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THE 2000 EMPLOYEE STOCK OPTION PLAN
OF
ECO SOIL SYSTEMS, INC.
Eco Soil Systems, Inc., a Nebraska corporation (the
"Company"), has adopted the 2000 Employee Stock Option Plan of Eco Soil Systems,
Inc. (the "Plan"), effective June 9, 2000, for the benefit of its eligible
employees.
The purposes of this Plan are as follows:
(1) To provide an additional incentive for Employees to
further the growth, development and financial success of the Company by
personally benefiting through the ownership of Company stock which recognizes
such growth, development and financial success.
(2) To enable the Company to obtain and retain the services of
Employees considered essential to the long range success of the Company by
offering them an opportunity to own stock in the Company which will reflect the
growth, development and financial success of the Company.
ARTICLE I.
DEFINITIONS
1.1 GENERAL. Wherever the following terms are used in this
Plan they shall have the meanings specified below, unless the context clearly
indicates otherwise.
1.2 AWARD LIMIT. "Award Limit" shall mean 100,000 shares of
Common Stock, as adjusted pursuant to Section 7.3.
1.3 BOARD. "Board" shall mean the Board of Directors of the
Company.
1.4 CODE. "Code" shall mean the Internal Revenue Code of 1986,
as amended.
1.5 COMMITTEE. "Committee" shall mean the Compensation
Committee of the Board, or another committee of the Board, appointed as provided
in Section 7.1.
1.6 COMMON STOCK. "Common Stock" shall mean the common stock
of the Company, $.005 par value per share, and any equity security of the
Company issued or authorized to be issued in the future, but excluding any
preferred stock and any warrants, options or other rights to purchase Common
Stock. Debt securities of the Company convertible into Common Stock shall be
deemed equity securities of the Company.
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1.7 COMPANY. "Company" shall mean Eco Soil Systems, Inc., a
Nebraska corporation.
1.8 CORPORATE TRANSACTION. "Corporate Transaction" shall mean
any of the following shareholder-approved transactions to which the Company is a
party:
(a) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
change the State in which the Company is incorporated, to form a holding company
or to effect a similar reorganization as to form whereupon this Plan and all
Options are assumed by the successor entity;
(b) the sale, transfer, exchange or other disposition of all
or substantially all of the assets of the Company, in complete liquidation or
dissolution of the Company in a transaction not covered by the exceptions to
clause (a) above; or
(c) any reverse merger in which the Company is the surviving
entity but in which securities possessing more than fifty percent (50%) of the
total combined voting power of the Company's outstanding securities are
transferred or issued to a person or persons different from those who held such
securities immediately prior to such merger.
1.9 DIRECTOR. "Director" shall mean a member of the Board.
1.10 DISABILITY. "Disability" shall mean, with respect to any
Optionee, (i) the suffering of any mental or physical illness, disability or
incapacity that shall in all material aspects preclude such Optionee from
performing his or her employment duties, or (ii) the absence of such Optionee
from his or her employment duties by reason of any mental or physical illness,
disability or incapacity for a period of six (6) months during any twelve (12)
month period; provided, however, in either case, that such illness, disability
or incapacity shall be reasonably determined to be of a permanent nature by the
Committee.
1.11 EMPLOYEE. "Employee" shall mean any employee (as defined
in accordance with Section 3401(c) of the Code) of the Company, or of any
corporation which is a Subsidiary.
