exv4w3
Exhibit 4.3
LIFEVANTAGE CORPORATION
2010 LONG-TERM INCENTIVE PLAN
(Effective as of September 27, 2010)
LIFEVANTAGE CORPORATION
2010 LONG-TERM INCENTIVE PLAN
(Effective as of September 27, 2010)
SECTION 1. INTRODUCTION.
The Board adopted the Lifevantage Corporation 2010 Long-Term Incentive Plan on the Adoption
Date conditioned on and subject to obtaining Company shareholder approval.
The purposes of the Plan are to (i) attract and retain the services of persons eligible to
participate in the Plan; (ii) motivate Selected Employees, by means of appropriate equity and
performance based incentives, to achieve long-term performance goals; (iii) provide equity and
performance based incentive compensation opportunities that are competitive with those of other
similar companies; and (iv) further align Participants’ interests with those of the Company’s other
shareholders and thereby promote the financial interests of the Company and its affiliates and
enhancement of shareholder return.
The Plan seeks to achieve this purpose by providing for Awards in the form of Options (which
may constitute Incentive Stock Options or Nonstatutory Stock Options), Stock Appreciation Rights,
Restricted Stock Grants, Stock Units and/or Cash Awards.
Capitalized terms shall have the meaning provided in Section 2 unless otherwise provided in
this Plan or any related Stock Option Agreement, SAR Agreement, Restricted Stock Grant Agreement or
Stock Unit Agreement.
SECTION 2. DEFINITIONS.
(a) “Adoption Date” means September 27, 2010.
(b) “Affiliate” means any entity other than a Subsidiary, if the Company and/or one or more
Subsidiaries own not less than 50% of such entity. For purposes of determining an individual’s
“Service,” this definition shall include any entity other than a Subsidiary, if the Company, a
Parent and/or one or more Subsidiaries own not less than 50% of such entity.
(c) “Award” means any award, under this Plan, to a Selected Employee of an Option, SAR,
Restricted Stock Grant, Stock Unit or to a Covered Employment of any Cash Award.
(d) “Board” means the Board of Directors of the Company, as constituted from time to time.
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(e) “Cash Award” means an award of a bonus opportunity, under this Plan, to a Covered Employee
that is (i) payable only in cash, (ii) not an Option, SAR, Restricted Stock Grant or Stock Unit,
(iii) paid based on achievement of Performance Goal(s) and (iv) intended to qualify as
performance-based compensation under Code Section 162(m).
(f) “Cashless Exercise” means, to the extent that a Stock Option Agreement so provides and as
permitted by applicable law and in accordance with any procedures established by the Committee, an
arrangement whereby payment of some or all of the aggregate Exercise Price may be made all or in
part by delivery of an irrevocable direction to a securities broker to sell Shares and to deliver
all or part of the sale proceeds to the Company. Cashless Exercise may also be utilized to satisfy
an Option’s tax withholding obligations as provided in Section 14(b).
(g) “Cause” means, except as may otherwise be provided in a Participant employment agreement
or applicable Award agreement (and in such case the employment agreement or Award agreement shall
govern as to the definition of Cause), (i) dishonesty or fraud, (ii) serious willful misconduct,
(iii) unauthorized use or disclosure of confidential information or trade secrets, (iv) conviction
or confession of a felony, or (v) any other act or omission by a Participant that, in the opinion
of the Company, could reasonably be expected to adversely affect the Company’s or a Subsidiary’s or
an Affiliate’s business, financial condition, prospects and/or reputation. In each of the
foregoing subclauses (i) through (v), whether or not a “Cause” event has occurred will be
determined by the Company’s chief human resources officer or other person performing that function
or, in the case of Participants who are Directors or Officers or Section 16 Persons, the Board,
each of whose determination shall be final, conclusive and binding. A Participant’s Service shall
be deemed to have terminated for Cause if, after the Participant’s Service has terminated, facts
and circumstances are discovered that would have justified a termination for Cause, including,
without limitation, violation of material Company policies or breach of confidentiality or other
restrictive covenants that may apply to the Participant.
