, unless
such distribution or payment can be made in a manner that complies
with Section 409A of the Code, and any amounts so deferred will be
paid in a lump sum on the day after such six month period elapses,
with the balance paid thereafter on the original
schedule.
(l) Repurchase Limitation. The terms of any
repurchase right will be specified in the Stock Award Agreement.
The repurchase price for vested shares of Common Stock will be the
Fair Market Value of the shares of Common Stock on the date of
repurchase. The repurchase price for unvested shares of Common
Stock will be the lower of (i) the Fair Market Value of the shares
of Common Stock on the date of repurchase or (ii) their original
purchase price. However, the Company will not exercise its
repurchase right until at least six months (or such longer or
shorter period of time necessary to avoid classification of the
Stock Award as a liability for financial accounting purposes) have
elapsed following delivery of shares of Common Stock subject to the
Stock Award, unless otherwise specifically provided by the
Board.
9. Adjustments upon Changes in Common Stock; Other
Corporate Events.
(a) Capitalization Adjustments. In the event
of a Capitalization Adjustment, the Board will appropriately and
proportionately adjust: (i) the class(es) and maximum number of
securities subject to the Plan pursuant to Section 3(a), (ii) the
class(es) and maximum number of securities that may be issued
pursuant to the exercise of ISOs pursuant to Section 3(c), and
(iii) the class(es) and number of securities and price per share of
stock subject to outstanding Stock Awards. The Board will make such
adjustments, and its determination will be final, binding and
conclusive.
(b) Dissolution or Liquidation. Except as
otherwise provided in the Stock Award Agreement, in the event of a
dissolution or liquidation of the Company, all outstanding Stock
Awards (other than Stock Awards consisting of vested and
outstanding shares of Common Stock not subject to a forfeiture
condition or the Company’s right of repurchase) will
terminate immediately prior to the completion of such dissolution
or liquidation, and the shares of Common Stock subject to the
Company’s repurchase rights or subject to a forfeiture
condition may be repurchased or reacquired by the Company
notwithstanding the fact that the holder of such Stock Award is
providing Continuous Service, provided, however, that the Board may,
in its sole discretion, cause some or all Stock Awards to become
fully vested, exercisable and/or no longer subject to repurchase or
forfeiture (to the extent such Stock Awards have not previously
expired or terminated) before the dissolution or liquidation is
completed but contingent on its completion.
(c) Corporate Transaction. The following provisions will
apply to Stock Awards in the event of a Corporate Transaction
unless otherwise provided in the instrument evidencing the Stock
Award or any other written agreement between the Company or any
Affiliate and the Participant or unless otherwise expressly
provided by the Board at the time of grant of a Stock Award. In the
event of a Corporate Transaction, then, notwithstanding any other
provision of the Plan, the Board may take one or more of the
following actions with respect to Stock Awards, contingent upon the
closing or completion of the Corporate Transaction:
(i) arrange for the surviving corporation
or acquiring corporation (or the surviving or acquiring
corporation’s parent company) to assume or continue the Stock
Award or to substitute a similar stock award for the Stock Award
(including, but not limited to, an award to acquire the same
consideration paid to the stockholders of the Company pursuant to
the Corporate Transaction);
(ii) arrange for the assignment of any
reacquisition or repurchase rights held by the Company in respect
of Common Stock issued pursuant to the Stock Award to the surviving
corporation or acquiring corporation (or the surviving or acquiring
corporation’s parent company);
(iii) accelerate the vesting, in whole or
in part, of the Stock Award (and, if applicable, the time at which
the Stock Award may be exercised) to a date prior to the effective
time of such Corporate Transaction as the Board determines (or, if
the Board does not determine such a date, to the date that is five
days prior to the effective date of the Corporate Transaction),
with such Stock Award terminating if not exercised (if applicable)
at or prior to the effective time of the Corporate Transaction;
provided, however, that the
Board may require Participants to complete and deliver to the
Company a notice of exercise before the effective date of a
Corporate Transaction, which exercise is contingent upon the
effectiveness of such Corporate Transaction;
(iv) arrange for the lapse, in whole or in
part, of any reacquisition or repurchase rights held by the Company
with respect to the Stock Award;
(v) cancel or arrange for the
cancellation of the Stock Award, to the extent not vested or not
exercised prior to the effective time of the Corporate Transaction,
in exchange for such cash consideration (including no
consideration) as the Board, in its sole discretion, may consider
appropriate; and
(vi) make a payment, in such form as may
be determined by the Board equal to the excess, if any, of (A) the
value of the property the Participant would have received upon the
exercise of the Stock Award immediately prior to the effective time
of the Corporate Transaction, over (B) any exercise price payable
by such holder in connection with such exercise. For clarity, this
payment may be zero ($0) if the value of the property is equal to
or less than the exercise price. Payments under this provision may
be delayed to the same extent that payment of consideration to the
holders of the Company’s Common Stock in connection with the
Corporate Transaction is delayed as a result of escrows, earn outs,
holdbacks or any other contingencies.