1.12 EXCHANGE ACT. "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
1.13 FAIR MARKET VALUE. "Fair Market Value" of a share of
Common Stock as of a given date shall be: (i) the closing sale price of a share
of Common Stock on the principal exchange on which the Common Stock is then
trading, if any, on such date, or, if shares were not traded on such date, then
on the next preceding trading day during which a sale occurred; (ii) if the
Common Stock is not traded on an exchange but is quoted on Nasdaq or a successor
quotation system, (1) the last sales price (if the Common Stock is then quoted
on the Nasdaq National Market or the Nasdaq SmallCap Market) or (2) the
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mean between the closing representative bid and asked prices (in all other
cases) for a share of the Common Stock on such date, or, if shares were not
traded on such date, then on the next preceding trading day during which a sale
occurred, as reported by Nasdaq or such successor quotation system; (iii) if the
Common Stock is not publicly traded on an exchange and not quoted on Nasdaq or a
successor quotation system, the mean between the closing bid and asked prices
for a share of Common Stock on such date, or, if shares were not traded on such
date, then on the next preceding trading day during which a sale occurred, as
determined in good faith by the Committee; or (iv) if the Common Stock is not
publicly traded, the fair market value of a share of Common Stock established by
the Committee acting in good faith.
1.14 INDEPENDENT DIRECTOR. "Independent Director" shall mean a
member of the Board who is not an Employee of the Company.
1.15 NON-QUALIFIED STOCK OPTION. "Non-Qualified Stock Option"
shall mean an Option that does not conform to the applicable provisions of
Section 422 of the Code.
1.16 OFFICER. "Officer" shall mean a President, Secretary,
Treasurer, Chairman of the Board, Vice President, Assistant Secretary or
Assistant Treasurer of the Company, as such positions are described in the
Company's Bylaws, or any other person designated an "officer" of the Company by
the Board of Directors in accordance with the Company's Bylaws.
1.17 OPTION. "Option" shall mean a stock option granted under
Article III of this Plan. An Option granted under this Plan shall be a
Non-Qualified Stock Option.
1.18 OPTION SHARES. "Option Shares" shall mean shares of
Common Stock acquired by Optionees through the exercise of Options under this
Plan.
1.19 OPTIONEE. "Optionee" shall mean an Employee granted an
Option under this Plan.
1.20 PLAN. "Plan" shall mean the 2000 Employee Stock Option
Plan of Eco Soil Systems, Inc.
1.21 QDRO. "QDRO" shall mean a qualified domestic relations
order as defined by the Code or Title I of the Employee Retirement Income
Security Act of 1974, as amended, or the rules thereunder.
1.22 RULE 16B-3. "Rule 16b-3" shall mean that certain Rule
16b-3 under the Exchange Act, as such Rule may be amended from time to time.
1.23 SECURITIES ACT. "Securities Act" shall mean the
Securities Act of 1933, as amended.
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1.24 SUBSIDIARY. "Subsidiary" shall mean any corporation in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain then owns
stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one (1) of the other corporations in such chain.
1.25 TERMINATION OF EMPLOYMENT. "Termination of Employment"
shall mean the time when the employee-employer relationship between an Optionee
and the Company or any Subsidiary is terminated for any reason, with or without
cause, including, but not by way of limitation, a termination by resignation,
discharge, death, Disability or retirement; but excluding (i) terminations where
there is a simultaneous reemployment or continuing employment of an Optionee by
the Company or any Subsidiary, (ii) at the discretion of the Committee,
terminations which result in a temporary severance of the employee-employer
relationship, and (iii) at the discretion of the Committee, terminations which
are followed by the simultaneous establishment of a consulting relationship by
the Company or a Subsidiary with the former employee. The Committee, in its
absolute discretion, shall determine the effect of all matters and questions
relating to Termination of Employment, including, but not by way of limitation,
the question of whether a Termination of Employment resulted from a discharge
for good cause, and all questions of whether particular leaves of absence
constitute Terminations of Employment; provided, however, that, unless otherwise
determined by the Committee in its discretion, a leave of absence, change in
status from an employee to an independent contractor or other change in the
employee-employer relationship shall constitute a Termination of Employment if,
and to the extent that, such leave of absence, change in status or other change
interrupts employment for the purposes of Section 422(a)(2) of the Code and the
then applicable regulations and revenue rulings under said Section.
Notwithstanding any other provision of this Plan, the Company or any Subsidiary
has an absolute and unrestricted right to terminate an Employee's employment at
any time for any reason whatsoever, with or without cause, except to the extent
expressly provided otherwise in writing.
