Exhibit 10.10

 

AKOUSTIS TECHNOLOGIES, INC.

 

2015 EQUITY INCENTIVE PLAN

 

1.             Purposes of the Plan. The purposes of this Plan are:

 

·to attract and retain the best available personnel for positions of substantial
responsibility,

 

·to provide incentives to individuals who perform services for the Company, and

 

·to promote the success of the Company’s business.

 

The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock
Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units,
Performance Units, Performance Shares and other stock or cash awards as the
Administrator may determine.

 

2.              Definitions. As used herein, the following definitions will
apply:

 

(a)     “Administrator” means the Board or any of its Committees as will be
administering the Plan, in accordance with Section 4 hereof.

 

(b)     “Affiliate” means any corporation or any other entity (including, but
not limited to, partnerships and joint ventures) controlling, controlled by, or
under common control with the Company.

 

(c)     “Applicable Laws” means the requirements relating to the administration
of equity-based awards under U.S. federal and state corporate laws, U.S. federal
and state securities laws, the Code, any stock exchange or quotation system on
which the Common Stock is listed or quoted and the applicable laws of any
foreign country or jurisdiction where Awards are, or will be, granted under the
Plans.

 

(d)     “Award” means, individually or collectively, a grant under the Plan of
Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units,
Performance Units, Performance Shares and other stock or cash awards as the
Administrator may determine.

 

(e)     “Award Agreement” means the written agreement setting forth the terms
and provisions applicable to each Award granted under the Plan. The Award
Agreement is subject to the terms and conditions of the Plan.

 

(f)     “Board” means the Board of Directors of the Company.

 

(g)     “Change in Control” means the occurrence of any of the following events
after the Effective Date:

 

 

 

 

(i)A change in the ownership of the Company which occurs on the date that any
one person, or more than one person acting as a group (“Person”), acquires
ownership of stock in the Company that, together with the stock already held by
such Person, constitutes more than 50% of the total voting power of the stock of
the Company; provided, however, that for purposes of this subsection (i), the
acquisition of additional stock by any Person who is considered to own more than
50% of the total voting power of the stock of the Company before the acquisition
will not be considered a Change in Control; or

 

(ii)The individuals who constitute the members of the Board cease, by reason of
a financing, merger, combination, acquisition, takeover or other non-ordinary
course transaction affecting the Company, to constitute at least fifty-one
percent (51%) of the members of the Board; or

 

(iii)The consummation of any of the following events: (A) a change in the
ownership of a substantial portion of the Company’s assets, which occurs on the
date that any Person acquires (or has acquired during the twelve (12) month
period ending on the date of the most recent acquisition by such Person) assets
from the Company that have a total gross fair market value equal to or more than
50% of the total gross fair market value of all of the assets of the Company
immediately prior to such acquisition or acquisitions, or (B) a merger,
consolidation or reorganization involving the Company, where either or both of
the events described in clauses (i) or (ii) above would be the result. For
purposes of this subsection (iii), the following will not constitute a change in
the ownership of a substantial portion of the Company’s assets or a Change in
Control: (A) a transfer to an entity that is controlled by the Company’s
stockholders immediately after the transfer, or (B) a transfer of assets by the
Company to: (1) a stockholder of the Company (immediately before the asset
transfer) in exchange for or with respect to the Company’s stock, (2) an entity,
50% or more of the total value or voting power of which is owned, directly or
indirectly, by the Company, (3) a Person that owns, directly or indirectly, 50%
or more of the total value or voting power of all the outstanding stock of the
Company, or (4) an entity, at least 50% of the total equity or voting power of
which is owned, directly or indirectly, by a Person described in subsection
(iii)(B)(3) above. For purposes of this subsection (iii), gross fair market
value means the value of the assets of the Company, or the value of the assets
being disposed of, determined without regard to any liabilities associated with
such assets.

 

For purposes of this Section 2(g), persons will be considered to be acting as a
group if they are owners of a corporation or other entity that enters into a
merger, consolidation, purchase or acquisition of stock, or similar business
transaction with the Company.

 

(h)     “Code” means the Internal Revenue Code of 1986, as amended. Any
reference to a section of the Code herein will be a reference to any successor
or amended section of the Code.

 

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(i)     “Committee” means a committee of Directors or of other individuals
satisfying Applicable Laws appointed by the Board in accordance with Section 4
hereof.

 

(j)     “Common Stock” means the common stock, par value $0.001 per share, of
the Company.

 

(k)     “Company” means Akoustis Technologies, Inc., a Nevada corporation, or
any successor thereto.

 

(l)     “Consultant” means any person, including an advisor, other than an
Employee engaged by the Company or a Parent, Subsidiary or Affiliate to render
services to such entity.

 

(m)     “Determination Date” means the latest possible date that will not
jeopardize the qualification of an Award granted under the Plan as
“performance-based compensation” under Section 162(m) of the Code.

 

(n)     “Director” means a member of the Board.

 

(o)     “Disability” means permanent and total disability as defined in
Section 22(e)(3) of the Code, provided that in the case of Awards other than
Incentive Stock Options, the Administrator in its discretion may determine
whether a permanent and total disability exists in accordance with uniform and
non-discriminatory standards adopted by the Administrator from time to time.

 

(p)     “Effective Date” shall have the meaning set forth in Section 18 hereof.

 

(q)     “Employee” means any person, including Officers and Directors, other
than a Consultant employed by the Company or any Parent, Subsidiary or Affiliate
of the Company. Neither service as a Director nor payment of a director’s fee by
the Company will be sufficient to constitute “employment” by the Company.

 

(r)     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(s)     “Exchange Program” means a program under which (i) outstanding Awards
are surrendered or cancelled in exchange for Awards of the same type (which may
have lower exercise prices and different terms), Awards of a different type,
and/or cash, and/or (ii) the exercise price of an outstanding Award is reduced.
The Administrator will determine the terms and conditions of any Exchange
Program in its sole discretion.

