|
1)
|
Title
of each class of securities to which transaction
applies:
|
|
____________________________________________________________________________________________
|
|
2)
|
Aggregate
number of securities to which transaction
applies:
|
| ____________________________________________________________________________________________ |
|
3)
|
Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is
calculated and state how it was determined):
|
|
|
____________________________________________________________________________________________ |
|
4)
|
Proposed
maximum aggregate value of transaction:
|
| ____________________________________________________________________________________________ |
|
5)
|
Total
fee paid:
|
| ____________________________________________________________________________________________ |
|
1)
|
Amount
Previously Paid:
|
| ____________________________________________________________________________________________ |
|
2)
|
Form
Schedule or Registration Statement No.:
|
| ____________________________________________________________________________________________ |
|
3)
|
Filing
Party:
|
| ____________________________________________________________________________________________ |
|
4)
|
Date
Filed:
|
| ____________________________________________________________________________________________ |
|
Very
truly yours,
/s/
Christopher J. Reed
Christopher
J. Reed
President
and Chief Executive Officer
Reed’s,
Inc.
|
|
1.
|
To
elect to our Board of Directors five directors, to serve until our
next
Annual Meeting of Stockholders or until their successors are elected
and
qualified, subject to their prior death, resignation or
removal.
|
|
2.
|
To
consider and vote upon an amendment to our certificate of incorporation
to
increase the authorized number of shares of common stock from 11,500,000
shares to 19,500,000 shares.
|
|
3.
|
To
adopt our 2007 Stock Incentive Award Plan (the “2007 Plan”) and to reserve
up to 1,500,000 shares of common stock for issuance under the 2007
Plan.
|
|
4.
|
To
transact such other business that may properly come before the Annual
Meeting or any adjournment or postponement
thereof.
|
|
By
Order of the Board of Directors
/s/
Christopher J. Reed
Christopher
J. Reed
President
and Chief Executive Officer
Reed’s,
Inc.
|
|
Page
|
||||
|
ABOUT
THE ANNUAL MEETING
|
1
|
|||
|
PROPOSAL
NO. 1 ELECTION OF DIRECTORS
|
5
|
|||
|
PROPOSAL
NO. 2 INCREASE OF AUTHORIZED SHARES OF COMMON STOCK
|
9
|
|||
|
PROPOSAL
NO. 3 APPROVAL OF REED’S 2007 STOCK INCENTIVE AWARD PLAN
|
11
|
|||
|
|
||||
|
CORPORATE
GOVERNANCE
|
14
|
|||
|
REPORT
OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
|
16
|
|||
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|
17
|
|||
|
EXECUTIVE
COMPENSATION
|
18
|
|||
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
|
20
|
|||
|
SECTION
16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
|
22
|
|||
|
|
||||
|
PRINCIPAL
AUDITOR FEES AND SERVICES
|
22
|
|||
|
|
||||
|
OTHER
MATTERS
|
23
|
|||
|
|
||||
|
STOCKHOLDER
PROPOSALS FOR THE NEXT ANNUAL MEETING OF STOCKHOLDERS
|
23
|
|||
|
NO
INCORPORATION BY REFERENCE OF CERTAIN PORTIONS OF THIS PROXY
STATEMENT
|
24
|
|||
|
APPROVAL
OF THE BOARD OF DIRECTORS
|
24
|
| Q: |
Who
is soliciting my vote?
|
| A: |
The
Board of Directors of Reed’s is soliciting your vote at the 2007 Annual
Meeting of Stockholders.
|
| Q: |
What
is the purpose of the Annual
Meeting?
|
| A: |
You
will be voting on three proposals:
|
| • |
To
elect five nominees to the Board of
Directors.
|
| • |
To
vote upon an amendment to our Certificate of Incorporation to increase
the
authorized number of shares of common stock to 19,500,000
shares.
|
| • |
To
approve the Reed’s 2007 Plan and to reserve up to 1,500,000 shares of
common stock for issuance under the 2007
Plan.
|
|
We
will also consider any other business that may properly come before
the
meeting.
|
| Q: |
What
is the Board of Directors’
recommendations?
|
| A: |
The
Board of Directors recommends a
vote:
|
| • |
FOR
the
election of the five nominees to the Board of
Directors.
|
| • |
FOR
the
increase of the authorized number of shares of common stock to
19,500,000
shares.
|
| • |
FOR
the approval
of the Reed’s 2007 Plan and to reserve up to 1,500,000 shares of common
stock for issuance under the 2007
Plan.
|
| Q: |
Who
is entitled to vote at the Annual
Meeting?
|
| A: |
The
Board of Directors set September __, 2007 as the record date for
the
Annual Meeting (the “record date”). All stockholders who owned Reed’s
common stock at the close of business on September __, 2007 may
attend and
vote at the Annual Meeting. We have 55,540 outstanding shares of
Series A
preferred stock which do not have voting rights on any matters,
including,
without limitation, the election of directors. However, so long
as any
shares of Series A preferred stock are outstanding, we will not,
without
first obtaining the approval of at least a majority of the holders
of the
Series A preferred stock: (i) amend our certificate of incorporation
or
bylaws in any manner which adversely affects the rights of the
Series A
preferred stockholders, or (ii) authorize or issue any equity security
having a preference over the Series A preferred stock with respect
to an
equity security other than any senior preferred stock. The Board
of
|
|
Directors
does not believe that we will have to obtain the approval of the
holders
of the Series A preferred stock with respect to any of the proposals
set
forth in this proxy statement.
|
|
Christopher
J. Reed, our President, a Chief Executive Officer and Chief Financial
Officer, beneficially holds approximately 36.69% of our outstanding
common
stock. Consequently, Mr. Reed, as our principal stockholder, has
the power
to have significant control over the outcome of any such vote or
any other
matter, on which the stockholders may
vote.
|
| Q: |
How
many votes do I have?
|
| A: |
You
will have one vote for each share of Reed’s common stock you owned at the
close of business on the record date, provided those shares are
either
held directly in your name as the stockholder of record or were
held for
you as the beneficial owner through a broker, bank or other
nominee.
|
| Q: |
What
is the difference between holding shares as a stockholder of record
and
beneficial owner?
|
| A: |
Many
stockholders of Reed’s hold their shares through a broker, bank or other
nominee rather than directly in their own name. As summarized below,
there
are some distinctions between shares held of record and those owned
beneficially.
|
|
Stockholder
of Record.
If your shares are registered directly in your name with Reed’s transfer
agent, Transfer On-Line, Inc., Portland, Oregon, you are considered
the
stockholder of record with respect to those shares, and these proxy
materials are being sent directly to you by Reed’s. As the stockholder of
record, you have the right to grant your voting proxy directly
to us or to
vote in person at the Annual Meeting. We have enclosed a proxy
card for
you to use.
|
|
Beneficial
Owner.
If your shares are held in a brokerage account or by a bank or
other
nominee, you are considered the beneficial owner of shares held
in “street
name,” and these proxy materials are being forwarded to you by your
broker, bank or nominee who is considered the stockholder of record
with
respect to those shares. As the beneficial owner, you have the
right to
direct your broker, bank or nominee on how to vote and are also
invited to
attend the Annual Meeting. However, since you are not the stockholder
of
record, you may not vote these shares in person at the Annual Meeting
unless you request, complete and deliver a proxy from your broker,
bank or
nominee. Your broker, bank or nominee has enclosed a voting instruction
card for you to use in directing the broker, bank or nominee regarding
how
to vote your shares.
|
| Q. |
How
do I vote?
|
| A. |
Your
vote is important. You may vote by mail or by attending the Annual
Meeting
and voting by ballot. If you choose to vote by mail, simply mark
your
proxy, date and sign it, and return it to our transfer agent, Transfer
On-Line, Inc., Portland, Oregon, in the postage-paid envelope
provided.
|
|
Submitting
your completed proxy card will not limit your right to vote at
the Annual
Meeting if you attend the meeting and vote in person. However,
if your
shares are held in the name of a bank, broker or other nominee,
you must
obtain a proxy, executed in your favor, from the holder of record
to be
able to vote at the Annual Meeting. You should allow yourself enough
time
prior to the Annual Meeting to obtain this proxy from the holder
of
record.
|
|
The
shares represented by the proxy cards received, properly marked,
dated,
signed and not revoked, will be voted at the Annual Meeting. If
you sign
and return your proxy card but do not give voting instructions,
the shares
represented by that proxy card will be voted as recommended by
the Board
of Directors.
|
| Q. |
How
many votes can be cast by all
stockholders?
|
| A. |
Each
share of Reed’s common stock is entitled to one vote. There is no
cumulative voting. We had 8,721,045 shares of common stock outstanding
and
entitled to vote on the record
date.
|
| Q: |
How
many votes must be present to hold the Annual
Meeting?
|
| A: |
A
majority of Reed’s outstanding shares as of the record date must be
present at the Annual Meeting in order to hold the Annual Meeting
and
conduct business. This is called a “quorum.” Shares are counted as present
at the Annual Meeting if you are present and vote in person at
the Annual
Meeting or a proxy card has been properly submitted by you or on
your
behalf. Both abstentions and broker non-votes are counted as present
for
the purpose of determining the presence of a
quorum.
|
| Q: |
How
are the voting are the requirements with respect to each of the
proposals?
|
| A: |
Proposal
1 - Election of Directors.
Directors are elected by a plurality
of
the votes cast. This means that the five individuals nominated
for
election to the Board of Directors who receive the most “FOR” votes (among
votes properly cast in person or by proxy) will be elected. Nominees
do
not need to receive a majority to be elected. If you withhold authority
to
vote with respect to the election of some or all of the nominees,
your
shares will not be voted with respect to those nominees indicated.
Your
shares will be counted for purposes of determining whether there
is a
quorum, but it will have no effect on the election of those
nominees.
|
|
Proposal
2 - Amendment to Certificate of Incorporation to Increase the Number
Authorized Shares of Common Stock.
The affirmative vote of a majority of the shares of common stock
issued
and outstanding as of the record date is required to approve the
proposal
to increase the number of authorized shares of common stock to
19,500,000
shares.
|
|
Proposal
3 - Approval of the Reed’s2007 Stock Incentive Award Plan.
To be approved by stockholders, this proposal must receive the
affirmative
“FOR” vote of a majority of the votes cast affirmatively or negatively
on
this proposal at the annual
meeting.
|
| Q: |
What
if I do not vote for the items listed on my proxy
card?
|
| A: |
If
you hold shares in your name and you return your signed proxy card
in the
enclosed envelope but do not mark selections, it will be voted
in
accordance with the recommendations of the Board of Directors.
