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EC POWER, INC.
1999 EQUITY INCENTIVE PLAN
INTRODUCTION
On ___________, 1999, the Board of Directors adopted this 1999 Equity
Incentive Plan (the "Plan") which Plan was approved by the Stockholders on
_________, 1999.
1. PURPOSES
(a) The purpose of the Plan is to provide a means by which selected
Employees and Directors of and Consultants to the Company and its
Affiliates may be given an opportunity to benefit from increases in
value of the common stock of the Company ("Common Stock") through
the granting of (i) Incentive Stock Options, (ii) Nonstatutory Stock
Options, (iii) stock bonuses and (iv) rights to purchase restricted
stock, and (v) stock appreciation rights, all as defined below.
(b) The Company, by means of the Plan, seeks to retain the services of
persons who are now Employees, Directors or Consultants, to secure
and retain the services of new Employees, Directors and Consultants,
and to provide incentives for such persons to exert maximum efforts
for the success of the Company and its Affiliates.
(c) The Company intends that the Stock Awards issued under the Plan
shall, in the discretion of the Board or any Committee to which
responsibility for administration of the Plan has been delegated
pursuant to subsection 3(c), be either (i) Options granted pursuant
to Section 6 or 7 hereof, including Incentive Stock Options and
Nonstatutory Stock Options, or (ii) stock bonuses or rights to
purchase restricted stock granted pursuant to Section 8 hereof, or
(iii) stock appreciation rights granted pursuant to Section 9
hereof. All Options shall be separately designated Incentive Stock
Options or Nonstatutory Stock Options at the time of grant, and a
separate certificate or certificates will be issued for shares
purchased on exercise of each type of Option.
2. DEFINITIONS
(a) "AFFILIATE" means any parent corporation or subsidiary corporation,
whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f) respectively, of the Code.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "COMMITTEE" means a Committee appointed by the Board in accordance
with subsection 3(c) of the Plan.
(e) "COMPANY" means EC Power, Inc.
(f) "CONCURRENT STOCK APPRECIATION RIGHT" OR "CONCURRENT RIGHT" means a
right granted pursuant to subsection 9(b)(2) of the Plan.
(g) "CONSULTANT" means any person, including an advisor, engaged by the
Company or an Affiliate to render consulting services and who is
compensated for such services, provided that the term "Consultant"
shall not include Directors who are paid only a director's fee by
the Company or who are not compensated by the Company for their
services as Directors.
(h) "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT" means the
employment or relationship as a Director or Consultant is not
interrupted or terminated. The Board, in its sole discretion, may
determine whether Continuous Status as an Employee, Director or
Consultant shall be considered interrupted in the case of: (i) any
leave of absence approved by the Board, including sick leave,
military leave, or any other personal leave; or (ii) transfers
between locations of the Company or between the Company, Affiliates
or their successors.
(i) "DIRECTOR" means a member of the Board.
(j) "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or any Affiliate of the Company. Neither
service as a Director nor payment of a director's fee by the Company
shall be sufficient to constitute "employment" by the Company.
(k) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(l) "FAIR MARKET VALUE" means, as of any date, the value of the Common
Stock of the Company determined as follows:
(1) If the Common Stock is listed on any established stock
exchange, or traded on the Nasdaq National Market or the Nasdaq
SmallCap Market, the Fair Market Value of a share of Common
Stock shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such
exchange or market (or the exchange or market with the greatest
volume of trading in Common Stock) on the last market trading
day prior to the day of determination, as reported in the Wall
Street Journal or such other source as the Board deems
reliable;
(2) In the absence of such markets for the Common Stock, the Fair
Market Value shall be determined in good faith by the Board.
(m) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code
and the regulations promulgated thereunder.
(n) "INDEPENDENT STOCK APPRECIATION RIGHT" means a right granted
pursuant to subsection 9(b)(3) of the Plan.
(o) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or
subsidiary, does not receive compensation (directly or indirectly)
from the Company or its parent or subsidiary for services rendered
as a consultant or in any capacity other than as a Director (except
for an amount as to which disclosure would not be required under
Item 404(a) of Regulation S-K promulgated pursuant to the Securities
Act of 1933 ("Regulation S-K"), does not possess an interest in any
other transaction as to which disclosure would be required under
Item 404(a) of Regulation S-K, and is not engaged in a business
relationship as to which disclosure would be required under Item
404(b) of Regulation S-K; or (ii) is otherwise considered a
"non-employee director" for purposes of Rule 16b-3.
(p) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify
as an Incentive Stock Option.
(q) "OFFICER" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(r) "OPTION" means a stock option granted pursuant to the Plan.
(s) "OPTION AGREEMENT" means a written agreement between the Company and
an Optionee evidencing the terms and conditions of an individual
Option grant. Each Option Agreement shall be subject to the terms
and conditions of the Plan.