 

(t)     “Fair Market Value” means, as of any date, the value of the Common Stock
as the Administrator may determine in good faith, by reference to the closing
price of such stock on any established stock exchange or on a national market
system on the day of determination, if the Common Stock is so listed on any
established stock exchange or on a national market system. If the Common Stock
is not listed on any established stock exchange or on a national market system,
the value of the Common Stock will be determined as the Administrator may
determine in good faith using (i) a valuation methodology set forth in Treasury
Regulation 1.409A-1(b)(5)(iv)(B) or (ii) with respect to valuations applicable
to Awards that are not subject to Code Section 409A, such other valuation
methods as the Administrator may select.

 

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(u)     “Fiscal Year” means the fiscal year of the Company.

 

(v)     “Incentive Stock Option” means an Option that by its terms qualifies and
is otherwise intended to qualify as an incentive stock option within the meaning
of Section 422 of the Code and the regulations promulgated thereunder.

 

(w)     “Nonstatutory Stock Option” means an Option that by its terms does not
qualify or expressly provides that it is not intended to qualify as an Incentive
Stock Option.

 

(x)     “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.

 

(y)     “Option” means a stock option granted pursuant to Section 6 hereof.

 

(z)     “Parent” means a “parent corporation,” whether now or hereafter
existing, as defined in Section 424(e) of the Code.

 

(aa)     “Participant” means the holder of an outstanding Award.

 

(bb)     “Performance Goals” will have the meaning set forth in Section 11
hereof.

 

(cc)     “Performance Period” means any Fiscal Year of the Company or such other
period as determined by the Administrator in its sole discretion.

 

(dd)     “Performance Share” means an Award denominated in Shares which may be
earned in whole or in part upon attainment of Performance Goals or other vesting
criteria as the Administrator may determine pursuant to Section 10 hereof.

 

(ee)     “Performance Unit” means an Award which may be earned in whole or in
part upon attainment of Performance Goals or other vesting criteria as the
Administrator may determine and which may be settled for cash, Shares or other
securities or a combination of the foregoing pursuant to Section 10 hereof.

 

(ff)     “Period of Restriction” means the period during which transfers of
Shares of Restricted Stock are subject to restrictions and, therefore, the
Shares are subject to a substantial risk of forfeiture. Such restrictions may be
based on the passage of time, the achievement of target levels of performance,
or the occurrence of other events specified in the applicable Award, as
interpreted and construed by the Administrator.

 

(gg)     “Plan” means this 2015 Equity Incentive Plan.

 

(hh)     “Restricted Stock” means Shares issued pursuant to an Award of
Restricted Stock under Section 8 hereof, or issued pursuant to the early
exercise of an Option.

 

(ii)     “Restricted Stock Unit” means a bookkeeping entry representing an
amount equal to the Fair Market Value of one Share, granted pursuant to
Section 9 hereof. Each Restricted Stock Unit represents an unfunded and
unsecured obligation of the Company.

 

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(jj)     “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to
Rule 16b-3, as in effect when discretion is being exercised with respect to the
Plan.

 

(kk)     “Section 16(b)” means Section 16(b) of the Exchange Act.

 

(ll)     “Service Provider” means an Employee, Director, or Consultant.

 

(mm)     “Share” means a share of the Common Stock, as adjusted in accordance
with Section 14 hereof.

 

(nn)     “Stock Appreciation Right” means an Award, granted alone or in
connection with an Option, that pursuant to Section 7 is designated as a Stock
Appreciation Right.

 

(oo)     “Subsidiary” means a “subsidiary corporation,” whether now or hereafter
existing, as defined in Section 424(f) of the Code.

 

3.             Stock Subject to the Plan.

 

(a)     Subject to the provisions of Section 14 hereof, the maximum aggregate
number of Shares that may be awarded and sold under the Plan is One Million Two
Hundred Thousand (1,200,000) Shares. The Shares may be authorized, but unissued,
or reacquired Common Stock.

 

(b)     Lapsed Awards. If an Award expires or becomes unexercisable without
having been exercised in full, or, with respect to Restricted Stock, Restricted
Stock Units, Performance Shares or Performance Units, is forfeited to or
repurchased by the Company, the unpurchased Shares (or for Awards other than
Options and Stock Appreciation Rights, the forfeited or repurchased Shares)
which were subject thereto will become available for future grant or sale under
the Plan (unless the Plan has terminated). Upon exercise of a Stock Appreciation
Right settled in Shares, the gross number of Shares covered by the portion of
the Award so settled will cease to be available under the Plan. Shares that have
actually been issued under the Plan under any Award will not be returned to the
Plan and will not become available for future distribution under the Plan;
provided, however, that if unvested Shares of Restricted Stock, Restricted Stock
Units, Performance Shares or Performance Units are repurchased by the Company or
are forfeited to the Company, such Shares will become available for future grant
under the Plan. Shares subject to an Award that are transferred to or retained
by the Company to pay the tax and/or exercise price of an Award will become
available for future grant or sale under the Plan. To the extent an Award under
the Plan is paid out in cash rather than Shares, such cash payment will not
result in reducing the number of Shares available for issuance under the Plan
and, for the elimination of doubt, the number of Shares of equal value to such
cash payment shall become available for future grant or sale under the Plan.
Notwithstanding the foregoing provisions of this Section 3(b), subject to
adjustment provided in Section 14 hereof, the maximum number of Shares that may
be issued upon the exercise of Incentive Stock Options will equal the aggregate
Share number stated in Section 3(a) above, plus, to the extent allowable under
Section 422 of the Code, any Shares that become available for issuance under the
Plan under this Section 3(b).

 

(c)     Share Reserve. The Company, during the term of this Plan, will at all
times reserve and keep available such number of Shares as will be sufficient to
satisfy the requirements of the Plan.

 

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4.              Administration of the Plan.

 

(a)          Procedure.

 

(i)Multiple Administrative Bodies. Different Committees may be established with
respect to different groups of Service Providers; in that event, the Committee
established with respect to a group of Service Providers shall administer the
Plan with respect to Awards granted to members of such group.

