Unassociated Document
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14C
(Rule
14c-101)
INFORMATION
STATEMENT PURSUANT TO SECTION 14(c) OF THE SECURITIES EXCHANGE ACT OF
1934
Check
the
appropriate box:
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Preliminary
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Definitive
Information Statement
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Confidential
for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
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CHINA
FIRE & SECURITY GROUP, INC.
(Name
of Registrant as Specified In Its Charter)
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of Filing Fee (Check the appropriate box):
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(2)
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Proposed
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CHINA
FIRE & SECURITY GROUP, INC.
South
Banbidian Industrial Park,
Liqiao
Township, Shunyi District
Beijing
101304, People’s Republic of China
(86-10)
8416 3816
INFORMATION
STATEMENT
Dear
Stockholders:
This
Information Statement (the "Information Statement") is furnished by the Board
of
Directors of China Fire & Security Group, Inc., a Florida corporation (the
"Company", or "us"), to the stockholders of record of the Company at the close
of business on January 28, 2008 (the "Record Date") to provide information
with
respect to certain corporate actions taken by written consent of Li Brothers
Holding Inc. and China Honor Investment Limited, holders of a majority of the
outstanding shares of the Company's common stock that were entitled to vote
on
such actions (the "Majority Stockholders").
The
written consents, executed both by Board of Directors of the Company on January
15, 2008 and the Majority Stockholders on the Record Date, have approved
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·
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the
adoption of China Fire & Security Group, Inc. 2008 Omnibus Long-term
Incentive Plan (the “2008 Plan”).
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The
Board
of Directors of the Company, and the Majority Stockholders, holding
approximately 55.2% of the outstanding shares of the Company's common stock,
both have approved, by written consent, all of the above-described actions.
Therefore, all required corporate approvals for these actions have been
obtained. This Information Statement is furnished solely for the purpose of
informing stockholders of these corporate actions in the manner required by
Rule
14c-2 under the Securities Exchange Act of 1934.
A
PROXY. THIS IS NOT A NOTICE OF A MEETING OF STOCKHOLDERS AND NO STOCKHOLDER'S
MEETING WILL BE HELD TO CONSIDER ANY MATTER DESCRIBED
HEREIN.
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By
Order of the Board of Directors,
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/s/
Brian Lin
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Chief
Executive Officer
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January______,
2008
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CHINA
FIRE & SECURITY GROUP, INC.
South
Banbidian Industrial Park,
Liqiao
Township, Shunyi District
Beijing
101304, People’s Republic of China
(86-10)
8416 3816
PURPOSE
OF INFORMATION STATEMENT
This
Information Statement (the "Information Statement") is being mailed to the
stockholders of record of China
Fire & Security Group, Inc., a Florida corporation (the "Company", or "us"),
at the close of business on January 28, 2008 (the "Record Date"). This
Information Statement is being sent to you for information purposes only. No
action is requested on your part.
This
Information Statement is being furnished by our Board of Directors to provide
stockholders with information concerning the adoption of China Fire &
Security Group, Inc. 2008 Omnibus Long-term Incentive Plan (the “2008 Plan”),
approved both by Board of Directors of the Company on January 15, 2008 and
by Li
Brothers Holding Inc. and China Honor Investment Limited, holders of a majority
of our voting stock (the "Majority Stockholders"), on the Record
Date.
RECORD
DATE AND VOTING SECURITIES
Only
stockholders of record at the close of business on the Record Date were entitled
to notice of the information disclosed in this Information Statement. As of
the
Record Date, the Company had one series of common stock, par value 0.001 per
share, outstanding. On the Record Date, 26,506,636 validly issued shares of
our
common stock were issued and outstanding and held of record
by all registered stockholders.
STOCKHOLDERS'
RIGHTS
The
elimination of the need for a special meeting of the stockholders to approve
the
actions described in this Information Statement is authorized by
Section 607.0704 of the Florida Business Corporation Act provides that any
action required or permitted to be taken at a meeting of stockholders of a
corporation may be taken without a meeting, before or after the action, if
a
written consent thereto is signed by the stockholders holding at least a
majority of the voting power. In order to eliminate the costs and management
time involved in holding a special meeting and in order to effect the actions
disclosed herein as quickly as possible in order to accomplish the purposes
of
the Company, we chose to obtain the written consent of a majority of the
Company's voting power to approve the actions described in this Information
Statement.
The
actions described in this Information Statement cannot be taken until at least
20 days after this Information Statement has first been sent or given to the
Company's stockholders.
DISSENTERS'
RIGHTS
The
Florida Business Corporation Act does not provide for dissenters' rights in
connection with any of the actions described in this Information Statement,
and
we will not provide stockholders with any such right independently.
EXPENSES
The
costs
of preparing, printing and mailing this Information Statement will be borne
by
the Company.
STOCKHOLDERS
SHARING AN ADDRESS
We
will
deliver only one Information Statement to multiple stockholders sharing an
address unless the Company has received contrary instructions from one or more
of the stockholders. We undertake to deliver promptly, upon written or oral
request, a separate copy of the Information Statement to a stockholder at a
shared address to which a single copy of the Information Statement is delivered.
A stockholder can notify us that the stockholder wishes to receive a separate
copy of the Information Statement by contacting the Company at the address
or phone number set forth above. Conversely, if multiple stockholders sharing
an
address receive multiple Information Statements and wish to receive only one,
such stockholders can notify us at the address or phone number set forth
above.
ADOPTION
OF THE 2008 PLAN
General
Description of the 2008 Plan
The
following summary describes the material features of the 2008
Plan. The summary does not purport to be complete and is qualified in
its entirety by reference to the complete text of the 2008 Plan, which is
annexed as Exhibit A to this Information Statement.
Purpose
The
2008
Plan is intended to enhance the Company’s and its Affiliates’ (as defined)
ability to attract and retain highly qualified officers, directors, key
employees and other persons, and to motivate such officers, directors, key
employees and other persons to serve the Company and its Affiliates and to
expend maximum effort to improve the business results and earnings of the
Company, by providing to such persons an opportunity to acquire or increase
a
direct proprietary interest in the operations and future success of the Company.
Administration
The
2008
Plan is administered by one or more officers or directors of the Company who
are
authorized by the Board to administer the Plan before the Committee is formed
(
the “ Designee”) or a committee appointed by our board of directors (the
“Committee”). The Committee may delegate their responsibilities to others,
including our board of directors, under such conditions and limitations as
it
may determine provided that the Committee, in its discretion, designate a
subcommittee of its members to serve as the Committee (to the extent the Board
has not designated another person, committee or entity as the Committee) or
to
cause the Committee to (i) consist solely of persons who are “Nonemployee
Directors” as defined in Rule 16b-3 issued under the Exchange Act, (ii) consist
solely of persons who are Outside Directors, or (iii) satisfy the applicable
requirements of any stock exchange on which the Common Stock may then be
listed. Subject to the express provisions of the 2008 Plan and to
applicable law, the Designees or Committee shall have full power and authority
to grant awards to the Service Providers (as defined) prescribed under the
2008
Plan. Unless otherwise expressly provided in the 2008 Plan, all
designations, determinations, interpretations and other decisions under or
with
respect to the 2008 Plan or any award or award agreement shall be within the
sole discretion of the Designees or Committee, as may be made at any time and
shall be final, conclusive and binding upon any eligible person and any holder
or beneficiary of any award.
Notwithstanding
the foregoing, no amendment or modification may be made to an outstanding Option
or SAR that (i) causes the Option or SAR to become subject to
Section 409A, (ii) reduces the Option Price or SAR Exercise Price,
either by lowering the Option Price or SAR Exercise Price or by canceling the
outstanding Option or SAR and granting a replacement Option or SAR with a lower
Option Price or SAR Exercise Price or (iii) would be treated as a repricing
under the rules of the exchange upon which the Company’s Stock trades, without,
with respect to item (i), the Grantee’s written prior approval, and with respect
to items (ii) and (iii), without the approval of the stockholders of the
Company, provided, that, appropriate adjustments may be made to outstanding
Options and SARs pursuant to the appropriate provisions in the 2008 Plan.
Deferral
Arrangement.
The
Designees or Committee may permit or require the deferral of any Award payment
into a deferred compensation arrangement, subject to such rules and procedures
as it may establish and in accordance with Section 409A, which may include
provisions for the payment or crediting of interest or dividend equivalents,
including converting such credits into deferred Stock units.
Stock
Subject to the Plan
Stock
Available. The
shares of Stock issuable under the 2008 Plan are available either from
authorized but unissued shares or from shares reacquired by us on the open
market. Subject to the adjustment provision mentioned below, the
maximum number of shares of Stock available for issuance under the 2008 Plan
shall be 2,000,000, and The maximum
number of Common Stock that will be awarded to any one Grantee (as defined)
during any calendar year shall not exceed 300,000.
Adjustments. In
the event of any corporate event (including, but not limited to, a change in
the
shares of the Company or the capitalization of the Company), or transaction,
as
described in the 2008 Plan, in order to prevent dilution or enlargement of
participants’ rights under the 2008 Plan, the Designees or Committee shall
substitute or adjust, as applicable, the number and kind of shares that may
be
issued under the 2008 Plan or under particular forms of awards, the number
and
kind of shares subject to outstanding awards, the option price or grant price
applicable to outstanding awards, the annual award limits, and other value
determinations applicable to outstanding awards.
Effect
of Change of Control
The
Designees or Committee shall determine the effect of a Change in Control upon
Awards, and such effect may be set forth in the appropriate award agreement.
Unless an Award Agreement (as defined) explicitly provides otherwise, if the
Company is to be consolidated with or acquired by another entity in a merger,
sale of all or substantially all of the Company’s assets other than a
transaction to merely change the state of incorporation (a “Corporate
Transaction”), the Designees or Committee or the board of directors of any
entity assuming the obligations of the Company hereunder, shall, as to the
awards such as outstanding Options, SARs, grants of Restricted Stock, Restricted
Stock Units and/or Unrestricted Stock either (i) make appropriate
provisions for the continuation of such awards by substitution; or (ii)
provide that all such awards must be exercised; or (iii) terminate all
Options and/or SARs in exchange for an equivalent cash payment.
Eligibility
Under
the
2008 Plan, Awards may be made to any Service Provider, including any Service
Provider (as defined) who is an officer or director of the Company or of any
Affiliate, as the Designees or Committee shall determine and designate from
time
to time in its discretion.