(h) “Change in Control” except as may otherwise be provided in a Participant employment
agreement or applicable Award agreement (and in such case the employment agreement or Award
agreement shall govern as to the definition of Change in Control), means the occurrence of any one
or more of the following: (i) any merger, consolidation or business combination in which the
shareholders of the Company immediately prior to the merger, consolidation or business combination
do not own at least a majority of the outstanding equity interests of the surviving parent entity,
(ii) the sale of all or substantially all of the Company’s assets, (iii) the acquisition of
beneficial ownership or control of (including, without limitation, power to vote) a majority of the
outstanding Shares by any person or entity (including a “group” as defined by or under Section
13(d)(3) of the Exchange Act), (iv) the dissolution or liquidation of the Company, (v) a contested
election of directors, as a result of which or in connection with which the persons who were
directors of the Company before such election or their nominees cease to constitute a majority of
the Board, or (vi) any other event specified by the Board or the Committee.
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A transaction shall not constitute a Change in Control if its sole purpose is to change the
state of the Company’s incorporation or to create a holding company that will be owned in
substantially the same proportions by the persons who held the Company’s securities immediately
before such transactions.
(i) “Code” means the Internal Revenue Code of 1986, as amended, and the regulations and
interpretations promulgated thereunder.
(j) “Committee” means a committee described in Section 3.
(k) “Common Stock” means the Company’s common stock, $0.0001 par value per Share, and any
other securities into which such shares are changed, for which such shares are exchanged or which
may be issued in respect thereof.
(l) “Company” means Lifevantage Corporation, a Colorado corporation.
(m) “Consultant” means an individual (or entity) which performs bona fide services to the
Company, a Parent, a Subsidiary or an Affiliate, other than as an Employee or Director or
Non-Employee Director.
(n) “Covered Employees” means those individuals whose compensation is subject to the deduction
limitations of Code Section 162(m).
(o) “Director” means a member of the Board who is also an Employee.
(p) “Disability” means, except as may otherwise be provided in a Participant employment
agreement or applicable Award agreement (and in such case the employment agreement or Award
agreement shall govern as to the definition of Disability), that the Participant is classified as
disabled under a long-term disability policy of the Company or, if no such policy applies, the
Participant is unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in death or which has
lasted or can be expected to last for a continuous period of not less than 12 months.
(q) “Employee” means any individual who is a common-law employee of the Company, or of a
Parent, or of a Subsidiary or of an Affiliate.
(r) “Equity Award” means any Award other than a Cash Award.
(s) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(t) “Exercise Price” means, in the case of an Option, the amount for which a Share may be
purchased upon exercise of such Option, as specified in the applicable Stock Option Agreement.
“Exercise Price,” in the case of a SAR, means an amount, as specified in the applicable SAR
Agreement, which is subtracted from the Fair Market Value in determining the amount payable to a
Participant upon exercise of such SAR.
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(u) “Fair Market Value” means the market price of a Share, determined by the Committee as
follows:
(i) If the Shares were traded on a stock exchange (such as the New York Stock
Exchange, NYSE Amex, the NASDAQ Global Market or NASDAQ Capital Market) at the time of
determination, then the Fair Market Value shall be equal to the regular session closing
price for such stock as reported by such exchange (or the exchange or market with the
greatest volume of trading in the Shares) on the date of determination, or if there were no
sales on such date, on the last date preceding such date on which a closing price was
reported;
(ii) If the Shares were traded on the OTC Bulletin Board at the time of determination,
then the Fair Market Value shall be equal to the last-sale price reported by the OTC
Bulletin Board for such date, or if there were no sales on such date, on the last date
preceding such date on which a sale was reported; and
(iii) If neither of the foregoing provisions is applicable, then the Fair Market Value
shall be determined by the Committee in good faith using a reasonable application of a
reasonable valuation method as the Committee deems appropriate.
Whenever possible, the determination of Fair Market Value by the Committee shall be based on
the prices reported by the applicable exchange or the OTC Bulletin Board, as applicable, or a
nationally recognized publisher of stock prices or quotations (including an electronic on-line
publication). Such determination shall be conclusive and binding on all persons.
(v) “Fiscal Year” means the Company’s fiscal year.
(w) “Incentive Stock Option” or “ISO” means an incentive stock option described in Code
Section 422.
(x) “Net Exercise” means, to the extent that a Stock Option Agreement so provides and as
permitted by applicable law, an arrangement pursuant to which the number of Shares issued to the
Optionee in connection with the Optionee’s exercise of the Option will be reduced by the Company’s
retention of a portion of such Shares. Upon such a net exercise of an Option, the Optionee will
receive a net number of Shares that is equal to (i) the number of Shares as to which the Option is
being exercised minus (ii) the quotient (rounded down to the nearest whole number) of the aggregate
Exercise Price of the Shares being exercised divided by the Fair Market Value of a Share on the
Option exercise date. The number of Shares covered by clause (ii) will be retained by the Company
and not delivered to the Optionee. No fractional Shares will be created as a result of a Net
Exercise and the Optionee must contemporaneously pay for any portion of the aggregate Exercise
Price that is not covered by the Shares retained by the Company under clause (ii). The number of
Shares delivered to the Optionee may be further reduced if Net Exercise is utilized under Section
14(b) to satisfy applicable tax withholding obligations.