1.26 TERMINATION FOR CAUSE. "Termination for Cause" shall mean
the time when the employee-employer relationship between an Optionee and the
Company or any Subsidiary is terminated for cause, as termination for cause is
defined in the Optionee's employment agreement; provided however, that if
termination for cause is not therein defined, it shall have such meaning, in
conformance with applicable law, as the Committee shall determine is
appropriate.
ARTICLE II.
SHARES SUBJECT TO PLAN
2.1 SHARES SUBJECT TO PLAN.
(a) The shares of stock subject to Options shall be Common
Stock. The aggregate number of such shares which may be issued upon exercise of
such options under the Plan shall be 800,000. The shares of Common Stock of the
Company issuable
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upon exercise of such options may be either previously authorized but unissued
shares or treasury shares.
(b) The maximum number of shares which may be subject to
Options granted under the Plan to any individual in any fiscal year of the
Company shall not exceed the Award Limit.
2.2 ADD-BACK OF OPTIONS. If any Option to acquire shares of
Common Stock under this Plan expires or is canceled without having been fully
exercised, the number of shares subject to such Option but as to which such
Option was not exercised prior to its expiration, cancellation or exercise may
again be available for the granting of Options hereunder, subject to the
limitations of Section 2.1. Furthermore, any shares subject to Options which are
adjusted pursuant to Section 7.3 and become exercisable with respect to shares
of stock of another corporation shall be considered canceled and may again be
available for the granting of Options hereunder, subject to the limitations of
Section 2.1. Shares of Common Stock which are delivered by the Optionee or
withheld by the Company upon the exercise of any Option under this Plan, in
payment of the exercise price thereof, may again be available for the granting
of Options hereunder, subject to the limitations of Section 2.1.
ARTICLE III.
GRANTING OF OPTIONS
3.1 ELIGIBILITY. Only the following classes of persons shall
be eligible to receive grants of Options under this Plan: (i) except as provided
in (ii) below, key Employees who are not Officers or Directors of the Company,
and (ii) newly hired Employees (including Employees who will become Officers or
Directors of the Company) and who have not previously been employed by the
Company and with respect to whom Options are to be granted as an inducement
essential to such Employees' entering into employment contracts with the
Company.
3.2 NON-QUALIFIED OPTIONS. No Option granted under this Plan
shall constitute an "incentive stock option" under Section 422 of the Code.
3.3 GRANTING OF OPTIONS.
(a) The Committee shall from time to time, in its absolute
discretion, and subject to applicable limitations of this Plan:
(i) Determine which eligible Employees are key
Employees and select from among the key Employees such of them as in its opinion
should be granted Options;
(ii) Subject to the Award Limit, determine the number
of shares to be subject to such Options granted to the selected key Employees;
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(iii) Determine the terms and conditions of such
Options, consistent with this Plan.
(b) Upon the selection of a key Employee to be granted an
Option, the Committee shall instruct the Secretary of the Company to issue the
Option and may impose such conditions on the grant of the Option as it deems
appropriate. Without limiting the generality of the preceding sentence, the
Committee may, in its discretion and on such terms as it deems appropriate,
require as a condition on the grant of an Option to an Employee that the
Employee surrender for cancellation some or all of the unexercised Options which
have been previously granted to him under this Plan or otherwise. An Option, the
grant of which is conditioned upon such surrender, may have an option price
lower (or higher) than the exercise price of such surrendered Option, may cover
the same (or a lesser or greater) number of shares as such surrendered Option,
may contain such other terms as the Committee deems appropriate, and shall be
exercisable in accordance with its terms, without regard to the number of
shares, price, exercise period or any other term or condition of such
surrendered Option.
ARTICLE IV.
TERMS OF OPTIONS
4.1 OPTION AGREEMENT. Each Option shall be evidenced by a
written Stock Option Agreement, which shall be executed by the Optionee and an
authorized officer of the Company and which shall contain such terms and
conditions as the Committee shall determine, consistent with this Plan.
