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x
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Preliminary
Proxy Statement
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¨
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Confidential,
For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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¨
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Definitive
Proxy Statement
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¨
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Definitive
Additional Materials
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¨
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Soliciting
Material Pursuant to § 240.14a-12
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¨
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No
fee required.
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¨
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1)
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Title
of each class of securities to which transaction
applies:
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(2)
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Aggregate
number of securities to which transaction applies:
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(3)
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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):
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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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x
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Fee
paid previously with preliminary materials.
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¨
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Check
box if any part of the fee is offset as provided by Exchange Act
Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid
previously. Identify the previous filing by registration statement
number,
or the form or schedule and the date of its
filing.
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(1)
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Amount
previously paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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(3)
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Filing
Party:
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(4)
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Date
Filed:
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1.
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A
proposal to approve the potential issuance of up to 50,000,000 shares
of
our common stock, par value $0.001 per share upon the conversion
of our
Series A Convertible Preferred Stock and the resulting change of
control
that will occur in connection with the share
issuance.
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2.
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A
proposal to approve an amendment to our certificate of incorporation
to
increase the authorized shares of our common stock from 35,000,000
to
400,000,000.
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3.
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A
proposal elect six (6) directors of the Company to serve until the
2008
Annual Meeting of Stockholders or until their successors have been
duly
elected and qualified;
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4.
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A
proposal to adopt the 2008 Stock Incentive
Plan;
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5.
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Such
other business as properly may come before the special meeting or
any
adjournments or postponements
thereof.
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/s/Yossi
Attia
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Yossi
Attia
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Page
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QUESTIONS
AND ANSWERS ABOUT THE SPECIAL MEETING
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5
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GENERAL
INFORMATION ABOUT THE SPECIAL MEETING
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8
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GENERAL
INFORMATION ABOUT VOTING
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8
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APPROVAL
OF ISSUANCE OF COMMON STOCK UPON CONVERSION OF THE SERIES A CONVERTIBLE
PREFERRED STOCK (PROPOSAL NO. 1)
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11
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APPROVAL
OF THE AMENDMENT TO INCREASE THE AUTHORIZED SHARES OF CAPITAL STOCK
(PROPOSAL NO. 2)
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21
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ELECTION
OF SIX (6) DIRECTORS (PROPOSAL NO. 3)
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23
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APPROVAL
OF THE 2008 STOCK INCENTIVE PLAN (PROPOSAL NO. 4)
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27
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OTHER
BUSINESS
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31
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STOCKHOLDERS’
PROPOSALS FOR 2007 ANNUAL MEETING
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31
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IMPORTANT
NOTICE REGARDING DELIVERY OF STOCKHOLDER DOCUMENTS
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31
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ELECTRONIC
ACCESS TO ANNUAL MEETING MATERIALS
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31
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WHERE
YOU CAN FIND MORE INFORMATION
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32
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INDEX
TO FINANCIAL STATEMENTS
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ANNEXES
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Annex
A
|
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Certificate
of Designation of Preferences, Rights and Limitations of Series A
Preferred Stock
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Annex
B
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Certificate
of Amendment of the Restated Certificate of Incorporation (Increase
in
Authorized Shares)
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Annex
C
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2008
Stock Incentive Plan
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Q:
|
Why
am I receiving these
materials?
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A:
|
You
are receiving this proxy statement for a special meeting of stockholders
because we have acquired DCG pursuant to the terms of an Agreement
and
Plan of Exchange, as amended, among us, DCG and the members of
DCG holding
all of the issued and outstanding membership interest of DCG, dated
May 1,
2008, pursuant to which we issued shares of Series A Preferred
Stock. We
are seeking shareholder approval for the issuance of up to 50,000,000
shares of common stock upon conversion of the Series A Preferred
Stock.
Further, we are also seeking approval in connection with the amendment
of
our certificate of incorporation to increase our authorized from
35,000,000 to 400,000,000 and the adoption of our 2008 Stock Incentive
Plan as well as electing six (6) new directors and adopting a 2008
Stock
Incentive Plan.
|
|
This
proxy statement contains important information about the terms of
the
Series A Preferred Stock, the issuance of our common stock pursuant
to the
Series A Preferred Stock and the resulting change of control that
will
occur in connection with the share issuance, the proposed amendment
to our
certificate of incorporation, the adoption of our 2008 Stock Incentive
Plan and the election of our directors. You should read it
carefully.
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Q:
|
When
and where is the special meeting of
stockholders?
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A:
|
The
special meeting will be held at 468
North Camden Dr. Second Floor, Beverly Hills, CA 90210_
at 11:30 a.m., local time, on *,
2008.
|
| Q: |
What
matters will be voted on at the special
meeting?
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A:
|
You
will be asked to consider and vote on the following
proposals:
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|
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1.
|
Proposal
No. 1—approval of the issuance of up to 50,000,000 shares of our common
stock upon the conversion and the resulting change of control that
will
occur in connection with the share
issuance;
|
|
|
2.
|
Proposal
No. 2—approval of an amendment to our certificate of incorporation to
increase the authorized shares of common stock from 35,000,000 to
400,000,000;
|
|
|
3.
|
Proposal
No. 3 - election of six (6) directors of the Company to serve until
the
2008 Annual Meeting of Stockholders or until their successors have
been
duly elected and qualified;
|
|
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4.
|
Proposal
No. 4 - authorizing the adoption of the 2008 Stock Incentive Plan;
and
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|
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5.
|
Such
other business as properly may come before the special meeting
or any
adjournments or postponements
thereof.
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Q:
|
How
does Emvelco’ Board of Directors recommend that I vote on the
proposals?
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A:
|
After
careful consideration, our board of directors recommends that our
stockholders vote:
|
|
|
•
|
|
“FOR”
Proposal No. 1 to approve the issuance of up to 50,000,000 shares of
our common stock, par value $0.001 per share, upon the conversion
of the
Series A Convertible Preferred Stock and the resulting change of
control
that will occur in connection with the share
issuance;
|
|
|
•
|
|
“FOR”
Proposal No. 2 to approve an amendment to our certificate of
incorporation to increase the number of authorized shares of our
common
stock from 35,000,000 to
400,000,000;
|
|
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•
|
|
“FOR”
Proposal No. 3 to election the of the nominee directors;
and
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|
•
|
|
“FOR”
Proposal No. 4 to approve the adoption of the 2008 Stock Incentive
Plan.