If you
indicate a choice with respect to any matter to be acted upon on
your
proxy card, the shares will be voted in accordance with your instructions.
With respect to any other matter that properly comes before the
meeting,
the proxyholders will vote as recommended by our Board of Directors,
or if
no recommendation is given, in their own
discretion.
|
|
If
you are a beneficial owner and hold your shares in street name
through a
broker and do not return the voting instruction card, the broker
or other
nominee will determine if it has the discretionary authority to
vote on
the particular matter. Under applicable rules, brokers have the
discretion
to vote on routine matters, such as the uncontested election of
directors.
As a result:
|
| • |
Your
broker will have the authority to exercise discretion to vote your
shares
with respect to Proposal 1 (election of directors) because that
proposal
involves matters that are considered
routine.
|
| • |
Your
broker will not have the authority to exercise discretion to vote
your
shares with respect to Proposal 2 (proposal to increase the authorized
number of shares of common stock) and Proposal 3 (approval of the
Reed’s
2007 Stock Incentive Award Plan), because they involve matters
that are
considered non-routine.
|
|
As
the proposals to be acted upon at the Annual Meeting include both
routine
and non-routine matters, the broker will turn in a proxy card for
uninstructed shares that votes “FOR” the election of directors, but
expressly states that the broker is NOT voting on the remaining
proposals.
The votes with respect to the remaining proposals in this case
are
referred to as “broker non-votes.” In tabulating the voting result for any
particular proposal, shares that constitute broker non-votes are
not
considered entitled to vote on that proposal.
Thus, although broker non-votes are counted for purposes of determining
a
quorum, broker non- votes will not otherwise affect the outcome
of any
matter being voted on at the annual meeting, except that with respect
to
Proposal 2, which requires the affirmative vote of a majority of
the
issued and outstanding shares of common stock issued and outstanding
as of
the record date for approval, broker non-votes will effectively
count as
votes against such proposal.
|
| Q: |
Can
I change or revoke my vote after I return my proxy
card?
|
| A: |
Yes.
Even if you sign the proxy card in the form accompanying this proxy
statement, you retain the power to revoke your proxy. You can revoke
your
proxy at any time before it is exercised by giving written notice
to the
Secretary of Reed’s, Inc. specifying such
revocation.
|
| Q: |
What
does it mean if I receive more than one
proxy?
|
| A: |
It
generally means your shares are registered differently or are
in more than
one account. Please provide voting instructions for all proxy
cards you
receive.
|
| Q: |
Who
can attend the Annual
Meeting?
|
| A: |
All
stockholders as of the record date, or their duly appointed proxies,
may
attend.
|
| Q: |
What
do I need to bring to the Annual Meeting and when should I
arrive?
|
| A: |
In
order to be admitted to the Annual Meeting, a stockholder must
present
proof of ownership of Reed’s common stock on the record date. If your
shares are held in the name of a bank, broker or other holder of
record, a
brokerage statement or letter from a bank or broker is an example
of proof
of ownership. Any holder of a proxy from a stockholder must present
the
proxy card, properly executed, to be admitted. Stockholders
and proxyholders must also present a form of photo identification
such as
a driver’s license.
|
|
The
Annual Meeting will be held at our corporate offices located at
13000
South Spring Street, Los Angeles, California 90061. Admission to
the
Annual Meeting will be limited. In
order to ensure that you are seated by the commencement of the
Annual
Meeting at 10:00 a.m., we recommend you arrive
early.
|
| Q: |
Who
pays for the proxy solicitation and how will Reed’s solicit
votes?
|
| A: |
We
will bear the expense of printing and mailing proxy materials.
In addition
to this solicitation of proxies by mail, our directors, officers
and other
employees may solicit proxies by personal interview, telephone,
facsimile
or email. They will not be paid any additional compensation for
such
solicitation. We will request brokers and nominees who hold shares
of our
common stock in their names to furnish proxy material to beneficial
owners
of the shares. We may reimburse such brokers and nominees for
their
reasonable expenses incurred in forwarding solicitation materials
to such
beneficial owners.
|
| Q: |
How
can I obtain a copy of Reed’s 2006 Annual Report on Form
10-KSB?
|
| A: |
A
copy of our 2006 Annual Report is being mailed with this proxy
statement
to each stockholder of record. Stockholders not receiving a copy
of the
annual report may obtain one without charge. Our Annual Report
on Form
10-KSB is also accessible through our website at www.reedsgingerbrew.com.
Requests and inquiries should be addressed to: Reed’s, Inc., 13000 South
Spring Street, Los Angeles, California 90061, Attn: Corporate
Secretary.
|
| Q: |
Is
a list of stockholders available?
|
| A: |
The
names of stockholders of record entitled to vote at the Annual
Meeting
will be available to stockholders entitled to vote at the Annual
Meeting
for ten days prior to the meeting for any purpose relevant to
the meeting.
This list can be viewed between the hours of 9:00 a.m. and 5:00
p.m. at
our principal executive offices at 13000 South Spring Street,
Los Angeles,
California 90061. Please contact Reed’s Secretary to make
arrangements.
|
| Q: |
How
do I find out the voting
results?
|
| A: |
Preliminary
voting results will be announced at the Annual Meeting, and the
final
voting results will be published in our Quarterly Report on Form
10-QSB
for the quarter ending September 30, 2007, which we will file
with the
Securities and Exchange Commission
(“SEC”).
|
|
Name
|
Age
|
Position
Held with Reed’s
|
|||||
|
Christopher
J. Reed
|
48
|
President,
Chief Executive Officer,
|
|||||
|
|
Chief
Financial Officer and Chairman
|
||||||
|
|
of
the Board
|
||||||
|
Judy
Holloway Reed
|
47
|
Secretary
and Director
|
|||||
|
Mark
Harris
|
50
|
Director
|
|||||
|
Dr.
D.S.J. Muffoletto, N.D.
|
52
|
Director
|
|||||
|
Michael
Fischman
|
51
|
Director
|
|
Name
|
Age
|
Position
Held with Reed’s
|
||
|
Thierry
Foucaut
|
42
|
Chief
Operating Officer
|
||
|
Rory
Ahearn
|
56
|
Senior
Vice President - Sales
|
||
|
Neal
Cohane
|
47
|
Vice
President - Sales
|
||
|
Robert
T. Reed, Jr.
|
51
|
Vice
President and National Sales Manager
- Mainstream
|
||
|
|
||||
|
Eric
Scheffer
|
39
|
Vice
President and National Sales Manager
- Natural Foods
|
||
|
|
||||
|
Robert
Lyon
|
57
|
Vice
President Sales - Special Projects
|
| • |
selecting,
hiring and terminating our independent
auditors;
|
| • |
evaluating
the qualifications, independence and performance of our independent
auditors;
|
| • |
approving
the audit and non-audit services to be performed by our independent
auditors;
|
| • |
reviewing
the design, implementation, adequacy and effectiveness of our
internal
controls and critical accounting
policies;
|
| • |
overseeing
and monitoring the integrity of our financial statements and
our
compliance with legal and regulatory requirements as they relate
to
financial statements or accounting
matters;
|
| • |
reviewing
with management and our independent auditors, any earnings announcements
and other public announcements regarding our results of operations;
and
|
| • |
preparing
the audit committee report that the SEC requires in our annual
proxy
statement.
|
| • |
approving
the compensation and benefits of our executive
officers;
|
| • |
reviewing
the performance objectives and actual performance of our officers;
and
|
| • |
administering
our stock option and other equity compensation
plans.
|
| • |
evaluating
the composition, size and governance of our Board of Directors
and its
committees and making recommendations regarding future planning
and the
appointment of directors to our
committees;
|
| • |
establishing
a policy for considering stockholder nominees for election to
our Board of
Directors; and
|
| • |
evaluating
and recommending candidates for election to our Board of
Directors.
|
| • |
a
representation that the stockholder is a holder of record of
our capital
stock;
|
| • |
the
name and address, as they appear on our books, of the stockholder
sending
such communication; and
|
| • |
the
class and number of shares of our capital stock that are beneficially
owned by such stockholder.
|
|
Name
of Beneficial Owner
|
Number
of Shares
|
Percentage
of Shares
|
|||||
|
Beneficially
Owned
|
Beneficially
Owned (1)
|
||||||
|
Directors
and Named Executive Officers
|
|
||||||
|
Christopher
J. Reed (2)
|
3,200,000
|
36.69
|
|||||
|
Judy
Holloway Reed (2)
|
3,200,000
|
36.69
|
|||||
|
Mark
Harris (3)
|
4,319
|
*
|
|||||
|
Dr.
Daniel S.J. Muffoletto, N.D
|
0
|
0
|
|||||
|
Michael
Fischman
|
0
|
0
|
|||||
|
Directors
and executive officers as a group (11 persons)
|
3,732,101
|
41.61
|
|||||
|
5%
or greater stockholders
|
|
||||||
|
Joseph
Grace
|
500,000
|
5.74
|
|||||
|
Alma
and Gabriel Elias (5)
|
1,318,724
|
14.70
|
|||||
| * |
Less
than 1%.
|
| (1) |
Beneficial
ownership is determined in accordance with the rules of the SEC.
Shares of
common stock subject to options or warrants currently exercisable
or
exercisable within 60 days of September __, 2007, are deemed
outstanding
for computing the percentage ownership of the stockholder holding
the
options or warrants, but are not deemed outstanding for computing
the
percentage ownership of any other stockholder. Unless
otherwise indicated in the footnotes to this table, we believe
stockholders named in the table have sole voting and sole investment
power
with respect to the shares set forth opposite such stockholder's
name.