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(y) “Non-Employee Director” means a member of the Board who is not an Employee.
(z) “Nonstatutory Stock Option” or “NSO” means a stock option that is not an ISO.
(aa) “Officer” means an individual who is an officer of the Company within the meaning of Rule
16a-1(f) of the Exchange Act.
(bb) “Option” means an ISO or NSO granted under the Plan entitling the Optionee to purchase a
specified number of Shares, at such times and applying a specified Exercise Price, as provided in
the applicable Stock Option Agreement.
(cc) “Optionee” means an individual, estate or other entity that holds an Option.
(dd) “Parent” means any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company, if each of the corporations other than the Company owns stock
possessing 50% or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain. A corporation that attains the status of a Parent on a date
after the Adoption Date shall be considered a Parent commencing as of such date.
(ee) “Participant” means an individual or estate or other entity that holds an Award.
(ff) “Performance Goals” means one or more objective performance targets established for a
Participant which may be described in terms of Company-wide objectives and/or objectives that are
related to the performance of the individual Participant or a Parent, Subsidiary, Affiliate,
division, department or function within the Company or entity in which the Participant is employed,
and such targets may be applied either individually, alternatively or in any combination, and
measured either annually or cumulatively over a period of years, on an absolute basis or relative
to a pre-established target, to previous years’ results or to a designated comparison group, in
each case as specified by the Committee. Any Performance Goals that are included in an Award in
order to make such Award qualify as performance-based compensation under Code Section 162(m) shall
be limited to one or more of the following target objectives: (i) operating income; (ii) earnings
before interest, taxes, depreciation and amortization, or EBITDA; (iii) earnings; (iv) cash flow;
(v) market share; (vi) sales or revenue; (vii) expenses; (viii) cost of goods sold; (ix)
profit/loss or profit margin; (x) working capital; (xi) return on equity or assets or investment;
(xii) earnings per share; (xiii) economic value added, or EVA; (xiv) stock price including without
limitation total shareholder return; (xv) price/earnings ratio; (xvi) debt or debt-to-equity;
(xvii) accounts receivable; (xviii) writeoffs; (xix) cash; (xx) assets; (xxi) liquidity; (xxii)
operations; (xxiii) research or related milestones; (xxiv) business development; (xxv) intellectual
property (e.g., patents); (xxvi) product development; (xxvii) regulatory activity; (xxviii)
information technology; (xxix) financings; (xxx) product quality control; (xxxi) management;
(xxxii)
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human resources; (xxxiii) corporate governance; (xxxiv) compliance program; (xxxv) legal
matters; (xxxvi) internal controls; (xxxvii) policies and procedures; (xxxviii) accounting and
reporting; (xxxix) strategic alliances, licensing and partnering; (xl) site, plant or building
development; (xli) corporate transactions including without limitation mergers, acquisitions,
divestitures and/or joint ventures; (xlii) customer satisfaction; (xliii) capital expenditures
and/or (xliv) Company advancement milestones. Awards issued to individuals who are not Covered
Employees (or which are not intended to qualify as performance-based compensation under Code
Section 162(m)) may take into account other (or no) factors.
(gg) “Performance Period” means any period of time as determined by the Committee, in its sole
discretion. The Committee may establish different Performance Periods for different Participants,
and the Committee may establish concurrent or overlapping Performance Periods.
(hh) “Plan” means this Lifevantage Corporation 2010 Long-Term Incentive Plan as it may be
amended from time to time.
(ii) “Prior Equity Compensation Plans” means the Company’s 2007 Long-Term Incentive Plan (as
assumed from Lifeline Therapeutics, Inc., a Colorado corporation) and its predecessor plans and any
other Company equity compensation plans.
(jj) “Re-Price” means that the Company has lowered or reduced the Exercise Price of
outstanding Options and/or outstanding SARs for any Participant(s) in a manner described by SEC
Regulation S-K Item 402(d)(2)(viii) (or as described in any successor provision(s) or
definition(s)).
(kk) “Restricted Stock Grant” means Shares awarded under the Plan as provided in Section 9.