4.2 OPTION PRICE. The price per share of the shares subject to
each Option shall be set by the Committee; provided, however, that unless
otherwise permitted by applicable securities laws, such price shall be not less
than eighty-five percent (85%) of the Fair Market Value of the stock at the time
the option is granted.
4.3 OPTION TERM. The term of an Option shall be set by the
Committee in its discretion; provided, however, that:
(a) no Option may have a term that extends beyond the
expiration of ten (10) years from the date the Option was granted; and
(b) the Committee may extend the term of any outstanding
Option in connection with any Termination of Employment of the Optionee, or
amend any other term or condition of such Option relating to such a termination;
and
(c) Unless otherwise permitted by applicable securities laws,
in the event of an Optionee's Termination of Employment for any reason except
death, Disability or Termination for Cause, the Optionee shall have at least
thirty (30) days from the date of such Termination, to exercise the Option, and
in the event of an Optionee's Termination of Employment due to the Optionee's
death or Disability, the Optionee shall have at least six (6) months from the
date of such Option. Notwithstanding the forgoing,
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if an Optionee's Termination of Employment also qualifies as a Termination for
Cause, the Company, in its discretion, may terminate the Optionee's right to
exercise his or her Options on the date of such termination or such other time
as the Committee in its discretion, shall deem appropriate.
4.4 OPTION VESTING.
(a) The period during which the right to exercise an Option in
whole or in part vests in the Optionee shall be set by the Committee and the
Committee may determine that an Option may not be exercised in whole or in part
for a specified period after it is granted; provided, however, that, subject to
Section 4.4(b), (i) unless otherwise permitted by applicable securities laws,
each Option shall become exercisable no later than five (5) years after such
Option is granted and such Option shall become exercisable with respect to at
least twenty percent (20%) of the shares of Common Stock subject to such Option,
as determined by the Committee in its sole discretion, on each anniversary of
the date of the grant of such Option; and (ii) unless the Committee otherwise
provides in the terms of the Stock Option Agreement or this Plan otherwise so
dictates, no Option shall be exercisable by any Optionee who is then subject to
Section 16 of the Exchange Act within the period ending six months and one day
after the date the Option is granted; provided, further, that Options may become
fully exercisable, subject to reasonable conditions such as continued employment
or consultancy, at any time or during any period established by the Committee.
(b) No portion of an Option which is unexercisable at
Termination of Employment shall thereafter become exercisable, except as may be
otherwise provided by the Committee either in the Stock Option Agreement or by
action of the following the grant of the Option.
4.5 CONSIDERATION. In consideration of the granting of an
Option, the Optionee shall agree, in the written Stock Option Agreement, to
remain in the employ of the Company or any Subsidiary for a period of at least
one (1) year (or such shorter period as may be fixed in the Stock Option
Agreement or by action of the Committee following grant of the Option) after the
Option is granted. Nothing in this Plan or in any Stock Option Agreement
hereunder shall confer upon any Optionee any right to continue in the employ of
the Company or any Subsidiary or shall interfere with or restrict in any way the
rights of the Company or any Subsidiary, which are hereby expressly reserved, to
discharge any Optionee at any time for any reason whatsoever, with or without
good cause.
4.6 FINANCIAL STATEMENTS. To the extent required by applicable
securities laws, each Optionee shall receive financial statements of the Company
at least annually.
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ARTICLE V.
EXERCISE OF OPTIONS
5.1 PARTIAL EXERCISE. An exercisable Option may be exercised
in whole or in part. However, an Option shall not be exercisable with respect to
fractional shares and the Committee may require that, by the terms of the
Option, a partial exercise be with respect to a minimum number of shares.