Award
Agreement
Each
Award shall be evidenced by an Award Agreement, determined by the Designees
or
Committee. Award Agreements granted from time to time or at the same time need
not contain similar provisions but shall be consistent with the terms of the
2008 Plan. Each Award Agreement evidencing an Award of Options shall specify
whether such Options are intended to be Non-Qualified Stock Options or Incentive
Stock Options, and in the absence of such specification such options shall
be
deemed Non-Qualified Stock Option.
In
an
Award Agreement, the Company may retain the right to cause a forfeiture of
the
gain realized by a Grantee (as defined) on account of actions taken by the
Grantee in violation or breach of or in conflict with any employment agreement,
non-competition agreement, any agreement prohibiting solicitation of employees
or clients of the Company or any Affiliate thereof or any confidentiality
obligation with respect to the Company or any Affiliate or otherwise in
competition with the Company or any Affiliate.
In
an
Award Agreement, the Company may retain the right to cause a forfeiture of
the
gain realized by a Grantee, if the Grantee voluntarily terminates his employment
with the Company. Furthermore, the Company may annul an Award if the Grantee
is
terminated for Cause as defined in the applicable Award Agreement or the Plan,
as applicable. The grant of any Award may be contingent upon the Grantee
executing the appropriate Award Agreement.
Types
of Awards under 2008 Plan
Options. The
Designees or Committee are authorized to grant options to Service Providers
with
the following terms and conditions:
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(i)
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Exercise
Price.
The Option Price of each Option shall be fixed by the Designees or
Committee and stated in the related Award Agreement. The Option Price
of
each Incentive Stock Option shall be at least the Fair Market Value
of a
share of Stock on the Grant Date; provided,
however,
that (i) in the event that a Grantee is a Ten Percent Stockholder as
of the Grant Date, the Option Price of an Option granted to such
Grantee
that is intended to be an Incentive Stock Option shall be not less
than
110 percent of the Fair Market Value of a share of Stock on the Grant
Date, and (ii) with respect to Awards made in substitution for or in
exchange for awards made by an entity acquired by the Company or
an
Affiliate, the Option Price does not need to be at least the Fair
Market
Value on the Grant Date. In no case shall the Option Price of any
Option
be less than the par value of a share of Stock.
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(ii)
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Option
Term. Each
Option shall terminate, and all rights to purchase shares of Stock
thereunder shall cease, upon the expiration of ten
years
from the Grant Date, or under such circumstances and on such date
prior
thereto as is set forth in the Plan or as may be fixed by the Designees
or
Committee and stated in the related Award Agreement.
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(iii)
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Time
and Method of Exercise. The
Designees or Committee, and the Award Agreement shall state the time
or
times at which an option may be exercised in whole or in part and
the
method or methods by which, and the form or forms (including, without
limitation, cash, shares, other securities, other awards or other
property, or any combination thereof, having a Fair Market Value
on the
exercise date equal to the applicable exercise price) in which, payment
of
the exercise price with respect thereto may be made or deemed to
have been
made.
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Stock
Appreciation Rights(the “SAR”). The
Designees or Committee is authorized to grant SARs to any Service Provider
subject to the terms of the 2008 Plan and any applicable award agreement. SARs
granted under the 2008 Plan shall confer on the holder a right to receive
payment from the Company in an amount determined by multiplying:(i) the
difference between the Fair Market Value of a Share on the date of exercise
over
the SARs Exercise Price; by(ii) the number of shares with respect to which
the
SARs is exercised. Subject to the terms of the 2008 Plan, the grant price,
term,
methods of exercise, dates of exercise, methods of settlement and any other
terms and conditions (including conditions or restrictions on the exercise
thereof) of any SARs shall be as determined by the Designees or
Committee.
Restricted
Stock. Restricted
stock is common stock that is subject to restrictions, including a prohibition
against transfer and a substantial risk of forfeiture, until the end of a
"restricted period", determined by the Designees or Committee at the time of
grant, during which the grantee must satisfy certain vesting conditions. Unless
the Designees or Committee otherwise provides in an Award Agreement or in
writing after the Award Agreement is issued, upon the termination of a Grantee’s
Service, any Restricted Stock held by such Grantee that have not vested, or
with
respect to which all applicable restrictions and conditions have not lapsed,
shall immediately be deemed forfeited, and the Grantee shall have no further
rights with respect to such Award. During the restricted period, the Grantee
has
the rights and privileges of a regular stockholder, except that the restrictions
set forth in the applicable award agreement apply.
Restricted
Stock Units. A
restricted stock unit entitles the Grantee to receive common stock, or cash
(or
other property) based on the value of common stock, after a "restricted period"
during which the Grantee must satisfy certain vesting conditions. If the Grantee
does not satisfy the vesting conditions by the end of the restricted period,
the
restricted stock unit is forfeited. the Grantee shall have no rights other
than
those of a general creditor of the Company. Restricted Stock Units represent
an
unfunded and unsecured obligation of the Company, subject to the terms and
conditions of the applicable Award Agreement.
Unrestricted
Stock Award. The
Designees or Committee may, in its sole discretion, grant (or sell at par value
or such other higher purchase price determined by the Designees or Committee)
an
Award of Unrestricted Stock to any Grantee pursuant to which such Grantee may
receive shares of Stock free of any restrictions (“Unrestricted Stock”) under
the Plan. Awards of Unrestricted Stock may be granted or sold in respect of
past
Services rendered and other valid consideration, or in lieu of, or in addition
to, any cash compensation due to such Grantee. Unless otherwise provided by
the
Designees or Committee, Awards of Unrestricted Stock shall be paid within the
time period set forth herein for short-term deferral.
Performance
and Annual Incentive Award. The
Designees or Committee is authorized to grant to any Service Provider
performance and annual service awards which are intended to be “qualified
performance-based compensation” within the meaning of Section 162(m) of the
Code. A performance and annual service award may be payable in cash
or in shares (including, without limitation, restricted
stock). Performance awards shall, to the extent required by Section
162(m), be conditioned solely on the achievement of one or more objective
performance goals, and such performance goals shall be established by the
Committee within the time period prescribed by, and shall otherwise comply
with
the requirements of, Section 162(m).
Amendment
and Termination
The
Board
may, at any time and from time to time, amend, suspend, or terminate the 2008
Plan as to any Awards which have not been made. An amendment shall be contingent
on approval of the Company’s stockholders to the extent stated by the Board,
required by applicable laws, regulations and rules, as amended, or required
by
applicable stock exchange listing requirements. No Awards shall be made after
termination of the 2008 Plan. No amendment, suspension, or termination of the
2008 Plan shall, without the consent of the Grantee, impair rights or
obligations under any Award theretofore awarded.
Term
of the 2008 Plan
The
2008
Plan shall be effective as of the Effective Date (as defined ) and shall
terminate on the ten (10) year anniversary of the Effective Date, and may
be terminated on any earlier date as set forth herein.
Income
Tax Withholding
In
order
to comply with all applicable federal, state, local or foreign income tax laws
or regulations, we may take such action as we deem appropriate to ensure that
all applicable federal, state, local or foreign payroll, withholding, income
or
other taxes, which are the sole and absolute responsibility of a Grantee, are
withheld or collected from such a Grantee.
Certain
Federal Income Tax Consequences
The
following is a brief summary of the principal federal income tax consequences
of
awards under the 2008 Plan. This summary is not an exhaustive description and
does not describe all applicable federal, state or local tax laws.
Incentive
Stock Options(the “ISO”)
A
2008
Plan participant is not subject to federal income tax at the time of either
the
grant or the exercise of an ISO. In the year in which an ISO is exercised,
however, the amount by which the fair market value of the shares of common
stock
received upon the exercise of an ISO exceeds the exercise price will constitute
an adjustment to the option holder’s income in computing alternative minimum
taxable income. Such adjustment could result in the imposition of, or increase
the amount of, the option holder’s “alternative minimum tax” under the Code, as
amended. If an option holder does not dispose of such shares of common stock
within two (2) years after the ISO was granted or one (1) year after the ISO
was
exercised, whichever is later (any disposition within those periods is a
“disqualifying disposition”), then any gain or loss recognized upon such
disposition generally will be treated as long-term capital gain or loss. In
such
event, the Company will not receive a tax deduction on either the exercise
of
the ISO or on the sale of the underlying common stock.
If
an
option holder makes a “disqualifying disposition,” the option holder will
realize ordinary income in an amount equal to the lesser of (i) the fair market
value of the common stock on the date the ISO is exercised minus the exercise
price, or (ii) the sales price received by the option holder on the disposition
of such common stock minus the exercise price. In such event, we will be
entitled to a deduction in an amount equal to the ordinary income recognized
by
the option holder. If a sale is a disqualifying disposition, the option holder
also may realize short-term or long-term capital gain or loss, if such shares
constitute capital assets in an option holder’s hands. The gain or loss will be
measured by the difference between the fair market value of the shares on the
date of exercise of the ISO and the sales price of the shares.
For
purposes of the alternative minimum tax (the “AMT”), the amount by which the
fair market value of a share of stock acquired on exercise of an ISO exceeds
the
exercise price generally will be an adjustment included in the optionee’s AMT
income. If there is a disqualifying disposition of the share in the year in
which the option is exercised, there will be no adjustment for AMT purposes
with
respect to the share. If there is a disqualifying disposition in a later year,
no income is included in the optionee’s AMT for that year. For cap AMT purposes,
the tax basis of a share acquired on exercise of an ISO is increased by the
amount of the adjustment taken into account with respect to that share for
AMT
purposes.
Non-Qualified
Stock Options(the “NQSO”)
No
income
is realized by an option holder upon the grant of an NQSO. Upon the exercise
of
an NQSO, however, the amount by which the fair market value of the common stock
on the date of exercise exceeds the exercise price will be taxed as ordinary
income to an option holder and the Company will be entitled to a deduction
in an
equal amount. Such amount will not be an adjustment to income in computing
alternative minimum taxable income. Upon subsequent sales of common stock
received upon exercise of NQSO’s, an option holder may realize short-term or
long-term capital gain or loss, depending upon the holding period of the shares,
if such shares constitute capital assets for the option holder. The gain or
loss
will be measured by the difference between the sales price and the tax basis
of
the shares sold. The tax basis for this purpose will be the sum of the exercise
price and the amount of ordinary income realized by the option holder as a
result of such exercise.