The
Board need not take the same action or actions with respect to all
Stock Awards or portions thereof or with respect to all
Participants. The Board may take different actions with respect to
the vested and unvested portions of a Stock Award.
(d) Change in Control. A Stock Award may be
subject to additional acceleration of vesting and exercisability
upon or after a Change in Control as may be provided in the Stock
Award Agreement for such Stock Award or as may be provided in any
other written agreement between the Company or any Affiliate and
the Participant, but in the absence of such provision, no such
acceleration will occur.
10. Plan Term; Earlier Termination or Suspension of
the Plan.
(a) Plan
Term. The Board may suspend or terminate the Plan at any
time. Unless terminated sooner by the Board, the Plan will
automatically terminate on the day before the 10th anniversary of
the earlier of (i) the date the Plan is adopted by the Board, or
(ii) the date the Plan is approved by the stockholders of the
Company. No Stock Awards may be granted under the Plan while the
Plan is suspended or after it is terminated.
(b) No
Impairment of Rights. Suspension or termination of the Plan
will not impair rights and obligations under any Stock Award
granted while the Plan is in effect except with the written consent
of the affected Participant or as otherwise permitted in the
Plan.
11. Effective Date of Plan.
This
Plan will become effective on the Effective Date.
12. Choice of Law.
The
laws of the State of Delaware will govern all questions
concerning the construction, validity and interpretation of this
Plan, without regard to that state’s conflict of laws
rules.
13. Definitions. As used in the Plan, the following
definitions will apply to the capitalized terms indicated
below:
(a) “Affiliate”
means, at the time of determination, any “parent” or
“majority-owned subsidiary” of the Company, as such
terms are defined in Rule 405. The Board will have the authority to
determine the time or times at which “parent” or
“majority-owned subsidiary” status is determined within
the foregoing definition.
(b) “Board” means
the Board of Directors of the Company.
(c) “Capitalization
Adjustment” means any change that is made in, or other
events that occur with respect to, the Common Stock subject to the
Plan or subject to any Stock Award after the Effective Date without
the receipt of consideration by the Company through merger,
consolidation, reorganization, recapitalization, reincorporation,
stock dividend, dividend in property other than cash, large
nonrecurring cash dividend, stock split, reverse stock split,
liquidating dividend, combination of shares, exchange of shares,
change in corporate structure, or any similar equity restructuring
transaction, as that term is used in Statement of Financial
Accounting Standards Board Accounting Standards Codification Topic
718 (or any successor thereto). Notwithstanding the foregoing, the
conversion of any convertible securities of the Company will not be
treated as a Capitalization Adjustment.