 

(ii)Section 162(m). To the extent that the Administrator determines it to be
desirable to qualify Awards granted hereunder as “performance-based
compensation” within the meaning of Section 162(m) of the Code, and if the
Company is then a “publicly held corporation” as defined therein, the Plan will
be administered by a Committee of two (2) or more “outside directors” within the
meaning of Section 162(m) of the Code.

 

(iii)Rule 16b-3. To the extent desirable to qualify transactions hereunder as
exempt under Rule 16b-3, the transactions contemplated hereunder will be
structured to satisfy the requirements for exemption under Rule 16b-3.

 

(iv)Other Administration. Other than as provided above, the Plan will be
administered by (A) the Board or (B) a Committee, which committee will be
constituted to satisfy Applicable Laws.

 

(b)          Powers of the Administrator. Subject to the provisions of the Plan,
and in the case of a Committee, subject to the specific duties delegated by the
Board to such Committee, the Administrator will have the authority, in its
discretion:

 

(i)to determine Fair Market Value;

 

(ii)to select the Service Providers to whom Awards may be granted hereunder;

 

(iii)to determine the terms and condition, not inconsistent with the terms of
the Plan, of any Award granted hereunder;

 

(iv)to institute an Exchange Program and to determine the terms and conditions,
not inconsistent with the terms of the Plan, for (1) the surrender or
cancellation of outstanding Awards in exchange for Awards of the same type,
Awards of a different type, and/or cash, or (2) the reduction of the exercise
price of outstanding Awards;

 

(v)to construe and interpret the terms of the Plan and Awards granted pursuant
to the Plan;

 

(vi)to prescribe, amend and rescind rules and regulations relating to the Plan,
including rules and regulations relating to sub-plans established for the
purpose of satisfying applicable foreign laws;

 

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(vii)to modify or amend each Award (subject to Section 19(c) hereof);

 

(viii)to authorize any person to execute on behalf of the Company any instrument
required to reflect or implement the grant of an Award previously granted by the
Administrator;

 

(ix)to allow a Participant to defer the receipt of the payment of cash or the
delivery of Shares that would otherwise be due to such Participant under an
Award pursuant to such procedures as the Administrator may determine consistent
with the requirements for compliance with or exemption from the provisions of
Code Section 409A; and

 

(x)to make all other determinations deemed necessary or advisable for
administering the Plan.

 

(c)          Effect of Administrator’s Decision. The Administrator’s decisions,
determinations, and interpretations will be final and binding on all
Participants and any other holders of Awards.

 

5.             Eligibility. Nonstatutory Stock Options, Restricted Stock,
Restricted Stock Units, Stock Appreciation Rights, Performance Units,
Performance Shares, and such other cash or stock awards as the Administrator
determines may be granted to Service Providers. Incentive Stock Options may be
granted only to Employees.

 

6.             Stock Options.

 

(a)          Limitations.

 

(i)Each Option will be designated in the Award Agreement as either an Incentive
Stock Option or a Nonstatutory Stock Option. However, notwithstanding such
designation, to the extent that the aggregate Fair Market Value of the Shares
with respect to which Incentive Stock Options are exercisable for the first time
by the Participant during any calendar year (under all plans of the Company and
any Parent or Subsidiary) exceeds $100,000 (U.S.), such Options will be treated
as Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive
Stock Options will be taken into account in the order in which they were
granted. The Fair Market Value of the Shares will be determined as of the time
the Option with respect to such Shares is granted.

 

(ii)Subject to the limits set forth in Section 3, the Administrator will have
complete discretion to determine the number of Shares subject to an Option
granted to any Participant.

 

(b)          Term of Option. The Administrator will determine the term of each
Option in its sole discretion; provided, however, that the term will be no more
than ten (10) years from the date of grant thereof in the case of Incentive
Stock Options Moreover, in the case of an Incentive Stock Option granted to a
Participant who, at the time the Incentive Stock Option is granted, owns stock
representing more than 10% of the total combined voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Incentive
Stock Option will be five (5) years from the date of grant or such shorter term
as may be provided in the Award Agreement.

 

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(c)           Option Exercise Price and Consideration.

 

(i)Exercise Price. The per share exercise price for the Shares to be issued
pursuant to exercise of an Option will be determined by the Administrator, but
will be no less than 100% of the Fair Market Value per Share on the date of
grant. In addition, in the case of an Incentive Stock Option granted to an
Employee who, at the time the Incentive Stock Option is granted, owns stock
representing more than 10% of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share exercise price will be no
less than 110% of the Fair Market Value per Share on the date of grant.
Notwithstanding the foregoing provisions of this Section 6(c), Options may be
granted with a per Share exercise price of less than 100% of the Fair Market
Value per Share on the date of grant pursuant to the issuance or assumption of
an Option in a transaction to which Section 424(a) of the Code applies in a
manner consistent with said Section 424(a).

 

(ii)Waiting Period and Exercise Dates. At the time an Option is granted, the
Administrator will fix the period within which the Option may be exercised and
will determine any conditions that must be satisfied before the Option may be
exercised.

 

(iii)Form of Consideration. The Administrator will determine the acceptable
form(s) of consideration for exercising an Option, including the method of
payment, to the extent permitted by Applicable Laws including but not limited to
tendering capital stock of the Company owned by a Participant, duly endorsed for
transfer to the Company.

 

(d)          Exercise of Option.

 

(i)Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder
will be exercisable according to the terms of the Plan and at such times and
under such conditions as determined by the Administrator and set forth in the
Award Agreement. An Option may not be exercised for a fraction of a Share.

 

An Option will be deemed exercised when the Company receives: (i) notice of
exercise (in such form as the Administrator specifies from time to time) from
the person entitled to exercise the Option, and (ii) full payment for the Shares
with respect to which the Option is exercised (together with any applicable
withholding taxes). No adjustment will be made for a dividend or other right for
which the record date is prior to the date the Shares are issued, except as
provided in Section 14 hereof.