(t) "OPTIONEE" means a person to whom an Option is granted pursuant to
the Plan.
(u) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the
meaning of Treasury regulations promulgated under Section 162(m) of
the Code), is not a former employee of the Company or an "affiliated
corporation" receiving compensation for prior services (other than
benefits under a tax qualified pension plan), was not an officer of
the Company or an "affiliated corporation" at any time, and is not
currently receiving direct or indirect remuneration from the Company
or an "affiliated corporation" for services in any capacity other
than as a Director, or (ii) is otherwise considered an "outside
director" for purposes of Section 162(m) of the Code.
(v) "PLAN" means this EC Power, Inc. 1999 Equity Incentive Plan.
(w) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any successor
to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
(x) "STOCK APPRECIATION RIGHT" means any of the various types of rights
which may be granted under Section 9 of the Plan.
(y) "STOCK AWARD" means any right granted under the Plan, including any
Option, any stock bonus, and any right to purchase restricted stock.
(z) "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and
conditions of an individual Stock Award grant. Each Stock Award
Agreement shall be subject to the terms and conditions of the Plan.
(aa) "TANDEM STOCK APPRECIATION RIGHT" OR "TANDEM RIGHT" means a right
granted pursuant to subsection 9(b)(1) of the Plan.
3. ADMINISTRATION
(a) The Plan shall be administered by the Board unless and until the
Board delegates administration to a Committee, as provided in
subsection 3(c).
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how each
Stock Award shall be granted; whether a Stock Award will be an
Incentive Stock Option, a Nonstatutory Stock Option, a stock
bonus, a right to purchase restricted stock, a Stock
Appreciation Right, or a combination of the foregoing; the
provisions of each Stock Award granted (which need not be
identical), including the time or times when a person shall be
permitted to receive stock pursuant to a Stock Award; whether a
person shall be permitted to receive stock upon exercise of an
Independent Stock Appreciation Right; and the number of shares
with respect to which a Stock Award shall be granted to each
such person.
(2) To construe and interpret the Plan and Stock Awards granted
under it, and to establish, amend and revoke rules and
regulations for its administration. The Board, in the exercise
of this power, may correct any defect, omission or
inconsistency in the Plan or in any Stock Award Agreement, in a
manner and to the extent it shall deem necessary or expedient
to make the Plan fully effective.
(3) To amend the Plan or a Stock Award as provided in Section 15.
(4) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best
interests of the Company which are not in conflict with the
provisions of the Plan.
(c) The Board may delegate administration of the Plan to a committee or
committees ("Committee") of one or more members of the Board. In
the discretion of the Board, a Committee may consist solely of two
or more Outside Directors, in accordance with Code Section 162(m),
or solely of two or more Non-Employee Directors, in accordance with
Rule 16b-3. If administration is delegated to a Committee, the
Committee shall have, in connection with the administration of the
Plan, the powers theretofore possessed by the Board (and references
in this Plan to the Board shall thereafter be to the Committee),
subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the
Board. The Board may abolish the Committee at any time and revest
in the Board the administration of the Plan.
4. SHARES SUBJECT TO THE PLAN
(a) Subject to the provisions of Section 13 relating to adjustments upon
changes in stock, the stock that may be issued pursuant to Stock
Awards shall not exceed in the aggregate one million (1,000,000)
shares of Common Stock (determined without giving effect to any
stock split that may be made in anticipation of the Company's
initial public offering of the Common Stock). If any Stock Award
shall for any reason expire or otherwise terminate, in whole or in
part, without having been exercised in full (or vested in the case
of Restricted Stock), the stock not acquired under such Stock Award
shall revert to and again become available for issuance under the
Plan. Shares subject to Stock Appreciation Rights exercised in
accordance with Section 9 of the Plan shall not be available for
subsequent issuance under the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
5. ELIGIBILITY
(a) Incentive Stock Options and Stock Appreciation Rights appurtenant
thereto may be granted only to Employees. Stock Awards other than
Incentive Stock Options and Stock Appreciation Rights appurtenant
thereto may be granted only to Employees, Directors or Consultants.
(b) No person shall be eligible for the grant of an Incentive Stock
Option if, at the time of grant, such person 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 of all
classes of stock of the Company or of any of its Affiliates unless
the exercise price of such Option is at least one hundred ten
percent (110%) of the Fair Market Value of such stock at the date of
grant and the Option is not exercisable after the expiration of five
(5) years from the date of grant.
6. OPTION PROVISIONS
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise)
the substance of each of the following provisions:
(a) TERM. No Option shall be exercisable after the expiration of ten
(10) years from the date it was granted.