(d) “Cause” will
have the meaning ascribed to such term in any written agreement
between the Participant and the Company defining such term and, in
the absence of such agreement, such term means, with respect to a
Participant, the occurrence of any of the following events: (i)
such Participant’s commission of any felony or any crime
involving fraud, dishonesty or moral turpitude under the laws of
the United States or any state thereof; (ii) such
Participant’s attempted commission of, or participation in, a
fraud or act of dishonesty against the Company, or any of its
employees or directors; (iii) such Participant’s intentional,
material violation of any contract or agreement between the
Participant and the Company, the Company’s employment
policies, or of any statutory or other duty owed to the Company;
(iv) such Participant’s unauthorized use or disclosure of the
Company’s confidential information or trade secrets; or (v)
such Participant’s gross misconduct. The determination that a
termination of the Participant’s Continuous Service is either
for Cause or without Cause will be made by the Company, in its sole
discretion. Any determination by the Company that the Continuous
Service of a Participant was terminated with or without Cause for
the purposes of outstanding Stock Awards held by such Participant
will have no effect upon any determination of the rights or
obligations of the Company or such Participant for any other
purpose.
(e) “Change in
Control” means the occurrence, in a single transaction
or in a series of related transactions, of any one or more of the
following events:
(i) any Exchange Act Person becomes the
Owner, directly or indirectly, of securities of the Company
representing more than 50% of the combined voting power of the
Company’s then outstanding securities other than by virtue of
a merger, consolidation or similar transaction. Notwithstanding the
foregoing, a Change in Control will not be deemed to occur (A) on
account of the acquisition of securities of the Company directly
from the Company, (B) on account of the acquisition of securities
of the Company by an investor, any affiliate thereof or any other
Exchange Act Person that acquires the Company’s securities in
a transaction or series of related transactions the primary purpose
of which is to obtain financing for the Company through the
issuance of equity securities or (C) solely because the level of
Ownership held by any Exchange Act Person (the “Subject
Person”) exceeds the designated percentage threshold
of the outstanding voting securities as a result of a repurchase or
other acquisition of voting securities by the Company reducing the
number of shares outstanding, provided that if a Change in Control
would occur (but for the operation of this sentence) as a result of
the acquisition of voting securities by the Company, and after such
share acquisition, the Subject Person becomes the Owner of any
additional voting securities that, assuming the repurchase or other
acquisition had not occurred, increases the percentage of the then
outstanding voting securities Owned by the Subject Person over the
designated percentage threshold, then a Change in Control will be
deemed to occur;
(ii) there is consummated a merger,
consolidation or similar transaction involving (directly or
indirectly) the Company and, immediately after the consummation of
such merger, consolidation or similar transaction, the stockholders
of the Company immediately prior thereto do not Own, directly or
indirectly, either (A) outstanding voting securities representing
more than 50% of the combined outstanding voting power of the
surviving Entity in such merger, consolidation or similar
transaction or (B) more than 50% of the combined outstanding voting
power of the parent of the surviving Entity in such merger,
consolidation or similar transaction, in each case in substantially the same proportions
as their Ownership of the outstanding voting securities of the
Company immediately prior to such transaction;
or
(iii) there is consummated a sale, lease,
exclusive license or other disposition of all or substantially all
of the consolidated assets of the Company and its Subsidiaries,
other than a sale, lease, license or other disposition of all or
substantially all of the consolidated assets of the Company and its
Subsidiaries to an Entity, more than 50% of the combined voting
power of the voting securities of which are Owned by stockholders
of the Company in substantially the same proportions as their
Ownership of the outstanding voting securities of the Company
immediately prior to such sale, lease, license or other
disposition.
Notwithstanding
the foregoing definition or any other provision of this Plan, (A)
the term Change in Control will not include a sale of assets,
merger or other transaction effected exclusively for the purpose of
changing the domicile of the Company, (B) the definition of Change
in Control (or any analogous term) in an individual written
agreement between the Company or any Affiliate and the Participant
will supersede the foregoing definition with respect to Stock
Awards subject to such agreement; provided, however, that if no
definition of Change in Control or any analogous term is set forth
in such an individual written agreement, the definition set forth
herein will apply, and (C) if at any time the Company’s
Certificate of Incorporation provides definitions of various
analogous transactions that would be deemed a liquidation event for
the Company, then such definition will apply as if it were the
definition set forth herein except as is otherwise expressly
provided in an individual written agreement between the Company or
any Affiliate and the Participant.