Unless
otherwise indicated, the officers, directors and stockholders
can be
reached at our principal offices. Percentage
of ownership is based on 8,721,045 shares of common stock outstanding
as
of September __, 2007.
|
| (2) |
Christopher
J. Reed and Judy Holloway Reed are husband and wife. The same
number of
shares of common stock is shown for each of them, as they may
each be
deemed to be the beneficial owner of all of such shares. These
shares have
been pledged as collateral to Robert T. Reed, Jr. to secure a
pledge of
Mr. Reed
of his shares as collateral for a line of credit extended to
us.
|
| (3) |
Consists
of: (i) 319 shares of common stock, and (ii) 4,000 shares of
common stock,
which can be converted at any time from 1,000 shares of Series
A preferred
stock. The address for Mr. Harris is 160 Barranca Road, Newbury
Park,
California 91320.
|
| (4) |
Includes
three executive officers (including Robert T. Reed, Jr., our
Executive
Vice-President and National Sales Manager - Mainstream (282,282
shares of
common stock, options exercisable into 50,000 shares of common
stock, and
60,000 shares of common stock, which can be converted at any
time from
15,000 shares of Series A preferred stock), Robert Lyon, our Vice
President Sales - Special Projects (options to purchase up to
60,000
shares) and Eric Scheffer, our Vice President and National Sales
Manager -
Natural Foods (500 shares and options to purchase up to 75,000
shares))
who beneficially own in the aggregate of 527,782 shares of common
stock.
Does not include options to purchase up to 310,000 shares of
common stock
which vest in portions through the period ending December
2010.
|
| (5) |
Elias
Family Charitable Trust, Alma and Gabriel Elias JTWROS and Wholesale
Realtors Supply may be deemed to be affiliates of each other
for purposes
of calculating beneficial ownership of their securities in this
table. The
registered ownership of such stockholders is as follows: (a)
Elias Family
Charitable Trust (25,500 shares of common stock and warrants
to purchase
up to 10,000 shares of common stock), (b) Alma and Gabriel Elias
JTWROS
(376,000 shares of common stock and warrants to purchase up to
157,528
shares of common stock), and (c) Wholesale Realtors Supply (666,363
shares
of common stock and warrants to purchase up to 83,333 shares
of common
stock).
|
|
Non-
|
||||||||||||||||||||||||||||
|
Non-Equity
|
Qualified
|
|||||||||||||||||||||||||||
|
|
|
Incentive
|
Deferred
|
|||||||||||||||||||||||||
|
Name
and Principal
|
Stock
|
Option
|
Plan
|
Compensation
|
All
Other
|
|
||||||||||||||||||||||
|
Position
|
Year
|
Salary
|
Bonus
|
Awards
|
Awards
|
Compensation
|
Earnings
|
Compensation
|
Total
|
|||||||||||||||||||
|
Christopher
J.
|
2006
|
$
|
150,00
|
0
|
0
|
0
|
0
|
0
|
0
|
$
|
150,000
|
|||||||||||||||||
|
Reed,
Chief
|
0
|
|||||||||||||||||||||||||||
|
Executive
Officer
|
|
|||||||||||||||||||||||||||
|
2005
|
$
|
150,00
|
0
|
0
|
0
|
0
|
0
|
0
|
$
|
150,000
|
||||||||||||||||||
|
0
|
||||||||||||||||||||||||||||
| • |
Any
breach of their duty of loyalty to our company or our
stockholders.
|
| • |
Acts
or omissions not in good faith or which involve intentional
misconduct or
a knowing violation of
law.
|
| • |
Unlawful
payments of dividends or unlawful stock repurchases or redemptions
as
provided in Section 174 of the Delaware General Corporation
Law.
|
| • |
Any
transaction from which the director derived an improper personal
benefit.
|
|
2006
|
2005
|
||||||
|
Audit
Fees
|
$
|
153,000
|
$
|
144,000
|
|||
|
Audit-Related
Fees
|
0
|
0
|
|||||
|
Tax
Fees
|
0
|
0
|
|||||
|
All
Other Fees
|
0
|
0
|
|||||
|
Total
|
$
|
153,000
|
$
|
144,000
|
|||
|
By
Order of the Board of Directors,
/s/
Christopher J. Reed
Christopher
J. Reed
President
and Chief Executive Officer
Reed’s,
Inc.
|
|
Section
1.
|
Purpose.
|
|
(a)
|
The
purpose of this 2007 Stock Incentive Award Plan (the “Plan”)
is to enable Reed’s, Inc. (the “Company”)
and its Subsidiaries and Affiliates to attract, retain, motivate,
and
reward employees, directors, and certain select service providers
of the
Company and its Subsidiaries and Affiliates, to provide for
equitable and
competitive compensation opportunities, to recognize individual
contributions and reward achievement of Company goals, and
to promote the
creation of long-term value for shareholders by strengthening
the
mutuality of interests between those employees, directors
and select
service providers and the Company’s shareholders.
|
|
(b)
|
The
Plan authorizes stock-based and cash-based incentives for
Participants.
Awards may be made in the form of (i) Incentive Stock Options;
(ii)
Nonqualified Stock Options; (iii) Restricted Stock; (iv)
Stock
Appreciation Rights; (v) Stock Units; and (vi) any combination
of the
foregoing.
|
|
Section
2.
|
Definitions.
The
following terms have the respective meanings, in addition
to the
capitalized terms defined in Section 1 hereof or as otherwise
defined
throughout this document:
|
|
(a)
|
“Affiliate”
means any entity (other than the Company and any Subsidiary)
that is
designated by the Board as a participating employer under
the
Plan.
|
|
(b)
|
“Award”
means any Option, SAR, Restricted Stock, Stock Unit, or Stock
granted as a
bonus or in lieu of another award, Dividend Equivalent, or
Other
Stock-Based Award, together with any related right or interest,
granted to
a Participant under the Plan.
|
|
(c)
|
“Award
Agreement”
means any Option Agreement, SAR Agreement, Restricted Stock
Agreement,
Stock Unit Agreement, or any other agreement under which
the Company (or a
Subsidiary or Affiliate) grants an Eligible Person an
Award.
|
|
(d)
|
“Beneficiary”
means the person(s) or trust(s) designated as being entitled
to receive
the benefits under a Participant’s Award upon and following a
Participant’s death. Unless otherwise determined by the Committee, a
Participant may designate one or more persons or one or more
trusts as his
or her Beneficiary.
|
|
(e)
|
“Board”
means the Company’s Board of
Directors.
|
|
(f)
|
“Code”
means the Internal Revenue Code of 1986, as amended from
time to time, any
successor thereto, and including any regulations promulgated
thereunder.
|
|
(g)
|
“Committee”
means the Compensation Committee of the Board or any other
committee
authorized by the Board to administer the Plan of which the
majority of
the members are both Outside Directors and Non-Employee
Directors.
|
|
(h)
|
“Corporate
Transaction”
means the occurrence of any of the following: (i) any person or group
of persons (as defined in Section 13(d) and 14(d) of the Exchange
Act) together with its affiliates, excluding employee benefit
plans of the
Company, is or becomes, directly or indirectly, the “beneficial owner” (as
defined in Rule 13d-3 of the Exchange Act) of securities
of the Company
representing 50% or more of the combined voting power of
the Company’s
then outstanding securities; or (ii) a merger or consolidation of the
Company with any other corporation or entity is consummated
regardless of
which entity is the survivor, other than a merger or consolidation
which
would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either
by remaining
outstanding or being converted into voting securities of
the surviving
entity or its parent) at least 50% of the combined voting
power of the
voting securities of the Company or such surviving entity
outstanding
immediately after such merger or consolidation; or (iii) the Company
is completely liquidated or all or substantially all of the
Company’s
assets are sold.
|
| (i) |
“Covered
Employee”
means an Eligible Person who is an employee of the Company,
a Subsidiary
or an Affiliate.
|
|
(j)
|
“Date
of Grant”
has the meaning set forth in Treasury Regulation Section
1.409A-1.
|
|
(k)
|
“Disability”
means a permanent and total disability as defined in Code
Section
409A.
|
|
(l)
|
“Dividend
Equivalent”
means a right, granted under this Plan, to receive cash,
Stock, other
Awards or other property equal in value to all or a portion
of the
dividends paid with respect to a specified number of shares
of
Stock.
|
|
(m)
|
“Exchange
Act”
means the Securities Exchange Act of 1934, as amended, and
shall include
any successor thereto.
|
|
(n)
|
“Fair
Market Value”
or “FMV”
means the fair market value of Stock, Awards or other property
as
determined in good faith by the Committee or under procedures
established
by the Committee as follows: if on the Date of Grant or other
determination date the Stock is listed on an established
securities
market, the Fair Market Value of a share of Stock shall be
the closing
price of the Stock on such exchange or in such market (if
there is more
than one such exchange or market the Committee shall determine
the
appropriate exchange or market) on the Date of Grant or such
other
determination date (or if there is no such reported closing
price, the
Fair Market Value shall be the mean between the highest bid
and lowest
asked prices or between the high and low sale prices on such
trading day)
or, if no sale of Stock is reported for such trading day,
on the next
preceding day on which any sale shall have been reported.
If the Stock is
not listed on such an exchange, quoted on such system or
traded on such a
market, Fair Market Value shall be the value of the Stock
as determined by
the Committee in good faith. Fair Market Value relating to
the exercise
price or base price of any Option or SAR shall at all times
conform to the
applicable requirements of Code Section 409A. Notwithstanding
any
provision of this subsection to the contrary, the Fair Market
Value of an
Award shall be established by the Committee immediately prior
to the grant
of such Award.
|
|
(o)
|
“Incentive
Stock Option”
or “ISO”
means any Option intended to be, designated as, and that
otherwise
qualifies as an “Incentive Stock Option” within the meaning of Code
Section 422.
|
|
(p)
|
“Non-Employee
Director”
has the meaning set forth under Section 16 of the Exchange
Act.
|
|
(q)
|
“Nonqualified
Stock Option”
means any Option that is not an Incentive Stock
Option.
|
|
(r)
|
“Option”
means a right to purchase Stock granted under Section
6(b).
|
|
(s)
|
“Outside
Director”
has the meaning set forth in Code Section
162(m).
|
|
(t)
|
“Other
Stock-Based Awards”
means Awards granted to a Participant that are valued, in
whole or in
part, by reference to, or otherwise based on, shares of
Stock.
|
|
(u)
|
“Participant”
means a person who has been granted an Award under the Plan
which remains
outstanding, including a person who is no longer an Eligible
Person.
|
|
(v)
|
“Restricted
Stock”
means Stock granted under this Plan which is subject to certain
restrictions and to a risk of
forfeiture.
|
|
(w)
|
“Section
16 Participant”
means a Participant under the Plan who is subject to Section
16 of the
Exchange Act.
|
|
(x)
|
“Stock”
means shares of the Company’s Common Stock, no par value per share, and
any other equity securities of the Company that may be substituted
or
resubstituted for such Stock.
|
|
(y)
|
“Stock
Appreciation Rights”
or “SARs”
means a right granted to a Participant under Section
6(c).
|
|
(z)
|
“Stock
Units”
means a right granted under this Plan to receive Stock or
other Awards or
a combination thereof at the end of a specified period. Stock
Units
subject to a risk of forfeiture may be designated as “Restricted
Stock Units.”
|
|
(aa)
|
“Subsidiary”
means any corporation (other than the Company or an Affiliate)
in an
unbroken chain of corporations beginning with the Company,
if each of the
corporations (other than the last corporation in the unbroken
chain) owns
stock possessing 50% or more of the total combined voting
power of all
classes of stock in one of the other corporations in that
chain.
|
|
Section
3.
|
Administration.
|
|
(a)
|
Authority
of the Committee.