 

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(ii)Termination of Relationship as a Service Provider. If a Participant ceases
to be a Service Provider, other than upon the Participant’s termination as the
result of the Participant’s death or Disability, the Participant may exercise
his or her Option within such period of time as is specified in the Award
Agreement to the extent that the Option is vested on the date of termination
(but in no event later than the expiration of the term of such Option as set
forth in the Award Agreement). In the absence of a specified time in the Award
Agreement, the Option will remain exercisable for three (3) months following the
Participant’s termination. Unless otherwise provided by the Administrator, if on
the date of termination the Participant is not vested as to his or her entire
Option, the Shares covered by the unvested portion of the Option will revert to
the Plan. If after termination the Participant does not exercise his or her
Option within the time specified by Award Agreement or by operation of this
Section 6(d)(3), the Option will terminate, and the Shares covered by such
Option will revert to the Plan.

 

(iii)Disability of Participant. If a Participant ceases to be a Service Provider
as a result of the Participant’s Disability, the Participant may exercise his or
her Option within such period of time as is specified in the Award Agreement to
the extent the Option is vested on the date of cessation (but in no event later
than the expiration of the term of such Option as set forth in the Award
Agreement). In the absence of a specified time in the Award Agreement, the
Option will remain exercisable for six (6) months following the date the
Participant ceases to be a Service Provider. Unless otherwise provided by the
Administrator, if on the date of cessation the Participant is not vested as to
his or her entire Option, the Shares covered by the unvested portion of the
Option will revert to the Plan. If after cessation the Participant does not
exercise his or her Option within the time specified herein, the Option will
terminate, and the Shares covered by such Option will revert to the Plan.

 

(iv)Death of Participant. If a Participant dies while a Service Provider, the
Option may be exercised within such period of time as is specified in the Award
Agreement to the extent that the Option is vested on the date of death (but in
no event may the option be exercised later than the expiration of the term of
such Option as set forth in the Award Agreement), by the Participant’s
beneficiary, provided such beneficiary has been designated prior to
Participant’s death in a form acceptable to the Administrator. If no such
beneficiary has been designated by the Participant, then such Option may be
exercised by the personal representative of the Participant’s estate or by the
person(s) to whom the Option is transferred pursuant to the Participant’s will
or in accordance with the laws of descent and distribution. In the absence of a
specified time in the Award Agreement, the Option will remain exercisable for
six (6) months following Participant’s death. Unless otherwise provided by the
Administrator, if at the time of death Participant is not vested as to his or
her entire Option, the Shares covered by the unvested portion of the Option will
continue to vest in accordance with the Award Agreement. If the Option is not so
exercised within the time specified herein, the Option will terminate, and the
Shares covered by such Option will revert to the Plan.

 

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7.              Stock Appreciation Rights.

 

(a)        Grant of Stock Appreciation Rights. Subject to the terms and
conditions of the Plan, a Stock Appreciation Right may be granted to Service
Providers at any time and from time to time as will be determined by the
Administrator, in its sole discretion.

 

(b)        Number of Shares. The Administrator will have complete discretion to
determine the number of Stock Appreciation Rights granted to any Participant.

 

(c)         Exercise Price and Other Terms. The Administrator, subject to the
provisions of the Plan, will have complete discretion to determine the terms and
conditions of Stock Appreciation Rights granted under the Plan; provided,
however, that the exercise price will be not less than 100% of the Fair Market
Value of a Share on the date of grant.

 

(d)         Stock Appreciation Rights Agreement. Each Stock Appreciation Right
grant will be evidenced by an Award Agreement that will specify the exercise
price, the number of Shares with respect to which the Award is granted, the term
of the Stock Appreciation Right, the conditions of exercise, and such other
terms and conditions as the Administrator, in its sole discretion, will
determine.

 

(e)        Expiration of Stock Appreciation Rights. A Stock Appreciation Right
granted under the Plan will expire upon the date determined by the
Administrator, in its sole discretion, and set forth in the Award Agreement;
provided, however, that the term will be no more than ten (10) years from the
date of grant thereof. Notwithstanding the foregoing, the rules of Section 6(d)
above also will apply to Stock Appreciation Rights.

 

(f)          Payment of Stock Appreciation Right Amount. Upon exercise of a
Stock Appreciation Right, a Participant will be entitled to receive payment from
the Company in an amount determined by multiplying:

 

(i)The difference between the Fair Market Value of a Share on the date of
exercise over the “stock appreciation right exercise price,” as defined under
Treasury Regulation Section 1.409A-1(b)(i)(B)(2), i.e.,, the Fair Market Value
of a Share on the date of grant of the Stock Appreciation Right; times

 

(ii)The number of Shares with respect to which the Stock Appreciation Right is
exercised.

 

At the discretion of the Administrator, the payment upon Stock Appreciation
Right exercise may be in cash, in Shares of equivalent value, or in some
combination thereof.

 

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8.             Restricted Stock.

 

(a)         Grant of Restricted Stock. Subject to the terms and provisions of
the Plan, the Administrator, at any time and from time to time, may grant Shares
of Restricted Stock to Service Providers in such amounts as the Administrator,
in its sole discretion, will determine.

 

(b)        Restricted Stock Agreement. Each Award of Restricted Stock will be
evidenced by an Award Agreement that will specify the Period of Restriction, the
number of Shares granted, and such other terms and conditions as the
Administrator, in its sole discretion, will determine.

 

(c)         Transferability. Except as provided in this Section 8, Shares of
Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated until such Shares become non-forfeitable at the end of
the applicable Period of Restriction.

 

(d)         Other Restrictions. The Administrator, in its sole discretion, may
impose such other restrictions on Shares of Restricted Stock as it may deem
advisable or appropriate.

 

(e)         Removal of Restrictions. Except as otherwise provided in this
Section 8, Shares of Restricted Stock covered by each Restricted Stock grant
made under the Plan will be released from escrow as soon as practicable after
the last day of the Period of Restriction. The Administrator, in its discretion,
may accelerate the time at which any restrictions will lapse or be removed.