(b) PRICE. The exercise price of each Incentive Stock Option shall be
not less than one hundred percent (100%) of the Fair Market Value of
the stock subject to the Option on the date the Option is granted,
and the exercise price of each Nonstatutory Stock Option shall be
not less than eighty-five percent (85%) of the Fair Market Value of
the stock subject to the Option on the date the Option is granted.
Notwithstanding the foregoing, an Option may be granted with an
exercise price lower than that set forth in the preceding sentence
if such Option is granted pursuant to an assumption or substitution
for another option in a manner satisfying the provisions of Section
424(a) of the Code.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes
and regulations, either (i) in cash at the time the Option is
exercised, or (ii) at the discretion of the Board or the Committee,
at the time of the grant of the Option, (A) by delivery to the
Company of other Common Stock of the Company, (B) according to a
deferred payment or other arrangement (which may include, without
limiting the generality of the foregoing, the use of other Common
Stock of the Company) with the person to whom the Option is granted
or to whom the Option is transferred pursuant to subsection 6(d), or
(C) in any other form of legal consideration that may be acceptable
to the Board.
In the case of any deferred payment arrangement, interest shall be
payable at least annually and shall be charged at the minimum rate
of interest necessary to avoid the treatment as interest, under any
applicable provisions of the Code, of any amounts other than amounts
stated to be interest under the deferred payment arrangement.
(d) TRANSFERABILITY. An Incentive Stock Option shall not be
transferable except by will or by the laws of descent and
distribution, and shall be exercisable during the lifetime of the
person to whom the Incentive Stock Option is granted only by such
person. A Nonstatutory Stock Option may be transferred to the
extent provided in the Option Agreement; provided that if the Option
Agreement does not expressly permit the transfer of a Nonstatutory
Stock Option, the Nonstatutory Stock Option shall not be
transferable except by will, by the laws of descent and distribution
or pursuant to a domestic relations order satisfying the
requirements of Rule 16b-3, and shall be exercisable during the
lifetime of the person to whom the Option is granted only by such
person or any transferee pursuant to a domestic relations order.
Notwithstanding the foregoing, the person to whom the Option is
granted may, by delivering written notice to the Company, in a form
satisfactory to the Company, designate a third party who, in the
event of the death of the Optionee, shall thereafter be entitled to
exercise the Option.
(e) VESTING. The total number of shares of stock subject to an Option
may, but need not, be allotted in periodic installments (which may,
but need not, be equal). The Option Agreement may provide that from
time to time during each of such installment periods, the Option may
become exercisable ("vest") with respect to some or all of the
shares allotted to that period, and may be exercised with respect to
some or all of the shares allotted to such period and/or any prior
period as to which the Option became vested but was not fully
exercised. The Option may be subject to such other terms and
conditions on the time or times when it may be exercised (which may
be based on performance or other criteria) as the Board may deem
appropriate. The provisions of this subsection 6(e) are subject to
any Option provisions governing the minimum number of shares as to
which an Option may be exercised.
(f) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR
CONSULTANT. In the event an Optionee's Continuous Status as an
Employee, Director or Consultant terminates (other than upon the
Optionee's death or disability), the Optionee may exercise his or
her Option (to the extent that the Optionee was entitled to exercise
it at the date of termination) but only within such period of time
ending on the earlier of (i) the date three (3) months after the
termination of the Optionee's Continuous Status as an Employee,
Director or Consultant (or such longer or shorter period specified
in the Option Agreement), or (ii) the expiration of the term of the
Option as set forth in the Option Agreement. If, after termination,
the Optionee does not exercise his or her Option within the time
specified in the Option Agreement, the Option shall terminate, and
the shares covered by such Option shall revert to and again become
available for issuance under the Plan.
(g) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous
Status as an Employee, Director or Consultant terminates as a result
of the Optionee's disability, the Optionee may exercise his or her
Option (to the extent that the Optionee was entitled to exercise it
at the date of termination), but only within such period of time
ending on the earlier of (i) the date twelve (12) months following
such termination (or such longer or shorter period specified in the
Option Agreement), or (ii) the expiration of the term of the Option
as set forth in the Option Agreement. If, at the date of
termination, the Optionee is not entitled to exercise his or her
entire Option, the shares covered by the unexercisable portion of
the Option shall revert to and again become available for issuance
under the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the
Option shall terminate, and the shares covered by such Option shall
revert to and again become available for issuance under the Plan.