(ll) “Restricted Stock Grant Agreement” means the agreement described in Section 9 evidencing
each Award of a Restricted Stock Grant.
(mm) “SAR Agreement” means the agreement described in Section 8 evidencing each Award of a
Stock Appreciation Right.
(nn) “SEC” means the Securities and Exchange Commission.
(oo) “Section 16 Persons” means those officers, directors or other persons who are subject to
Section 16 of the Exchange Act.
(pp) “Securities Act” means the Securities Act of 1933, as amended.
(qq) “Selected Employee” means an Employee, Consultant, Director, or Non-Employee Director who
has been selected by the Committee to receive an Award under the Plan.
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(rr) “Separation From Service” means a Participant’s separation from service with the Company
within the meaning provided to such term under Code Section 409A.
(ss) “Service” means service as an Employee, Director, Non-Employee Director or Consultant.
Service will be deemed terminated as soon as the entity to which Service is being provided is no
longer either (i) the Company, (ii) a Parent, (iii) a Subsidiary or (iv) an Affiliate. A
Participant’s Service does not terminate if he or she is a common-law employee and goes on a bona
fide leave of absence that was approved by the Company in writing and the terms of the leave
provide for continued service crediting, or when continued service crediting is required by
applicable law. However, for purposes of determining whether an Option is entitled to continuing
ISO status, a common-law employee’s Service will be treated as terminating ninety (90) days after
such Employee went on leave, unless such Employee’s right to return to active work is guaranteed by
law or by a contract. Service terminates in any event when the approved leave ends, unless such
Employee immediately returns to active work. The Committee determines which leaves count toward
Service, and when Service commences and terminates for all purposes under the Plan. For avoidance
of doubt, a Participant’s Service shall not be deemed terminated if the Committee determines that
(i) a transition of employment to service with a partnership, joint venture or corporation not
meeting the requirements of a Subsidiary in which the Company or a Subsidiary is a party is not
considered a termination of Service, (ii) the Participant transfers between service as an Employee
and service as a Consultant or other personal service provider (or vice versa), or (iii) the
Participant transfers between service as an Employee and that of a Non-Employee Director (or vice
versa). The Committee may determine whether any company transaction, such as a sale or spin-off of
a division or subsidiary that employs a Participant, shall be deemed to result in termination of
Service for purposes of any affected Awards, and the Committee’s decision shall be final and
binding.
(tt) “Share” means one share of Common Stock.
(uu) “Shareholder Approval Date” means the date that the Company’s shareholders approve this
Plan provided that such approval must occur on or before the first anniversary of the Adoption
Date.
(vv) “Specified Employee” means a Participant who is considered a “specified employee” within
the meaning provided to such term under Code Section 409A.
(ww) “Stock Appreciation Right” or “SAR” means a stock appreciation right awarded under the
Plan which provides the holder with a right to potentially receive, in cash and/or Shares, value
with respect to a specific number of Shares, as provided in Section 8.
(xx) “Stock Option Agreement” means the agreement described in Section 6 evidencing each Award
of an Option.
(yy) “Stock Unit” means a bookkeeping entry representing the equivalent of one Share, as
awarded under the Plan and as provided in Section 10.
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(zz) “Stock Unit Agreement” means the agreement described in Section 10 evidencing each Award
of Stock Units.
(aaa) “Subsidiary” means any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company, if each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain. A corporation that
attains the status of a Subsidiary on a date after the Adoption Date shall be considered a
Subsidiary commencing as of such date.
(bbb) “Termination Date” means the date on which a Participant’s Service terminates as
determined by the Committee.
(ccc) “10-Percent Shareholder” means an individual who owns more than 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.
SECTION 3. ADMINISTRATION.
(a) Committee Composition. A Committee appointed by the Board shall administer the
Plan. Unless the Board provides otherwise, the Board’s Compensation Committee (or a comparable
committee of the Board) shall be the Committee. The Board may also at any time terminate the
functions of the Committee and reassume all powers and authority previously delegated to the
Committee.
To the extent required, the Committee shall have membership composition which enables (i)
Awards to Section 16 Persons to qualify as exempt from liability under Section 16(b) of the
Exchange Act and (ii) Awards to Covered Employees to be able to qualify as performance-based
compensation as provided under Code Section 162(m) (to the extent such Awards are intended to
qualify as performance-based compensation).