5.2 MANNER OF EXERCISE. All or a portion of an exercisable
Option shall be deemed exercised upon delivery of all of the following to the
Secretary of the Company or such Secretary's office:
(a) A written notice complying with the applicable rules
established by the Committee stating that the Option, or a portion thereof, is
exercised. The notice shall be signed by the Optionee or other person then
entitled to exercise the Option or such portion;
(b) Such representations and documents as the Committee, in
its absolute discretion, deems necessary or advisable to effect compliance with
all applicable provisions of the Securities Act and any other federal or state
securities laws or regulations. The Committee may, in its absolute discretion,
also take whatever additional actions it deems appropriate to effect such
compliance including, without limitation, placing legends on share certificates
and issuing stop-transfer notices to agents and registrars;
(c) In the event that the Option shall be exercised pursuant
to Section 8.1 by any person or persons other than the Optionee, appropriate
proof of the right of such person or persons to exercise the Option; and
(d) Full cash payment to the Secretary of the Company for the
shares and for payment of any applicable withholding or other applicable
employment taxes with respect to which the Option, or portion thereof, is
exercised. However, at the discretion of the Committee, the terms of the Option
may (i) allow a delay in payment up to thirty (30) days from the date the
Option, or portion thereof, is exercised; (ii) allow payment, in whole or in
part, through the delivery of shares of Common Stock owned by the Optionee
(which, in the case of shares of Common Stock acquired from the Company, have
been owned by the Optionee for more than six (6) months on the date of
delivery), duly endorsed for transfer to the Company with a Fair Market Value on
the date of delivery equal to the aggregate exercise price of the Option or
exercised portion thereof; (iii) allow payment, in whole or in part, through the
surrender of shares of Common Stock then issuable upon exercise of the Option
having a Fair Market Value on the date of Option exercise equal to the aggregate
exercise price of the Option or exercised portion thereof; (iv) allow payment,
in whole or in part, through the delivery of property of any kind which
constitutes good and valuable consideration; (v) allow payment, in whole or in
part, through the delivery of a full recourse promissory note bearing interest
(at no less than such rate as shall then preclude the imputation of interest
under the Code) and
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payable upon such terms as may be prescribed by the Committee; (vi) allow
payment, in whole or in part, through the delivery of a notice that the Optionee
has placed a market sell order with a broker with respect to shares of Common
Stock then issuable upon exercise of the Option, and that the broker has been
directed to pay a sufficient portion of the net proceeds of the sale to the
Company in satisfaction of the Option exercise price and any applicable
withholding or other employment taxes; or (vii) allow payment through any
combination of the consideration provided in the foregoing subparagraphs (ii),
(iii), (iv), (v) and (vi). In the case of a promissory note, the Committee may
also prescribe the form of such note and the security to be given for such note.
The Option may not be exercised, however, by delivery of a promissory note or by
a loan from the Company when or where such loan or other extension of credit is
prohibited by law.
5.3 CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES. The Company
shall not be required to issue or deliver any certificate or certificates for
shares of stock purchased upon the exercise of any Option or portion thereof
prior to fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock
exchanges, if any, on which such class of stock is then listed;
(b) The completion of any registration or other qualification
of such shares under any state or federal law, or under the rulings or
regulations of the Securities and Exchange Commission or any other governmental
regulatory body which the Committee or the Board shall, in its absolute
discretion, deem necessary or advisable;
(c) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Committee or the Board shall, in
its absolute discretion, determine to be necessary or advisable;
(d) The lapse of such reasonable period of time following the
exercise of the Option as the Committee or the Board may establish from time to
time for reasons of administrative convenience; and
(e) The receipt by the Company of full payment for such
shares, including payment of any applicable withholding tax.
5.4 RIGHTS AS SHAREHOLDERS. The holders of Options shall not
be, nor have any of the rights or privileges of, shareholders of the Company in
respect of any shares purchasable upon the exercise of any part of an Option
unless and until certificates representing such shares have been issued by the
Company to such holders.
ARTICLE VI.