(h) DEATH OF OPTIONEE. In the event of the death of an Optionee during,
or within a three-month period (or 12 month period in the case of
totally disabled Optionees) after the termination of, the Optionee's
Continuous Status as an Employee, Director or Consultant, the Option
shall be fully vested and may be exercised by the Optionee's estate,
by a person who acquired the right to exercise the Option by bequest
or inheritance or by a person designated to exercise the option upon
the Optionee's death pursuant to subsection 6(d), but only within
the period ending on the earlier of (i) the date twelve (12) months
following the date of death (or such longer or shorter period
specified in the Option Agreement), or (ii) the expiration of the
term of such Option as set forth in the Option Agreement. If, at
the time of death, the Optionee was not entitled to exercise his or
her entire Option, the shares covered by the unexercisable portion
of the Option shall revert to and again become available for
issuance under the Plan. If, after death, the Option is not
exercised within the time specified herein, the Option shall
terminate, and the shares covered by such Option shall revert to and
again become available for issuance under the Plan.
(i) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionee may elect at any time while an Employee,
Director or Consultant to exercise the Option as to any part or all
of the shares subject to the Option prior to the full vesting of the
Option. Any unvested shares so purchased may be subject to a
repurchase right in favor of the Company or to any other restriction
the Board determines to be appropriate.
(j) RE-LOAD OPTIONS. Without in any way limiting the authority of the
Board or Committee to make or not to make grants of Options
hereunder, the Board or Committee shall have the authority (but not
an obligation) to include as part of any Option Agreement a
provision entitling the Optionee to a further Option (a "Re-Load
Option") in the event the Optionee exercises the Option evidenced by
the Option agreement, in whole or in part, by surrendering other
shares of Common Stock in accordance with this Plan and the terms
and conditions of the Option Agreement. Any such Re-Load Option (i)
shall be for a number of shares equal to the number of shares
surrendered as part or all of the exercise price of such Option;
(ii) shall have an expiration date which is the same as the
expiration date of the Option the exercise of which gave rise to
such Re-Load Option; and (iii) shall have an exercise price which is
equal to one hundred percent (100%) of the Fair Market Value of the
Common Stock subject to the Re- Load Option on the date of exercise
of the original Option. Notwithstanding the foregoing, a Re-Load
Option which is an Incentive Stock Option and which is granted to a
10% stockholder (as described in subsection 5(b)), shall have an
exercise price which is equal to one hundred ten percent (110%) of
the Fair Market Value of the stock subject to the Re-Load Option on
the date of exercise of the original Option and shall have a term
which is no longer than five (5) years.
Any such Re-Load Option may be an Incentive Stock Option or a
Nonstatutory Stock Option, as the Board or Committee may designate
at the time of the grant of the original Option; PROVIDED, HOWEVER,
that the designation of any Re-Load Option as an Incentive Stock
Option shall be subject to the one hundred thousand dollars
($100,000) annual limitation on exercisability of Incentive Stock
Options described in subsection 13(d) of the Plan and in Section
422(d) of the Code. There shall be no Re-Load Options on a Re-Load
Option. Any such Re-Load Option shall be subject to the
availability of sufficient shares under subsection 4(a) and shall be
subject to such other terms and conditions as the Board or Committee
may determine which are not inconsistent with the express provisions
of the Plan regarding the terms of Options.
7. OPTION GRANTS FOR NON-EMPLOYEE DIRECTORS
Unless otherwise explicitly provided by the Board, Non-Employee Directors
shall not be eligible for any Stock Awards under the Plan other than the
nonstatutory stock options provided under this Section 7 on the following
terms and conditions:
(a) INITIAL GRANT FOR NON-EMPLOYEE DIRECTORS. Each person who is a Non-
Employee Director at the date the Company's initial public offering
of shares of common stock is effective or who becomes a Non-Employee
Director as of any date thereafter shall, upon such date, be granted
an option to purchase a number of shares of Common Stock determined
by a majority of non-participating Directors on the terms and
conditions set forth herein.
(b) ANNUAL GRANT. Following each annual meeting of the Company's
stockholders occuring after the effectiveness of the initial public
offering of the Common Stock, (i) each person who continuously has
been a Non-Employee Director for a full year since the last annual
meeting of the Company's stockholders automatically shall be granted
an option to purchase a number of shares of Common Stock determined
by a majority of non-participating Directors (determined without
giving effect to any stock split that may be made in anticipation
of the Company's initial public offering of the Common Stock) on
the terms and conditions set forth herein, and (ii) each other
person who is then a Non-Employee Director automatically shall be
granted an option to purchase, on the terms and conditions set
forth herein, the number of shares of common stock of the Company
(rounded up to the nearest whole share) determined by multiplying
the number of shares determined by the Board (determined without
giving effect to any stock split that may be made in anticipation
of the Company's initial public offering of the Common Stock) by a
fraction, the numerator of which is the number of days the person
continuously has been a Non-Employee Director as of the date of
such grant and the denominator of which is 365.