Restricted
Stock
A
participant who has been awarded Restricted Stock will not realize taxable
income at the time of the award, and the Company will not be entitled to a
deduction at that time; provided,
however,
that
the participant may elect to treat the value of the shares of Stock as income
at
the time of receipt (without regard to restrictions) by filing with the IRS
(with a copy to us) an election under Section 83(b) of the Code no later than
thirty days after the issuance date. When the restrictions on the Restricted
Shares lapse, the participant will have ordinary income and the Company will
have a corresponding deduction. The measure of such income and deduction will
be
the fair market value of the shares at the time the restrictions
lapse.
Share
Appreciation Rights(“SAR”) and Performance
Units(“PSU”)
No
income
is realized by a holder of a SAR or PSU at the time the SAR or PSU is granted;
however, upon exercise, the amount of cash or the fair market value of the
shares of Common Stock received will be taxable as ordinary income to the holder
thereof and the Company will be entitled to a deduction in an equal
amount.
With
respect to tandem stock appreciation rights, if the recipient elects to
surrender the underlying option in exchange for cash or shares of stock equal
to
the appreciation inherent in the underlying option, the tax consequences to
the
recipient will be the same as discussed above. If the recipient elects to
exercise the underlying option, the holder will be taxed at the time of exercise
as if he or she had exercised a nonqualified stock option.
$1,000,000
Compensation Limit
The
Code
limits the deductibility (under certain circumstances) of compensation that
exceeds $1,000,000 annually that is paid by the Company to the Chief Executive
Officer and the next three most highly compensated executive officers (other
than the principal financial officer) as determined at the end of the Company’s
taxable year. The Code and the regulations promulgated thereunder provide
certain exclusions from the amounts included in the $1,000,000 limitation,
including compensation that is “qualified performance-based compensation” within
the meaning of the regulations. The Plan generally is intended to satisfy the
requirements set forth in the regulations with respect to “qualified
performance-based compensation” with respect to options that are exercisable at
an exercise price of not less than 100% of the fair market value of a share
of
common stock on the date of grant. However, if an option is exercisable at
a
price less than 100% of the price of a share of common stock on the date of
grant, the compensatory element of such NQSO (i.e.,
the
excess of such fair market value over the exercise price) will not constitute
“qualified performance-based compensation,” unless the exercise of options is
contingent upon the attainment of pre-established performance
goals.
Miscellaneous
The
2008
Plan is not qualified under Section 401 of the Code. In addition, the 2008
Plan
is not subject to any of the provisions of the Employee Retirement Income
Security Act of 1974, as amended. The 2008 Plan is not intended to be a funded
plan.
PRINCIPAL
STOCKHOLDERS
The
following table sets forth information as of the Record Date, regarding the
beneficial ownership of our common stock, including 26,506,636 shares of Common
Stock, 1,081,994 warrants to purchase Common Stock, and 487,500 stock options
that are exercisable by the management team within 60 days from July 1,
2007:
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each
person who is known by us to be the beneficial owner of more than
five
percent (5%) of our issued and outstanding shares of Common Stock;
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each
of our directors, executive officers and nominees to become directors;
and
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all
directors and executive officers as a group.
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Title of Class
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Name and Address of Beneficial Owner*
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Amount and
Nature of
Beneficial
Owner
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Percent of Class
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Common
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Li
Brothers Holding Inc. |
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12,768,000
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(1)
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45.7
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%
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Common
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Vyle
Investment Inc. |
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2,622,000
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(2)
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9.4
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%
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Common
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China
Honor Investment Limited |
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2,667,600
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(3)
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9.5
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%
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Common
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Worldtime
Investment Advisors Limited |
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2,576,400
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9.2
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%
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Common
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Gangjin
Li |
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12,993,000
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(4)
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46.5
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%
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Common
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Brian
Lin |
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899,100
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(5)
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3.2
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%
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Common
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Tieying
Guo |
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15,000
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(6)
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0.1
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%
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Common
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Qihong
Wu |
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0
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|
|
0.0
|
%
|
|
Common
|
|
Gene
Michael Bennett |
|
|
0
|
|
|
0.0
|
%
|
|
Common
|
|
Guoyou
Zhang |
|
|
0
|
|
|
0.0
|
%
|
|
Common
|
|
Yushen
Liu |
|
|
0
|
|
|
0.0
|
%
|
|
Common
|
|
Directors
and executive officers as a group (7) persons |
|
|
13,907,100
|
|
|
49.8
|
%
|
|
*
|
The
address for the officers and directors is South Banbidian Industrial
Park,
Liqiao Township, Shunyi District, Beijing 101304, People’s Republic of
China, (86-10) 8416 3816.
|
|
(1)
|
Li
Brothers Holding Inc is a BVI company of which Mr. Gangjin Li is the
sole shareholder.
|
|
(2)
|
Vyle
Investment Inc. is a BVI company of which Mr. Brian Lin owns
30%.
|
|
(3)
|
China
Honor Investment Inc. is a BVI company of which Mr. Ang Li is the
sole shareholder. Mr. Ang Li is the son of Mr. Gangjin Li, who
disclaims beneficial ownership of such shares.
|
|
(4)
|
Represents
the number of shares of Common Stock plus options to purchase 225,000
shares of Common Stock that is exercisable within 60 days from July
1,
2007.
|
|
(5)
|
Represents
the number of shares of Common Stock plus options to purchase 112,500
shares of Common Stock that is exercisable within 60 days from July
1,
2007.
|
|
(5)
|
Represents
the number of shares of options to purchase 1,500 shares of Common
Stock
that is exercisable within 60 days from July 1, 2007.
|
ADDITIONAL
AVAILABLE INFORMATION
We
are
subject to the information and reporting requirements of the Securities Exchange
Act of 1934 and in accordance with such act we file periodic reports, documents
and other information with the Securities and Exchange Commission relating
to
our business, financial statements and other matters. Such reports and other
information may be inspected and are available for copying at the offices of
the
Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C.
20549 or may be accessed at www.sec.gov.
|
|
By
Order of the Board of
Directors:
China
Fire & Security Group, Inc.
|
|
|
|
|
|
By:
|
|
January
16, 2008
|
Brian
Lin, Chief Executive Officer
|
Exhibit
A
CHINA
FIRE & SECURITY GROUP, INC
2008
OMNIBUS LONG-TERM INCENTIVE PLAN
China
Fire & Security Group, Inc., a Florida corporation (the “Company”), sets
forth herein the terms of its 2008 Omnibus Long-Term Incentive Plan (the
“Plan”), as follows:
The
Plan
is intended to enhance the Company’s and its Affiliates’ (as defined herein)
ability to attract and retain highly qualified officers, directors, key
employees and other persons, and to motivate such officers, directors, key
employees and other persons to serve the Company and its Affiliates and to
expend maximum effort to improve the business results and earnings of the
Company, by providing to such persons an opportunity to acquire or increase
a
direct proprietary interest in the operations and future success of the Company.
To this end, the Plan provides for the grant of stock options, stock
appreciation rights, restricted stock, restricted stock units, unrestricted
stock and cash awards. Any of these awards may, but need not, be made as
performance incentives to reward attainment of annual or long-term performance
goals in accordance with the terms hereof. Stock options granted under the
Plan
may be non-qualified stock options or incentive stock options, as provided
herein.
For
purposes of interpreting the Plan and related documents (including Award
Agreements), the following definitions shall apply:
2.1. “Affiliate”
means
any company or other trade or business that “controls,” is “controlled by” or is
“under common
control”
with the Company within the meaning of Rule 405 of Regulation C under the
Securities Act, including, without limitation, any Subsidiary.
2.2. “Annual
Incentive Award” means
an
Award made subject to attainment of performance goals (as described in
Section 13) over a performance period of a duration as specified by the
Designees or Committee.
2.3. “Award”
means a
grant of an Option, Stock Appreciation Right, Restricted Stock, Restricted
Stock
Unit, Unrestricted Stock, or cash award, as determined by the Designees or
Committee from time to time under the Plan.
2.4. “Award
Agreement”
means a
written agreement between the Company and a Grantee, or notice from the Company
to a Grantee, that evidences and sets out the terms and conditions of an Award.
2.5. “Board”
means
the Board of Directors of the Company.
2.6. “Cause”
means,
as determined by the Designees or Committee and unless otherwise provided in
an
applicable agreement with the Company or an Affiliate at or before the Grant
Date: (i) engaging in any act, omission or misconduct that is injurious to
the
Company or its Affiliates; (ii) gross negligence or willful misconduct in
connection with the performance of duties; (iii) conviction of a criminal
offense (other than minor traffic offenses); (iv) fraud, embezzlement or
misappropriation of funds or property of the Company or an Affiliate;
(v) material breach of any term of any employment, consulting or other
services, confidentiality, intellectual property or non-competition agreements,
if any, between the Service Provider and the Company or an Affiliate; (vi)
the
entry of an order duly issued by any regulatory agency (including federal,
state
and local regulatory agencies and self-regulatory bodies) having jurisdiction
over the Company or an Affiliate requiring the removal from any office held
by
the Service Provider with the Company or prohibiting a Service Provider from
participating in the business or affairs of the Company or any Affiliate; or
(vii) the revocation or threatened revocation of any of the Company’s or an
Affiliate’s government licenses, permits or approvals, which is primarily due to
the Service Provider’s action or inaction and such revocation or threatened
revocation would be alleviated or mitigated in any material respect by the
termination of the Service Provider’s Services.
2.7. “Change
in Control”
shall
have the meaning set forth in Section 15.2.
2.8. “Code”
means
the Internal Revenue Code of 1986, as now in effect or as hereafter amended.
2.9. “Committee”
means
the Compensation Committee of the Board, or such other committee as determined
by the Board. The Compensation Committee of the Board may, in its discretion,
designate a subcommittee of its members to serve as the Committee (to the extent
the Board has not designated another person, committee or entity as the
Committee) or to cause the Committee to (i) consist solely of persons who are
“Nonemployee Directors” as defined in Rule 16b-3 issued under the Exchange Act,
(ii) consist solely of persons who are Outside Directors, or (iii) satisfy
the
applicable requirements of any stock exchange on which the Common Stock may
then
be listed.
2.10. “Company”
means
China Fire & Security Group, Inc., a Florida corporation, or any successor
corporation.
2.11. “Common
Stock” or “Stock”
means
share of common stock of the Company, par value $0.001 per share.