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|
Q:
|
Who
is entitled to vote?
|
|
A:
|
The
securities that can be voted at the special meeting consist of our
common
stock, $0.001 par value per share with each share of common stock
entitling its holder to one vote on each matter submitted to the
stockholders.
|
|
Q:
|
What
stockholder approvals are required to approve the share issuance
in
connection with the conversion of the shares of preferred stock and
the
resulting change of control that will occur in connection with the
share
issuance, the amendment to the certificate of incorporation, the
election
of the nominee directors and the adoption of the 2008 Stock Incentive
Plan?
|
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A:
|
The
presence, in person or by proxy, of a majority in voting power of
the
outstanding shares of our common stock is necessary to constitute
a quorum
at the special meeting. Abstentions and broker non-votes will be
counted
towards a quorum. The approvals required to approve the Proposals
are as
follows:
|
|
|
•
|
|
Proposal
No. 1—approval of the issuance of up to 50,000,000 shares of our
common stock upon conversion of the shares of Preferred Stock and
the
resulting change of control that will occur in connection with
the share
issuance—although we are not required to obtain shareholder approval for
this item we are seeking the affirmative vote of the holders of a majority
in voting power of our common stock present, in person or represented
by
proxy, and entitled to vote at the special
meeting.
|
|
|
•
|
|
Proposal
No. 2—approval of an amendment to our certificate of incorporation to
increase the authorized shares of our common stock from 35,000,000
to
400,000,000—the vote required to approve Proposal No. 2 is governed
by Delaware law and requires the affirmative vote of the holders
of a
majority in voting power of our outstanding common
stock.
|
|
|
-
|
Proposal
No. 3 - election of six (6) directors of the Company to serve until
the
2008 Annual Meeting of Stockholders or until their successors have
been
duly elected and qualified requires the affirmative vote of the holders
of
a plurality of the shares of common stock represented at the special
meeting in
person or by proxy and entitled to vote.
|
|
|
4.
|
Proposal
No. 4 - authorizing the adoption of the 2008 Stock Incentive Plan
requires
the affirmative vote of the holders of a majority of the shares of
the
Company's Common Stock present at the Special Meeting in person or
by
proxy and entitled to vote and constituting at least a majority of
the
required quorum.
|
|
Q:
|
How
do I cast my vote if I am a holder of
record?
|
|
A:
|
After
carefully reading and considering the information contained in this
proxy
statement, if you are a holder of record, you may vote in person
at the
special meeting or by
VOTING
BY MAIL. You may vote by mail by marking, signing and dating the
enclosed
proxy card as promptly as possible and returning it in the enclosed
postage-paid envelope. Proxies should not be sent by the stockholder
to
the Company, but to American Stock Transfer and Trust Company, the
Company's Registrar and Transfer Agent, at 59 Maiden Lane, New York,
New
York 10038. A pre-addressed, postage-paid envelope is provided for
this
purpose.
VOTING
BY TELEPHONE. You may vote by telephone by dialing the toll free
number on
the enclosed proxy card and casting your vote in accordance with
the
instructions given to you on the telephone. Telephone voting is available
24 hours a day. If you vote by telephone you should not return your
proxy
card.
VOTING
VIA THE INTERNET. You may vote via the Internet by visiting the website
shown on the enclosed proxy card. Internet voting is also available
24
hours a day. If you vote via the Internet you should not return your
proxy
card.
|
|
Q:
|
If
my shares are held in “street name” will someone else vote my shares for
me?
|
|
A:
|
If
you hold your shares in “street name” (which means your shares are held of
record by a broker, bank or nominee), you must provide the record
holder
of your shares with instructions on how to vote your shares. If you
do not
provide your broker, bank or nominee with instructions on how to
vote your
shares, such person or entity may not be permitted to vote your shares.
Also, under the rules of the New York Stock Exchange and American
Stock
Exchange, which we refer to as the Exchanges, that govern most domestic
stock brokerage firms, member firms that hold shares in street name
for
beneficial owners may, to the extent that such beneficial owners
do not
furnish voting instructions with respect to any or all proposals
submitted
for stockholder action, vote in their discretion upon proposals which
are
considered “discretionary” proposals under the rules of the Exchanges.
These votes by brokerage firms are considered as votes cast in determining
the outcome of any discretionary proposal. Member brokerage firms
that
have received no instructions from their clients as to “non-discretionary”
proposals do not have discretion to vote on these proposals. If the
brokerage firm returns a proxy card without voting on a non-discretionary
proposal because it received no instructions, this is referred to
as a
“broker non-vote” on the proposal. “Broker non-votes” are considered in
determining whether a quorum exists at the special meeting for each
proposal. Broker non-votes will have the same effect as “AGAINST” votes
for any proposal except Proposal Nos. 1 and 5. For Proposal Nos.
1 and 5,
broker non-votes will have no effect and will not be counted towards
the
vote total.
|
|
Q:
|
When
should I send in my proxy
card?
|
|
A:
|
You
should send in your proxy card by mail as soon as possible so that
your
shares will be voted at the special
meeting.
|
|
Q:
|
Can
I change my vote after I have delivered my
proxy?
|
|
A:
|
Yes.
Any stockholder delivering a proxy has the power to revoke it at
any time
before it is voted (1) by giving written notice to Robin Ann
Gorelick, Esq., at c/o Law Offices of Gorelick & Associates, 468 N.
Camden Drive Suite 361D, Beverly Hills, CA 90210, (2) by
executing and delivering a proxy card bearing a later date or (3) by
voting in person at the special meeting. Please note, however, that
under
the rules of the Exchanges and the NASDAQ Stock Market, any beneficial
owner of our common stock whose shares are held in street name by
a member
brokerage firm may revoke his or her proxy and vote his or her shares
in
person at the special meeting only in accordance with applicable
rules and
procedures of the Exchanges and the NASDAQ Stock Market, as employed
by
the beneficial owner’s brokerage
firm.
|
|
Q:
|
May
I vote in person?
|
|
A:
|
Yes.
You may attend the special meeting and vote your shares in person.