ADMINISTRATION
6.1 COMPENSATION COMMITTEE. The Compensation Committee (or
another committee of the Board assuming the functions of the Committee under
this Plan) shall consist solely of two or more Independent Directors appointed
by and holding office
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at the pleasure of the Board, each of whom is a "non-employee director" as
defined by Rule 16(b)-3. Appointment of Committee members shall be effective
upon acceptance of appointment. Committee members may resign at any time by
delivering written notice to the Board. Vacancies in the Committee may be filled
by the Board.
6.2 DUTIES AND POWERS OF COMMITTEE. It shall be the duty of
the Committee to conduct the general administration of this Plan in accordance
with its provisions. The Committee shall have the power to interpret this Plan
and the agreements pursuant to which Options are granted or awarded, and to
adopt such rules for the administration, interpretation, and application of this
Plan as are consistent therewith and to interpret, amend or revoke any such
rules. Any such grant or award under this Plan need not be the same with respect
to each Optionee. In its absolute discretion, the Board may at any time and from
time to time exercise any and all rights and duties of the Committee under this
Plan except with respect to matters which under Rule 16b-3 are required to be
determined in the sole discretion of the Committee.
6.3 MAJORITY RULE; UNANIMOUS WRITTEN CONSENT. The Committee
shall act by a majority of its members in attendance at a meeting at which a
quorum is present or by a memorandum or other written instrument signed by all
members of the Committee.
6.4 COMPENSATION; PROFESSIONAL ASSISTANCE; GOOD FAITH ACTIONS.
Members of the Committee shall receive such compensation for their services as
members as may be determined by the Board. All expenses and liabilities which
members of the Committee incur in connection with the administration of this
Plan shall be borne by the Company. The Committee may, with the approval of the
Board, employ attorneys, consultants, accountants, appraisers, brokers, or other
persons. The Committee, the Company and the Company's officers and Directors
shall be entitled to rely upon the advice, opinions or valuations of any such
persons. All actions taken and all interpretations and determinations made by
the Committee or the Board in good faith shall be final and binding upon all
Optionees, the Company and all other interested persons. No members of the
Committee or Board shall be personally liable for any action, determination or
interpretation made in good faith with respect to this Plan or Options, and all
members of the Committee and the Board shall be fully protected by the Company
in respect of any such action, determination or interpretation.
ARTICLE VII.
MISCELLANEOUS PROVISIONS
7.1 NOT TRANSFERABLE.
(a) Options under this Plan may not be sold, pledged,
assigned, or transferred in any manner other than by will or the laws of descent
and distribution or pursuant to a QDRO, unless and until such options have been
exercised, or the shares underlying such Options have been issued, and all
restrictions applicable to such shares have lapsed. No Option or interest or
right therein shall be liable for the debts, contracts
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or engagements of the Optionee or the Optionee's successors in interest or shall
be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect, except to
the extent that such disposition is permitted by the preceding sentence.
(b) During the lifetime of the Optionee, only such Optionee
may exercise an Option (or any portion thereof) granted to such Optionee under
the Plan, unless the Option has been disposed of pursuant to a QDRO. After the
death of the Optionee, any exercisable portion of an Option may, prior to the
time when such portion becomes unexercisable under the Plan or the applicable
Stock Option Agreement or other agreement, be exercised by the Optionee's
personal representative or by any person empowered to do so under the deceased
Optionee's will or under the then applicable laws of descent and distribution.
7.2 AMENDMENT, SUSPENSION OR TERMINATION OF THIS PLAN. Except
as otherwise provided in this Section 7.2, this Plan may be wholly or partially
amended or otherwise modified, suspended or terminated at any time or from time
to time by the Board or the Committee. No action of the Board or the Committee
may be taken that would require shareholder approval as a matter of applicable
law, regulation or rule. No amendment, suspension or termination of this Plan
shall, without the consent of the holder of Options, alter or impair any rights
or obligations under any Options theretofore granted or awarded, unless the
award itself otherwise expressly so provides. No Options may be granted or
awarded during any period of suspension or after termination of this Plan.