2.12. “Covered
Employee”
means
a
Grantee who is a “covered employee” within the meaning of Section 162(m)(3)
of the Code, as qualified by Section 13.4 herein.
2.13. “Disability”
means
the Grantee is unable to perform each of the essential duties of such Grantee’s
position by reason of a medically determinable physical or mental impairment
which is potentially permanent in character or which can be expected to last
for
a continuous period of not less than 12 months; provided,
however,
that,
with respect to rules regarding expiration of an Incentive Stock Option
following termination of the Grantee’s Service, Disability has the meaning as
set forth in Section 22(e)(3) of the Code.
2.14. “Designee”
means
one or more officers or directors of the Company who are authorized by the
Board
to administer the Plan before the Committee is formed.
2.15. “Effective
Date”
means
the date set forth in Section
16.10
herein.
2.16. “Exchange
Act”
means
the Securities Exchange Act of 1934, as now in effect or as hereafter amended.
2.17. “Fair
Market Value”
of a
share of Common Stock as of a particular date shall mean (i) the closing sale
price reported for a share of Common Stock on such date on the national
securities exchange or national market system on which such stock is principally
traded, or if such date is not a trading day, the trading day immediately
preceding such date on which a sale was reported, or (ii) if the shares of
Common Stock are not then listed on a national securities exchange or national
market system, or the value of such shares is not otherwise determinable, such
value as determined by the Board in good faith in its sole discretion (but
in
any event not less than fair market value within the meaning of Section 409A).
2.18. “Family
Member”
means a
person who is a spouse, former spouse, child, stepchild, grandchild, parent,
stepparent, grandparent, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother, sister, brother-in-law, or sister-in-law,
including adoptive relationships, of the applicable individual, any person
sharing the applicable individual’s household (other than a tenant or employee),
a trust in which any one or more of these persons have more than fifty percent
of the beneficial interest, a foundation in which any one or more of these
persons (or the applicable individual) control the management of assets, and
any
other entity in which one or more of these persons (or the applicable
individual) own more than fifty percent of the voting interests.
2.19. “Grant
Date”
means,
as determined by the Designees or Committee, the latest to occur of (i) the
date as of which the Designees or Committee approves an Award, (ii) the
date on which the recipient of an Award first becomes eligible to receive an
Award under Section 6 hereof, or (iii) such other date as may be
specified by the Designees or Committee in the Award Agreement.
2.20. “Grantee”
means a
person who receives or holds an Award under the Plan.
2.21. “Incentive
Stock Option”
means an
“incentive stock option” within the meaning of Section 422 of the Code, or
the corresponding provision of any subsequently enacted tax statute, as amended
from time to time.
2.22. “Non-Qualified
Stock Option”
means an
Option that is not an Incentive Stock Option.
2.23. “Option”
means
an
option to purchase one or more shares of Stock pursuant to the Plan.
2.24. “Option
Price”
means
the exercise price for each share of Stock subject to an Option.
2.25. “Outside
Director”
means a
member of the Board who is not an officer or employee of the Company or an
Affiliate, determined in accordance with the requirements of Section 162(m)
of
the Code.
2.26. “Performance
Award”
means an
Award made subject to the attainment of performance goals (as described in
Section 13) over a performance period of up to ten (10) years.
2.27. “Plan”
means
this China Fire & Security Group,, Inc. 2008 Omnibus Long-Term Incentive
Plan.
2.28. “PRC”
means People’s Republic of China, excluding Hong Kong, Macau and
Taiwan.
2.29. “Purchase
Price”
means
the purchase price for each share of Stock pursuant to a grant of Restricted
Stock or Unrestricted Stock.
2.30. “Reporting
Person”
means a
person who is required to file reports under Section 16(a) of the Exchange
Act.
2.31. “Restricted
Stock”
means
shares of Stock, awarded to a Grantee pursuant to Section 10 hereof.
2.32. “Restricted
Stock Unit”
means a
bookkeeping entry representing the equivalent of shares of Stock, awarded to
a
Grantee pursuant to Section 10 hereof.
2.33. “SAR
Exercise Price”
means
the per share exercise price of a SAR granted to a Grantee under Section 9
hereof.
2.34. “Section
409A”
shall
mean Section 409A of the Code and all formal guidance and regulations
promulgated thereunder.
2.35. “Securities
Act”
means
the Securities Act of 1933, as now in effect or as hereafter amended.
2.36. “Separation
from Service”
means a
termination of Service by a Service Provider, as determined by the Designees
or
Committee, which determination shall be final, binding and conclusive; provided
if any Award governed by Section 409A is to be distributed on a Separation
from Service, then the definition of Separation from Service for such purposes
shall comply with the definition provided in Section 409A.
2.37. “Service”
means
service as a Service Provider to the Company or an Affiliate. Unless otherwise
stated in the applicable Award Agreement, a Grantee’s change in position or
duties shall not result in interrupted or terminated Service, so long as such
Grantee continues to be a Service Provider to the Company or an Affiliate.
2.38. “Service
Provider”
means an
employee, officer or director of the Company or an Affiliate, or a consultant
or
adviser currently providing services to the Company or an Affiliate.
2.39. “Stock
Appreciation Right” or “SAR”
means a
right granted to a Grantee under Section 9 hereof.
2.40. “Subsidiary”
means
any “subsidiary corporation” of the Company within the meaning of
Section 424(f) of the Code.
2.41. “Termination
Date”
means
the date upon which an Option shall terminate or expire, as set forth in
Section 8.3 hereof.
2.42. “Ten
Percent Stockholder”
means an
individual who owns more than ten percent (10%) of the total combined
voting power of all classes of outstanding stock of the Company, its parent
or
any of its Subsidiaries. In determining stock ownership, the attribution rules
of Section 424(d) of the Code shall be applied.
2.43. “Unrestricted
Stock”
means an
Award pursuant to Section 11 hereof.
|
3.
|
ADMINISTRATION
OF THE PLAN
|
3.1. General.
The
Designees or Committee shall have such powers and authorities related to the
administration of the Plan as are consistent with the Company’s certificate of
incorporation and bylaws and applicable law. The Designees or Committee shall
have full power and authority to take all actions and to make all determinations
required or provided for under the Plan, any Award or any Award Agreement,
and
shall have full power and authority to take all such other actions and make
all
such other determinations not inconsistent with the specific terms and
provisions of the
Plan
that the Designees or Committee deems to be necessary or appropriate to the
administration of the Plan. The interpretation and construction by the Designees
or Committee of any provision of the Plan, any Award or any Award Agreement
shall be final, binding and conclusive. Without limitation, the Designees or
Committee shall have full and final authority, subject to the other terms and
conditions of the Plan, to:
(i)
designate Grantees;
(ii)
determine the type or types of Awards to be made to a Grantee;
(iii)
determine the number of shares of Stock to be subject to an Award;
(iv)
establish the terms and conditions of each Award (including, but not limited
to,
the Option Price of any Option, the nature and duration of any restriction
or
condition (or provision for lapse thereof) relating to the vesting, exercise,
transfer, or forfeiture of an Award or the shares of Stock subject thereto,
and
any terms or conditions that may be necessary to qualify Options as Incentive
Stock Options);
(v)
prescribe the form of each Award Agreement; and
(vi)
amend, modify, or supplement the terms of any outstanding Award including the
authority, in order to effectuate the purposes of the Plan, to modify Awards
to
foreign nationals or individuals who are employed outside the United States
to recognize differences in local law, tax policy, or custom.
Notwithstanding
the foregoing, no amendment or modification may be made to an outstanding Option
or SAR that (i) causes the Option or SAR to become subject to
Section 409A, (ii) reduces the Option Price or SAR Exercise Price,
either by lowering the Option Price or SAR Exercise Price or by canceling the
outstanding Option or SAR and granting a replacement Option or SAR with a lower
Option Price or SAR Exercise Price or (iii) would be treated as a repricing
under the rules of the exchange upon which the Company’s Stock trades, without,
with respect to item (i), the Grantee’s written prior approval, and with respect
to items (ii) and (iii), without the approval of the stockholders of the
Company, provided, that, appropriate adjustments may be made to outstanding
Options and SARs pursuant to Section 15.
The
Company may retain the right in an Award Agreement to cause a forfeiture of
the
gain realized by a Grantee on account of actions taken by the Grantee in
violation or breach of or in conflict with any employment agreement,
non-competition agreement, any agreement prohibiting solicitation of employees
or clients of the Company or any Affiliate thereof or any confidentiality
obligation with respect to the Company or any Affiliate thereof or otherwise
in
competition with the Company or any Affiliate thereof, to the extent specified
in such Award Agreement applicable to the Grantee. The Company may retain the
right in an Award Agreement to cause a forfeiture of the gain realized by a
Grantee, if the Grantee voluntarily terminates his employment with the Company.
Furthermore, the Company may annul an Award if the Grantee is terminated for
Cause as defined in the applicable Award Agreement or the Plan, as applicable.
The grant of any Award may be contingent upon the Grantee executing the
appropriate Award Agreement.
3.2. Deferral
Arrangement.
The
Designees or Committee may permit or require the deferral of any Award payment
into a deferred compensation arrangement, subject to such rules and procedures
as it may establish and in accordance with Section 409A, which may include
provisions for the payment or crediting of interest or dividend equivalents,
including converting such credits into deferred Stock units.
3.3. No
Liability.
No
member
of the Board or of the Designees or Committee shall be liable for any action
or
determination made in good faith with respect to the Plan, any Award or Award
Agreement.
3.4. Book
Entry.
Notwithstanding
any other provision of this Plan to the contrary, the Company may elect to
satisfy any requirement under this Plan for the delivery of stock certificates
through the use of book-entry.
|
4.
|
STOCK
SUBJECT TO THE PLAN
|
Subject
to adjustment as provided in Section 15
hereof,
the maximum number of shares of Stock available for issuance under the Plan
shall be 2,000,000.
All
such shares of Stock available for issuance under the Plan shall be available
for issuance pursuant to Incentive Stock Options. Stock issued or to be issued
under the Plan shall be authorized but unissued shares; or, to the extent
permitted by applicable law, issued shares that have been reacquired by the
Company. The maximum number of Common Stock that will be awarded to any one
Grantee during any calendar year shall not exceed 300,000.
The
Designees or Committee may adopt reasonable procedures for making adjustments
in
accordance with Section 15.