If you
hold shares in “street name” through a broker or other nominee, you must
provide a legal proxy executed by your broker or other nominee to
vote
your shares at the meeting.
|
|
Q:
|
What
should I do if I receive more than one set of voting
materials?
|
|
A:
|
You
may receive more than one set of voting materials, including multiple
copies of this document and multiple proxy cards or voting instruction
cards. For example, if you hold your shares in more than one brokerage
account, you will receive a separate voting instruction card for
each
brokerage account in which you hold shares. If you are a holder of
record
and your shares are registered in more than one name, you will receive
more than one proxy card. Please complete, sign, date and return
each
proxy card and voting instruction card that you
receive.
|
|
Q:
|
Who
can help answer my
questions?
|
|
A:
|
If
you have any questions about the Plan of Exchange Agreement, the
issuance
of shares pursuant to the Plan of Exchange Agreement, the amendment
to our
certificate of incorporation or any of the other proposals, or about
how
to submit your proxy, or if you need additional copies of this document
or
the enclosed proxy card, you should
contact:
|
|
Q:
|
Who
is soliciting my proxy and bearing the cost of this proxy
solicitation?
|
|
A:
|
Emvelco
is making the solicitations made in this proxy statement. We will
pay the
solicitation costs, which includes the cost of printing and distributing
proxy materials and soliciting of votes. Our directors, officers
and
employees may solicit proxies without additional compensation.
|
|
Q:
|
Where
can I find more information about the
companies?
|
|
A:
|
You
can find more information about us from various sources described
under
“Where You Can Find More Information” below.
|
|
1.
|
approval
of the issuance of up to 50,000,000 shares of our common stock
upon the
conversion and the resulting change of control that will occur
in
connection with the share
issuance;
|
|
2.
|
an
amendment to our certificate of incorporation to increase the authorized
shares of our common stock from 35,000,000 to
400,000,000;
|
|
3.
|
election
of six (6) directors of the Company to serve until the 2008 Annual
Meeting
of Stockholders or until their successors have been duly elected
and
qualified;
|
|
4.
|
authorizing
the adoption of the 2008 Stock Incentive Plan;
and
|
|
5.
|
such
other business as properly may come before the special meeting
or any
adjournments or postponements
thereof.
|
|
|
•
|
|
each
person expected to be a director or executive officer of the combined
company;
|
|
|
•
|
|
each
person expected to be the beneficial owner of more than 5% of our
common
stock anticipated to be outstanding after conversion of the shares
of
Series A Preferred Stock; and
|
|
|
•
|
|
all
such directors and executive officers as a
group.
|
|
Name
and Address of Beneficial Owner
|
Shares
Beneficially
Owned
|
Percentage Beneficially Owned
|
|||||
|
PMFT
Holdings, Ltd. (1)
|
15,000,000
|
26.21
|
%
|
||||
|
Corporate
Group Services Limited (2)
|
15,000,000
|
26.21
|
%
|
||||
|
Sully,
LLC (3)
|
10,000,000
|
17.47
|
%
|
||||
|
Beacon
Financial Corp. (4)
|
10,000,000
|
17.47
|
%
|
||||
|
Atia
Family Trust (5)
|
1,610,619
|
2.81
|
%
|
||||
|
Yossi
Attia (5)
|
1,610,619
|
2.81
|
%
|
|
|
High
($)
|
Low
($)
|
|||||
|
Quarter
Ended:
|
|
|
|||||
|
|
|
|
|||||
|
2006
|
|
|
|||||
|
March
31, 2006
|
4.05
|
3.14
|
|||||
|
June
30, 2006
|
3.35
|
2.36
|
|||||
|
September
30, 2006
|
2.61
|
1.41
|
|||||
|
December
31, 2006
|
2.76
|
1.67
|
|||||
|
2007
|
|||||||
|
March
31, 2007
|
1.93
|
1.30
|
|||||
|
June
30, 2007
|
1.60
|
1.17
|
|||||
|
September
30, 2007
|
1.56
|
0.92
|
|||||
|
December
31, 2007
|
1.10
|
0.40
|
|||||
|
|
|||||||
|
2008
|
|||||||
|
March
31 2008
|
1.60
|
0.41
|
|||||
|
June
30, 2008
|
1.44
|
0.43
|
|||||
|
Name & Principal Position
|
Year
|
Salary ($)
|
Bonus ($)
|
Stock
Awards($)
|
Option
Awards ($)
|
Total ($)
|
|||||||||||||
|
Yossi
Attia
|
2007
|
$
|
240,000
|
120,000
|
$
|
—
|
—
|
$
|
360,000
|
||||||||||
|
Robin
Gorelick
|
2007
|
155,000
|
—
|
—
|
—
|
155,000
|
|||||||||||||
|
|
|||||||||||||||||||
|
Totals
|
2007
|
$
|
395,000
|
120,000
|
$
|
—
|
$
|
515,000
|
|||||||||||
|
Yossi
Attia (1) (2)
|
2006
|
$
|
184,000
|
—
|
$
|
93,750
|
—
|
$
|
277,750
|
||||||||||
|
|
Option
Awards
|
Stock
Awards
|
||||||||||||||||||||||||||
|
Name
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
Number
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
(#)
|
|
Market
Value
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
($)
|
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
(#)
|
|
Equity
Incentive
Plan
Awards:
Market
or
Payout
Value
of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
($)
|
|
||||||||||||
|
Yossi
Attia (1)
|
100,000
|
(2)
|
—
|
—
|
$
|
3.40
|
03/12/2011
|
50,000
|
(3)
|
$
|
92,500
|
(3)
|
—
|
—
|
||||||||||||||
|
(1)
|
Mr.
Attia was appointed as Chief Executive Officer of the Company on
August
14, 2006.
|
|
(2)
|
On
March 22, 2005, the Company granted 100,000 options to Yossi Attia.
The
stock options granted vest at the rate of 25,000 options on each
September
22 of 2005, 2006, 2007 and 2008, respectively. The exercise price
of the
options ($3.40) is equal to the market price on the date the options
were
granted.
|
|
(3)
|
In
accordance with Mr. Attia’s employment agreement, Mr. Attia was entitled
to receive 111,458 shares of common stock for the first year. No
shares
have been issued. The 25,000 option represents the shares of common
stock
that have not vested to date. The value of such shares is based on
the
closing price for the Company’s common stock of $0.51 as of December 31,
2007.
|
|
Name
|
Fees
Earned
or
Paid
in
Cash
|
Stock
Awards
|
Option
Awards
|
All
Other Compensation
|
Total
|
|||||||||||
|
Stewart
Reich
|
$
|
65,000
|
—
|
—
|
—
|
$
|
65,000
|
|||||||||
|
Ilan
Kenig
|
50,000
|
—
|
—
|
—
|
50,000
|
|||||||||||
|
Darren
C Dunckel*)
|
120,000
|
—
|
—
|
—
|
120,000
|
|||||||||||
|
Gerald
Schaffer
|
50,000
|
—
|
—
|
—
|
50,000
|
|||||||||||
|
|
||||||||||||||||
|
Total
|
$
|
285,000
|
—
|
—
|
—
|
$
|
285,000
|
|||||||||
|
Name
|
Shares
acquired
on
exercise
(#)
|
Value
realized
($)
|
Number
of
securities
underlying
unexercised
options/SARs
at
FY-end (#)
Exercisable/
Unexercisable
|
Value
of the unexercised
in
the money options/SARs
at
FY-end
($)*
Exercisable/
Unexercisable
|
|||||||||
|
Yossi
Attia, CEO, Director
|
None
|
None
|
100,000
|
$
|
0.00
|
||||||||
|
1.