The Board may also appoint one or more separate committees of the Board, each composed of
directors of the Company who need not qualify under Rule 16b-3 of the Exchange Act or Code Section
162(m), that may administer the Plan with respect to Selected Employees who are not Section 16
Persons or Covered Employees, respectively, may grant Awards under the Plan to such Selected
Employees and may determine all terms of such Awards. To the extent permitted by applicable law,
the Board may also appoint a committee, composed of one or more Officers, that may authorize Awards
to Employees (who are not Section 16 Persons or Covered Employees) within parameters specified by
the Board and consistent with any limitations imposed by applicable law.
Notwithstanding the foregoing, the Board shall constitute the Committee and shall administer
the Plan with respect to all Awards granted to Non-Employee Directors.
(b) Authority of the Committee. Subject to the provisions of the Plan, the Committee
shall have full authority and discretion to take any actions it deems necessary
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or advisable for the administration of the Plan. Such actions shall include without
limitation:
(i) determining Selected Employees who are to receive Awards under the Plan;
(ii) determining the type, number, vesting requirements, Performance Goals (if
any) and their degree of satisfaction, and other features and conditions of
such Awards and amending such Awards;
(iii) correcting any defect, supplying any omission, or reconciling or
clarifying any inconsistency in the Plan or any Award agreement;
(iv) accelerating the vesting, or extending the post-termination exercise
term, or waiving restrictions, of Awards at any time and under such terms and
conditions as it deems appropriate;
(v) interpreting the Plan and any Award agreements;
(vi) making all other decisions relating to the operation of the Plan; and
(vii) adopting such plans or subplans as may be deemed necessary or
appropriate to provide for the participation by non-U.S. employees of the
Company and its Subsidiaries and Affiliates, which plans and/or subplans shall
be attached hereto as appendices.
The Committee may adopt such rules or guidelines, as it deems appropriate to implement the
Plan. The Committee’s determinations under the Plan shall be final, conclusive and binding on all
persons. The Committee’s decisions and determinations need not be uniform and may be made
selectively among Participants in the Committee’s sole discretion. The Committee’s decisions and
determinations will be afforded the maximum deference provided by applicable law.
(c) Indemnification. To the maximum extent permitted by applicable law, each member
of the Committee, or of the Board, or any persons (including without limitation Employees and
Officers) who are delegated by the Board or Committee to perform administrative functions in
connection with the Plan, shall be indemnified and held harmless by the Company against and from
(i) any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or
her in connection with or resulting from any claim, action, suit, or proceeding to which he or she
may be a party or in which he or she may be involved by reason of any action taken or failure to
act under the Plan or any Award Agreement, and (ii) from any and all amounts paid by him or her in
settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any
judgment in any such claim, action, suit, or proceeding against him or her, provided he or she
shall give the Company an opportunity, at its own expense, to handle and defend the same before he
or she undertakes to handle and defend it on his or her own behalf. The foregoing right of
indemnification shall not be exclusive of any other
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rights of indemnification to which such persons may be entitled under the Company’s Articles
of Incorporation or Bylaws, by contract, as a matter of law, or otherwise, or under any power that
the Company may have to indemnify them or hold them harmless.
SECTION 4. GENERAL.
(a) General Eligibility. Only Employees, Consultants, Directors and Non-Employee
Directors shall be eligible for designation as Selected Employees by the Committee.
(b) Incentive Stock Options. Only Selected Employees who are common-law employees of
the Company, a Parent or a Subsidiary shall be eligible for the grant of ISOs. In addition, a
Selected Employee who is a 10-Percent Shareholder shall not be eligible for the grant of an ISO
unless the requirements set forth in Section 422(c)(5) of the Code are satisfied. If and to the
extent that any Shares are issued under a portion of any Option that exceeds the $100,000
limitation of Section 422 of the Code, such Shares shall not be treated as issued under an ISO
notwithstanding any designation otherwise. Certain decisions, amendments, interpretations and
actions by the Committee and certain actions by a Participant may cause an Option to cease to
qualify as an ISO pursuant to the Code and by accepting an Option the Participant agrees in advance
to such disqualifying action.
(c) Buyout of Awards. Subject to approval of Company shareholders, the Committee may
at any time (i) offer to buy out for a payment in cash or cash equivalents (including without
limitation Shares valued at Fair Market Value that may or may not be issued from this Plan) an
Award previously granted or (ii) authorize a Participant to elect to cash out an Award previously
granted, in either case at such time and based upon such terms and conditions as the Committee
shall establish.