If the
Option Price of any Option granted under the Plan, or if pursuant to
Section 16.3
the
withholding obligation of any Grantee with respect to an Option or other Award,
is satisfied by tendering shares of Stock to the Company (by either actual
delivery or by attestation) or by withholding shares of Stock, the number of
shares of Stock issued net of the shares of Stock tendered or withheld shall
be
deemed delivered for purposes of determining the maximum number of shares of
Stock available for delivery under the Plan. To the extent that an Award under
the Plan is canceled, expired, forfeited, settled in cash, settled by issuance
of fewer shares than the number underlying the Award, or otherwise terminated
without delivery of shares to the Grantee, the shares retained by or returned
to
the Company will be available under the Plan; and shares that are withheld
from
such an Award or separately surrendered by the Grantee in payment of any
exercise price or taxes relating to such an Award shall be deemed to constitute
shares not delivered to the Grantee and will be available under the Plan. In
addition, in the case of any Award granted in assumption of or in substitution
for an award of a company or business acquired by the Company or a Subsidiary
or
Affiliate or with which the Company or a Subsidiary or Affiliate combines,
shares issued or issuable in connection with such substitute Award shall not
be
counted against the number of shares reserved under the Plan.
|
5.
|
EFFECTIVE
DATE,
DURATION AND AMENDMENTS
|
5.1. Term.
The
Plan
shall be effective as of the Effective Date and shall terminate on the ten
(10) year anniversary of the Effective Date, and may be terminated on any
earlier date as provided in Section 5.2.
5.2. Amendment
and Termination of the Plan.
The
Board
may, at any time and from time to time, amend, suspend, or terminate the Plan
as
to any Awards which have not been made. An amendment shall be contingent on
approval of the Company’s stockholders to the extent stated by the Board,
required by applicable laws, regulations and rules, as amended, or required
by
applicable stock exchange listing requirements. No Awards shall be made after
termination of the Plan. No amendment, suspension, or termination of the Plan
shall, without the consent of the Grantee, impair rights or obligations under
any Award theretofore awarded.
|
6.
|
AWARD
ELIGIBILITY AND LIMITATIONS
|
6.1. Service
Providers and Other Persons.
Subject
to this Section 6,
Awards
may be made to any Service Provider, including any Service Provider who is
an
officer or director of the Company or of any Affiliate, as the Designees or
Committee shall determine and designate from time to time in its discretion.
6.2. Successive
Awards.
An
eligible person may receive more than one Award, subject to such restrictions
as
are provided herein.
6.3. Stand-Alone,
Additional, Tandem, and Substitute Awards.
Awards
may, in the discretion of the Designees or Committee, be granted either alone
or
in addition to, in tandem with, or in substitution or exchange for, any other
Award or any award granted under another plan of the Company, any Affiliate,
or
any business entity to be acquired by the Company or an Affiliate, or any other
right of a Grantee to receive payment from the Company or any Affiliate. Such
additional, tandem, and substitute or exchange Awards may be granted at any
time. If an Award is granted in substitution or exchange for another Award,
the
Designees or Committee shall have the right to require the surrender of such
other Award in consideration for the grant of the new Award. The Board shall
have the right, in its discretion, to make Awards in substitution or exchange
for any other award under another plan of the Company, any Affiliate, or any
business entity to be acquired by the Company or an Affiliate. In addition,
subject to the sole discretion of the Designees or Committee from time to time,
Awards may be granted in lieu of cash compensation, including in lieu of cash
amounts payable under other plans of the Company or any Affiliate, in which
the
value of Stock subject to the Award is equivalent in value to the cash
compensation (for example, Restricted Stock Units or Restricted Stock).
Each
Award shall be evidenced by an Award Agreement, in such form or forms as the
Designees or Committee shall from time to time determine. Without limiting
the
foregoing, an Award Agreement may be provided in the form of a notice which
provides that acceptance of the Award constitutes acceptance of all terms of
the
Plan and the notice. Award Agreements granted from time to time or at the same
time need not contain similar provisions but shall be consistent with the terms
of the Plan. Each Award Agreement evidencing an Award of Options shall specify
whether such Options are intended to be Non-Qualified Stock Options or Incentive
Stock Options, and in the absence of such specification such options shall
be
deemed Non-Qualified Stock Options.
|
8.
|
TERMS
AND CONDITIONS OF OPTIONS
|
8.1. Option
Price.
The
Option Price of each Option shall be fixed by the Designees or Committee and
stated in the related Award Agreement. The Option Price of each Incentive Stock
Option shall be at least the Fair Market Value of a share of Stock on the Grant
Date; provided,
however,
that
(i) in the event that a Grantee is a Ten Percent Stockholder as of the
Grant Date, the Option Price of an Option granted to such Grantee that is
intended to be an Incentive Stock Option shall be not less than 110 percent
of
the Fair Market Value of a share of Stock on the Grant Date, and (ii) with
respect to Awards made in substitution for or in exchange for awards made by
an
entity acquired by the Company or an Affiliate, the Option Price does not need
to be at least the Fair Market Value on the Grant Date. In no case shall the
Option Price of any Option be less than the par value of a share of
Stock.
8.2. Vesting.
Subject
to Section 8.3
hereof,
each Option shall become exercisable at such times and under such conditions
(including without limitation performance requirements) as shall be determined
by the Designees or Committee and stated in the Award Agreement. For purposes
of
this Section 8.2,
fractional numbers of shares of Stock subject to an Option shall be rounded
down
to the next nearest whole number.
8.3. Term.
Each
Option shall terminate, and all rights to purchase shares of Stock thereunder
shall cease, upon the expiration of ten
years
from the Grant Date, or under such circumstances and on such date prior thereto
as is set forth in the Plan or as may be fixed by the Designees or Committee
and
stated in the related Award Agreement (the “Termination Date”).
8.4. Separation
from Service.
Except
as
otherwise provided in an Award Agreement, if a Grantee’s employment with or
service to the Company or Affiliate terminates for any reason other than Cause,
(i) Options granted to such Grantee, to the extent that they are exercisable
at
the time of such termination, shall remain exercisable for a period of not
more
than 90 days after such termination (one year in the case of termination by
reason of death or Disability), on which date they shall expire, and (ii)
Options granted to such Grantee, to the extent that they were not exercisable
at
the time of such termination, shall expire on the date of such
termination.
In the
event of the termination of a Grantee’s employment or service for Cause, all
outstanding Options granted to such Grantee shall expire on the date of such
termination. Notwithstanding the foregoing, no Option shall be exercisable
after
the expiration of its term.
8.5. Limitations
on Exercise of Option.
Notwithstanding
any other provision of the Plan, in no event may any Option be exercised, in
whole or in part, (i) prior to the date the Plan is approved by the Board
and stockholders of the Company as provided herein or (ii) after the
occurrence of an event referred to in Section 15
hereof
which results in termination of the Option.
8.6. Method
of Exercise.
An
Option
that is exercisable may be exercised by the Grantee’s delivery to the Company of
written notice of exercise on any business day, at the Company’s principal
office, on the form specified by the Company. Such notice shall specify the
number of shares of Stock with respect to which the Option is being exercised
and which exercise method shall be , determined by the Designees or Committees
solely in its discretion, and the
Designees or Committee may approve
payment in whole or in part by an alternative method, including (i) by means
of
any cashless exercise procedure approved by the Designees
or Committee,
(ii) in the form of unrestricted shares of Stock already owned by the Grantee
on
the date of surrender to the extent the shares of Stock having a Fair Market
Value on the date of surrender equal to the aggregate Option Price of the shares
as to which such Option shall be exercised, provided
that,
in
the case of an Incentive Stock Option, the right to make payment in the form
of
already owned shares of Stock may be authorized only at the time of grant,
or
(iii) any combination of the foregoing.
8.7. Rights
of Holders of Options.
Unless
otherwise stated in the related Award Agreement, an individual holding or
exercising an Option shall have none of the rights of a stockholder (for
example, the right to receive cash or dividend payments or distributions
attributable to the subject shares of Stock or to direct the voting of the
subject shares of Stock ) until the shares of Stock covered thereby are fully
paid and issued to him. Except as provided in Section 15
hereof,
no adjustment shall be made for dividends, distributions or other rights for
which the record date is prior to the date of such issuance.
8.8. Delivery
of Stock Certificates.
Promptly
after the exercise of an Option by a Grantee and the payment in full of the
Option Price, such Grantee shall be entitled to the issuance of a stock
certificate or certificates evidencing his or her ownership of the shares of
Stock subject to the Option.
8.9. Transferability
of Options.
Except
as
provided in Section 8.10,
during
the lifetime of a Grantee, only the Grantee (or, in the event of legal
incapacity or incompetence, the Grantee’s guardian or legal representative) may
exercise an Option. Except as provided in Section 8.10,
no
Option shall be assignable or transferable by the Grantee to whom it is granted,
other than by will or the laws of descent and distribution.
8.10. Family
Transfers.
If
authorized in the applicable Award Agreement, a Grantee may transfer, not for
value, all or part of an Option which is not an Incentive Stock Option to any
Family Member. For the purpose of this Section 8.10,
a “not
for value” transfer is a transfer which is (i) a gift, (ii) a transfer
under a domestic relations order in settlement of marital property rights;
or
(iii) a transfer to an entity in which more than fifty percent of the
voting interests are owned by Family Members (or the Grantee) in exchange for
an
interest in that entity. Following a transfer under this Section 8.10,
any
such Option shall continue to be subject to the same terms and conditions as
were applicable immediately prior to transfer. Subsequent transfers of
transferred Options are prohibited except to Family Members of the original
Grantee in accordance with this Section 8.10
or by
will or the laws of descent and distribution. Notwithstanding the foregoing,
the
Designees or Committee may also provide that Options may be transferred to
persons other than Family Members. The events of termination of Service of
Section 8.4
hereof
shall continue to be applied with respect to the original Grantee, following
which the Option shall be exercisable by the transferee only to the extent,
and
for the periods specified, in Section 8.4.
8.11. Limitations
on Incentive Stock Options.
An
Option
shall constitute an Incentive Stock Option only (i) if the Grantee of such
Option is an employee of the Company or any Subsidiary of the Company;
(ii) to the extent specifically provided in the related Award Agreement;
and (iii) to the extent that the aggregate Fair Market Value (determined at
the time the Option is granted) of the shares of Stock with respect to which
all
Incentive Stock Options held by such Grantee become exercisable for the first
time during any calendar year (under the Plan and all other plans of the
Grantee’s employer and its Affiliates) does not exceed $100,000. This limitation
shall be applied by taking Options into account in the order in which they
were
granted.
|
9.
|
TERMS
AND CONDITIONS OF STOCK APPRECIATION RIGHTS
|
9.1. Right
to Payment.