(c) TERM. The term of each Non-Employee Director's option commences on
the date it is granted and, unless sooner terminated as set forth
herein, expires on the date ("Expiration Date") ten (10) years from
the date of grant. If the Non-Employee Director's Continuous Status
as an Employee, Director or Consultant terminates, the option shall
terminate on the earlier of the Expiration Date or the date three
(3) months following the date of termination of such Continuous
Status (twelve (12) months if such termination is due to death or
disability). In any and all circumstances, a Non-Employee
Director's option may be exercised following termination of his or
her Continuous Status as an Employee, Director or Consultant only as
to that number of shares as to which it was exercisable on the date
of termination of such status under the provisions of subsection
7(g).
(d) PRICE. The exercise price of each Non-Employee Director's option
shall be one hundred percent (100%) of the fair market value of the
stock subject to such option on the date such option is granted.
(e) CONSIDERATION. Payment of the exercise price of each option is due
in full in cash upon any exercise when the number of shares being
purchased upon such exercise is less than 1,000 shares. However,
when the number of shares being purchased upon an exercise is 1,000
or more shares, the Non-Employee Director may elect to make payment
of the exercise price under one of the following alternatives:
(1) Payment of the exercise price per share in cash or by check at
the time of exercise; or
(2) Provided that at the time of the exercise the Company's common
stock is publicly traded and quoted regularly in the Wall
Street Journal, payment by delivery of shares of common stock
of the Company already owned by the optionee, held for the
period required to avoid a charge to the Company's reported
earnings, and owned free and clear of any liens, claims,
encumbrances or security interest, which common stock shall be
valued at its fair market value on the date preceding the date
of exercise; or
(3) Payment by a combination of the methods of payment specified in
Paragraphs (1) and (2) above.
Notwithstanding the foregoing, a Non-Employee Director's option
may be exercised pursuant to a program developed under
Regulation T as promulgated by the Federal Reserve Board which
results in the receipt of cash (or check) by the Company prior
to the issuance of shares of the Company's common stock.
(f) TRANSFERABILITY. A Non-Employee Director's option shall not be
transferable except by will or by the laws of descent and
distribution, or pursuant to a domestic relations order satisfying
the requirements of Rule 16b-3 and shall be exercisable during the
lifetime of the Non-Employee Director only by such person (or by his
guardian or legal representative) or transferee pursuant to such an
order. Notwithstanding the foregoing, a Non-Employee Director may,
by delivering written notice to the Company in a form satisfactory
to the Company, designate a third party who, in the event of the
death of the Non-Employee Director, shall thereafter be entitled to
exercise the option.
(g) VESTING. A Non-Employee Director's initial grant under Section 7(a)
may, but need not become exercisable in installments over a period
of years at a rate determined by the Board; provided that the
optionee has, during the entire period prior to such vesting date,
continuously served as a Non-Employee Director or employee of or
consultant to the Company or any Affiliate, whereupon such option
shall become fully exercisable in accordance with its terms with
respect to that portion of the shares represented by that
installment. A Non-Employee Director's annual grant under Section
7(b) shall be fully vested at all times.
8. TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK
Each stock bonus or restricted stock purchase agreement shall be in such
form and shall contain such terms and conditions as the Board or the Committee
shall deem appropriate. The terms and conditions of stock bonus or restricted
stock purchase agreements may change from time to time, and the terms and
conditions of separate agreements need not be identical, but each stock bonus
or restricted stock purchase agreement shall include (through incorporation of
provisions hereof by reference in the agreement or otherwise) the substance of
each of the following provisions as appropriate:
(a) PURCHASE PRICE. The purchase price under each restricted stock
purchase agreement shall be such amount as the Board or Committee
shall determine and designate in such agreement but in no event
shall the purchase price be less than eighty-five percent (85%) of
the stock's Fair Market Value on the date such award is made.
Notwithstanding the foregoing, the Board or the Committee may
determine that eligible participants in the Plan may be awarded
stock pursuant to a stock bonus agreement in consideration for past
services actually rendered to the Company for its benefit.
(b) TRANSFERABILITY. No rights under a stock bonus or restricted stock
purchase agreement shall be transferable except by will or the laws
of descent and distribution or, if the agreement so provides,
pursuant to a domestic relations order satisfying the requirements
of Rule 16b-3, so long as stock awarded under such agreement remains
subject to the terms of the agreement.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to a
stock purchase agreement shall be paid either: (i) in cash at the
time of purchase; (ii) at the discretion of the Board or the
Committee, according to a deferred payment or other arrangement with
the person to whom the stock is sold; or (iii) in any other form of
legal consideration that may be acceptable to the Board or the
Committee in its discretion. Notwithstanding the foregoing, the
Board or the Committee to which administration of the Plan has been
delegated may award stock pursuant to a stock bonus agreement in
consideration for past services actually rendered to the Company or
for its benefit.
(d) VESTING. Shares of stock sold or awarded under the Plan may, but
need not, be subject to a repurchase option in favor of the Company
in accordance with a vesting schedule to be determined by the Board
or the Committee.