|
If
your shares are registered in your own name, please contact our transfer
agent by writing to them at American Stock Transfer and Trust Company,
the
Company's Registrar and Transfer Agent, at 59 Maiden Lane, New York,
New
York 10038 (Attn: Emvelco Corp. Representative) or calling
*.
|
|
2.
|
If
a bank, broker or other nominee holds your shares, please contact
your
bank, broker or other nominee
directly.
|
|
|
|
Name:
Robin Ann Gorelick
|
|
Title:
Company Secretary
|
|
Date
to Effect Conversion
|
|
Number
of shares of Preferred Stock owned prior to Conversion
|
|
Number
of shares of Preferred Stock to be Converted
|
|
Stated
Value of shares of Preferred Stock to be Converted
|
|
Number
of shares of Common Stock to be Issued
|
|
Applicable
Set Price
|
|
Number
of shares of Preferred Stock subsequent to Conversion
|
| EMVELCO CORP. | |
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
1.
|
Definitions.
|
|
(a)
|
"Board"
-
The Board of Directors of the
Company.
|
|
(b)
|
"Code"
-
The Internal Revenue Code of 1986, as amended from time to
time.
|
|
(c)
|
"Committee"
-
The Compensation Committee of the Company's Board, or such other
committee
of the Board that is designated by the Board to administer the Plan,
composed of not less than two members of the Board all of whom are
disinterested persons, as contemplated by Rule 16b-3 ("Rule
16b-3")
promulgated under the Securities Exchange Act of 1934, as amended
(the
"Exchange
Act").
|
|
(d)
|
"Company"
-
EMVELCO CORP. and its subsidiaries including subsidiaries of
subsidiaries.
|
|
(e)
|
"Exchange
Act"
-
The Securities Exchange Act of 1934, as amended from time to
time.
|
|
(f)
|
"Fair
Market Value"
-
The fair market value of the Company's issued and outstanding Stock
as
determined in good faith by the Board or
Committee.
|
|
(g)
|
"Grant"
-
The grant of any form of stock option, stock award, or stock purchase
offer, whether granted singly, in combination or in tandem, to a
Participant pursuant to such terms, conditions and limitations as
the
Committee may establish in order to fulfill the objectives of the
Plan.
|
|
(h)
|
"Grant
Agreement"
-
An agreement between the Company and a Participant that sets forth
the
terms, conditions and limitations applicable to a
Grant.
|
|
(i)
|
"Option"
-
Either an Incentive Stock Option, in accordance with Section 422
of Code,
or a Nonstatutory Option, to purchase the Company's Stock that may
be
awarded to a Participant under the Plan. A Participant who receives
an
award of an Option shall be referred to as an "Optionee."
|
|
(j)
|
"Participant"
-
A director, officer, employee or consultant of the Company to whom
an
Award has been made under the Plan.
|
|
(k)
|
"Restricted
Stock Purchase Offer"
-
A Grant of the right to purchase a specified number of shares of
Stock
pursuant to a written agreement issued under the
Plan.
|
|
(l)
|
"Securities
Act"
-
The Securities Act of 1933, as amended from time to
time.
|
|
(m)
|
"Stock"
-
Authorized and issued or unissued shares of common stock of the
Company.
|
|
(n)
|
"Stock
Award"
-
A Grant made under the Plan in stock or denominated in units of stock
for
which the Participant is not obligated to pay additional
consideration.
|
|
2.
|
Administration.
The Plan shall be administered by the Board, provided however, that
the
Board may delegate such administration to the Committee. Subject
to the
provisions of the Plan, the Board and/or the Committee shall have
authority to (a) grant, in its discretion, Incentive Stock Options
in
accordance with Section 422 of the Code, or Nonstatutory Options,
Stock
Awards or Restricted Stock Purchase Offers; (b) determine in good
faith
the fair market value of the Stock covered by any Grant; (c) determine
which eligible persons shall receive Grants and the number of shares,
restrictions, terms and conditions to be included in such Grants;
(d)
construe and interpret the Plan; (e) promulgate, amend and rescind
rules
and regulations relating to its administration, and correct defects,
omissions and inconsistencies in the Plan or any Grant; (f) consistent
with the Plan and with the consent of the Participant, as appropriate,
amend any outstanding Grant or amend the exercise date or dates thereof;
(g) determine the duration and purpose of leaves of absence which
may be
granted to Participants without constituting termination of their
employment for the purpose of the Plan or any Grant; and (h) make
all
other determinations necessary or advisable for the Plan's administration.
The interpretation and construction by the Board of any provisions of the
Plan or selection of Participants shall be conclusive and final.
No member
of the Board or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any
Grant
made thereunder.
|
|
3.
|
Eligibility.
|
|
(a)
|
General:
The persons who shall be eligible to receive Grants shall be directors,
officers, employees or consultants to the Company. The term consultant
shall mean any person, other than an employee, who is engaged by
the
Company to render services and is compensated for such services.
An
Optionee may hold more than one Option. Any issuance of a Grant to
an
officer or director of the Company subsequent to the first registration
of
any of the securities of the Company under the Exchange Act shall
comply
with the requirements of Rule
16b-3.
|
|
(b)
|
Incentive
Stock Options:
Incentive Stock Options may only be issued to employees of the Company.