(d) Restrictions on Shares. Any Shares issued pursuant to an Award shall be subject
to such Company policies, rights of repurchase, rights of first refusal and other transfer
restrictions as the Committee may determine. Such restrictions shall apply in addition to any
restrictions that may apply to holders of Shares generally and shall also comply to the extent
necessary with applicable law. In no event shall the Company be required to issue fractional
Shares under this Plan.
(e) Beneficiaries. A Participant may designate one or more beneficiaries with respect
to an Award by timely filing the prescribed form with the Company. A beneficiary designation may
be changed by filing the prescribed form with the Company at any time before the Participant’s
death. If no beneficiary was designated or if no designated beneficiary survives the Participant,
then after a Participant’s death any vested Award(s) shall be transferred or distributed to the
Participant’s estate.
(f) Performance Goals. The Committee may, in its discretion, include Performance
Goals or other performance objectives in any Award. If Performance Goals are included in Awards to
Covered Employees in order to enable such Awards to qualify as performance-based compensation under
Code Section 162(m), then such Awards will
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be subject to the achievement of such Performance Goals that will be established and
administered pursuant to the requirements of Code Section 162(m) and as described in this Section
4(f). If an Award is intended to qualify as performance-based compensation under Code Section
162(m) and to the extent required by Code Section 162(m), the Committee shall certify in writing
the degree to which the Performance Goals have been satisfied before any Shares underlying an Award
or any Award payments are released to a Covered Employee with respect to a Performance Period.
Without limitation, the approved minutes of a Committee meeting shall constitute such written
certification. With respect to Awards that are intended to qualify as performance-based
compensation under Code Section 162(m), the Committee may adjust the evaluation of performance
under a Performance Goal (to the extent permitted by Code Section 162(m)) to remove the effects of
certain events including without limitation the following:
(i) asset write-downs or discontinued operations,
(ii) litigation or claim judgments or settlements,
(iii) material changes in or provisions under tax law, accounting principles or other
such laws or provisions affecting reported results,
(iv) reorganizations or restructuring programs or divestitures or acquisitions, and/or
(v) extraordinary non-recurring items as described in applicable accounting principles
and/or items of gain, loss or expense determined to be extraordinary or unusual in nature
or infrequent in occurrence.
Notwithstanding satisfaction of any completion of any Performance Goal, to the extent
specified at the time of grant of an Award, the number of Shares, Options, SARs, Stock Units or
other benefits granted, issued, retainable and/or vested under an Award on account of satisfaction
of such Performance Goals may be reduced by the Committee on the basis of such further
considerations as the Committee in its sole discretion shall determine. Awards with Performance
Goals or performance objectives (if any) that are granted to Selected Employees who are not Covered
Employees or any Awards to Covered Employees which are not intended to qualify as performance-based
compensation under Code Section 162(m) need not comply with the requirements of Code Section
162(m).
(g) No Rights as a Shareholder. A Participant, or a transferee of a Participant,
shall have no rights as a shareholder (including without limitation voting rights or dividend or
distribution rights) with respect to any Common Stock covered by an Award until such person becomes
entitled to receive such Common Stock, has satisfied any applicable withholding or tax obligations
relating to the Award and the Common Stock has been issued to the Participant. No adjustment shall
be made for cash or stock dividends or other rights for which the record date is prior to the date
when such Common Stock is issued, except as expressly provided in Section 11.
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(h) Termination of Service. Unless the applicable Award agreement or employment
agreement provides otherwise (and in such case, the Award or employment agreement shall govern as
to the consequences of a termination of Service for such Awards), the following rules shall govern
the vesting, exercisability and term of outstanding Awards held by a Participant in the event of
termination of such Participant’s Service (in all cases subject to the term of the Option or SAR as
applicable):
(i) if the Service of a Participant is terminated for Cause, then all of
Participant’s Options, SARs, unvested portions of Stock Units and unvested
portions of Restricted Stock Grants shall terminate and be forfeited
immediately without consideration as of the Termination Date (except for
repayment of any amounts the Participant had previously paid to the Company to
acquire Shares underlying the forfeited Awards);
(ii) if the Service of Participant is terminated for any reason other than for
Cause and other due to Participant’s death or Disability), then the vested
portion of Participant’s then-outstanding Options/SARs may be exercised by
such Participant or his or her personal representative within three months
after the Termination Date and all unvested portions of Participant’s
outstanding Awards shall be forfeited without consideration as of the
Termination Date (except for repayment of any amounts the Participant had
previously paid to the Company to acquire Shares underlying the forfeited
Awards); or
(iii) if the Service of a Participant is terminated due to Participant’s death
or Disability, the vested portion of Participant’s then outstanding
Options/SARs may be exercised within twelve months after the Termination Date
and all unvested portions of any outstanding Awards shall be forfeited without
consideration as of the Termination Date (except for repayment of any amounts
the Participant had previously paid to the Company to acquire Shares
underlying the forfeited Awards).