A
SAR
shall confer on the Grantee a right to receive, upon exercise thereof, the
excess of (i) the Fair Market Value of one share of Stock on the date of
exercise over (ii) the SAR Exercise Price, as determined by the Designees
or Committee. The Award Agreement for an SAR shall specify the SAR Exercise
Price, which shall be fixed on the Grant Date. SARs may be granted alone or
in
conjunction with all or part of an Option or at any subsequent time during
the
term of such Option or in conjunction with all or part of any other Award.
A SAR
granted in tandem with an outstanding Option following the Grant Date of such
Option may have a grant price that is equal to the Option Price.
9.2. Other
Terms.
The
Designees or Committee shall determine at the Grant Date or thereafter, the
time
or times at which and the circumstances under which a SAR may be exercised
in
whole or in part (including based on achievement of performance goals and/or
future service requirements), the time or times at which SARs shall cease to
be
or become exercisable following termination of Service or upon other conditions,
the method of exercise, whether or not a SAR shall be in tandem or in
combination with any other Award, and any other terms and conditions of any
SAR.
9.3. Term
of SARs.
The
term of a SAR granted under the Plan shall be determined by the Designees or
Committee, in its sole discretion; provided, however, that such term shall
not
exceed ten
years.
9.4. Payment
of SAR Amount.
Upon
exercise of a SAR, a Grantee shall be entitled to receive payment from the
Company in an amount determined by multiplying:
(i)
the
difference between the Fair Market Value of a Share on the date of exercise
over
the SAR Exercise Price; by
(ii)
the
number of Shares with respect to which the SAR is exercised.
SARs
shall be settled in cash or
Stock
of equivalent value, as determined by the Designees or Committee and set forth
in the Award Agreement.
|
10.
|
TERMS
AND CONDITIONS OF RESTRICTED STOCK AND RESTRICTED STOCK UNITS
|
10.1. Restrictions.
At
the
time of grant, the Designees or Committee may, in its sole discretion, establish
a period of time (a “restricted period”) and any additional restrictions
including the satisfaction of corporate or individual performance objectives
applicable to an Award of Restricted Stock or Restricted Stock Units in
accordance with Section 13.1
and
13.2.
Each
Award of Restricted Stock or Restricted Stock Units may be subject to a
different restricted period and additional restrictions. Neither Restricted
Stock nor Restricted Stock Units may be sold, transferred, assigned, pledged
or
otherwise encumbered or disposed of during the restricted period or prior to
the
satisfaction of any other applicable restrictions.
10.2. Restricted
Stock Certificates.
The
Company shall issue stock, in the name of each Grantee to whom Restricted Stock
has been granted, stock certificates or other evidence of ownership representing
the total number of shares of Restricted Stock granted to the Grantee, as soon
as reasonably practicable after the Grant Date. The Designees or Committee
may
provide in an Award Agreement that either (i) the Secretary of the Company
shall hold such certificates for the Grantee’s benefit until such time as the
Restricted Stock is forfeited to the Company or the restrictions lapse, or
(ii) such certificates shall be delivered to the Grantee, provided,
however,
that
such certificates shall bear a legend or legends that comply with the applicable
securities laws and regulations and makes appropriate reference to the
restrictions imposed under the Plan and the Award Agreement.
10.3. Rights
of Holders of Restricted Stock.
Unless
the Designees or Committee otherwise provides in an Award Agreement, holders
of
Restricted Stock shall have the right to vote such Stock and the right to
receive any dividends declared or paid with respect to such Stock. The Designees
or Committee may provide that any dividends paid on Restricted Stock must be
reinvested in shares of Stock, which may or may not be subject to the same
restrictions applicable to such Restricted Stock. All distributions, if any,
received by a Grantee with respect to Restricted Stock as a result of any stock
split, stock dividend, combination of shares, or other similar transaction
shall
be subject to the restrictions applicable to the original Award.
10.4. Rights
of Holders of Restricted Stock Units.
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10.4.1.
|
Settlement
of Restricted Stock Units.
|
Restricted
Stock Units may be settled in cash or Stock, as determined by the Designees
or
Committee and set forth in the Award Agreement. The Award Agreement shall also
set forth whether the Restricted Stock Units shall be settled (i) within
the time period specified in Section 16.9.1
for
short
term deferrals or (ii) otherwise within the
requirements of Section 409A, in which case the Award Agreement shall
specify upon which events such Restricted Stock Units shall be settled.
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10.4.2.
|
Voting
and Dividend Rights.
|
Holders
of Restricted Stock Units shall have no rights as stockholders of the Company.
The Designees or Committee may provide in an Award Agreement that the holder
of
such Restricted Stock Units shall be entitled to receive, upon the Company’s
payment of a cash dividend on its outstanding Stock, a cash payment for each
Restricted Stock Unit held equal to the per-share dividend paid on the Stock,
which may be deemed reinvested in additional Restricted Stock Units at a price
per unit equal to the Fair Market Value of a share of Stock on the date that
such dividend is paid to shareholders.
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10.4.3.
|
Creditor’s
Rights.
|
A
holder
of Restricted Stock Units shall have no rights other than those of a general
creditor of the Company. Restricted Stock Units represent an unfunded and
unsecured obligation of the Company, subject to the terms and conditions of
the
applicable Award Agreement.
10.5. Termination
of Service.
Unless
the Designees or Committee otherwise provides in an Award Agreement or in
writing after the Award Agreement is issued, upon the termination of a Grantee’s
Service, any Restricted Stock or Restricted Stock Units held by such Grantee
that have not vested, or with respect to which all applicable restrictions
and
conditions have not lapsed, shall immediately be deemed forfeited, and the
Grantee shall have no further rights with respect to such Award.
10.6. Purchase
of Restricted Stock.
The
Grantee shall be required, to the extent required by applicable law, to purchase
the Restricted Stock from the Company at a Purchase Price equal to the greater
of (i) the aggregate par value of the shares of Stock represented by such
Restricted Stock or (ii) the Purchase Price, if any, specified in the
related Award Agreement. If specified in the Award Agreement, the Purchase
Price
may be deemed paid by Services already rendered. The Purchase Price shall be
payable in a form described in Section 12
or,
in
the discretion of the Designees or Committee, in consideration for past Services
rendered.
10.7. Delivery
of Stock.
Upon
the
expiration or termination of any restricted period and the satisfaction of
any
other conditions prescribed by the Designees or Committee, the restrictions
applicable to shares of Restricted Stock or Restricted Stock Units settled
in
Stock shall lapse, and, unless otherwise provided in the Award Agreement, a
stock certificate for such shares shall be delivered, free of all such
restrictions, to the Grantee or the Grantee’s beneficiary or estate, as the case
may be.
|
11.
|
TERMS
AND CONDITIONS OF UNRESTRICTED STOCK AWARDS
|
The
Designees or Committee may, in its sole discretion, grant (or sell at par value
or such other higher purchase price determined by the Designees or Committee)
an
Award of Unrestricted Stock to any Grantee pursuant to which such Grantee may
receive shares of Stock free of any restrictions (“Unrestricted Stock”) under
the Plan. Awards of Unrestricted Stock may be granted or sold as described
in
the preceding sentence in respect of past Services rendered and other valid
consideration, or in lieu of, or in addition to, any cash compensation due
to
such Grantee. Unless otherwise provided by the Designees or Committee, Awards
of
Unrestricted Stock shall be paid within the time period specified in
Section 16.9.1
for
short-term deferrals.
| 12. |
FORM
OF PAYMENT FOR OPTIONS, RESTRICTED STOCK AND STOCK APPRECIATION
RIGHTS
|
12.1. General
Rule.
Payment
of the Option Price for the shares purchased pursuant to the exercise of an
Option or the Purchase Price for Restricted Stock shall be made in cash or
in
cash equivalents acceptable to the Company, except as provided in this
Section 12.
12.2. Surrender
of Stock.
To
the
extent the Award Agreement so provides, payment of the Option Price for shares
purchased pursuant to the exercise of an Option or the Purchase Price for
Restricted Stock may be made all or in part through the tender to the Company
of
shares of Stock, which shares shall be valued, for purposes of determining
the
extent to which the Option Price or Purchase Price has been paid thereby, at
their Fair Market Value on the date of exercise or surrender.
12.3. Cashless
Exercise.
With
respect to an Option only (and not with respect to Restricted Stock), to the
extent permitted by law and to the extent the Award Agreement so provides,
payment of the Option Price may be made all or in part by delivery (on a form
acceptable to the Designees or Committee) of an irrevocable direction to a
licensed securities broker acceptable to the Company to sell shares of Stock
and
to deliver all or part of the sales proceeds to the Company in payment of the
Option Price and any withholding taxes described in Section 16.3.
12.4. Payment
of Exercising SAR Rights.
In
the
event that the SAR rights are granted to a Grantee, to the extent permitted
by
law and to the extent the Award Agreement so provides, the payment of the SAR
amount may be made all or in part by cash or delivery of Stock of equivalent
value, at the sole discretion of the Designees or Committee, in payment of
any
withholding taxes described in Section 16.3.
12.5. Other
Forms of Payment.
To
the
extent the Award Agreement so provides, as determined by the Designees or
Committee in its sole discretion, payment of the Option Price or the Purchase
Price may be made in any other form that is consistent with applicable laws,
regulations and rules.
|
13.
|
TERMS
AND CONDITIONS OF PERFORMANCE AND ANNUAL INCENTIVE AWARDS
|
13.1. Performance
Conditions.
The
right
of a Grantee to exercise or receive a grant or settlement of any Award, and
the
timing thereof, may be subject to such performance conditions as may be
specified by the Designees or Committee. The Designees or Committee may use
such
business criteria and other measures of performance as it may deem appropriate
in establishing any performance conditions, and may exercise its discretion
to
reduce the amounts payable under any Award subject to performance conditions,
except as limited under Sections
13.2 hereof
in
the case of a Performance Award or Annual Incentive Award intended to qualify
under Code Section 162(m).