The Plan shall be administered by the Committee. Any interpretation
or
administration of the Plan by the Committee, and all actions
and
determinations of the Committee, shall be final, binding
and conclusive on
the Company, its shareholders, Subsidiaries, Affiliates,
all Participants
in the Plan, their respective legal representatives, successors
and
assigns, and all persons claiming under or through any of
them.
|
|
(b)
|
Composition
of the Committee.
The Committee shall consist of not less than three directors,
all of whom
shall be Outside Directors and Non-Employee Directors. Those
Directors
shall be appointed by the Board and shall serve as the Committee
at the
pleasure of the Board. The function of the Committee specified
in the Plan
shall be exercised by the entire Board if, and to the extent
that, no
Committee exists that has the authority to so administer
the
Plan.
|
|
(c)
|
Manner
of Exercise of Committee Authority. The
Committee shall have the full power and authority to interpret
and
administer the Plan in its sole discretion, including exercising
all the
powers and authorities either specifically granted to it
under the Plan or
necessary or advisable in the administration of the Plan.
The Committee’s
powers and authorities include, without limitation, the sole
ability to
determine: eligibility criteria for Awards; persons to whom,
and the time
or times at which, Awards shall be granted; number of shares
of Stock to
be covered by each Award; interpretation of Plan provisions;
amendments,
rules, and regulations relating to the Plan; consideration,
if any, to be
paid for Awards; specific terms and conditions of individual
Awards; and
Awards that qualify as performance-based compensation under
Code Section
162(m). The Committee shall have the power and authority
to make all other
determinations deemed necessary or advisable for the administration
of the
Plan.
|
|
(d)
|
Delegation
of Authority.
The Committee may delegate to one or more of its members
or to one or more
agents such administrative duties as it may deem advisable,
and the
Committee or any person to whom it has delegated duties as
aforesaid may
employ one or more persons to render advice with respect
to any
responsibility the Committee or such person may have under
the Plan;
provided, that such delegation may not include the selection
or grant of
Awards to Participants or Eligible Persons who are executive
officers of
the Company or any Subsidiary or Affiliate, or Section 16
Participants.
|
|
(e)
|
Committee
Vacancies.
The Board shall fill all vacancies in the Committee. The
Board may from
time to time appoint additional members to the Committee
and may at any
time remove one or more Committee members and substitute
others. One
member of the Committee shall be selected by the Board as
chairman. The
Committee shall hold its meetings at such times and places
as it shall
deem advisable. All determinations of the Committee shall
be made by not
less than a majority of its members either present in person
or
participating by conference telephone at a meeting or by
written consent.
The Committee shall keep minutes of its meetings. The Committee
may
appoint a secretary to keep such minutes and may make such
rules and
regulations for the conduct of its business as it shall deem
advisable,
but in accordance with the written charter prepared by the
Board and which
may be amended from time to time by the Board. The secretary
shall not
need to be a member of the Committee or a member of the
Board.
|
|
(f)
|
Limitation
of Liability. The
Committee and each member thereof, and any person acting
pursuant to
authority delegated by the Committee, shall be entitled,
in good faith, to
rely or act upon any report or other information furnished
by any
executive officer, other officer or employee of the Company
or a
Subsidiary or Affiliate, the Company’s independent auditors, consultants
or any other agents assisting in the administration of the
Plan. Members
of the Committee, any person acting pursuant to authority
delegated by the
Committee, and any officer or employee of the Company or
a Subsidiary or
Affiliate acting at the direction or on behalf of the Committee
or a
delegee shall not be personally liable for any action or
determination
taken or made in good faith with respect to the Plan, and
shall, to the
extent permitted by law, be fully indemnified and protected
by the Company
with respect to any such action or
determination.
|
|
Section
4.
|
Stock
Subject to Plan.
|
|
(a)
|
Overall
Number of Shares Available. Subject
to adjustment as provided under Section 11(c), the total
number of shares
of Stock reserved and available for delivery in connection
with Awards
under the Plan shall be 1,500,000. Any shares of Stock issued
under the
Plan may consist, in whole or in part, of authorized and
unissued shares
or treasury shares.
|
|
(b)
|
Accounting
Procedures. The
Committee may adopt reasonable accounting procedures to ensure
appropriate
counting of Stock subject to the Plan, avoid double counting
(as, for
example, in the case of tandem or substitute Awards), and
make adjustments
in accordance with this Section 4(b). Shares shall be counted
against
those reserved to the extent such shares have been delivered
and are no
longer subject to a risk of forfeiture. Accordingly, (i)
to the extent
that an Award under the Plan is canceled, expired, forfeited,
settled in
cash, settled by delivery of fewer shares than the number
underlying the
Award, or otherwise terminated without delivery of Stock
to the
Participant, the Stock retained by or returned to the Company
will not be
deemed to have been delivered under the Plan; and (ii) Stock
that is
withheld from such Award or separately surrendered by the
Participant in
payment of the exercise price or taxes relating to such Award
shall be
deemed to constitute Stock not delivered and will be available
under the
Plan. The Committee may determine that Awards may be outstanding
that
relate to more Stock than the aggregate shares of Stock remaining
available under the Plan so long as Awards will not in fact
result in
delivery and vesting of shares of Stock in excess of the
number then
available under the Plan. In addition, in the case of any
Award granted in
assumption of or in substitution for an award of a company
or business
acquired by the Company or a Subsidiary or Affiliate or with
which the
Company or a Subsidiary or Affiliate combines, shares delivered
or
deliverable in connection with such assumed or substitute
Award shall not
be counted against the number of shares of Stock reserved
under the
Plan.
|
|
(c)
|
Individual
Annual Award Limits.
No
Participant may be granted Options or other Awards under
the Plan with
respect to an aggregate of more than 75,000 shares of Stock
(subject to
adjustment as otherwise may be provided for throughout this
Plan) during
any calendar year.
|
|
Section
5.
|
Eligibility.
|
|
(a)
|
Eligibility.
Grants of Awards may be made from time to time to those officers,
employees and directors of the Company or any Subsidiary
or Affiliate who
are designated by the Committee in its sole and exclusive
discretion as
eligible to receive such Awards (“Eligible
Persons”).
Eligible Persons may include, but shall not necessarily be
limited to,
employees, officers, and directors of the Company and any
Subsidiary or
Affiliate; however, Options intended to qualify as ISOs shall
be granted
only to Eligible Persons while actually employed by the Company,
a
Subsidiary or an Affiliate. The Committee may grant more
than one Award to
the same Eligible Person. No Award shall be granted to any
Eligible Person
during any period of time when such Eligible Person is on
a leave of
absence. Awards to be granted to directors, which may include
members of
the Committee, must be approved and granted by a majority
of the
disinterested members of the Board.
|
|
(b)
|
Substitutions/Acquisitions.
Holders of awards granted by a company or business acquired
by the Company
or a Subsidiary or Affiliate, or with which the Company or
a Subsidiary or
Affiliate combines, may be eligible for substitute Awards
under this Plan
that will be granted in assumption of or in substitution
for such
outstanding awards in connection with such acquisition or
combination
transaction. In such cases, holders of the assumed or substituted
awards
will become Participants in the Plan; provided, however,
that such
assumption or substitution in no way causes an Award under
this Plan to
become subject to the terms and conditions of Code Section
409A.
|
|
(c)
|
Participation.
An Eligible Person shall become a Participant in the Plan
and shall
perfect his or her Award only after he or she has completed
the applicable
Award Agreement in a manner that is satisfactory to the Committee
and has
delivered said Award Agreement to the Committee. A Participant
shall
continue his or her participation in the Plan, even if no
longer an
Eligible Person, until any and all of his or her interests
that are held
under the Plan expire or are paid.
|
|
Section
6.
|
Specific
Terms of Awards Granted Under the Plan.
|
|
(a)
|
General
Terms of All Awards. All
Awards granted under the Plan, including Awards of any Stock
Units, shall
be evidenced by individual agreements between the Company
(or Subsidiary
or Affiliate) and the applicable Eligible Person (an “Award
Agreement”).
Award Agreements may provide for grants of Awards on the
specific terms
and conditions set forth in this Section 6. Alternatively,
the Committee
may impose on any individual Award, as specified in the individual
Award
Agreement, such additional terms and conditions, not inconsistent
with the
provisions of the Plan, or applicable law, as the Committee
shall
determine, including terms requiring forfeiture of Awards
in the event of
termination of employment or service by the Participant and
terms
permitting a Participant to make elections relating to his
or her Award.
The Committee shall retain full power and discretion with
respect to any
term or condition of an Award that is not mandatory under
the Plan and the
terms of the Award Agreement; provided, that the exercise
of such
discretion shall in no event cause an Award that is not otherwise
subject
to the terms and conditions of Code Section 409A to become
“subject
to the terms and conditions of Code Section 409A”
unless otherwise agreed upon between the Company (or Subsidiary
or
Affiliate) and the Eligible Person; provided further, that,
to the extent
an Award is subject to the terms and conditions of Code Section
409A, the
Committee shall provide the Award in the form and manner
required by Code
Section 409A, unless otherwise agreed upon by the Company
(or Subsidiary
or Affiliate) and Eligible Person. For purposes of the Plan,
“subject
to the terms and conditions of Code Section 409A,”
means the applicable Award or compensation subject to said
Award provides
for a deferral of compensation as determined under Code Section
409A. The
Committee shall require the payment of lawful consideration
for an Award
to the extent necessary to satisfy the requirements of the
Delaware
General Company Law, and may otherwise require payment of
consideration
for an Award except as limited by the Plan and as otherwise
required by
applicable law.
|
|
(b)
|
Option
Awards.