(f) “Code” means
the Internal Revenue Code of 1986, as amended, including any
applicable regulations and guidance thereunder.
(g) “Committee”
means a committee of two or more Directors to whom authority has
been delegated by the Board in accordance with Section
2(c).
(h) “Common Stock”
means the common stock of the Company.
(i) “Company” means
Scientific Industries, Inc., Inc.,
a Delaware corporation.
(j) “Consultant”
means any person, including an advisor, who is (i) engaged by the
Company or an Affiliate to render consulting or advisory services
and is compensated for such services, or (ii) serving as a
member of the board of directors of an Affiliate and is compensated
for such services. However, service
solely as a Director, or payment of a fee for such service, will
not cause a Director to be considered a “Consultant”
for purposes of the Plan.
(k) “Continuous
Service” means that the Participant’s service
with the Company or an Affiliate, whether as an Employee, Director
or Consultant, is not interrupted or terminated. A change in the
capacity in which the Participant renders service to the Company or
an Affiliate as an Employee, Director or Consultant 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 service with the Company or an Affiliate, will
not terminate a Participant’s Continuous Service;
provided, however, that if
the Entity for which a Participant is rendering services ceases to
qualify as an Affiliate, as determined by the Board in its sole
discretion, such Participant’s Continuous Service will be
considered to have terminated on the date such Entity ceases to
qualify as an Affiliate. For example, a change in status from an
Employee of the Company to a Consultant of an Affiliate or to a
Director will not constitute an interruption of Continuous Service.
To the extent permitted by law, the Board or the chief executive
officer of the Company, in that party’s sole discretion, may
determine whether Continuous Service will be considered interrupted
in the case of (i) any leave of absence approved by the Board or
chief executive officer, including sick leave, military leave or
any other personal leave, or (ii) transfers between the Company, an
Affiliate, or their successors. Notwithstanding the foregoing, a
leave of absence will be treated as Continuous Service for purposes
of vesting in a Stock Award only to such extent as may be provided
in the Company’s leave of absence policy, in the written
terms of any leave of absence agreement or policy applicable to the
Participant, or as otherwise required by law.
(l) “Corporate
Transaction” means the consummation, in a single
transaction or in a series of related transactions, of any one or
more of the following events:
(i) a sale or other disposition of all or
substantially all, as determined by the Board in its sole
discretion, of the consolidated assets of the Company and its
Subsidiaries;
(ii) a sale or other disposition of more
than 50% of the
outstanding securities of the Company;
(iii) a merger, consolidation or similar
transaction following which the Company is not the surviving
corporation; or
(iv) a merger, consolidation or similar
transaction following which the Company is the surviving
corporation but the shares of Common Stock outstanding immediately
preceding the merger, consolidation or similar transaction are
converted or exchanged by virtue of the merger, consolidation or
similar transaction into other property, whether in the form of
securities, cash or otherwise.
(m) “Director”
means a member of the Board.
(n) “Disability”
means, with respect to a Participant, the inability of such
Participant to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment that
can be expected to result in death or that has lasted or can be
expected to last for a continuous period of not less than twelve
(12) months as provided in Sections 22(e)(3) and 409A(a)(2)(c)(i)
of the Code, and will be determined by the Board on the basis of
such medical evidence as the Board deems warranted under the
circumstances.
(o) “Effective
Date” means the effective date of this Plan, which is
the earlier of (i) the date that this Plan is first approved by the
Company’s stockholders, and (ii) the date this Plan is
adopted by the Board.
(p) “Employee”
means any person employed by the Company or an Affiliate. However,
service solely as a Director, or payment of a fee for such
services, will not cause a Director to be considered an
“Employee” for purposes of the
Plan.
(q) “Entity” means
a corporation, partnership, limited liability company or other
entity.