 

(f)          Voting Rights. During the Period of Restriction, Service Providers
holding Shares of Restricted Stock granted hereunder may exercise full voting
rights with respect to those Shares, unless the Administrator determines
otherwise in a manner not prohibited by the Award Agreement.

 

(g)         Dividends and Other Distributions. During the Period of Restriction,
Service Providers holding Shares of Restricted Stock will be entitled to receive
all dividends and other distributions paid with respect to such Shares unless
otherwise provided in the Award Agreement. If any such dividends or
distributions are paid in Shares, the Shares will be subject to the same
restrictions on transferability and provisions for forfeiture as the Shares of
Restricted Stock with respect to which they were paid.

 

(h)         Return of Restricted Stock to Company. On the date set forth in the
Award Agreement, the Restricted Stock for which restrictions have not lapsed
will revert to the Company and again will become available for grant under the
Plan.

 

(i)          Section 162(m) Performance Restrictions. For purposes of qualifying
grants of Restricted Stock as “performance-based compensation” under
Section 162(m) of the Code, the Administrator, in its discretion, may condition
the lapse of restrictions based upon the achievement of Performance Goals. The
Performance Goals will be set by the Administrator on or before the
Determination Date. In granting Restricted Stock which is intended to qualify
under Section 162(m) of the Code, the Administrator will follow any procedures
determined by it from time to time to be necessary or appropriate to ensure
qualification of the Award under Section 162(m) of the Code (e.g., in
determining the Performance Goals).

 

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9.              Restricted Stock Units.

 

(a)         Grant. Restricted Stock Units may be granted at any time and from
time to time as determined by the Administrator. Each Restricted Stock Unit
grant will be evidenced by an Award Agreement that will specify such other terms
and conditions as the Administrator, in its sole discretion, will determine in
accordance with the terms and conditions of the Plan, including all terms,
conditions, and restrictions related to the grant, the number of Restricted
Stock Units and the form of payout, which, subject to Section 9(d) hereof, may
be left to the discretion of the Administrator.

 

(b)         Vesting Criteria and Other Terms. The Administrator will set vesting
criteria in its discretion, which, depending on the extent to which the criteria
are met, will determine the number of Restricted Stock Units that will be paid
out to the Participant. After the grant of Restricted Stock Units, the
Administrator, in its sole discretion, may reduce or waive any restrictions for
such Restricted Stock Units. Each Award of Restricted Stock Units will be
evidenced by an Award Agreement that will specify the vesting criteria, and such
other terms and conditions as the Administrator, in its sole discretion will
determine. The Administrator, in its discretion, may accelerate the time at
which any restrictions will lapse or be removed, subject to the prohibition on
acceleration of the timing of distribution of deferred compensation subject to
Section 409A of the Code, to the extent applicable to the Award.

 

(c)        Earning Restricted Stock Units. Upon meeting the applicable vesting
criteria, the Participant will be entitled to receive a payout as specified in
the Award Agreement.

 

(d)        Form and Timing of Payment. Payment of earned Restricted Stock Units
will be made as soon as practicable after the date(s) set forth in the Award
Agreement, which shall satisfy the requirements of Section 409A of the Code, to
the extent applicable to such Award. The Administrator, in its sole discretion,
may pay earned Restricted Stock Units in cash, Shares, or a combination thereof.
Shares represented by Restricted Stock Units that are fully paid in cash again
will be available for grant under the Plan.

 

(e)         Cancellation. On the date set forth in the Award Agreement, all
unearned Restricted Stock Units will be forfeited to the Company.

 

(f)          Section 162(m) Performance Restrictions. For purposes of qualifying
grants of Restricted Stock Units as “performance-based compensation” under
Section 162(m) of the Code, the Administrator, in its discretion, may set
restrictions based upon the achievement of Performance Goals. The Performance
Goals will be set by the Administrator on or before the Determination Date. In
granting Restricted Stock Units which are intended to qualify under
Section 162(m) of the Code, the Administrator will follow any procedures
determined by it from time to time to be necessary or appropriate to ensure
qualification of the Award under Section 162(m) of the Code (e.g., in
determining the Performance Goals).

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10.            Performance Units and Performance Shares.

 

(a)          Grant of Performance Units/Shares. Performance Units and
Performance Shares may be granted to Service Providers at any time and from time
to time, as will be determined by the Administrator, in its sole discretion. The
Administrator will have complete discretion in determining the number of
Performance Units/Shares granted to each Participant.

 

(b)         Value of Performance Units/Shares. Each Performance Unit will have
an initial value that is established by the Administrator on or before the date
of grant. Each Performance Share will have an initial value equal to the Fair
Market Value of a Share on the date of grant.

 

(c)          Performance Objectives and Other Terms. The Administrator will set
performance objectives or other vesting provisions. The Administrator may set
vesting criteria based upon the achievement of Company-wide, business unit, or
individual goals (including, but not limited to, continued employment), or any
other basis determined by the Administrator in its discretion. Each Award of
Performance Units/Shares will be evidenced by an Award Agreement that will
specify the Performance Period, and such other terms and conditions as the
Administrator, in its sole discretion, will determine.

 

(d)         Earning of Performance Units/Shares. After the applicable
Performance Period has ended, the holder of Performance Units/Shares will be
entitled to receive a payout of the number of Performance Units/Shares earned by
the Participant over the Performance Period, to be determined as a function of
the extent to which the corresponding performance objectives or other vesting
provisions have been achieved. After the grant of a Performance Unit/Share, the
Administrator, in its sole discretion, may reduce or waive any performance
objectives or other vesting provisions for such Performance Unit/Share.

 

(e)         Form and Timing of Payment of Performance Units/Shares. Payment of
earned Performance Units/Shares will be made as soon as practicable after the
expiration of the applicable Performance Period or, if earlier, after the date
on which a Participant’s interest in such Performance Units/Shares is no longer
subject to a substantial risk of forfeiture, provided however, that in no event
shall such payment be made after the later to occur of (i) December 31 of the
year in which such risk of forfeiture lapses or (ii) two and one-half months
after such risk of forfeiture lapses. The Administrator, in its sole discretion,
may pay earned Performance Units/Shares in the form of cash, in Shares (which
have an aggregate Fair Market Value equal to the value of the earned Performance
Units/Shares at the close of the applicable Performance Period) or in a
combination thereof.