Options granted under the Plan shall be evidenced by an agreement
(“Option
Agreements”). Options that are awarded may be of one of two types which
shall be indicated on the face of the Option Agreement: (i)
ISOs or (ii)
Nonqualified Stock Options. The Committee is authorized to
grant Options
to Participants on the following terms and
conditions:
|
| (i) |
Option
Term; Time and Method of Exercise.
The Committee shall determine the term of each Option; provided
that in no
event shall the term of any Option exceed a period of ten
years from the
Date of Grant. The Committee shall determine the time or
times at which or
the circumstances under which an Option may be exercised
in whole or in
part (including based on achievement of performance goals
and/or future
service requirements), the methods by which such exercise
price may be
paid or deemed to be paid and the form of such payment (including,
without
limitation, cash, Stock (including by withholding Stock deliverable
upon
exercise), other Awards or awards granted under other plans
of the Company
or any Subsidiary or Affiliate, or other property), and the
methods by or
forms in which Stock will be delivered or deemed to be delivered
in
satisfaction of Options to
Participants.
|
| (ii) |
Exercise
Price.
The option price per share of Stock purchasable under a Nonqualified
Stock
Option or an Incentive Stock Option shall be determined by
the Committee
at the time of grant, shall be set forth on the applicable
Option
Agreement, and shall be not less than 100% of the Fair Market
Value of the
Stock at the Date of Grant (or, with respect to an Incentive
Stock Option,
110% of the Fair Market Value of the Stock at the Date of
Grant in the
case of a Participant who at the Date of Grant owns Stock
possessing more
than 10% of the total combined voting power of all classes
of Stock of the
Company or its parent or subsidiary corporations (as determined
under Code
Sections 424(d), (e) and (f))).
|
| (iii) |
Non-Transferability
of Options.
No Option shall be transferable by any Participant other
than by will or
by the laws of descent and distribution or pursuant to a
qualified
domestic relations order (as defined in the Code or the Employment
Retirement Income Security Act of 1974, as amended) except
that, if so
provided in the Option Agreement, the Participant may transfer
the Option,
other than an ISO, during the Participant’s lifetime to one or more
members of the Participant’s family, to one or more trusts for the benefit
of one or more of the Participant’s family, or to a partnership or
partnerships of members of the Participant’s family, or to a charitable
organization as defined in Code Section 501(c)(3), provided
that the
transfer would not result in the loss of any exemption under
Rule 16b-3 of
the Exchange Act with respect to any Option. The transferee
of an Option
will be subject to all restrictions, terms and conditions
applicable to
the Option prior to its transfer, except that the Option
will not be
further transferable by the transferee other than by will
or by the laws
of descent and distribution.
|
| (iv) |
Disposition
upon Termination of Employment.
|
|
(A)
|
Termination
by Death. Subject to Sections 6(b)(i) and 6(b)(v), if any
Participant’s
employment with the Company or any Subsidiary or Affiliate
terminates by
reason of death, any Option held by that Participant shall
become
immediately and automatically vested and exercisable. If
termination of a
Participant’s employment is due to death, then any Option held by that
Participant may thereafter be exercised for a period of two
years (or with
respect to an ISO, for a period of one year) (or such other
period as the
Committee may specify at or after grant) from the date of
death.
Notwithstanding the foregoing, in no event will any Option
be exercisable
after the expiration of the option period of Option. The
balance of the
Option shall be forfeited if not exercised within two years
(or one year
with respect to ISOs).
|
|
(B)
|
Termination
by Reason of Disability. Subject to Sections 6(b)(i) and
6(b)(v), if a
Participant’s employment with the Company or any Subsidiary or Affiliate
terminates by reason of Disability, any Option held by that
Participant
shall become immediately and automatically vested and exercisable.
If
termination of a Participant’s employment is due to Disability, then any
Option held by that Participant may thereafter be exercised
by the
Participant or by the Participant’s duly authorized legal representative
if the Participant is unable to exercise the Option as a
result of the
Participant’s Disability, for a period of two years (or with respect
to an
ISO, for a period of one year) (or such other period as the
Committee may
specify at or after grant) from the date of such termination
of
employment; and if the Participant dies within that two-year
period (or
such other period as the Committee may specify at or after
grant), any
unexercised Option held by that Participant shall thereafter
be
exercisable by the estate of the Participant (acting through
its
fiduciary) for the duration of the two-year period from the
date of that
termination of employment. Notwithstanding the foregoing,
in no event will
any Option be exercisable after the expiration of the option
period of
such Option. The balance of the Option shall be forfeited
if not exercised
within two years (or one year with respect to
ISOs).
|
|
(C)
|
Termination
for Cause. Unless otherwise determined by the Committee at
or after the
time of granting any Option, if a Participant’s employment with the
Company or any Subsidiary or Affiliate terminates for Cause,
any unvested
Options will be forfeited and terminated immediately upon
termination and
any vested Options held by that Participant shall terminate
30 days after
the date employment terminates. Notwithstanding the foregoing,
in no event
will any Option be exercisable after the expiration of the
option period
of such Option. The balance of the Option shall be
forfeited.
|
|
(D)
|
Other
Termination/Retirement. Unless otherwise determined by the
Committee at or
after the time of granting any Option, if a Participant retires
from
employment with the Company (or a Subsidiary or Affiliate) or a
Participant’s employment with the Company (or a Subsidiary or Affiliate)
terminates for any reason other than death, Disability, or
for Cause, all
Options held by that Participant shall terminate three months
after the
date employment terminates. Notwithstanding the foregoing,
in no event
will any Option be exercisable after the expiration of the
option period
(which shall be established in the Option Agreement) of such
Option. The
balance of the Option shall be
forfeited.
|
|
(E)
|
Leave
of Absence. In the event a Participant is granted a leave
of absence by
the Company or any Subsidiary or Affiliate to enter military
service or
because of sickness, the Participant’s employment with the Company or such
Subsidiary or Affiliate will not be considered terminated,
and the
Participant shall be deemed an employee of the Company or
such Subsidiary
or Affiliate during such leave of absence or any extension
thereof granted
by the Company or such Subsidiary or Affiliate. Notwithstanding
the
foregoing, in the case of an ISO, a leave of absence of more
than 90 days
will be viewed as a termination of employment unless continued
employment
is guaranteed by contract or
statute.
|
| (v) |
Incentive
Stock Options.
Notwithstanding Sections 6(b)(iii) and 6(b)(iv), an ISO shall
be
exercisable by (A) a Participant’s authorized legal representative (if the
Participant is unable to exercise the ISO as a result of
the Participant’s
Disability) only if, and to the extent, permitted by Section
422 of the
Code and (B) by the Participant’s estate, in the case of death, or
authorized legal representative, in the case of Disability,
no later than
ten years from the date the ISO was granted (in addition
to any other
restrictions or limitations that may apply). Anything in
the Plan to the
contrary notwithstanding, no term or provision of the Plan
relating to
ISOs shall be interpreted, amended or altered, nor shall
any discretion or
authority granted under the Plan be exercised, so as to disqualify
the
Plan under Code Section 422 of the Code, or, without the
consent of the
Participants affected, to disqualify any ISO under Code Section
422.
|
|
(c)
|
Stock
Appreciation Rights. SARs
granted under the Plan shall be evidenced by an agreement
(“SAR
Agreements”). The Committee is authorized to grant SARs to Participants
on
the following terms and conditions:
|
| (i) |
Right
to Payment.
An SAR shall confer on the Participant to whom it is granted
a right to
receive, upon exercise thereof, the excess of (A) the Fair
Market Value of
one share of Stock on the date of exercise over (B) the grant
price of the
SAR as determined by the Committee. The grant price of each
SAR shall be
not less than the Fair Market Value of a share of Stock on
the Date of
Grant of such SAR.
|
| (ii) |
Other
Terms.
The Committee shall determine the term of each SAR, provided
that in no
event shall the term of an SAR exceed a period of ten years
from the Date
of Grant. The Committee shall determine at the Date of Grant
or
thereafter, the time or times at which and the circumstances
under which
an SAR may be exercised in whole or in part (including based
on
achievement of performance goals and/or future service requirements),
the
method of exercise, method of settlement, form of consideration
payable in
settlement, method by or forms in which Stock will be delivered
or deemed
to be delivered to Participants, whether or not an SAR shall
be
free-standing or in tandem or combination with any other
Award. The
Committee may require that an outstanding Option be exchanged
for an SAR
exercisable for Stock having vesting, expiration, and other
terms
substantially the same as the Option, so long as such exchange
will not
result in additional accounting expense to the
Company.
|
|
(d)
|
Restricted
Stock. Restricted
Stock granted under the Plan shall be evidenced by an agreement
(“Restricted Stock Agreements”). The Committee is authorized to grant
Restricted Stock to Participants on the following terms and
conditions:
|
| (i) |
Grant
and Restrictions.
Restricted Stock shall be subject to such restrictions on
transferability,
risk of forfeiture and other restrictions, if any, as the
Committee may
impose, which restrictions may lapse separately or in combination
at such
times, under such circumstances (including based on achievement
of
performance goals and/or future service requirements), in
such
installments or otherwise and under such other circumstances
as the
Committee may determine at the Date of Grant, and which shall
be set forth
on the applicable Restricted Stock Agreement, or thereafter.
Except to the
extent restricted under the terms of the Plan and any Restricted
Stock
Agreement, a Participant granted Restricted Stock shall have
all of the
rights of a stockholder, including the right to vote the
Restricted Stock
and the right to receive dividends thereon; provided, however,
that the
Committee may require mandatory reinvestment of dividends
in additional
Restricted Stock, may provide that no dividends will be paid
on Restricted
Stock or retained by the Participant, or may impose other
restrictions on
the rights attached to Restricted
Stock.
|
| (ii) |
Forfeiture.
Except as otherwise determined by the Committee, upon termination
of
employment or service during the applicable restriction period,
Restricted
Stock that is at that time subject to restrictions shall
be forfeited and
reacquired by the Company; provided that the Committee may
provide, by
rule or regulation or in any Restricted Stock Agreement,
or may determine
in any individual case, that restrictions or forfeiture conditions
relating to Restricted Stock will lapse in whole or in part,
including in
the event of terminations resulting from specified
causes.
|
| (iii) |
Certificates
for Stock.