(r) “Exchange Act”
means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
(s) “Exchange Act
Person” means any
natural person, Entity or “group” (within the meaning
of Section 13(d) or 14(d) of the Exchange Act), except that
“Exchange Act Person” will not include (i) the Company
or any Subsidiary of the Company, (ii) any employee benefit plan of
the Company or any Subsidiary of the Company or any trustee or
other fiduciary holding securities under an employee benefit plan
of the Company or any Subsidiary of the Company, (iii) an
underwriter temporarily holding securities pursuant to a registered
public offering of such securities, (iv) an Entity Owned, directly
or indirectly, by the stockholders of the Company in substantially
the same proportions as their Ownership of stock of the Company;
or (v) any natural person, Entity or
“group” (within the meaning of Section 13(d) or 14(d)
of the Exchange Act) that, as of the Effective Date, is the Owner,
directly or indirectly, of securities of the Company representing
more than 50% of the combined voting power of the Company’s
then outstanding securities.
(t) “Fair Market
Value” means, as of any date, unless otherwise
required by any applicable provision of the Code, as of any date,
the closing sales price of a share of the Common Stock on the
applicable date: (i) as reported on the principal national
securities exchange on which it is then traded or (ii) if not
traded on any such national securities exchange, the closing price
of a share of Common Stock as reported by an automated quotation
system sponsored by the National Association of Securities Dealers,
Inc. If the Common Stock is not readily tradable on a national
securities exchange, or any automated quotation system sponsored by
the National Association of Securities Dealers, Inc., its Fair
Market Value shall be set in good faith by the Committee, taking
into account all factors that the Committee deems relevant, and
shall be determined by the reasonable application of a reasonable
valuation method within the meaning of Section 409A of the
Code.
(u) “Good
Reason” will have the
meaning ascribed to such term in any written agreement between the
Participant and the Company defining such term and, in the absence
of such agreement, such term means, with respect to a Participant,
a material and unreasonable diminution of such Participant’s
duties (as determined by the Board in its sole discretion) without
such Participant’s consent; provided, however, that the
following shall not constitute Good Reason: (i) a change of title;
(ii) a reduction in such Participant’s duties by virtue of
the Company undergoing a Change in Control and/or being made part
of a larger entity or group of entities; and/or (iii) cessation of such
Participant’s service, if any, on the Board or a committee
thereof. For such Participant to receive the benefits under the
applicable written agreement between such Participant and the
Company as a result of a voluntary resignation for Good Reason,
unless otherwise provided in such agreement, all of the following
requirements must be satisfied: (A) such Participant must provide
notice to the Company of such Participant’s intent to assert
Good Reason within thirty (30) days of the initial existence of the
condition set forth in the previous sentence; (B) the Company will
have thirty (30) days (the “Company Cure
Period”) from the date of such notice to remedy the
condition and, if it does so, such Participant may withdraw such
Participant’s resignation or such Participant may resign with
no benefits under the applicable written agreement; and (C) any
termination of such Participant’s Continuous Service under
this provision must occur within ten (10) days of the earlier of
expiration of the Company Cure Period or written notice from the
Company that it will not undertake to cure the applicable
condition. Unless otherwise set forth in the applicable written
agreement, should the Company remedy the condition as set forth
above and then such condition arises again, such Participant may
assert Good Reason again subject to all of the conditions set forth
herein. Unless otherwise set forth in the applicable written
agreement, the term “Company” for purposes of
“Good Reason” will be interpreted to include any
Affiliate of the Company to which such Participant provides
services, if appropriate, as determined by the Board in its sole
discretion.
(v) “Incentive Stock
Option” or “ISO” means an
option granted pursuant to Section 5 of the Plan that is intended
to be, and that qualifies as, an “incentive stock
option” within the meaning of Section 422 of the
Code.
(w) “Nonstatutory Stock
Option” or “NSO” means an
option granted pursuant to Section 5 of the Plan that does not
qualify as an ISO.
(x) “Officer” means
any person designated by the Company as an officer.