7.3 CHANGES IN COMMON STOCK OR ASSETS OF THE COMPANY,
ACQUISITION OR LIQUIDATION OF THE COMPANY AND OTHER CORPORATE EVENTS.
(a) Subject to Section 7.3(d), (A) in the event that the
Committee determines that any dividend or other distribution (whether in the
form of cash, Common Stock, other securities, or other property),
recapitalization, reclassification, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase, liquidation, dissolution, or sale,
transfer, exchange or other disposition of all or substantially all of the
assets of the Company (including, but not limited to, a Corporate Transaction),
or exchange of Common Stock or other securities of the Company, issuance of
warrants or other rights to purchase Common Stock or other securities of the
Company, or other similar corporate transaction or event, in the Committee's
sole discretion, affects the Common Stock such that an adjustment is determined
by the Committee to be appropriate in order to prevent dilution or enlargement
of the benefits or potential benefits intended to be made available under the
Plan or with respect to an Option, or (B) in the event of any stock split or
reverse stock split, then the Committee shall, in such manner as it may deem
equitable, adjust any or all of
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(i) the number and kind of shares of Common Stock (or
other securities or property) with respect to which Options may be granted under
the Plan, (including, but not limited to, adjustments of the limitations in
Section 2.1 on the maximum number and kind of shares which may be issued and
adjustments of the Award Limit),
(ii) the number and kind of shares of Common Stock
(or other securities or property)
subject to outstanding Options, and
(iii) the grant or exercise price with respect to any
Option.
(b) Subject to Section 7.3(d), in the event of any Corporate
Transaction or other transaction or event described in Section 7.3(a) or any
unusual or nonrecurring transactions or events affecting the Company, any
Affiliate of the Company, or the financial statements of the Company or any
Affiliate, or of changes in applicable laws, regulations, or accounting
principles, the Committee in its discretion is hereby authorized to take any one
(1) or more of the following actions whenever the Committee determines that such
action is appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan or
with respect to any option under this Plan, to facilitate such transactions or
events or to give effect to such changes in laws, regulations or principles:
(i) In its sole and absolute discretion, and on such
terms and conditions as it deems appropriate, the Committee may provide, either
by the terms of the agreement or by action taken prior to the occurrence of such
transaction or event and either automatically or upon the Optionee's request,
for either the purchase of any such Option for an amount of cash equal to the
amount that could have been attained upon the exercise of such Option, or
realization of the Optionee's rights had such Option been currently exercisable
or payable or fully vested or the replacement of such Option with other rights
or property selected by the Committee in its sole discretion;
(ii) In its sole and absolute discretion, the
Committee may provide, either by the terms of such Option or by action taken
prior to the occurrence of such transaction or event that it cannot be exercised
after such event;
(iii) In its sole and absolute discretion, and on
such terms and conditions as it deems appropriate, the Committee may provide,
either by the terms of such Option or by action taken prior to the occurrence of
such transaction or event, that for a specified period of time prior to such
transaction or event, such Option shall be exercisable as to all shares covered
thereby, notwithstanding anything to the contrary in (i) Section 4.4 or (ii) the
provisions of such Option;
(iv) In its sole and absolute discretion, and on such
terms and conditions as it deems appropriate, the Committee may provide, either
by the terms of such Option or by action taken prior to the occurrence of such
transaction or event, that upon such event, such Option be assumed by the
successor or survivor corporation, or a
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parent or subsidiary thereof, or shall be substituted for by similar options
covering the stock of the successor or survivor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to the number and kind of
shares and prices; and
(v) In its sole and absolute discretion, and on such
terms and conditions as it deems appropriate, the Committee may make adjustments
in the number and type of shares of Common Stock (or other securities or
property) subject to outstanding Options and/or in the terms and conditions of
(including the grant or exercise price), and the criteria included in,
outstanding Options and Options which may be granted in the future.
(c) Subject to Section 7.3(d) and 7.8, the Committee may, in
its discretion, include such further provisions and limitations in any Option as
it may deem equitable and in the best interests of the Company.