Restricted Stock granted under the Plan shall be evidenced
in such manner
as the Committee shall determine. Certificates representing
Restricted
Stock shall be registered in the name of the Participant
and shall bear an
appropriate legend referring to the terms, conditions and
restrictions
applicable to the Award of such Restricted Stock. The Company
shall retain
physical possession of the stock certificates until the time
that the
restrictions thereon have lapsed, and the Participant shall
have delivered
a stock power to the Company, endorsed in blank, relating
to the Stock
covered by such Restricted Stock.
|
| (iv) |
Dividends
and Splits.
As a condition to the grant of an Award of Restricted Stock,
the Committee
may require that any dividends paid on a share of Restricted
Stock shall
be either (A) paid with respect to such Restricted Stock
at the dividend
payment date in cash, in kind, or in a number of shares of
unrestricted
Stock having a Fair Market Value equal to the amount of such
dividends, or
(B) automatically reinvested in additional Restricted Stock
or held in
kind, which shall be subject to the same terms as applied
to the original
Restricted Stock to which it relates, or (C) deferred as
to payment,
either as a cash deferral or with the amount or value thereof
automatically deemed reinvested in Stock Units, other Awards
or other
investment vehicles, subject to such terms as the Committee
shall
determine or permit a Participant to elect. Unless otherwise
determined by
the Committee, Stock distributed in connection with a Stock
split or Stock
dividend, and other property distributed as a dividend, shall
be subject
to restrictions and a risk of forfeiture to the same extent
as the
Restricted Stock with respect to which such Stock or other
property has
been distributed.
|
|
(e)
|
Stock
Units.
Stock Units granted under the Plan, whether or not subject
to
restrictions, shall be evidenced by an agreement (“Stock Unit Agreement”).
The Committee is authorized to grant Stock Units to Participants,
subject
to the following terms and
conditions:
|
| (i) |
Award
and Restrictions.
Issuance of Stock will occur upon expiration of the holding
period, if
any, specified for the Stock Units by the Committee. In addition,
Stock
Units shall be subject to such restrictions on transferability,
risk of
forfeiture and other restrictions, if any, as the Committee
may impose,
which restrictions may lapse at the expiration of the holding
period or at
earlier specified times (including based on achievement of
performance
goals and/or future service requirements), separately or
in combination,
in installments or otherwise, and under such other circumstances
as the
Committee may determine at the Date of Grant or thereafter.
Stock Units
may be settled by delivery of Stock, other Awards, or a combination
thereof, as determined by the Committee at the Date of Grant
or
thereafter.
|
| (ii) |
Forfeiture.
Except as otherwise determined by the Committee, upon termination
of
employment or service during the applicable deferral period
or portion
thereof to which forfeiture conditions apply (as provided
in the Award
document evidencing the Stock Units), all Stock Units that
are at that
time subject to such forfeiture conditions shall be forfeited;
provided
that the Committee may provide, by rule or regulation or
in any Award
document, or may determine in any individual case, that restrictions
or
forfeiture conditions relating to Stock Units will lapse
in whole or in
part, including in the event of terminations resulting from
specified
causes. Stock Units subject to a risk of forfeiture shall
be designated as
“Restricted Stock Units” unless otherwise determined by the
Committee.
|
| (iii) |
Dividend
Equivalents.
Unless otherwise determined by the Committee, Dividend Equivalents
on the
specified number of shares of Stock underlying Stock Units
shall be either
(A) paid with respect to such Stock Units at the dividend
payment date in
cash or in shares of unrestricted Stock having a Fair Market
Value equal
to the amount of such dividends, or (B) deferred with respect
to such
Stock Units, either as a cash deferral or as a number of
additional Stock
Units with a value equal to the value of the Dividend Equivalents
or with
such value otherwise deemed reinvested in additional Stock
Units, other
Awards or other investment vehicles having a Fair Market
Value equal to
the amount of such dividends, as the Committee shall determine
or permit a
Participant to elect; provided, however, that the Committee
may provide
that no Dividend Equivalents will be paid on a given Award
of Stock
Units.
|
|
(f)
|
Bonus
Stock and Awards in Lieu of Obligations.
The Committee is authorized to grant to Participants Stock
as a bonus, or
to grant Stock or other Awards in lieu of obligations of
the Company or a
Subsidiary or Affiliate to pay cash or deliver other property
under the
Plan or under other plans or compensatory arrangements, subject
to such
terms as shall be determined by the Committee; provided,
that such grants
shall not be in lieu of prior promises to pay deferrals of
compensation so
that any Award under this Plan that would not otherwise be
subject to Code
Section 409A does not become subject to Code Section 409A
due to a grant
in lieu of other obligation of the Company, a Subsidiary
or an Affiliate;
provided further, that any payment of such Stock as a bonus
shall be paid
or transferred to the Participant on the March 15 of the
calendar year
following the calendar year in which the Participant earned
the
bonus.
|
|
(g)
|
Other
Stock-Based Awards.
The Committee is authorized, subject to limitations under
applicable law,
to grant to Participants such other Awards that may be denominated
or
payable in, valued in whole or in part by reference to, or
otherwise based
on, or related to, Stock or factors that may influence the
value of Stock,
including, without limitation, convertible or exchangeable
debt
securities, other rights convertible or exchangeable into
Stock, purchase
rights for Stock, Awards with value and payment contingent
upon
performance of the Company or business units thereof or any
other factors
designated by the Committee, and Awards valued by reference
to the book
value of Stock or the value of securities of or the performance
of
specified subsidiaries or affiliates or other business units.
The
Committee shall determine the terms and conditions of such
Awards. Stock
delivered pursuant to an Award in the nature of a purchase
right granted
under this Section shall be purchased for such consideration,
paid for at
such times, by such methods, and in such forms, including,
without
limitation, cash, Stock, other Awards, or other property,
as the Committee
shall determine. Cash awards, as an element of or supplement
to any other
Award under the Plan, may also be granted pursuant to this
Section.
|
|
Section
7.
|
Additional
Provisions Applicable to Awards.
|
|
(a)
|
Stand-Alone,
Additional, Tandem, and Substitute Awards.
Awards granted under the Plan may, in the discretion of the
Committee, be
granted either alone or in addition to, in tandem with, or
in substitution
or exchange for, any other Award or any award granted under
another plan
of the Company, any Subsidiary or Affiliate, or any business
entity to be
acquired by the Company or a Subsidiary or Affiliate, or
any other right
of a Participant to receive payment from the Company or any
Subsidiary or
Affiliate. Awards granted in addition to or in tandem with
other Awards or
awards may be granted either as of the same time as or a
different time
from the grant of such other Awards. Subject to the Plan’s terms, the
Committee may determine that, in granting a new Award, the
in-the-money
value or fair value of any surrendered Award or award or
the value of any
other right to payment surrendered by the Participant may
be applied to
the purchase of any other Award; provided, that such surrender
does not
result in a “modification,” “extension,” or “renewal,” of a Stock right,
as determined under Code Section 409A, so that such Stock
rights thereby
become subject to the terms and conditions of Code Section
409A. Any
transaction otherwise authorized under this Section 7(a)
remains subject
to all applicable restrictions under the Plan and may not
result in an
Award that is not otherwise subject to the terms and conditions
of Code
Section 409A becoming subject to the terms and conditions
of Code Section
409A by virtue of such transaction; in such event, any transaction
that
would otherwise be permissible under this Section 7(a) shall
be prohibited
unless the Participant and the Company mutually agree in
writing to
subject an Award to Code Section 409A under this Section
7(a).
|
|
(b)
|
Form
and Timing of Payment Under Awards; Deferrals.
Subject to the terms of the Plan and any applicable Award
Agreement,
payments to be made by the Company or a Subsidiary or Affiliate
upon the
exercise of an Option or other Award or settlement of an
Award may be made
in such forms as the Committee shall determine, including,
without
limitation, cash, Stock, other Awards or other property,
and may be made
in a single payment or transfer, or in
installments.
|
|
(c)
|
Certain
Limitations on Awards to Ensure Compliance with Code Section
409A.
|
| (i) |
409A
Awards and Deferrals.
Other
provisions of the Plan notwithstanding, the terms of any
“409A
Award”
(which for this purpose means only such an Award held by
a Participant
subject to United States federal income tax and which is
subject to the
terms and conditions of Code Section 409A), including any
authority of the
Company and rights of the Participant with respect to the
409A Award,
shall be limited to those terms permitted under Code Section
409A, and any
terms or conditions not permitted under Code Section 409A
shall be
automatically modified and limited to the extent necessary
to conform said
Award with Code Section 409A. The following rules will apply
to 409A
Awards:
|
|
(A)
|
If
a Participant is permitted to elect to defer an Award or
any payment under
an Award, such election shall be permitted only at times
in compliance
with Code Section 409A (including transition rules
thereunder);
|
|
(B)
|
The
Company shall have no authority to accelerate or delay distributions
relating to 409A Awards in excess of the authority permitted
under Code
Section 409A;
|
|
(C)
|
Any
distribution of a 409A Award triggered by a Participant’s termination of
employment shall be made only at the time that the Participant
has had a
“Separation
from Service”
within the meaning of Code Section 409A (or at such earlier
time preceding
a termination of employment that there occurs another event
triggering a
distribution under the Plan or the applicable Award Agreement
in
compliance with Code Section 409A);
|
|
(D)
|
Any
distribution of a 409A Award to a “Specified Employee,” as determined
under Code Section 409A, after Separation from Service, shall
occur at the
expiration of the six-month period following said Specified
Employee’s
Separation from Service. In the case of installment payments,
this
six-month delay shall not affect the timing of any installment
otherwise
payable after the six-month delay
period;
|
|
(E)
|
In
the case of any distribution of a 409A Award, the time and
form of payment
for such distribution will be specified in the Award Agreement,
which will
be provided to the Participant in the manner provided for
under Code
Section 409A; provided that, if the time and form of payment
for such
distribution is not otherwise specified in the Plan or an
Award Agreement
or other governing document, the distribution shall be made
in one lump
sum amount on March 15 in the calendar year following the
calendar year at
which the settlement of the Award is specified to occur,
any applicable
restriction lapses, or there is no longer a substantial risk
of forfeiture
applicable to such amounts;
|
| (ii) |
Distribution
upon Vesting. In the case of any Award providing for a distribution
upon
the lapse of a substantial risk of forfeiture, the time and
form of
payment for such distribution will be specified in the Award
Agreement,
which will be provided to the Participant in the manner provided
for under
Code Section 409A; provided that, if the timing and form
of payment of
such distribution is not otherwise specified in the Plan
or an Award
Agreement or other governing document, the distribution shall
be made in
one lump sum amount on March 15 of the calendar year following
the
calendar year in which the substantial risk of forfeiture
lapses.
|
| (iii) |
Scope
and Application of This Provision.