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13.2.
|
Performance
or Annual Incentive Awards Granted to Designated Covered Employees.
|
If
and to
the extent that the Designees or Committee determines that a Performance or
Annual Incentive Award to be granted to a Grantee who is designated by the
Designees or Committee as likely to be a Covered Employee should qualify as
“performance-based compensation” for purposes of Code Section 162(m), the
grant, exercise and/or settlement of such Performance or Annual Incentive Award
shall be contingent upon achievement of pre-established performance goals and
other terms set forth in this Section 13.2.
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|
13.2.1. |
Performance
Goals Generally.
|
The
performance goals for such Performance or Annual Incentive Awards shall consist
of one or more business criteria and a targeted level or levels of performance
with respect to each of such criteria, as specified by the Designees or
Committee consistent with this Section 13.2.
Performance goals shall be objective and shall otherwise meet the requirements
of Code Section 162(m) and regulations thereunder including the requirement
that the level or levels of performance targeted by the Designees or Committee
result in the achievement of performance goals being “substantially uncertain.”
The Designees or Committee may determine that such Performance or Annual
Incentive Awards shall be granted, exercised and/or settled upon achievement
of
any one performance goal or that two or more of the performance goals must
be
achieved as a condition to grant, exercise and/or settlement of such Performance
or Annual Incentive Awards. Performance goals may differ for Performance or
Annual Incentive Awards granted to any one Grantee or to different Grantees.
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13.2.2.
|
Business
Criteria.
|
One
or
more of the following business criteria for the Company, on a consolidated
basis, and/or specified subsidiaries or business units of the Company (except
with respect to the total stockholder return and earnings per share criteria),
shall be used exclusively by the Designees or Committee in establishing
performance goals for such Performance or Annual Incentive Awards:
(i) total stockholder return; (ii) such total stockholder return as
compared to total return (on a comparable basis) of a publicly available index
such as, but not limited to, the Standard & Poor’s 500 Stock Index;
(iii) net income; (iv) pretax earnings; (v) earnings before
interest expense, taxes, depreciation and amortization; (vi) pretax
operating earnings after interest expense and before bonuses, service fees,
and
extraordinary or special items; (vii) operating margin;
(viii) earnings per share; (ix) return on equity; (x) return on
capital; (xi) return on investment; (xii) operating earnings;
(xiii) working capital; (xiv) ratio of debt to stockholders’ equity
and (xv) revenue.
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13.2.3.
|
Timing
for Establishing Performance Goals.
|
Performance
goals shall be established not later than 90 days after the beginning of any
performance period applicable to such Performance or Annual Incentive Awards,
or
at such other date as may be required or permitted for “performance-based
compensation” under Code Section 162(m).
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13.2.4.
|
Settlement
of Performance or Annual Incentive Awards; Other Terms.
|
Settlement
of such Performance or Annual Incentive Awards shall be in cash, , SAR,
Restricted Stock, Restricted Stock Units, other Awards or other property, in
the
discretion of the Designees or Committee. The Designees or Committee may, in
its
discretion, reduce the amount of a settlement otherwise to be made in connection
with such Performance or Annual Incentive Awards. The Designees or Committee
shall specify the circumstances in which such Performance or Annual Incentive
Awards shall be paid or forfeited in the event of termination of Service by
the
Grantee prior to the end of a performance period or settlement of Performance
Awards.
13.3. Written
Determinations.
All
determinations by the Designees or Committee as to the establishment of
performance goals, the amount of any Performance Award pool or potential
individual Performance Awards and as to the achievement of performance goals
relating to Performance Awards, and the amount of any Annual Incentive Award
pool or potential individual Annual Incentive Awards and the amount of final
Annual Incentive Awards, shall be made in writing in the case of any Award
intended to qualify under Code Section 162(m). To the extent permitted by
Code Section 162(m), the Designees or Committee may delegate any
responsibility relating to such Performance Awards or Annual Incentive Awards.
13.4. Status
of
Section 13.2 Awards Under Code Section 162(m).
It
is the
intent of the Company that Performance Awards and Annual Incentive Awards under
Section 13.2
hereof
granted to persons who are designated by the Designees or Committee as likely
to
be Covered Employees within the meaning of Code Section 162(m) and
regulations thereunder shall, if so designated by the Designees or Committee,
constitute “qualified performance-based compensation” within the meaning of Code
Section 162(m) and regulations thereunder. Accordingly, the terms of
Section 13.2,
including the definitions of Covered Employee and other terms used therein,
shall be interpreted in a manner consistent with Code Section 162(m) and
regulations thereunder. The foregoing notwithstanding, because the Designees
or
Committee cannot determine with certainty whether a given Grantee will be a
Covered Employee with respect to a fiscal year that has not yet been completed,
the term Covered Employee as used herein shall mean only a person designated
by
the Designees or Committee, at the time of grant of Performance Awards or an
Annual Incentive Award, as likely to be a Covered Employee with respect to
that
fiscal year. If any provision of the Plan or any agreement relating to such
Performance Awards or Annual Incentive Awards does not comply or is inconsistent
with the requirements of Code Section 162(m) or regulations thereunder,
such provision shall be construed or deemed amended to the extent necessary
to
conform to such requirements.
14.1. General.
The
Company shall not be required to sell or issue any shares of Stock under any
Award if the sale or issuance of such shares would constitute a violation by
the
Grantee, any other individual exercising an Option, or the Company of any
provision of any law or regulation of any governmental authority, including
without limitation any federal or state securities laws or regulations and
the
laws and regulations of PRC. If at any time the Company shall determine, in
its
discretion, that the listing, registration or qualification of any shares
subject to an Award upon any securities exchange or under any governmental
regulatory body is necessary or desirable as a condition of, or in connection
with, the issuance or purchase of shares hereunder, no shares of Stock may
be
issued or sold to the Grantee or any other individual exercising an Option
pursuant to such Award unless such listing, registration, qualification, consent
or approval shall have been effected or obtained free of any conditions not
acceptable to the Company, and any delay caused thereby shall in no way affect
the date of termination of the Award. Specifically, in connection with the
Securities Act, upon the exercise of any Option or the delivery of any shares
of
Stock underlying an Award, unless a registration statement under such Act is
in
effect with respect to the shares of Stock covered by such Award, the Company
shall not be required to sell or issue such shares unless the Designees or
Committee has received evidence satisfactory to it that the Grantee or any
other
individual exercising an Option may acquire such shares pursuant to an exemption
from registration under the Securities Act. Any determination in this connection
by the Designees or Committee shall be final, binding, and conclusive. The
Company may, but shall in no event be obligated to, register any securities
covered hereby pursuant to the Securities Act. The Company shall not be
obligated to take any affirmative action in order to cause the exercise of
an
Option or the issuance of shares of Stock pursuant to the Plan to comply with
any law or regulation of any governmental authority. As to any jurisdiction
that
expressly imposes the requirement that an Option shall not be exercisable until
the shares of Stock covered by such Option are registered or are exempt from
registration, the exercise of such Option (under circumstances in which the
laws
of such jurisdiction apply) shall be deemed conditioned upon the effectiveness
of such registration or the availability of such an exemption.
14.2. Rule
16b-3.
During
any time when the Company has a class of equity security registered under
Section 12 of the Exchange Act, it is the intent of the Company that Awards
and the exercise of Options granted hereunder will qualify for the exemption
provided by Rule 16b-3 under the Exchange Act. To the extent that any provision
of the Plan or action by the Board or Designees or Committee does not comply
with the requirements of Rule 16b-3, it shall be deemed inoperative to the
extent permitted by law and deemed advisable by the Board, and shall not affect
the validity of the Plan. In the event that Rule 16b-3 is revised or replaced,
the Board may exercise its discretion to modify this Plan in any respect
necessary to satisfy the requirements of, or to take advantage of any features
of, the revised exemption or its replacement.
| 15. |
EFFECT
OF CHANGES IN CAPITALIZATION
|
15.1. Changes
in Stock.
If
the
number of outstanding shares of Stock is increased or decreased or the shares
of
Stock are changed into or exchanged for a different number or kind of shares
or
other securities of the Company on account of any recapitalization,
reclassification, stock split, reverse split, combination of shares, exchange
of
shares, stock dividend or other distribution payable in capital stock, or other
increase or decrease in such shares effected without receipt of consideration
by
the Company occurring after the Effective Date, the number and kinds of shares
for which grants of Options and other Awards may be made under the Plan shall
be
adjusted proportionately and accordingly by the Company; provided that any
such
adjustment shall comply with Section 409A. In addition, the number and kind
of shares for which Awards are outstanding shall be adjusted proportionately
and
accordingly so that the proportionate interest of the Grantee immediately
following such event shall, to the extent practicable, be the same as
immediately before such event. Any such adjustment in outstanding Options or
SARs shall not change the aggregate Option Price or SAR Exercise Price payable
with respect to shares that are subject to the unexercised portion of an
outstanding Option or SAR, as applicable, but shall include a corresponding
proportionate adjustment in the Option Price or SAR Exercise Price per share.
The conversion of any convertible securities of the Company shall not be treated
as an increase in shares effected without receipt of consideration.
Notwithstanding the foregoing, in the event of any distribution to the Company’s
stockholders of securities of any other entity or other assets (including an
extraordinary cash dividend but excluding a non-extraordinary dividend payable
in cash or in stock of the Company) without receipt of consideration by the
Company, the Company shall in such manner as the Company deems appropriate,
adjust (i) the number and kind of shares subject to outstanding Awards
and/or (ii) the exercise price of outstanding Options and Stock
Appreciation Rights to reflect such distribution.
15.2. Definition
of Change in Control.
Unless
an
Award Agreement provides for a different meaning, a “Change in Control” shall
mean the occurrence of any of the following:
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|
(i)
|
Any
‘person’ (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act) becomes the ‘beneficial owner’ (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing more than fifty percent (50%) of the total voting power
represented by the Company’s then-outstanding voting securities,
provided,
however,
that a Change in Control shall not be deemed to occur if an employee
benefit plan (or a trust forming a part thereof) maintained by the
Company, directly or indirectly, becomes the beneficial owner of
more than
fifty percent (50%) of the then-outstanding voting securities of the
Company after such acquisition;
|
|
|
(ii)
|
A
majority of the members of the Board is replaced during any 12-month
period commencing on the Effective Date, by directors whose appointment
or
election is not endorsed by a majority of the members of the Board
prior
to the date of the appointment;
|
|
|
(iii)
|
The
consummation of a merger or consolidation of the Company with any
other
corporation, other than a merger or consolidation which would result
in
(a) the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding
or
being converted into voting securities of the surviving entity) at
least
fifty percent (50%) of the total voting power represented by the
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; or (b) the directors
of the Company immediately prior thereto continuing to represent
at least
fifty percent (50%) of the directors of the Company or such surviving
entity immediately after such merger or consolidation; or
|
|
|
(iv)
|
The
consummation of the sale or disposition by the Company of all or
substantially all of the Company’s assets.
|
Notwithstanding
the foregoing, if it is determined that an Award hereunder is subject to the
requirements of Section 409A, the Company will not be deemed to have undergone
a
Change in Control unless the Company is deemed to have undergone a change in
control pursuant to the definition in Section 409A.