(e) TERMINATION OF CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR
CONSULTANT. In the event a Participant's Continuous Status as an
Employee, Director or Consultant terminates, the Company may
repurchase or otherwise reacquire any or all of the shares of stock
held by that person which have not vested as of the date of
termination under the terms of the stock bonus or restricted stock
purchase agreement between the Company and such person.
9. STOCK APPRECIATION RIGHTS
(a) The Board or Committee shall have full power and authority,
exercisable in its sole discretion, to grant Stock Appreciation
Rights under the Plan to Employees, Directors and Consultants. To
exercise any outstanding Stock Appreciation Right, the holder must
provide written notice of exercise to the Company in compliance with
the provisions of the Stock Award Agreement evidencing such right.
Except as provided in subsection 5(c), no limitation shall exist on
the aggregate amount of cash payments the Company may make under the
Plan in connection with the exercise of a Stock Appreciation Right.
(b) Three types of Stock Appreciation Rights shall be authorized for
issuance under the Plan:
(1) TANDEM STOCK APPRECIATION RIGHTS. Tandem Stock Appreciation
Rights will be granted appurtenant to an Option, and shall,
except as specifically set forth in this Section 9, be subject
to the same terms and conditions applicable to the particular
Option grant to which it pertains. Tandem Stock Appreciation
Rights will require the holder to elect between the exercise of
the underlying Option for shares of stock and the surrender, in
whole or in part, of such Option for an appreciation
distribution. The appreciation distribution payable on the
exercised Tandem Right shall be in cash (or, if so provided, in
an equivalent number of shares of stock based on Fair Market
Value on the date of the Option surrender) in an amount up to
the excess of (A) the Fair Market Value (on the date of the
Option surrender) of the number of shares of stock covered by
that portion of the surrendered Option in which the Optionee is
vested over (B) the aggregate exercise price payable for such
vested shares.
(2) CONCURRENT STOCK APPRECIATION RIGHTS. Concurrent Rights will
be granted appurtenant to an Option and may apply to all or any
portion of the shares of stock subject to the underlying Option
and shall, except as specifically set forth in this Section 9,
be subject to the same terms and conditions applicable to the
particular Option grant to which it pertains. A Concurrent
Right shall be exercised automatically at the same time the
underlying Option is exercised with respect to the particular
shares of stock to which the Concurrent Right pertains. The
appreciation distribution payable on an exercised Concurrent
Right shall be in cash (or, if so provided, in an equivalent
number of shares of stock based on Fair Market Value on the
date of the exercise of the Concurrent Right) in an amount
equal to such portion as shall be determined by the Board or
the Committee at the time of the grant of the excess of (A) the
aggregate Fair Market Value (on the date of the exercise of the
Concurrent Right) of the vested shares of stock purchased under
the underlying Option which have Concurrent Rights appurtenant
to them over (B) the aggregate exercise price paid for such
shares.
(3) INDEPENDENT STOCK APPRECIATION RIGHTS. Independent Rights will
be granted independently of any Option and shall, except as
specifically set forth in this Section 9, be subject to the
same terms and conditions applicable to Nonstatutory Stock
Options as set forth in Section 6. They shall be denominated
in share equivalents. The appreciation distribution payable on
the exercised Independent Right shall be not greater than an
amount equal to the excess of (A) the aggregate Fair Market
Value (on the date of the exercise of the Independent Right) of
a number of shares of Company stock equal to the number of
share equivalents in which the holder is vested under such
Independent Right, and with respect to which the holder is
exercising the Independent Right on such date, over (B) the
aggregate Fair Market Value (on the date of the grant of the
Independent Right) of such number of shares of Company stock.
The appreciation distribution payable on the exercised
Independent Right shall be in cash or, if so provided, in an
equivalent number of shares of stock based on Fair Market Value
on the date of the exercise of the Independent Right.
10. CANCELLATION AND RE-GRANT OF OPTIONS
(a) The Board or the Committee shall have the authority to effect, at
any time and from time to time, (i) the repricing of any outstanding
Options and/or any Stock Appreciation Rights under the Plan and/or
(ii) with the consent of any adversely affected holders of Options
and/or Stock Appreciation Rights, the cancellation of any
outstanding Options and/or any Stock Appreciation Rights under the
Plan and the grant in substitution therefor of new Options and/or
Stock Appreciation Rights under the Plan covering the same or
different numbers of shares of stock, but having an exercise price
per share not less than: eighty-five percent (85%) of the Fair
Market Value for a Nonstatutory Stock Option, one hundred percent
(100%) of the Fair Market Value in the case of an Incentive Stock
Option or, in the case of an Incentive Stock Option held by a 10%
stockholder (as described in subsection 5(b)), not less than one
hundred ten percent (110%) of the Fair Market Value per share of
stock on the new grant date. Notwithstanding the foregoing, the
Board or the Committee may grant an Option and/or Stock
Appreciation Right with an exercise price lower than that set forth
above if such Option and/or Stock Appreciation Right is granted as
part of a transaction to which section 424(a) of the Code applies.