Incentive Stock Options may be granted to officers or directors,
provided
they are also employees of the Company. Payment of a director's fee
shall
not be sufficient to constitute employment by the
Company.
|
|
(c)
|
Nonstatutory
Option:
The provisions of the foregoing Section 3(b) shall not apply to any
Option
designated as a "Nonstatutory
Option"
or which sets forth the intention of the parties that the Option
be a
Nonstatutory Option.
|
|
(d)
|
Stock
Awards and Restricted Stock Purchase Offers:
The provisions of this Section 3 shall not apply to any Stock Award
or
Restricted Stock Purchase Offer under the
Plan.
|
|
4.
|
Stock.
|
|
(a)
|
Authorized
Stock:
Stock subject to Grants may be either unissued or reacquired
Stock.
|
|
(b)
|
Number
of Shares:
Subject to adjustment as provided in Section 5(i) of the Plan, the
total
number of shares of Stock which may be purchased or granted directly
by
Options, Stock Awards or Restricted Stock Purchase Offers, or purchased
indirectly through exercise of Options granted under the Plan shall
not
exceed FIVE MILLION (5,000,000). If any Grant shall for any reason
terminate or expire, any shares allocated thereto but remaining
unpurchased upon such expiration or termination shall again be available
for Grants with respect thereto under the Plan as though no Grant
had
previously occurred with respect to such shares. Any shares of Stock
issued pursuant to a Grant and repurchased pursuant to the terms
thereof
shall be available for future Grants as though not previously covered
by a
Grant.
|
|
(c)
|
Reservation
of Shares:
The Company shall reserve and keep available at all times during
the term
of the Plan such number of shares as shall be sufficient to satisfy
the
requirements of the Plan. If, after reasonable efforts, which efforts
shall not include the registration of the Plan or Grants under the
Securities Act, the Company is unable to obtain authority from any
applicable regulatory body, which authorization is deemed necessary
by
legal counsel for the Company for the lawful issuance of shares hereunder,
the Company shall be relieved of any liability with respect to its
failure
to issue and sell the shares for which such requisite authority was
so
deemed necessary unless and until such authority is
obtained.
|
| (d) |
Application
of Funds:
The
proceeds received by the Company from the sale of Stock pursuant
to the
exercise of Options or rights under Stock Purchase Agreements will
be used
for general corporate purposes.
|
|
(e)
|
No
Obligation to Exercise:
The issuance of a Grant shall impose no obligation upon the Participant
to
exercise any rights under such
Grant.
|
|
5.
|
Terms
and Conditions of Options. Options granted hereunder shall be evidenced
by
agreements between the Company and the respective Optionees, in such
form
and substance as the Board or Committee shall from time to time approve.
The form of Incentive Stock Option Agreement attached hereto as
Exhibit
A
and the three forms of a Nonstatutory Stock Option Agreement for
employees, for directors and for consultants, attached hereto as
Exhibit
B-1, Exhibit
B-2
and
Exhibit B-3,
respectively, shall be deemed to be approved by the Board. Option
agreements need not be identical, and in each case may include such
provisions as the Board or Committee may determine, but all such
agreements shall be subject to and limited by the following terms
and
conditions:
|
|
(a)
|
Number
of Shares:
Each Option shall state the number of shares to which it
pertains.
|
|
(b)
|
Exercise
Price:
Each Option shall state the exercise price, which shall be determined
as
follows:
|
| (i) |
Any
Incentive Stock Option granted to a person who at the time the Option
is
granted owns (or is deemed to own pursuant to Section 424(d) of the
Code)
stock possessing more than ten percent (10%) of the total combined
voting
power or value of all classes of stock of the Company ("Ten
Percent Holder")
shall have an exercise price of no less than 110% of the Fair Market
Value
of the Stock as of the date of grant;
and
|
| (ii) |
Incentive
Stock Options granted to a person who at the time the Option is granted
is
not a Ten Percent Holder shall have an exercise price of no less
than 100%
of the Fair Market Value of the Stock as of the date of
grant.
|
|
(c)
|
Medium
and Time of Payment:
The exercise price shall become immediately due upon exercise of
the
Option and shall be paid in cash or check made payable to the Company
or
as follows:
|
| (i) |
in
shares of Stock held by the Optionee,
or
|
| (ii) |
through
a special sale and remittance procedure pursuant to which the Optionee
shall concurrently provide irrevocable written instructions (a) to
a
Company designated brokerage firm to effect the immediate sale of
the
purchased shares and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares plus all applicable
Federal, state and local income and employment taxes required to
be
withheld by the Company by reason of such purchase and (b) to the
Company
to deliver the certificates for the purchased shares directly to
such
brokerage firm in order to complete the sale
transaction.
|
|
(d)
|
Term
and Exercise of Options:
In
no event shall any Option be exercisable after the expiration of
ten (10)
years from the date it is granted, and no Incentive Stock Option
granted
to a Ten Percent Holder shall, by its terms, be exercisable after
the
expiration of five (5) years from the date of the Option. Unless
otherwise
specified by the Board or the Committee in the resolution authorizing
such
Option, the date of grant of an Option shall be deemed to be the
date upon
which the Board or the Committee authorizes the granting of such
Option.
|
|
(e)
|
Termination
of Status as Employee, Consultant or Director:
If
Optionee's status as an employee shall terminate for any reason other
than
Optionee's disability or death, then Optionee (or if the Optionee
shall
die after such termination, but prior to exercise, Optionee's personal
representative or the person entitled to succeed to the Option) shall
have
the right to exercise the portions of any of Optionee's Incentive
Stock
Options which were exercisable as of the date of such termination,
in
whole or in part, not less than 30 days nor more than three (3) months
after such termination (or, in the event of "termination
for good cause"
as that term is defined in Delaware case law related thereto, or
by the
terms of the Plan or the Option Agreement or an employment agreement,
the
Option shall automatically terminate as of the termination of employment
as to all shares covered by the Option).
|
|
(f)
|
Disability
of Optionee:
If
an Optionee is disabled (within the meaning of Section 22(e)(3) of
the
Code) at the time of termination, the three (3) month period set
forth in
Section 5(e) shall be a period, as determined by the Board and set
forth
in the Option, of not less than six months nor more than one year
after
such termination.
|
|
(g)
|
Death
of Optionee:
If
an Optionee dies while employed by, engaged as a consultant to, or
serving
as a Director of the Company, the portion of such Optionee's Option
which
was exercisable at the date of death may be exercised, in whole or
in
part, by the estate of the decedent or by a person succeeding to
the right
to exercise such Option at any time within (i) a period, as determined
by
the Board and set forth in the Option, of not less than six (6) months
nor
more than one (1) year after Optionee's death, which period shall
not be
more, in the case of a Nonstatutory Option, than the period for exercise
following termination of employment or services, or (ii) during the
remaining term of the Option, whichever is the lesser. The Option
may be
so exercised only with respect to installments exercisable at the
time of
Optionee's death and not previously exercised by the
Optionee.
|
|
(h)
|
Nontransferability
of Option:
No
Option shall be transferable by the Optionee, except by will or by
the
laws of descent and
distribution.