 

(f)          Cancellation of Performance Units/Shares. On the date set forth in
the Award Agreement, all unearned or unvested Performance Units/Shares will be
forfeited to the Company, and again will be available for grant under the Plan.

 

(g)         Section 162(m) Performance Restrictions. For purposes of qualifying
grants of Performance Units/Shares as “performance-based compensation” under
Section 162(m) of the Code, the Administrator, in its discretion, may set
restrictions based upon the achievement of Performance Goals. The Performance
Goals will be set by the Administrator on or before the Determination Date. In
granting Performance Units/Shares which are intended to qualify under
Section 162(m) of the Code, the Administrator will follow any procedures
determined by it from time to time to be necessary or appropriate to ensure
qualification of the Award under Section 162(m) of the Code (e.g., in
determining the Performance Goals).

 

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11.            Performance-Based Compensation Under Code Section 162(m).

 

(a)         General. If the Administrator, in its discretion, decides to grant
an Award intended to qualify as “performance-based compensation” under Code
Section 162(m), the provisions of this Section 11 will control over any contrary
provision in the Plan; provided, however, that the Administrator may in its
discretion grant Awards that are not intended to qualify as “performance-based
compensation” under Section 162(m) of the Code to such Participants that are
based on Performance Goals or other specific criteria or goals but that do not
satisfy the requirements of this Section 11.

 

(b)        Performance Goals. The granting and/or vesting of Awards of
Restricted Stock, Restricted Stock Units, Performance Shares and Performance
Units and other incentives under the Plan may be made subject to the attainment
of performance goals relating to one or more business criteria within the
meaning of Code Section 162(m) and may provide for a targeted level or levels of
achievement (“Performance Goals”) including (i) earnings per Share,
(ii) operating cash flow, (iii) operating income, (iv) profit after-tax,
(v) profit before-tax, (vi) return on assets, (vii) return on equity,
(viii) return on sales, (ix) revenue, and (x) total shareholder return. Any
Performance Goals may be used to measure the performance of the Company as a
whole or a business unit of the Company and may be measured relative to a peer
group or index. The Performance Goals may differ from Participant to Participant
and from Award to Award. Prior to the Determination Date, the Administrator will
determine whether any significant element(s) will be included in or excluded
from the calculation of any Performance Goal with respect to any Participant.

 

(c)         Procedures. To the extent necessary to comply with the
performance-based compensation provisions of Code Section 162(m), with respect
to any Award granted subject to Performance Goals, within the first twenty-five
percent (25%) of the Performance Period, but in no event more than ninety (90)
days following the commencement of any Performance Period (or such other time as
may be required or permitted by Code Section 162(m)), the Administrator will, in
writing, (i) designate one or more Participants to whom an Award will be made,
(ii) select the Performance Goals applicable to the Performance Period, (iii)
establish the amounts of such Awards, as applicable, which may be earned for
such Performance Period, and (iv) specify the relationship between Performance
Goals and the amounts of such Awards, as applicable, to be earned by each
Participant for such Performance Period. Following the completion of each
Performance Period but in no event later than December 31 of the year in which
such Performance Period ends or, if later, the date that is two and one-half
months after the end of such Performance Period, the Administrator will certify
in writing whether the applicable Performance Goals have been achieved for such
Performance Period and pay any amount to which a Participant is entitled under
an Award with respect to such Performance Period. In determining the amounts
earned by a Participant, the Administrator will have the right to reduce or
eliminate (but not to increase) the amount payable at a given level of
performance to take into account additional factors that the Administrator may
deem relevant to the assessment of individual or corporate performance for the
Performance Period. A Participant will be eligible to receive payment pursuant
to an Award for a Performance Period only if the Performance Goals for such
period are achieved.

 

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(d)        Additional Limitations. Notwithstanding any other provision of the
Plan, any Award which is granted to a Participant and is intended to constitute
qualified performance based compensation under Code Section 162(m) will be
subject to any additional limitations set forth in the Code (including any
amendment to Section 162(m)) or any regulations and ruling issued thereunder
that are requirements for qualification as qualified performance-based
compensation as described in Section 162(m) of the Code, and the Plan will be
deemed amended to the extent necessary to conform to such requirements.

 

12.           Leaves of Absence. Unless the Administrator provides otherwise,
vesting of Awards granted hereunder will be suspended during any unpaid leave of
absence. A Service Provider will not cease to be an Employee in the case of
(i) any leave of absence approved by the Company, or (ii) transfers between
locations of the Company or between the Company, its Parent, or any Subsidiary.
For purposes of Incentive Stock Options, no such leave may exceed three (3)
months, unless reemployment upon expiration of such leave is guaranteed by
statute or contract. If reemployment upon expiration of a leave of absence
approved by the Company is not so guaranteed, then six (6) months and one day
following the commencement of such leave any Incentive Stock Option held by the
Participant will cease to be treated as an Incentive Stock Option and will be
treated for tax purposes as a Nonstatutory Stock Option.

 

13.           Transferability of Awards. Unless determined otherwise by the
Administrator, an Award may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Participant, only by the Participant. If the Administrator makes an Award
transferable, such Award may only be transferred (i) by will, (ii) by the laws
of descent and distribution, (iii) to a revocable trust, or (iv) as permitted by
Rule 701 of the Securities Act of 1933, as amended.

 

14.        Adjustments; Dissolution or Liquidation; Merger or Change in Control.

 

(a)        Adjustments. In the event that any dividend or other distribution
(whether in the form of cash, Shares, other securities, or other property),
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, or exchange of
Shares or other securities of the Company, or other change in the corporate
structure of the Company affecting the Shares occurs, the Administrator, in
order to prevent diminution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, will adjust the number and class
of Shares that may be delivered under the Plan and/or the number, class, and
price of Shares covered by each outstanding Award, and the numerical Share
limits set forth in Sections 3, 6, 7, 8, 9 and 10 hereof.