(b) Shares subject to an Option or Stock Appreciation Right canceled
under this Section 10 shall continue to be counted against the
maximum award of Options and Stock Appreciation Rights permitted to
be granted pursuant to the Plan. The repricing of an Option and/or
Stock Appreciation Right hereunder resulting in a reduction of the
exercise price, shall be deemed to be a cancellation of the original
Option and/or Stock Appreciation Right and the grant of a substitute
Option and/or Stock Appreciation Right; in the event of such
repricing, both the original and the substituted Options and Stock
Appreciation Rights shall be counted against the maximum awards of
Options and Stock Appreciation Rights permitted to be granted
pursuant to the Plan, to the extent required by Section 162(m) of
the Code.
11. COVENANTS OF THE COMPANY
(a) During the terms of the Stock Awards, the Company shall keep
available at all times the number of shares of stock required to
satisfy such Stock Awards.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be
required to issue and sell shares under Stock Awards; provided,
however, that this undertaking shall not require the Company to
register under the Securities Act of 1933, as amended (the
"Securities Act") either the Plan, any Stock Award or any stock
issued or issuable pursuant to any such Stock Award. If, after
reasonable efforts, the Company is unable to obtain from any such
regulatory commission or agency the authority which counsel for the
Company deems necessary for the lawful issuance and sale of stock
under the Plan, the Company shall be relieved from any liability for
failure to issue and sell stock upon exercise of such Stock Awards
unless and until such authority is obtained.
12. USE OF PROCEEDS FROM STOCK
Proceeds from the sale of stock pursuant to Stock Awards shall constitute
general funds of the Company.
13. MISCELLANEOUS
(a) The Board shall have the power to accelerate the time at which a
Stock Award may first be exercised or the time during which a Stock
Award or any part thereof will vest, notwithstanding the provisions
in the Stock Award stating the time at which it may first be
exercised or the time during which it will vest.
(b) Neither an Employee, Director nor a Consultant nor any person to
whom a Stock Award is transferred in accordance with the Plan shall
be deemed to be the holder of, or to have any of the rights of a
holder with respect to, any shares subject to such Stock Award
unless and until such person has satisfied all requirements for
exercise of the Stock Award pursuant to its terms.
(c) Nothing in the Plan or any instrument executed or Stock Award
granted pursuant thereto shall confer upon any Employee, Consultant
or other holder of Stock Awards any right to continue in the employ
of the Company or any Affiliate, or to continue serving as a
Consultant and Director, or shall affect the right of the Company or
any Affiliate to terminate the employment of any Employee with or
without notice and with or without cause, or the right to terminate
the relationship of any Consultant pursuant to the terms of such
Consultant's agreement with the Company or Affiliate or service as a
Director pursuant to the Company's By-Laws.
(d) To the extent that the aggregate Fair Market Value (determined at
the time of grant) of stock with respect to which Incentive Stock
Options are exercisable for the first time by any Optionee during
any calendar year under all plans of the Company and its Affiliates
exceeds one hundred thousand dollars ($100,000), the Options or
portions thereof which exceed such limit (according to the order in
which they were granted) shall be treated as Nonstatutory Stock
Options.
(e) The Company may require any person to whom a Stock Award is granted,
or any person to whom a Stock Award is transferred in accordance
with the Plan, as a condition of exercising or acquiring stock under
any Stock Award, (1) to give written assurances satisfactory to the
Company as to such person's knowledge and experience in financial
and business matters and/or to employ a purchaser representative
reasonably satisfactory to the Company who is knowledgeable and
experienced in financial and business matters, and that he or she is
capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award;
and (2) to give written assurances satisfactory to the Company
stating that such person is acquiring the stock subject to the Stock
Award for such person's own account and not with any present
intention of selling or otherwise distributing the stock. The
foregoing requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (i) the issuance of the shares
upon the exercise or acquisition of stock under the Stock Award has
been registered under a then currently effective registration
statement under the Securities Act, or (ii) as to any particular
requirement, a determination is made by counsel for the Company that
such requirement need not be met in the circumstances under the then
applicable securities laws. The Company may, upon advice of counsel
to the Company, place legends on stock certificates issued under the
Plan as such counsel deems necessary or appropriate in order to
comply with applicable securities laws, including, but not limited
to, legends restricting the transfer of the stock.