|
|
(i)
|
Recapitalization:
Subject to any required action of shareholders, the number of shares
of
Stock covered by each outstanding Option, and the exercise price
per share
thereof set forth in each such Option, shall be proportionately adjusted
for any increase or decrease in the number of issued shares of Stock
of
the Company resulting from a stock split, stock dividend, combination,
subdivision or reclassification of shares, or the payment of a stock
dividend, or any other increase or decrease in the number of such
shares
affected without receipt of consideration by the Company; provided,
however, the conversion of any convertible securities of the Company
shall
not be deemed to have been "effected
without receipt of consideration"
by the Company.
|
|
(j)
|
Rights
as a Shareholder:
An
Optionee shall have no rights as a shareholder with respect to any
shares
covered by an Option until the effective date of the issuance of
the
shares following exercise of such Option by Optionee. No adjustment
shall
be made for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions or other rights for
which
the record date is prior to the date such stock certificate is issued,
except as expressly provided in Section 5(i) hereof.
|
|
(k)
|
Modification,
Acceleration, Extension, and Renewal of Options:
Subject to the terms and conditions and within the limitations of
the
Plan, the Board may modify an Option, or, once an Option is exercisable,
accelerate the rate at which it may be exercised, and may extend
or renew
outstanding Options granted under the Plan or accept the surrender
of
outstanding Options (to the extent not theretofore exercised) and
authorize the granting of new Options in substitution for such Options,
provided such action is permissible under Section 422 of the Code
and
applicable state securities rules. Notwithstanding the provisions
of this
Section 5(k), however, no modification of an Option shall, without
the
consent of the Optionee, alter to the Optionee's detriment or impair
any
rights or obligations under any Option theretofore granted under
the
Plan.
|
|
(l)
|
Exercise
Before Exercise Date:
At
the discretion of the Board, the Option may, but need not, include
a
provision whereby the Optionee may elect to exercise all or any portion
of
the Option prior to the stated exercise date of the Option or any
installment thereof. Any shares so purchased prior to the stated
exercise
date shall be subject to repurchase by the Company upon termination
of
Optionee's employment as contemplated by Section 5(n) hereof prior
to the
exercise date stated in the Option and such other restrictions and
conditions as the Board or Committee may deem
advisable.
|
|
(m)
|
Other
Provisions:
The Option agreements authorized under the Plan shall contain such
other
provisions, including, without limitation, restrictions upon the
exercise
of the Options, as the Board or the Committee shall deem advisable.
Shares
shall not be issued pursuant to the exercise of an Option, if the
exercise
of such Option or the issuance of shares thereunder would violate,
in the
opinion of legal counsel for the Company, the provisions of any applicable
law or the rules or regulations of any applicable governmental or
administrative agency or body, such as the Code, the Securities Act,
the
Exchange Act, applicable state securities rules, Delaware corporation
law,
and the rules promulgated under the foregoing or the rules and regulations
of any exchange upon which the shares of the Company are listed.
Without
limiting the generality of the foregoing, the exercise of each Option
shall be subject to the condition that if at any time the Company
shall
determine that (i) the satisfaction of withholding tax or other similar
liabilities, or (ii) the listing, registration or qualification of
any
shares covered by such exercise upon any securities exchange or under
any
state or federal law, or (iii) the consent or approval of any regulatory
body, or (iv) the perfection of any exemption from any such withholding,
listing, registration, qualification, consent or approval is necessary
or
desirable in connection with such exercise or the issuance of shares
thereunder, then in any such event, such exercise shall not be effective
unless such withholding, listing registration, qualification, consent,
approval or exemption shall have been effected, obtained or perfected
free
of any conditions not acceptable to the
Company.
|
|
(n)
|
Repurchase
Agreement:
The Board may, in its discretion, require as a condition to the Grant
of
an Option hereunder, that an Optionee execute an agreement with the
Company, in form and substance satisfactory to the Board in its discretion
("Repurchase
Agreement"),
(i) restricting the Optionee's right to transfer shares purchased
under
such Option without first offering such shares to the Company or
another
shareholder of the Company upon the same terms and conditions as
provided
therein; and (ii) providing that upon termination of Optionee's employment
with the Company, for any reason, the Company (or another shareholder
of
the Company, as provided in the Repurchase Agreement) shall have
the right
at its discretion (or the discretion of such other shareholders)
to
purchase and/or redeem all such shares owned by the Optionee on the
date
of termination of his or her employment at a price equal to: (A)
the fair
value of such shares as of such date of termination; or (B) if such
repurchase right lapses at 20% of the number of shares per year,
the
original purchase price of such shares, and upon terms of payment
permissible under applicable state securities rules; provided that
in the
case of Options or Stock Awards granted to officers, directors,
consultants or affiliates of the Company, such repurchase provisions
may
be subject to additional or greater restrictions as determined by
the
Board or Committee.
|
|
6.
|
Stock
Awards and Restricted Stock Purchase
Offers.
|
|
(a)
|
Types
of Grants.
|
| (i) |
Stock
Award.
All or part of any Stock Award under the Plan may be subject to conditions
established by the Board or the Committee, and set forth in the Stock
Award Agreement, which may include, but are not limited to, continuous
service with the Company, achievement of specific business objectives,
increases in specified indices, attaining growth rates and other
comparable measurements of Company performance. Such Awards may be
based
on Fair Market Value or other specified valuation. All Stock Awards
will
be made pursuant to the execution of a Stock Award Agreement substantially
in the form attached hereto as Exhibit
C.
|
| (ii) |
Restricted
Stock Purchase Offer.
A
Grant of a Restricted Stock Purchase Offer under the Plan shall be
subject
to such (i) vesting contingencies related to the Participant's continued
association with the Company for a specified time and (ii) other
specified
conditions as the Board or Committee shall determine, in their sole
discretion, consistent with the provisions of the Plan. All Restricted
Stock Purchase Offers shall be made pursuant to a Restricted Stock
Purchase Offer substantially in the form attached hereto as Exhibit
D.
|
|
(b)
|
Conditions
and Restrictions.
Shares of Stock which Participants may receive as a Stock Award under
a
Stock Award Agreement or Restricted Stock Purchase Offer under a
Restricted Stock Purchase Offer may include such restrictions as
the Board
or Committee, as applicable, shall determine, including restrictions
on
transfer, repurchase rights, right of first refusal, and forfeiture
provisions. When transfer of Stock is so restricted or subject to
forfeiture provisions it is referred to as "Restricted
Stock".