(i) Code Section 409A. Notwithstanding anything in the Plan to the contrary, the Plan
and Awards granted hereunder are intended to comply with the requirements of Code Section 409A and
shall be interpreted in a manner consistent with such intention. In the event that any provision
of the Plan or an Award Agreement is determined by the Committee to not comply with the applicable
requirements of Code Section 409A and the Treasury Regulations and other guidance issued
thereunder, the Committee shall have the authority to take such actions and to make such changes to
the Plan or an Award Agreement as the Committee deems necessary to comply with such requirements,
provided that no such action shall adversely affect any outstanding Award without the consent of
the affected Participant. Each payment to a Participant made pursuant to this Plan shall be
considered a separate payment and not one of a series of payments for purposes of Code Section
409A. Notwithstanding the foregoing or anything elsewhere in the Plan or an Award Agreement to the
contrary, if upon a Participant’s Separation From
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Service he/she is then a Specified Employee, then solely to the extent necessary to comply
with Code Section 409A and avoid the imposition of taxes under Code Section 409A, the Company shall
defer payment of “nonqualified deferred compensation” subject to Code Section 409A payable as a
result of and within six (6) months following such Separation From Service under this Plan until
the earlier of (i) the first business day of the seventh month following the Participant’s
Separation From Service, or (ii) ten (10) days after the Company receives written confirmation of
the Participant’s death. Any such delayed payments shall be made without interest. In no event
whatsoever shall the Company be liable for any additional tax, interest or penalties that may be
imposed on a Participant by Code Section 409A or for any damages for failing to comply with Code
Section 409A.
(j) Suspension or Termination of Awards. If at any time (including after a notice of
exercise has been delivered) the Committee (or the Board), reasonably believes that a Participant
has committed an act of Cause (which includes a failure to act), the Committee (or Board) may
suspend the Participant’s right to exercise any Option or SAR (or payment of a Cash Award or
vesting of Restricted Stock Grants or Stock Units) pending a determination of whether there was in
fact an act of Cause. If the Committee (or the Board) determines a Participant has committed an
act of Cause, neither the Participant nor his or her estate shall be entitled to exercise any
outstanding Option or SAR whatsoever and all of Participant’s outstanding Awards shall then
terminate without consideration. Any determination by the Committee (or the Board) with respect to
the foregoing shall be final, conclusive and binding on all interested parties.
(k) Electronic Communications. Subject to compliance with applicable law and/or
regulations, an Award agreement or other documentation or notices relating to the Plan and/or
Awards may be communicated to Participants by electronic media.
(l) Unfunded Plan. Insofar as it provides for Awards, the Plan shall be unfunded.
Although bookkeeping accounts may be established with respect to Participants who are granted
Awards under this Plan, any such accounts will be used merely as a bookkeeping convenience. The
Company shall not be required to segregate any assets which may at any time be represented by
Awards, nor shall this Plan be construed as providing for such segregation, nor shall the Company
or the Committee be deemed to be a trustee of stock or cash to be awarded under the Plan.
(m) Liability of Company. The Company (or members of the Board or Committee) shall
not be liable to a Participant or other persons as to: (a) the non-issuance or sale of Shares as to
which the Company has been unable to obtain from any regulatory body having jurisdiction the
authority deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any
Shares hereunder; and (b) any unexpected or adverse tax consequence or any tax consequence
expected, but not realized, by any Participant or other person due to the grant, receipt, exercise
or settlement of any Award granted hereunder.
(n) Reformation. In the event any provision of this Plan shall be held illegal or
invalid for any reason, such provisions will be reformed by the Board if possible and
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to the extent needed in order to be held legal and valid. If it is not possible to reform the
illegal or invalid provisions then the illegality or invalidity shall not affect the remaining
parts of this Plan, and this Plan shall be construed and enforced as if the illegal or invalid
provision had not been included.
(o) Director Fees. If the Board affirmatively determines to implement this Section
4(o), then each Non-Employee Director may be awarded either a Restricted Stock Grant or Stock Units
in accordance with the terms and conditions contained in this Section 4(o).