(f) To the extent provided by the terms of a Stock Award Agreement, the
person to whom a Stock Award is granted may satisfy any federal,
state or local tax withholding obligation relating to the exercise
or acquisition of stock under a Stock Award by any of the following
means or by a combination of such means: (1) tendering a cash
payment; (2) authorizing the Company to withhold shares from the
shares of the Common Stock otherwise issuable to the participant as
a result of the exercise or acquisition of stock under the Stock
Award; or (3) delivering to the Company owned and unencumbered
shares of the Common Stock of the Company.
14. ADJUSTMENTS UPON CHANGES IN STOCK
(a) If any change is made in the stock subject to the Plan, or subject
to any Stock Award, without the receipt of consideration by the
Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in
property other than cash, stock split, liquidating dividend,
combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of
consideration by the Company), the Plan will be appropriately
adjusted in the class(es) and maximum number of shares subject to
the Plan and the maximum number of shares subject to award to any
person during any calendar year, and the outstanding Stock Awards
will be appropriately adjusted in the class(es) and number of shares
and price per share of stock subject to such outstanding Stock
Awards. Such adjustments shall be made by the Board or the
Committee, the determination of which shall be final, binding and
conclusive. (The conversion of any convertible securities of the
Company shall not be treated as a "transaction not involving the
receipt of consideration by the Company".)
(b) In the event of: (1) a dissolution, liquidation or sale of
substantially all of the assets of the Company; (2) a merger or
consolidation in which the Company is not the surviving corporation;
or (3) a reverse merger in which the Company is the surviving
corporation but the shares of the Common Stock outstanding
immediately preceding the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash
or otherwise, then to the extent permitted by applicable law: (i)
any surviving corporation or an Affiliate of such surviving
corporation shall assume any Stock Awards outstanding under the Plan
or shall substitute similar Stock Awards for those outstanding under
the Plan, or (ii) such Stock Awards shall continue in full force and
effect. In the event any surviving corporation and its Affiliates
refuse to assume or continue such Stock Awards, or to substitute
similar options for those outstanding under the Plan, then, with
respect to Stock Awards held by persons then performing services as
Employees, Directors or Consultants, the time during which such
Stock Awards may be exercised shall be accelerated and the Stock
Awards terminated if not exercised prior to such event.
15. AMENDMENT OF THE PLAN AND STOCK AWARDS
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 14 relating to adjustments
upon changes in stock, no amendment shall be effective unless
approved by the stockholders of the Company to the extent
stockholder is necessary for the Plan to satisfy the requirements of
Section 422 of the Code, Rule 16b-3 or any Nasdaq or securities
exchange listing requirements.
(b) The Board may in its sole discretion submit any other amendment to
the Plan for stockholder approval, including, but not limited to,
amendments to the Plan intended to satisfy the requirements of
Section 162(m) of the Code and the regulations thereunder regarding
the exclusion of performance-based compensation from the limit on
corporate deductibility of compensation paid to certain executive
officers.
(c) It is expressly contemplated that the Board may amend the Plan in
any respect the Board deems necessary or advisable to provide
eligible Employees, Directors or Consultants with the maximum
benefits provided or to be provided under the provisions of the Code
and the regulations promulgated thereunder relating to Incentive
Stock Options and/or to bring the Plan and/or Incentive Stock
Options granted under it into compliance therewith.
(d) Rights and obligations under any Stock Award granted before
amendment of the Plan shall not be impaired by any amendment of the
Plan unless (i) the Company requests the consent of the person to
whom the Stock Award was granted and (ii) such person consents in
writing.
(e) The Board at any time, and from time to time, may amend the terms of
any one or more Stock Award; provided, however, that the rights and
obligations under any Stock Award shall not be impaired by any such
amendment unless (i) the Company requests the consent of the person
to whom the Stock Award was granted and (ii) such person consents in
writing.
16. TERMINATION OR SUSPENSION OF THE PLAN
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate ten (10) years from the
date the Plan is adopted by the Board or approved by the
stockholders of the Company, whichever is earlier. No Stock Awards
may be granted under the Plan while the Plan is suspended or after
it is terminated.
(b) Rights and obligations under any Stock Award granted while the Plan
is in effect shall not be impaired by suspension or termination of
the Plan, except with the consent of the person to whom the Stock
Award was granted.
17. EFFECTIVE DATE OF PLAN
This amendment and restatement of the Plan shall become effective on the
date of closing of the initial public offering pursuant to an effective
registration statement covering the offer and sale of Common Stock to the
public, but no Stock Awards granted under the Plan shall be exercised unless
and until the Plan has been approved by the stockholders of the Company, which
approval shall be within twelve (12) months before or after the date the Plan
is adopted by the Board.
IN WITNESS WHEREOF, the Company has executed this Plan as of the _____
day of March, 1999.
EC POWER, INC.
By:_________________________________________
William J. Potter, President/Secretary