Further, with Board or Committee approval, Stock Awards or Restricted
Stock Purchase Offers may be deferred, either in the form of installments
or a future lump sum distribution. The Board or Committee may permit
selected Participants to elect to defer distributions of Stock Awards
or
Restricted Stock Purchase Offers in accordance with procedures established
by the Board or Committee to assure that such deferrals comply with
applicable requirements of the Code including, at the choice of
Participants, the capability to make further deferrals for distribution
after retirement. Any deferred distribution, whether elected by the
Participant or specified by the Stock Award Agreement, Restricted
Stock
Purchase Offers or by the Board or Committee, may require the payment
be
forfeited in accordance with the provisions of Section 6(c). Dividends
or
dividend equivalent rights may be extended to and made part of any
Stock
Award or Restricted Stock Purchase Offers denominated in Stock or
units of
Stock, subject to such terms, conditions and restrictions as the
Board or
Committee may establish.
|
|
(c)
|
Cancellation
and Rescission of Grants.
Unless the Stock Award Agreement or Restricted Stock Purchase Offer
specifies otherwise, the Board or Committee, as applicable, may cancel
any
unexpired, unpaid, or deferred Grants at any time if the Participant
is
not in compliance with all other applicable provisions of the Stock
Award
Agreement or Restricted Stock Purchase Offer, the Plan and with the
following conditions:
|
| (i) |
A
Participant shall not render services for any organization or engage
directly or indirectly in any business which, in the judgment of
the chief
executive officer of the Company or other senior officer designated
by the
Board or Committee, is or becomes competitive with the Company, or
which
organization or business, or the rendering of services to such
organization or business, is or becomes otherwise prejudicial to
or in
conflict with the interests of the Company. For Participants whose
employment has terminated, the judgment of the chief executive officer
shall be based on the Participant's position and responsibilities
while
employed by the Company, the Participant's post-employment
responsibilities and position with the other organization or business,
the
extent of past, current and potential competition or conflict between
the
Company and the other organization or business, the effect on the
Company's customers, suppliers and competitors and such other
considerations as are deemed relevant given the applicable facts
and
circumstances. A Participant who has retired shall be free, however,
to
purchase as an investment or otherwise, stock or other securities
of such
organization or business so long as they are listed upon a recognized
securities exchange or traded over-the-counter, and such investment
does
not represent a substantial investment to the Participant or a greater
than ten percent (10%) equity interest in the organization or
business.
|
| (ii) |
A
Participant shall not, without prior written authorization from the
Company, disclose to anyone outside the Company, or use in other
than the
Company's business, any confidential information or material, as
defined
in the Company's Proprietary Information and Invention Agreement
or
similar agreement regarding confidential information and intellectual
property, relating to the business of the Company, acquired by the
Participant either during or after employment with the Company.
|
| (iii) |
A
Participant, pursuant to the Company's Proprietary Information and
Invention Agreement, shall disclose promptly and assign to the Company
all
right, title and interest in any invention or idea, patentable or
not,
made or conceived by the Participant during employment by the Company,
relating in any manner to the actual or anticipated business, research
or
development work of the Company and shall do anything reasonably
necessary
to enable the Company to secure a patent where appropriate in the
United
States and in foreign countries.
|
| (iv) |
Upon
exercise, payment or delivery pursuant to a Grant, the Participant
shall
certify on a form acceptable to the Committee that he or she is in
compliance with the terms and conditions of the Plan. Failure to
comply
with all of the provisions of this Section 6(c) prior to, or during
the
six months after, any exercise, payment or delivery pursuant to a
Grant
shall cause such exercise, payment or delivery to be rescinded. The
Company shall notify the Participant in writing of any such rescission
within two years after such exercise, payment or delivery. Within
ten days
after receiving such a notice from the Company, the Participant shall
pay
to the Company the amount of any gain realized or payment received
as a
result of the rescinded exercise, payment or delivery pursuant to
a Grant.
Such payment shall be made either in cash or by returning to the
Company
the number of shares of Stock that the Participant received in connection
with the rescinded exercise, payment or
delivery.
|
|
(d)
|
Nonassignability.
|
| (i) |
Except
pursuant to Section 6(e)(iii) and except as set forth in Section
6(d)(ii),
no Grant or any other benefit under the Plan shall be assignable
or
transferable, or payable to or exercisable by, anyone other than
the
Participant to whom it was
granted.
|
| (ii) |
Where
a Participant terminates employment and retains a Grant pursuant
to
Section 6(e)(ii) in order to assume a position with a governmental,
charitable or educational institution, the Board or Committee, in
its
discretion and to the extent permitted by law, may authorize a third
party
(including but not limited to the trustee of a "blind" trust), acceptable
to the applicable governmental or institutional authorities, the
Participant and the Board or Committee, to act on behalf of the
Participant with regard to such
Awards.
|
|
(e)
|
Termination
of Employment.
If
the employment or service to the Company of a Participant terminates,
other than pursuant to any of the following provisions under this
Section
6(e), all unexercised, deferred and unpaid Stock Awards or Restricted
Stock Purchase Offers shall be cancelled immediately, unless the
Stock
Award Agreement or Restricted Stock Purchase Offer provides otherwise:
|
| (i) |
Retirement
Under a Company Retirement Plan.
When a Participant's employment terminates as a result of retirement
in
accordance with the terms of a Company retirement plan, the Board
or
Committee may permit Stock Awards or Restricted Stock Purchase Offers
to
continue in effect beyond the date of retirement in accordance with
the
applicable Grant Agreement and the exercisability and vesting of
any such
Grants may be accelerated.
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| (ii) |
Rights
in the Best Interests of the Company.
When a Participant resigns from the Company and, in the judgment
of the
Board or Committee, the acceleration and/or continuation of outstanding
Stock Awards or Restricted Stock Purchase Offers would be in the
best
interests of the Company, the Board or Committee may (i) authorize,
where
appropriate, the acceleration and/or continuation of all or any part
of
Grants issued prior to such termination and (ii) permit the exercise,
vesting and payment of such Grants for such period as may be set
forth in
the applicable Grant Agreement, subject to earlier cancellation pursuant
to Section 9 or at such time as the Board or Committee shall deem
the
continuation of all or any part of the Participant's Grants are not
in the
Company's best interest.
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| (iii) |
Death
or Disability of a Participant.
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(1)
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In
the event of a Participant's death, the Participant's estate or
beneficiaries shall have a period up to the expiration date specified
in
the Grant Agreement within which to receive or exercise any outstanding
Grant held by the Participant under such terms as may be specified
in the
applicable Grant Agreement. Rights to any such outstanding Grants
shall
pass by will or the laws of descent and distribution in the following
order: (a) to beneficiaries so designated by the Participant; if
none,
then (b) to a legal representative of the Participant; if none, then
(c)
to the persons entitled thereto as determined by a court of competent
jurisdiction. Grants so passing shall be made at such times and in
such
manner as if the Participant were
living.