 

(b)        Dissolution or Liquidation. In the event of the proposed dissolution
or liquidation of the Company, any corporate separation or division, including,
but not limited to, a split-up, a split-off or a spin-off; a reverse merger in
which the Company is the surviving entity, but the shares of Company stock
outstanding immediately preceding the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or
otherwise; or the transfer of more than fifty percent (50%) of the then
outstanding voting stock of the Company to another person or entity. the
Administrator will notify each Participant as soon as practicable prior to the
effective date of such proposed transaction. The Company, to the extent
permitted by applicable law but otherwise in its sole discretion may provide
for: (i) the continuation Awards by the Company (if the Company is surviving
entity or its parent; (ii) the assumption of the Plan and such outstanding
Awards by the surviving entity or its parent; (iii) the substitution by the
surviving entity or its parent of rights with substantially the same terms for
such outstanding Awards; or (iv) the cancellation of such outstanding Rights
without payment of any consideration provided that in the case of this clause
(iv), the Administrator will provide notice of its intention to cancel Award and
offer a reasonable opportunity to exercise vested Awards.

 

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(c)         Change in Control. In the event of a merger or Change in Control,
each outstanding Award will be treated as the Administrator determines,
including, without limitation, that each Award will be assumed or an equivalent
option or right substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation (the “Successor Corporation”). The
Administrator will not be required to treat all Awards similarly in the
transaction.

 

In the event that the Successor Corporation does not assume or substitute for
the Award, the Participant will fully vest in and have the right to exercise all
of his or her outstanding Options and Stock Appreciation Rights, including
Shares as to which such Awards would not otherwise be vested or exercisable, all
restrictions on Restricted Stock will lapse, and, with respect to Restricted
Stock Units, Performance Shares and Performance Units, all Performance Goals or
other vesting criteria will be deemed achieved at target levels and all other
terms and conditions met. In addition, if an Option or Stock Appreciation Right
is not assumed or substituted for in the event of a Change in Control, the
Administrator will notify the Participant in writing or electronically that the
Option or Stock Appreciation Right will be fully vested and exercisable for a
period of time determined by the Administrator in its sole discretion, and the
Option or Stock Appreciation Right will terminate upon the expiration of such
period.

 

For the purposes of this subsection (c), an Award will be considered assumed if,
following the Change in Control, the Award confers the right to purchase or
receive, for each Share subject to the Award immediately prior to the Change in
Control, the consideration (whether stock, cash, or other securities or
property) or, in the case of a Stock Appreciation Right upon the exercise of
which the Administrator determines to settle in cash or a Performance Share or
Performance Unit which the Administrator can determine to settle in cash, the
fair market value of the consideration received in the merger or Change in
Control by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the Change in Control
is not solely common stock of the Successor Corporation, the Administrator may,
with the consent of the Successor Corporation, provide for the consideration to
be received upon the exercise of an Option or Stock Appreciation Right or upon
the payout of a Performance Share or Performance Unit, for each Share subject to
such Award (or in the case of Performance Units, the number of implied shares
determined by dividing the value of the Performance Units by the per share
consideration received by holders of Common Stock in the Change in Control), to
be solely common stock of the Successor Corporation equal in fair market value
to the per share consideration received by holders of Common Stock in the Change
in Control.

 

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Notwithstanding anything in this Section 14(c) to the contrary, an Award that
vests, is earned or paid-out upon the satisfaction of one or more Performance
Goals will not be considered assumed if the Company or its successor modifies
any of such Performance Goals without the Participant’s consent; provided,
however, a modification to such Performance Goals only to reflect the Successor
Corporation’s post-Change in Control corporate structure will not be deemed to
invalidate an otherwise valid Award assumption.

 

15.            Tax Withholding

 

(a)         Withholding Requirements. Prior to the delivery of any Shares or
cash pursuant to an Award (or exercise thereof), the Company will have the power
and the right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy federal, state, local, foreign or other
taxes (including the Participant’s FICA obligation) required to be withheld with
respect to such Award (or exercise thereof).

 

(b)        Withholding Arrangements. The Administrator, in its sole discretion
and pursuant to such procedures as it may specify from time to time, may permit
a Participant to satisfy such tax withholding obligation, in whole or in part by
(without limitation) (i) paying cash, (ii) electing to have the Company withhold
otherwise deliverable cash or Shares having a Fair Market Value equal to the
minimum amount required to be withheld, (iii) delivering to the Company
already-owned Shares having a Fair Market Value equal to the amount required to
be withheld, or (iv) selling a sufficient number of Shares otherwise deliverable
to the Participant through such means as the Administrator may determine in its
sole discretion (whether through a broker or otherwise) equal to the amount
required to be withheld. The amount of the withholding requirement will be
deemed to include any amount which the Administrator agrees may be withheld at
the time the election is made, not to exceed the amount determined by using the
maximum federal, state or local marginal income tax rates applicable to the
Participant with respect to the Award on the date that the amount of tax to be
withheld is to be determined. The Fair Market Value of the Shares to be withheld
or delivered will be determined as of the date that the taxes are required to be
withheld.

 

16.            No Effect on Employment or Service. Neither the Plan nor any
Award will confer upon a Participant any right with respect to continuing the
Participant’s relationship as a Service Provider with the Company, nor will they
interfere in any way with the Participant’s right or the Company’s right to
terminate such relationship at any time, with or without cause, to the extent
permitted by Applicable Laws.

 

17.           Date of Grant. The date of grant of an Award will be, for all
purposes, the date on which the Administrator makes the determination granting
such Award, or such other later date as is determined by the Administrator.
Notice of the determination will be provided to each Participant within a
reasonable time after the date of such grant.

 

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18.            Term of Plan. Subject to Section 22 hereof, the Plan will become
effective upon its adoption by the Board (the “Effective Date”). It will
continue in effect for a term of ten (10) years unless terminated earlier under
Section 19 hereof; provided, however, that such expiration shall not affect
Awards then outstanding, and the terms and conditions of this Plan shall
continue to apply to such Awards.