7.4 TAX WITHHOLDING. The Company shall be entitled to require
payment in cash or deduction from other compensation payable to each Optionee of
any sums required by federal, state or local tax law to be withheld with respect
to the issuance, vesting or exercise of any Option. The Committee may in its
discretion and in satisfaction of the foregoing requirement allow such Optionee
to satisfy withholding tax obligations by electing to have the Company withhold
from the shares of Common Stock to be issued upon exercise of an Option that
number of shares having a Fair Market Value equal to the minimum amount required
to be withheld based on the statutory withholding rates for federal and state
tax purposes that apply to supplemental taxable income. The Fair Market Value of
the shares of Common Stock to be withheld shall be determined on the date that
the amount of tax to be withheld is to be determined. All elections by Optionees
to have shares of Common Stock withheld for this purpose shall be made in such
form and under such conditions as the Committee may deem necessary or advisable.
7.5 LOANS. The Committee may, in its discretion, extend one
(1) or more loans to key Employees in connection with the exercise or receipt of
an Option granted under this Plan. The terms and conditions of any such loan
shall be set by the Committee.
7.6 LIMITATIONS APPLICABLE TO SECTION 16 PERSONS AND
PERFORMANCE-BASED COMPENSATION. Notwithstanding any other provision of this
Plan, this Plan, and any Option granted to any individual who is then subject to
Section 16 of the Exchange Act, shall be subject to any additional limitations
set forth in any applicable exemptive rule under Section 16 of the Exchange Act
(including any amendment to Rule 16b-3 of the Exchange Act) that are
requirements for the application of such exemptive rule. To the extent permitted
by applicable law, the Plan and Options granted or awarded hereunder shall be
deemed amended to the extent necessary to conform to such applicable exemptive
rule.
7.7 EFFECT OF PLAN UPON OPTIONS AND COMPENSATION PLANS. The
adoption of this Plan shall not affect any other compensation or incentive plans
in effect
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for the Company or any Subsidiary. Nothing in this Plan shall be construed to
limit the right of the Company (i) to establish any other forms of incentives or
compensation for Employees, directors or consultants of the Company or any
Subsidiary or (ii) to grant or assume options or other rights otherwise than
under this Plan in connection with any proper corporate purpose including but
not by way of limitation, the grant or assumption of options in connection with
the acquisition by purchase, lease, merger, consolidation or otherwise, of the
business, stock or assets of any corporation, partnership, limited liability
company, firm or association.
7.8 COMPLIANCE WITH LAWS. This Plan, the granting and vesting
of Options under this Plan and the issuance and delivery of shares of Common
Stock and the payment of money under this Plan or under Options granted
hereunder are subject to compliance with all applicable federal and state laws,
rules and regulations (including but not limited to state and federal securities
law and federal margin requirements) and to such approvals by any listing,
regulatory or governmental authority as may, in the opinion of counsel for the
Company, be necessary or advisable in connection therewith. Any securities
delivered under this Plan shall be subject to such restrictions, and the person
acquiring such securities shall, if requested by the Company, provide such
assurances and representations to the Company as the Company may deem necessary
or desirable to assure compliance with all applicable legal requirements. To the
extent permitted by applicable law, the Plan and Options granted or awarded
hereunder shall be deemed amended to the extent necessary to conform to such
laws, rules and regulations.
7.9 TITLES. Titles are provided herein for convenience only
and are not to serve as a basis for interpretation or construction of this Plan.
7.10 GOVERNING LAW. This Plan and any agreements hereunder
shall be administered, interpreted and enforced under the internal laws of the
State of Delaware without regard to conflicts of laws thereof.
* * *
I hereby certify that the foregoing Plan was duly adopted by
the Board of Directors of Eco Soil Systems, Inc. on June 9, 2000.
Executed on this 9th day of June, 2000.
/s/ Dennis Sentz
------------------------
Secretary