(y) “Option” means
an ISO or an NSO to purchase shares of Common Stock granted
pursuant to the Plan.
(z) “Option
Agreement” means a written agreement between the
Company and an Optionholder evidencing the terms and conditions of
an Option grant. Each Option Agreement will be subject to the terms
and conditions of the Plan.
(aa) “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.
(bb) “Other Stock
Award” means an award
based in whole or in part by reference to the Common Stock which is
granted pursuant to the terms and conditions of Section
6(c).
(cc) “Other Stock
Award Agreement” means
a written agreement between the
Company and a holder of an
Other Stock Award evidencing the terms and conditions of an Other
Stock Award grant. Each Other Stock Award Agreement will be subject
to the terms and conditions of the Plan.
(dd) “Own,”
“Owned,”
“Owner,”
“Ownership”Aperson
or Entity will be deemed to “Own,” to have
“Owned,” to be the “Owner” of, or to have
acquired “Ownership” of securities if such person or
Entity, directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, has or shares voting
power, which includes the power to vote or to direct the voting,
with respect to such securities.
(ee) “Participant”
means a person to whom a Stock Award is granted pursuant to the
Plan or, if applicable, such other person who holds an outstanding
Stock Award.
(ff) “Plan” means
this 2022 Equity Incentive
Plan.
(gg) “Restricted
Stock Award” means an
award of shares of Common Stock which is granted pursuant to the
terms and conditions of Section 6(a).
(hh) “Restricted
Stock Award Agreement”
means a written agreement between the Company and a holder of a
Restricted Stock Award evidencing the terms and conditions of a
Restricted Stock Award grant. Each Restricted Stock Award Agreement
will be subject to the terms and conditions of the
Plan.
(ii) “Restricted
Stock Unit Award” or
“RSU
Award” means a right to receive shares of Common Stock
which is granted pursuant to the terms and conditions of Section
6(b).
(jj) “Restricted Stock Unit Award
Agreement” or
“RSU
Award Agreement” means a written agreement between
the Company and a holder of a RSU Award evidencing the terms and
conditions of a RSU Award grant. Each RSU Award Agreement will be
subject to the terms and conditions of the Plan.
(kk) “Rule 405”
means Rule 405 promulgated under the Securities Act.
(ll) “Rule 701”
means Rule 701 promulgated under the Securities Act.
(mm) “Securities
Act” means the Securities Act of 1933, as
amended.
(nn) “Stock Appreciation
Right” or “SAR” means a
right to receive the appreciation on Common Stock that is granted
pursuant to the terms and conditions of Section 5.
(oo) “Stock Appreciation Right
Agreement” or “SAR Agreement”
means a written agreement between the Company and a holder of a
Stock Appreciation Right evidencing the terms and conditions of a
Stock Appreciation Right grant. Each Stock Appreciation Right
Agreement will be subject to the terms and conditions of the
Plan.
(pp) “Stock
Award” means any right to
receive Common Stock granted under the Plan, including an ISO, a
Nonstatutory Stock Option, a Restricted Stock Award, a RSU Award, a
Stock Appreciation Right or any Other Stock
Award.
(qq) “Stock Award
Agreement” means a
written agreement between the Company and a Participant evidencing
the terms and conditions of a Stock Award grant. Each Stock Award
Agreement will be subject to the terms and conditions of the
Plan.
(rr) “Subsidiary”
means, with respect to the Company, (i) any corporation of which
more than 50% of the outstanding capital stock having ordinary
voting power to elect a majority of the board of directors of such
corporation (irrespective of whether, at the time, stock of any
other class or classes of such corporation will have or might have
voting power by reason of the happening of any contingency) is at
the time, directly or indirectly, Owned by the Company, and (ii)
any partnership, limited liability company or other entity in which
the Company has a direct or indirect interest (whether in the form
of voting or participation in profits or capital contribution) of
more than 50%.
(ss) “Ten Percent
Stockholder” 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 any Affiliate.