 

19.            Amendment and Termination of the Plan.

 

(a)         Amendment and Termination. The Administrator may at any time amend,
alter, suspend or terminate the Plan.

  

(b)         Stockholder Approval. Subject to Section 22, the Company will obtain
stockholder approval of the Plan and any Plan amendment to the extent necessary
or desirable to comply with Applicable Laws.

 

(c)          Effect of Amendment or Termination. No amendment, alteration,
suspension, or termination of the Plan will impair the rights of any
Participant, unless mutually agreed otherwise between the Participant and the
Administrator, which agreement must be in writing and signed by the Participant
and the Company. Termination of the Plan will not affect the Administrator’s
ability to exercise the powers granted to it hereunder with respect to Awards
granted under the Plan prior to the date of such termination.

 

20.            Conditions Upon Issuance of Shares.

 

(a)          Legal Compliance. Shares will not be issued pursuant to the
exercise of an Award unless the exercise of such Award and the issuance and
delivery of such Shares will comply with Applicable Laws and will be further
subject to the approval of counsel for the Company with respect to such
compliance.

 

(b)         Investment Representations. As a condition to the exercise of an
Award, the Company may require the person exercising such Award to represent and
warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation is
required.

 

(c)         Restrictive Legends. All Award Agreements and all securities of the
Company issued pursuant thereto shall bear such legends regarding restrictions
on transfer and such other legends as the appropriate officer of the Company
shall determine to be necessary or advisable to comply with applicable
securities and other laws.

 

21.            Inability to Obtain Authority. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company’s counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, will relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority will not have been obtained.

 

-18-

 

 

22.           Stockholder Approval. The Plan will be subject to approval by the
stockholders of the Company within twelve (12) months after the date the Plan is
adopted by the Board. Such stockholder approval will be obtained in the manner
and to the degree required under Applicable Laws, including without limitation
Section 422 of the Code. In the event that stockholder approval is not obtained
within twelve (12) months after the date the Plan is adopted by the Board, all
Incentive Stock Options granted hereunder shall be void ab initio and of no
effect. Notwithstanding any other provisions of the Plan, no Awards shall be
exercisable until the date of such stockholder approval.

 

23.           Notification of Election Under Section 83(b) of the Code. If any
Service Provider shall, in connection with the acquisition of Shares under the
Plan, make the election permitted under Section 83(b) of the Code, such Service
Provider shall notify the Company of such election within ten (10) days of
filing notice of the election with the Internal Revenue Service and provide the
Company with a copy thereof, in addition to any filing and a notification
required pursuant to regulations issued under the authority of Section 83(b) of
the Code. A Service Provider shall not be permitted to make a Section 83(b)
election with respect to an Award of a Restricted Stock Unit.

 

24.           Notification Upon Disqualifying Disposition Under Section 421(b)
of the Code. Each Service Provider shall notify the Company of any disposition
of Shares issued pursuant to the exercise of an Incentive Stock Option under the
circumstances described in Section 421(b) of the Code (relating to certain
disqualifying dispositions), within ten (10) days of such disposition.

 

25.            409A Timing Rule for Specified Employees. If at the time of a
Service Provider’s separation from service, such individual is considered a
“specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code,
and if any payment that such Service Provider becomes entitled to under the Plan
or any Award is deemed payable on account of such individual’s separation from
service, then no such payment shall be made prior to the date that is the
earlier of (i) six months and one day after the individual’s separation from
service, or (ii) the individual’s death.

 

26.            Governing 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 laws rules, subject to the Company’s
intention that the Plan satisfy the requirements of jurisdictions outside of the
United States of America with respect to Awards subject to such jurisdictions.

 

27.            General Provisions.

 

(a)         No Rights as Stockholder.     Except as specifically provided in
this plan, a Participant or a transferee of an Award shall have no rights as a
stockholder with respect to any shares covered by the Award until the date of
the issuance of such shares to the Participant, 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 Stock is issued.

 

-19-

 

 

(b)         Other Compensation Arrangements.     Nothing contained in this Plan
shall prevent the Board from adopting other or additional compensation
arrangements, subject to stockholder approval is required; and such arrangements
may be either generally applicable or applicable only in specific cases.

 

(c)         Disqualifying Dispositions.     Any participant who shall make a
“disposition” (as defined in Section 424 of the Code) of all or any portion of
an Incentive Stock Option within two (2) years from the date of grant of such
Incentive Stock Option or within (1) year after the issuance of the shares of
Stock acquired upon exercise of such Incentive Stock Option 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 Stock.

 

(d)        Regulatory Matters     Each Stock Option Agreement and Stock Purchase
Agreement shall provide that no shares shall be purchased or sold thereunder
unless and until (i) any then applicable requirements of state or federal laws
and regulatory agencies shall have been fully compiled with to the satisfaction
of the Company and its counsel and (ii) if required to do so by the Company, the
Optionee or Offeree shall have executed and delivered to the Company a letter of
investment intent in such form and containing such provisions as the Board or
Committee may require.

 

(e)        Delivery.     Upon exercise of an Award granted under this Plan, the
Company shall issue Stock or pay any amounts due within a reasonable period of
time thereafter. Subject to any statutory obligations the Company may otherwise
have, for purposes of this Plan, thirty days shall be considered a reasonable
period of time.

 

(f)          Other Provisions.     The Stock Option Agreements and Stock
Purchase Agreements authorized under the Plan may contain such other provisions
not inconsistent with this Plan, including, without limitation, restrictions
upon the exercise of the Rights, as the Administrator may deem advisable.

 

(g)         Section 409A. Awards under the Plan are intended either to be exempt
from the rules of Section 409A of the Code or to satisfy those rules, and the
Plan and such awards shall be construed accordingly. Granted rights may be
modified at any time, in the Administrator’s direction, so as to increase the
likelihood of exemption from or compliance with the rules of Section 409A of the
Code.

 

-20-