For
purposes of the Plan, references to a term or event (including
any
authority or right of the Company or a Participant) being
“permitted”
under Code Section 409A mean that the term or event will
not cause the
Participant to be deemed to be in constructive receipt of
compensation
relating to the 409A Award prior to the distribution of cash,
shares or
other property or to be liable for payment of interest or
a tax penalty
under Code Section 409A.
|
|
Section
8.
|
Corporate
Transactions.
|
|
(a)
|
Corporate
Transaction in which Awards are not Assumed.
Upon the occurrence of a Corporate Transaction in which outstanding
Options, Share Appreciation Rights, Restricted Stock Awards,
Stock Units,
and Other Stock-Based Awards are not being assumed or
continued:
|
| (i) |
All
outstanding shares of Restricted Stock shall be deemed to
have vested, and
all Stock Units shall be deemed to have vested and the shares
of Stock
subject thereto shall be delivered, immediately prior to
the occurrence of
such Corporate Transaction, and
|
| (ii) |
Either
of the following two actions shall be
taken:
|
|
(A)
|
fifteen
days prior to the scheduled consummation of a Corporate Transaction,
all
Options and Share Appreciation Rights outstanding hereunder
shall become
immediately exercisable and shall remain exercisable for
a period of
fifteen days, or
|
|
(B)
|
the
Committee may elect, in its sole discretion, to cancel any
outstanding
Awards of Options, Restricted Stock, Stock Units, and/or
Share
Appreciation Rights and pay or deliver, or cause to be paid
or delivered,
to the holder thereof an amount in cash or securities having
a value (as
determined by the Committee acting in good faith), in the
case of
Restricted Stock or Stock Units, equal to the formula or
fixed price per
share paid to holders of shares of Stock and, in the case
of Options or
Share Appreciation Rights, equal to the product of the number
of shares of
Stock subject to the Option or Share Appreciation Right (the
“Award
Shares”) multiplied by the amount, if any, by which (I) the formula
or fixed price per share paid to holders of shares of Stock
pursuant to
such transaction exceeds (II) the Option Price or Share Appreciation
Right
Exercise Price applicable to such Award
Shares.
|
|
(b)
|
Corporate
Transaction in which Awards are Assumed.
The Plan, Options, Share Appreciation Rights, Restricted
Stock Awards,
Stock Units, and Other Stock-Based Awards theretofore granted
shall
continue in the manner and under the terms so provided in
the event of any
Corporate Transaction to the extent that provision is made
in writing in
connection with such Corporate Transaction for the assumption
or
continuation of the Options, Share Appreciation Rights, Restricted
Stock
Awards, Stock Units, and Other Stock-Based Awards theretofore
granted, or
for the substitution for such Options, Share Appreciation
Rights,
Restricted Stock Awards, Stock Units, and Other Stock-Based
Awards for new
common stock options and stock appreciation rights and new
common stock
units and restricted stock relating to the stock of a successor
entity, or
a parent or subsidiary thereof, with appropriate adjustments
as to the
number of shares (disregarding any consideration that is
not common stock)
and option and stock appreciation right exercise prices in
accordance with
the provisions of Sections 5(b) and
10(c).
|
|
Section
9.
|
Additional
Award Forfeiture
Provisions.
|
|
Section
10.
|
General
Provisions.
|
|
(a)
|
Compliance
with Legal and Other Requirements.
|
| (i) |
The
Company may, to the extent deemed necessary or advisable
by the Committee,
postpone the issuance or delivery of Stock or payment of
other benefits
under any Award until completion of such registration or
qualification of
such Stock or other required action under any federal or
state law, rule
or regulation, listing or other required action with respect
to any stock
exchange or automated quotation system upon which the Stock
or other
securities of the Company are listed or quoted, or compliance
with any
other obligation of the Company, as the Committee may consider
appropriate, and may require any Participant to make such
representations,
furnish such information and comply with or be subject to
such other
conditions as it may consider appropriate in connection with
the issuance
or delivery of Stock or payment of other benefits in compliance
with
applicable laws, rules, and regulations, listing requirements,
or other
obligations. The foregoing notwithstanding, in connection
with a Corporate
Transaction, the Company shall take or cause to be taken
no action, and
shall undertake or permit to arise no legal or contractual
obligation,
that results or would result in any postponement of the issuance
or
delivery of Stock or payment of benefits under any Award
or the imposition
of any other conditions on such issuance, delivery or payment,
to the
extent that such postponement or other condition would represent
a greater
burden on a Participant than existed on the 90th day preceding
the
Corporate Transaction.
|
| (ii) |
If
the Participant is subject to the reporting requirements
of Section 16(a)
of the Securities Exchange Act of 1934, as amended, the grant
of this
Option shall not be effective until such person complies
with the
reporting requirement of Section
16(a).
|
|
(b)
|
Limits
on Transferability; Beneficiaries.
|
| (i) |
Awards
granted under the Plan shall not be transferable other than
by will or by
the laws of descent, and Options may be exercised as provided
for under
Section 6(b). A Beneficiary, transferee, or other person
claiming any
rights under the Plan from or through any Participant (except
in the case
of an Option which is governed by Section 6(b)) shall be
subject to all
terms and conditions of the Plan and any Award Agreement
applicable to
such Participant, except as otherwise determined by the Committee,
and to
any additional terms and conditions deemed necessary or appropriate
by the
Committee. Any attempted sale, pledge, assignment, hypothecation
or other
transfer of an Award contrary to the provisions hereof and
the levy of any
execution, attachment or similar process upon an Award shall
be null and
void and without force or effect and shall result in automatic
termination
of the Award.
|
| (ii) |
(A)
As a condition to the transfer of any shares of Stock issued
upon exercise
of an Award granted under this Plan, the Company may require
an opinion of
counsel, satisfactory to the Company, to the effect that
such transfer
will not be in violation of the Securities Act of 1933 or
any other
applicable securities laws or that such transfer has been
registered under
federal and all applicable state securities laws; (B) further,
the Company
shall be authorized to refrain from delivering or transferring
shares of
Stock issued under this Plan until the Board determines that
such delivery
or transfer will not violate applicable securities laws and
the
Participant has tendered to the Company any federal, state
or local tax
owed by the Participant as a result of exercising the Award,
or disposing
of any Stock, when the Company has a legal liability to satisfy
such tax;
(C) the Company shall not be liable for damages due to delay
in the
delivery or issuance of any stock certificate for any reason
whatsoever,
including, but not limited to, a delay caused by listing
requirements of
any securities exchange or any registration requirements
under the
Securities Act of 1933, the Securities Exchange Act of 1934,
or under any
other state or federal law, rule or regulations; (D) the
Company is under
no obligation to take any action or incur any expense in
order to register
or qualify the delivery or transfer of shares of Stock under
applicable
securities laws or to perfect any exemption from such registration
or
qualification; and (E) furthermore, the Company will have
no liability to
any Participant for refusing to deliver or transfer shares
of Stock if
such refusal is based upon the foregoing provisions of this
Paragraph.
|
|
(c)
|
Effect
of Certain Changes.
In
the event of any merger, reorganization, consolidation, recapitalization,
share dividend, share split, combination of shares or other
change in
corporate structure of the Company affecting the Stock, such
substitution
or adjustment shall be made in the aggregate number of Stock
reserved for
issuance under the Plan, in the number and option price of
Stock subject
to outstanding Options granted under the Plan, in the number
and purchase
price of Stock subject to outstanding Award Agreements granted
under the
Plan, including the number of SARs, the number of shares
of Restricted
Stock, and any other outstanding Awards granted under the
Plan as may be
approved by the Committee, in its sole discretion, but the
number of Stock
subject to any Award shall always be a whole number. Any
fractional shares
shall be eliminated. Notwithstanding the foregoing, any event
that results
in a reorganization, consolidation, recapitalization, share
dividend,
share split, combination of shares or other change in corporate
structure
of the Company that affects the Company’s Stock, any substitution or
adjustment of the number of shares of Stock underlying the
applicable
Award shall be done in accordance with Treasury Regulation
Section
1.409A-1(b)(5), so that such Award does not result in an
extension,
modification, or renewal, as such terms are defined under
Code Section
409A.
|
|
(d)
|
Tax
Provisions.
|
| (i) |
Withholding.
The Committee shall so require, as a condition of exercise,
each
Participant to agree that: (A) no later than the date of
exercise of any
Option granted hereunder, the optionee will pay to the Company
or make
arrangements satisfactory to the Committee regarding payment
of any
federal, state or local taxes of any kind required by law
to be withheld
upon the exercise of such Option; and (B) the Company shall,
to the extent
permitted or required by law, have the right to deduct federal,
state and
local taxes of any kind required by law to be withheld upon
the exercise
of such Option from any payment of any kind otherwise due
to the optionee.
For withholding tax purposes, the shares of Stock shall be
valued on the
date the withholding obligations are incurred. The Company
shall not be
obligated to advise any optionee of the existence of any
such tax or the
amount that the Company will be so required to
withhold.
|
| (ii) |
Required
Consent to and Notification of Code Section 83(b) Election.
No election under Code Section 83(b) or under a similar provision
of the
laws of a jurisdiction outside the United States may be made
unless
expressly permitted by the terms of the Award Agreement or
by action of
the Committee in writing prior to the making of such election.
In any case
in which a Participant is permitted to make such an election
in connection
with an Award, the Participant shall notify the Company of
such election
within ten days of filing notice of the election with the
Internal Revenue
Service or other governmental authority, in addition to any
filing and
notification required pursuant to regulations issued under
Code Section
83(b) or other applicable
provision.
|
| (iii) |
Requirement
of Notification upon Disqualifying Disposition under Code
Section
421(b).
If any Participant shall make any disposition of shares of
Stock delivered
pursuant to the exercise of an ISO under the circumstances
described in
Code Section 421(b) (i.e., a disqualifying disposition),
such Participant
shall notify the Company of such disposition within ten days
thereof.
|
| (iv) |
The
Company shall have the right, but not the obligation, to
contest, at its
expense, any tax ruling or decision, administrative or judicial,
on any
issue which is related to the Plan and which the Board believes
to be
important to holders of Options issued under the Plan and
to conduct any
such contest or any litigation arising therefrom to a final
decision.
|
|
(e)
|
Changes
to the Plan.