15.3. Effect
of Change in Control; Corporate Transactions
The
Designees or Committee shall determine the effect of a Change in Control upon
Awards, and such effect may be set forth in the appropriate Award Agreement.
Unless
an
Award Agreement explicitly provides otherwise, if the Company is to be
consolidated with or acquired by another entity in a merger, sale of all or
substantially all of the Company’s assets other than a transaction to merely
change the state of incorporation (a “Corporate Transaction”), the Designees or
Committee or the board of directors of any entity assuming the obligations
of
the Company hereunder (the “Successor Board”), shall, as to outstanding Options
and/or SARs, either (i) make appropriate provision for the continuation of
such Options and/or SARs by substituting on an equitable basis for the Shares
then subject to such Options and/or SARs either the consideration payable with
respect to the outstanding shares of Common Stock in connection with the
Corporate Transaction or securities of any successor or acquiring entity; or
(ii) upon written notice to the Grantees, provide that all Options and/or
SARs must be exercised (either to the extent then exercisable or, at the
discretion of the Designees or Committee or, upon a change of control of the
Company, all Options and/or SARs being made fully exercisable for purposes
of
this Section 15.3), within a specified number of days of the date of such
notice, at the end of which period the Options and/or SARs shall terminate;
or
(iii) terminate all Options and/or SARs in exchange for a cash payment
equal to the excess of the Fair Market Value of the Shares subject to such
Options and/or SARs (either to the extent then exercisable or, at the discretion
of the Designees or Committee, all Options and/or SARs being made fully
exercisable for purposes of this Section 15.3) over the exercise price
thereof.
Unless
an
Award Agreement explicitly provides otherwise, with respect to outstanding
grants of Restricted Stock, Restricted Stock Units and/or Unrestricted Stock,
the Designees or Committee or the Successor Board, shall either (i) make
appropriate provisions for the continuation of such grants of Restricted Stock,
Restricted Stock Units and/or Unrestricted Stock by substituting on an equitable
basis for the Shares then subject to such Restricted Stock, Restricted Stock
Units and/or Unrestricted Stock either the consideration payable with respect
to
the outstanding Shares of Common Stock in connection with the Corporate
Transaction or securities of any successor or acquiring entity; or (ii) upon
written notice to the Grantees, provide that all grants of Restricted Stock,
Restricted Stock Units and/or Unrestricted Stock must be accepted (to the extent
then subject to acceptance) within a specified number of days of the date of
such notice, at the end of which period the offer of the Restricted Stock,
Restricted Stock Units and/or Unrestricted Stock shall terminate; or (iii)
terminate all grants of Restricted Stock, Restricted Stock Units and/or
Unrestricted Stock in exchange for a cash payment equal to the excess of the
Fair Market Value of the Shares subject to such Restricted Stock, Restricted
Stock Units and/or Unrestricted Stock over the purchase price thereof, if any.
In addition, in the event of a Corporate Transaction, the Administrator may
waive any or all Company repurchase rights with respect to outstanding
Restricted Stock and/or Restricted Stock Units.
15.4. Reorganization
Which Does Not Constitute a Change in Control.
If
the
Company undergoes any reorganization, merger, or consolidation of the Company
with one or more other entities which does not constitute a Change in Control,
any Option or SAR theretofore granted pursuant to the Plan shall pertain to
and
apply to the securities to which a holder of the number of shares of Stock
subject to such Option or SAR would have been entitled immediately following
such reorganization, merger, or consolidation, with a corresponding
proportionate adjustment of the Option Price or SAR Exercise Price per share
so
that the aggregate Option Price or SAR Exercise Price thereafter shall be the
same as the aggregate Option Price or SAR Exercise Price of the shares remaining
subject to the Option or SAR immediately prior to such reorganization, merger,
or consolidation. Subject to any contrary language in an Award Agreement, any
restrictions applicable to such Award shall apply as well to any replacement
shares received by the Grantee as a result of the reorganization, merger or
consolidation.
15.5. Adjustments.
Adjustments
under this Section 15
related
to shares of Stock or securities of the Company shall be made by the Designees
or Committee, whose determination in that respect shall be final, binding and
conclusive. No fractional shares or other securities shall be issued pursuant
to
any such adjustment, and any fractions resulting from any such adjustment shall
be eliminated in each case by rounding downward to the nearest whole share.
15.6. No
Limitations on Company.
The
making of Awards pursuant to the Plan shall not affect or limit in any way
the
right or power of the Company to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure or to merge,
consolidate, dissolve, or liquidate, or to sell or transfer all or any part
of
its business or assets.
16.1. Disclaimer
of Rights.
No
provision in the Plan or in any Award Agreement shall be construed to confer
upon any individual the right to remain in the employ or service of the Company
or any Affiliate, or to interfere in any way with any contractual or other
right
or authority of the Company either to increase or decrease the compensation
or
other payments to any individual at any time, or to terminate any employment
or
other relationship between any individual and the Company. In addition,
notwithstanding anything contained in the Plan to the contrary, unless otherwise
stated in the applicable Award Agreement, no Award granted under the Plan shall
be affected by any change of duties or position of the Grantee, so long as
such
Grantee continues to be a Service Provider, if applicable. The obligation of
the
Company to pay any benefits pursuant to this Plan shall be interpreted as a
contractual obligation to pay only those amounts described herein, in the manner
and under the conditions prescribed herein. The Plan shall in no way be
interpreted to require the Company to transfer any amounts to a third party
trustee or otherwise hold any amounts in trust or escrow for payment to any
Grantee or beneficiary under the terms of the Plan.
16.2. Nonexclusivity
of the Plan.
Neither
the adoption of the Plan nor the submission of the Plan to the stockholders
of
the Company for approval shall be construed as creating any limitations upon
the
right and authority of the Board to adopt such other incentive compensation
arrangements (which arrangements may be applicable either generally to a class
or classes of individuals or specifically to a particular individual or
particular individuals), including, without limitation, the granting of stock
options as the Board in its discretion determines desirable.
16.3. Withholding
Taxes.
The
Company or an Affiliate, as the case may be, shall have the right to deduct
from
payments of any kind otherwise due to a Grantee any federal, state, or local
taxes of any kind required by applicable laws, regulations or rules to be
withheld (i) with respect to the vesting of or other lapse of restrictions
applicable to an Award, (ii) upon the issuance of any shares of Stock upon
the exercise of an Option, or (iii) pursuant to an Award. At the time of
such vesting, lapse, or exercise, the Grantee shall pay to the Company or the
Affiliate, as the case may be, any amount that the Company or the Affiliate
may
reasonably determine to be necessary to satisfy such withholding obligation.
Subject to the prior approval of the Company or the Affiliate, which may be
withheld by the Company or the Affiliate, as the case may be, in its sole
discretion, the Grantee may elect to satisfy such obligations, in whole or
in
part, (i) by causing the Company or the Affiliate to withhold shares of
Stock otherwise issuable to the Grantee or (ii) by delivering to the
Company or the Affiliate shares of Stock already owned by the Grantee. The
shares of Stock so delivered or withheld shall have an aggregate Fair Market
Value equal to such withholding obligations. The Fair Market Value of the shares
of Stock used to satisfy such withholding obligation shall be determined by
the
Company or the Affiliate as of the date that the amount of tax to be withheld
is
to be determined. A Grantee who has made an election pursuant to this
Section 16.3
may
satisfy his or her withholding obligation only with shares of Stock that are
not
subject to any repurchase, forfeiture, unfulfilled vesting, or other similar
requirements.
16.4. Captions.
The
use
of captions in this Plan or any Award Agreement is for the convenience of
reference only and shall not affect the meaning of any provision of the Plan
or
any Award Agreement.
16.5. Other
Provisions.
Each
Award Agreement may contain such other terms and conditions not inconsistent
with the Plan as may be determined by the Designees or Committee, in its sole
discretion.
16.6. Number
and Gender.
With
respect to words used in this Plan, the singular form shall include the plural
form, the masculine gender shall include the feminine gender, etc., as the
context requires.
16.7. Severability.
If
any
provision of the Plan or any Award Agreement shall be determined to be illegal
or unenforceable by any court of law in any jurisdiction, the remaining
provisions hereof and thereof shall be severable and enforceable in accordance
with their terms, and all provisions shall remain enforceable in any other
jurisdiction.
16.8. Governing
Law.
The
validity and construction of this Plan and the instruments evidencing the Awards
hereunder shall be governed by the laws of the State of Florida, USA, without
regard to any choice of law principles thereof or of any other jurisdiction.
16.9. Section 409A.
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16.9.1.
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Short-Term
Deferrals.
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For
each
Award intended to comply with the short-term deferral exception provided for
under Section 409A, the related Award Agreement shall provide that such
Award shall be paid out by the later of (i) the 15th
day of
the third month following the Grantee’s first taxable year in which the Award is
no longer subject to a substantial risk of forfeiture or (ii) the
15th
day of
the third month following the end of the Company’s first taxable year in which
the Award is no longer subject to a substantial risk of forfeiture.
To
the
extent that the Board determines that a Grantee would be subject to the
additional 20% tax imposed on certain deferred compensation arrangements
pursuant to Section 409A as a result of any provision of any Award, to the
extent permitted by Section 409A, such provision shall be deemed amended to
the minimum extent necessary to avoid application of such additional tax. The
Board shall determine the nature and scope of such amendment.
16.10. Stockholder
Approval; Effective Date of Plan.
The
Plan
shall be effective upon the its approval by the Board and stockholders. . No
award that is intended to qualify as performance-based compensation within
the
meaning of section 162(m) of the Code shall be effective unless and until the
Plan is approved by the stockholders of the Company.