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(2)
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In
the event a Participant is deemed by the Board or Committee to be
unable
to perform his or her usual duties by reason of mental disorder or
medical
condition which does not result from facts which would be grounds
for
termination for cause, Grants and rights to any such Grants may be
paid to
or exercised by the Participant, if legally competent, or a committee
or
other legally designated guardian or representative if the Participant
is
legally incompetent by virtue of such
disability.
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(3)
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After
the death or disability of a Participant, the Board or Committee
may in
its sole discretion at any time (1) terminate restrictions in Grant
Agreements; (2) accelerate any or all installments and rights; and
(3)
instruct the Company to pay the total of any accelerated payments
in a
lump sum to the Participant, the Participant's estate, beneficiaries
or
representative; notwithstanding that, in the absence of such termination
of restrictions or acceleration of payments, any or all of the payments
due under the Grant might ultimately have become payable to other
beneficiaries.
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(4)
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In
the event of uncertainty as to interpretation of or controversies
concerning this Section 6, the determinations of the Board or Committee,
as applicable, shall be binding and
conclusive.
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7.
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Investment
Intent. All Grants under the Plan are intended to be exempt from
registration under the Securities Act provided by Rule 701 thereunder.
Unless and until the granting of Options or sale and issuance of
Stock
subject to the Plan are registered under the Securities Act or shall
be
exempt pursuant to the rules promulgated thereunder, each Grant under
the
Plan shall provide that the purchases or other acquisitions of Stock
thereunder shall be for investment purposes and not with a view to,
or for
resale in connection with, any distribution thereof. Further, unless
the
issuance and sale of the Stock have been registered under the Securities
Act, each Grant shall provide that no shares shall be purchased upon
the
exercise of the rights under such Grant unless and until (i) all
then
applicable requirements of state and federal laws and regulatory
agencies
shall have been fully complied with to the satisfaction of the Company
and
its counsel, and (ii) if requested to do so by the Company, the person
exercising the rights under the Grant shall (i) give written assurances
as
to knowledge and experience of such person (or a representative employed
by such person) in financial and business matters and the ability
of such
person (or representative) to evaluate the merits and risks of exercising
the Option, and (ii) execute and deliver to the Company a letter
of
investment intent and/or such other form related to applicable exemptions
from registration, all in such form and substance as the Company
may
require. If shares are issued upon exercise of any rights under a
Grant
without registration under the Securities Act, subsequent registration
of
such shares shall relieve the purchaser thereof of any investment
restrictions or representations made upon the exercise of such
rights.
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8.
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Amendment,
Modification, Suspension or Discontinuance of the Plan. The Board
may,
insofar as permitted by law, from time to time, with respect to any
shares
at the time not subject to outstanding Grants, suspend or terminate
the
Plan or revise or amend it in any respect whatsoever, except that
without
the approval of the shareholders of the Company, no such revision
or
amendment shall (i) increase the number of shares subject to the
Plan,
(ii) decrease the price at which Grants may be granted, (iii) materially
increase the benefits to Participants, or (iv) change the class of
persons
eligible to receive Grants under the Plan; provided, however, no
such
action shall alter or impair the rights and obligations under any
Option,
or Stock Award, or Restricted Stock Purchase Offer outstanding as
of the
date thereof without the written consent of the Participant thereunder.
No
Grant may be issued while the Plan is suspended or after it is terminated,
but the rights and obligations under any Grant issued while the Plan
is in
effect shall not be impaired by suspension or termination of the
Plan.
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9.
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Tax
Withholding. The Company shall have the right to deduct applicable
taxes
from any Grant payment and withhold, at the time of delivery or exercise
of Options, Stock Awards or Restricted Stock Purchase Offers or vesting
of
shares under such Grants, an appropriate number of shares for payment
of
taxes required by law or to take such other action as may be necessary
in
the opinion of the Company to satisfy all obligations for withholding
of
such taxes. If Stock is used to satisfy tax withholding, such stock
shall
be valued based on the Fair Market Value when the tax withholding
is
required to be made.
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10.
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Availability
of Information. During the term of the Plan and any additional period
during which a Grant granted pursuant to the Plan shall be exercisable,
the Company shall make available, not later than one hundred and
twenty
(120) days following the close of each of its fiscal years, such
financial
and other information regarding the Company as is required by the
bylaws
of the Company and applicable law to be furnished in an annual report
to
the shareholders of the Company.
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11.
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Notice.
Any written notice to the Company required by any of the provisions
of the
Plan shall be addressed to the chief personnel officer or to the
chief
executive officer of the Company, and shall become effective when
it is
received by the office of the chief personnel officer or the chief
executive officer.
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12.
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Indemnification
of Board. In addition to such other rights or indemnifications as
they may
have as directors or otherwise, and to the extent allowed by applicable
law, the members of the Board and the Committee shall be indemnified
by
the Company against the reasonable expenses, including attorneys'
fees,
actually and necessarily incurred in connection with the defense
of any
claim, action, suit or proceeding, or in connection with any appeal
thereof, to which they or any of them may be a party by reason of
any
action taken, or failure to act, under or in connection with the
Plan or
any Grant granted thereunder, and against all amounts paid by them
in
settlement thereof (provided such settlement is approved by independent
legal counsel selected by the Company) or paid by them in satisfaction
of
a judgment in any such claim, action, suit or proceeding, except
in any
case in relation to matters as to which it shall be adjudged in such
claim, action, suit or proceeding that such Board or Committee member
is
liable for negligence or misconduct in the performance of his or
her
duties; provided that within sixty (60) days after institution of
any such
action, suit or Board proceeding the member involved shall offer
the
Company, in writing, the opportunity, at its own expense, to handle
and
defend the same.
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13.
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Governing
Law. The Plan and all determinations made and actions taken pursuant
hereto, to the extent not otherwise governed by the Code or the securities
laws of the United States, shall be governed by the law of the State
of
Delaware and construed accordingly.
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14.
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Effective
and Termination Dates. The Plan shall become effective on the date
it is
approved by the holders of a majority of the shares of Stock then
outstanding. The Plan shall terminate ten years later, subject to
earlier
termination by the Board pursuant to Section 8.
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EMVELCO
CORP.,
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a
Delaware corporation
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By:
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Its:
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Chief
Executive Officer
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