The Board at any time and from time to time may suspend,
terminate, modify
or amend the Plan; provided, however, that any amendment
that would: (i)
materially increase the benefits accruing to Participants
under the Plan,
or (ii) increase the number of shares of Stock as to which
Awards may be
granted under the Plan or materially modify the requirements
as to
eligibility for participation in the Plan shall be subject
to the approval
of a majority of the shareholders of the Company presented
or represented
and entitled to vote at a duly constituted and held meeting
of
shareholders. Any such increase or modification that may
result from
adjustments authorized by Section 10(c) hereof shall not
require such
approval. Except as otherwise provided, no suspension, termination,
modification or amendment of the Plan may adversely affect
any Award
previously granted, unless the written consent of the Participant
is
obtained.
|
|
(f)
|
Unfunded
Status of Awards, Creation of Trusts. The
Plan is intended to constitute an “unfunded” plan for equity incentive
compensation. With respect to any payments not yet made to
a Participant
or obligations to deliver Stock pursuant to an Award, nothing
contained in
the Plan or any Award shall give any such Participant any
rights that are
greater than those of a general creditor of the Company;
provided that the
Committee may authorize the creation of trusts and deposit
therein cash,
Stock, other Awards or other property, or make other arrangements
to meet
the Company’s obligations under the Plan. Such trusts or other
arrangements shall be consistent with the “unfunded” status of the Plan
unless the Committee otherwise
determines.
|
|
(g)
|
Nonexclusivity
of the Plan.
Neither
the adoption of the Plan by the Board nor its submission
to the
stockholders of the Company for approval shall be construed
as creating
any limitations on the power of the Board or a committee
thereof to adopt
such other incentive or compensation arrangements, apart
from the Plan, as
it may deem desirable, including incentive or compensation
arrangements
and awards that do not qualify under Code Section 162(m)
or to which Code
Section 409A does apply, and such other arrangements may
be either
applicable generally or only in specific
cases.
|
|
(h)
|
Payments
in the Event of Forfeitures; Fractional Shares. Unless
otherwise determined by the Committee, in the event of a
forfeiture of an
Award with respect to which a Participant paid cash consideration,
the
Participant shall be repaid the amount of such cash consideration.
No
fractional shares of Stock shall be issued or delivered pursuant
to the
Plan or any Award. The Committee shall determine whether
cash, other
Awards or other property shall be issued or paid in lieu
of such
fractional shares or whether such fractional shares or any
rights thereto
shall be forfeited or otherwise
eliminated.
|
|
(i)
|
Compliance
with Code Section 162(m).
|
| (i) |
It
is the intent of the Company that Options and SARs granted
to Covered
Employees and other Awards designated as Awards to Covered
Employees shall
constitute qualified “performance-based compensation” within the meaning
of Code Section 162(m) unless otherwise determined by the
Committee at the
time of the Award grant. The foregoing notwithstanding, because
the
Committee cannot determine with certainty whether a given
Participant will
be a Covered Employee with respect to a fiscal year that
has not yet been
completed, the term Covered Employee as used herein shall
mean only a
person designated by the Committee as likely to be a Covered
Employee with
respect to a specified fiscal year. If any provision of the
Plan or any
Award Agreement relating to an Award that is designated as
intended to
comply with Code Section 162(m) does not comply or is inconsistent
with
the requirements of Code Section 162(m), such provision shall
be construed
or deemed amended to the extent necessary to conform to such
requirements,
and no provision shall be deemed to confer upon the Committee
or any other
person discretion to increase the amount of compensation
otherwise payable
in connection with any such Award upon attainment of the
applicable
performance objectives.
|
| (ii) |
Notwithstanding
any other provision of this Plan to the contrary, the Company
may delay
the payment of any amount otherwise due to the Participant
under this Plan
if the Company reasonably anticipates that its deduction
resulting from
such payment, either alone or in combination with any other
amounts to be
paid or provided to under any section of this Plan or any
Award Agreement
associated with the Plan, would be reduced or eliminated
by the Code
Section 162(m) deduction limitation; provided, however, that
the Company
shall make payments to the Participant at the earliest date
at which the
Company believes the Code Section 162(m) deduction limitation
will no
longer reduce or eliminate the Company’s deduction for such
payments.
|
|
(j)
|
Governing
Law. The
validity, construction, and effect of the Plan, any rules
and regulations
relating to the Plan and any Award Agreement shall be determined
in
accordance with the laws of the State of Delaware, without
giving effect
to principles of conflicts of laws, and applicable provisions
of federal
law.
|
|
(k)
|
Limitation
on Rights Conferred Under Plan. Neither
the Plan nor any action taken hereunder shall be construed
as (i) giving
any Eligible Person or Participant the right to continue
as an Eligible
Person or Participant or in the employ or service of the
Company or a
Subsidiary or Affiliate, (ii) interfering in any way with
the right of the
Company or a Subsidiary or Affiliate to terminate any Eligible
Person’s or
Participant’s employment or service at any time (subject to the terms
and
provisions of any separate written agreements), (iii) giving
an Eligible
Person or Participant any claim to be granted any Award under
the Plan or
to be treated uniformly with other Participants and employees,
or (iv)
conferring on a Participant any of the rights of a stockholder
of the
Company unless and until the Participant is duly issued or
transferred
shares of Stock in accordance with the terms of an Award.
Any Award shall
not be deemed compensation for purposes of computing benefits
under any
retirement plan of the Company or any Subsidiary or Affiliate
and shall
not affect any benefits under any other benefit plan under
which the
availability or amount of benefits is related to the level
of compensation
(unless required by any such other plan or arrangement with
specific
reference to Awards under this
Plan).
|
|
(l)
|
Termination
of Right of Action.
Every right of action arising out of or in connection with
the Plan by or
on behalf of the Company or of any Subsidiary or Affiliate,
or by any
shareholder of the Company or of any Subsidiary or Affiliate
against any
past, present or future member of the Board, or against any
employer, or
by an employee (past, present or future) against the Company
or any
Subsidiary or Affiliate will, irrespective of the place where
an action
may be brought and irrespective of the place of residence
of any such
shareholder, director or employee, cease and be barred as
of the
expiration of three years from the date of the act or omission
in respect
of which such right of action is alleged to have
risen.
|
|
(m)
|
Assumption.
The
terms and conditions of any outstanding Awards granted pursuant
to this
Plan shall be assumed by, be binding upon and inure to the
benefit of any
successor company to the Company and shall continue to be
governed by, to
the extent applicable, the terms and conditions of this Plan.
Such
successor Company shall not be otherwise obligated to assume
this
Plan.
|
|
(n)
|
Severability;
Entire Agreement. If
any of the provisions of this Plan or any Award document
is finally held
to be invalid, illegal or unenforceable (whether in whole
or in part),
such provision shall be deemed modified to the extent, but
only to the
extent, of such invalidity, illegality or unenforceability,
and the
remaining provisions shall not be affected thereby; provided,
that, if any
of such provisions is finally held to be invalid, illegal,
or
unenforceable because it exceeds the maximum scope determined
to be
acceptable to permit such provision to be enforceable, such
provision
shall be deemed to be modified to the minimum extent necessary
to modify
such scope in order to make such provision enforceable hereunder.
The Plan
and any Award Agreements contain the entire agreement of
the parties with
respect to the subject matter thereof and supersede all prior
agreements,
promises, covenants, arrangements, communications, representations
and
warranties between them, whether written or oral with respect
to the
subject matter thereof. No rule of strict construction shall
be applied
against the Company, the Committee, or any other person in
the
interpretation of any terms of the Plan, Award, or agreement
or other
document relating thereto.
|
|
(o)
|
Plan
Effective Date.
The Plan will become effective if, and at such time as, the
stockholders
of the Company have approved it by the affirmative votes
of the holders of
a majority of the voting securities of the Company present,
or
represented, and entitled to vote on the subject matter at
a duly held
meeting of stockholders, provided that the total vote cast
on the proposal
represents over 50 percent in interest of all securities
entitled to vote
on the proposal. The date of such stockholder approval will
be the
Effective Date. Unless earlier terminated by action of the
Board, the
authority of the Committee to make grants under the Plan
will terminate on
the date that is ten years after the latest date upon which
stockholders
of the Company have approved the Plan and the Plan will remain
in effect
until such time as the Company has no further rights or obligations
with
respect to outstanding Awards or otherwise under the
Plan.
|
|
(p)
|
Adoption.
|
| _______________ (i) |
This
Plan was approved by the Board of Directors of the Company
at a
meeting
on August 22, 2007.
|
| ______________ (ii) |
This
Plan was approved by the shareholders of the Company at a
meeting
on _______________, 2007.
|
|
REEDS,
INC.
By:
___________________
|
|
(1)
|
(INSTRUCTIONS:
To withhold authority to vote for any individual nominee,
strike a line
through the nominee's name listed below)
|
o FOR all nominees listed herein (except as marked up to the contrary below). | o WITHHOLD AUTHORITY to vote for all nominees listed below. | ||
| 01-Christopher J. Reed | 02-Judy Holloway Reed | 03-Mark Harris | |||
|
04-Dr.
D.S.J. Muffoletto, N.D.
|
05-Michael
Fischman
|
||||
|
(2)
|
To
consider and vote upon an amendment to our certificate
of incorporation to
increase the authorized number of shares of common stock
from 11,500,000
shares to 19,500,000 shares.
|
||||
|
o
FOR o
AGAINST o
ABSTAIN
|
|||||
| (3) |
To
adopt our 2007 Stock Incentive Plan (the “2007 Plan”) and to reserve up to
1,500,000 shares of common stock for issuance under the
2007
Plan.
|
||||
|
o
FOR o
AGAINST o
ABSTAIN
|
|||||
| PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED, PRE-PAID ENVELOPE. | |||||
|
Please
date and execute this Proxy exactly as your name appears
hereon. When
shares are held by joint tenants, both should sign. When
signing as
attorney, executor, administrator, trustee or guardian,
please give full
title as such. If a corporation, please sign in full
corporate name by the
president or other authorized officer. If a partnership,
please sign in
partnership name by authorized person.
|
|||||
| Dated: ___________________________, 2007 | |||||
| ________________________________ | |||||
|
Signature
|
|||||
| ________________________________ | |||||
|
Signature,
if held jointly
|
|||||