(i) Participation Elections. Each Non-Employee Director may elect
to receive a Restricted Stock Grant (or Stock Units) under the Plan in lieu of
payment of a portion of his or her annual cash retainer. Such an election may
be for any dollar or percentage amount equal to at least 50% of the
Non-Employee Director’s annual cash retainer (up to a limit of 100% of the
annual cash retainer of Non-Employee Directors). The election must be made
prior to the beginning of the annual board of directors cycle which shall be
any twelve month continuous period designated by the Board (the “Board Cycle”)
and such election may need to be made earlier as necessary to comply with Code
Section 409A. Any amount of the annual retainer not elected to be received as
a Restricted Stock Grant or Stock Units shall be payable in cash in accordance
with the Company’s standard payment procedures.
(ii) Awards of Stock. As soon as reasonably practicable following
the commencement of each Board Cycle, each Non-Employee Director who has
timely made the election described in Section 4(o)(i) with respect to that
Board Cycle shall be granted a number of Shares pursuant to a Restricted Stock
Grant (or Stock Units) having a fair market value equivalent to the amount of
the annual cash retainer elected to be received as a Restricted Stock Grant
(or Stock Units) under Section 4(o)(i) for such Board Cycle, rounded down to
the nearest full Share. Such Restricted Stock Grant (or Stock Units) will be
evidenced by an executed Restricted Stock Grant Agreement (or Stock Unit
Agreement) between the Company and the electing Non-Employee Director. Such
Restricted Stock Grant (or Stock Units) may be subject to vesting conditions
at grant.
(iii) Other Terms. Shares (or Stock Units) granted under this
Section 4(o) shall otherwise be subject to the terms of the Plan applicable to
Non-Employee Directors or to Participants generally (other than provisions
specifically applying only to Employees).
(p) Re Pricing of Options or SARs. Notwithstanding anything to the contrary,
outstanding Options or SARs may not be Re-Priced without the approval of Company shareholders.
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(q) Successor Provision. Any reference to a statute, rule or regulation, or to a
section of a statute, rule or regulation, is a reference to that statute, rule, regulation, or
section as amended from time to time, both before and after the Adoption Date and including any
successor provisions.
(r) Governing Law. This Plan and all Awards shall be construed in accordance with and
governed by the laws of the State of Colorado but without regard to its conflict of law provisions.
The Committee may provide that any dispute as to any Award shall be presented and determined in
such forum as the Committee may specify, including through binding arbitration. Unless otherwise
provided in the Award Agreement, recipients of an Award under the Plan are deemed to submit to the
exclusive jurisdiction and venue of the federal or state courts of Colorado to resolve any and all
issues that may arise out of or relate to the Plan or any related Award Agreement.
SECTION 5. SHARES SUBJECT TO PLAN AND SHARE LIMITS.
(a) Basic Limitations. The Common Stock issuable under the Plan shall be authorized
but unissued Shares or treasury Shares. Subject to adjustment as provided in Section 11, the
maximum aggregate number of Shares that may be issued under the Plan shall not exceed 3,500,000
Shares. The maximum aggregate number of Shares that may be issued in connection with any single
type of Equity Award (NSOs, ISOs, SARs, Restricted Stock Grants or Stock Units) under the Plan
shall be 3,500,000 Shares.
(b) Share Re-Use. If Equity Awards are forfeited or are terminated for any reason
other than being exercised, then the Shares underlying such Equity Awards shall again become
available for Equity Awards under the Plan. If SARs are exercised or Stock Units are settled in
Shares, then only the number of Shares (if any) actually issued in settlement of such SARs or Stock
Units shall reduce the number of Shares available under the Share limits stated in Section 5(a) and
the balance shall again become available for Equity Awards under the Plan. If a Participant pays
the Exercise Price by Net Exercise or by surrendering previously owned Shares (or by stock
attestation) and/or, as permitted by the Committee, pays any withholding tax obligation with
respect to an Equity Award by electing to have Shares withheld or surrendering previously owned
Shares (or by stock attestation), the surrendered Shares and the Shares withheld to pay taxes shall
be available for issuance under the Plan and shall not count toward the Share limits set forth in
Section 5(a). Any Shares that are delivered and any Equity Awards that are granted by, or become
obligations of, the Company, as a result of the assumption by the Company of, or in substitution
for, outstanding awards previously granted by another entity (as provided in Sections 6(e), 8(f),
9(e) or 10(e)) shall not be counted against the Share limits specified in Sections 5(a) and 5(d).
(c) Dividend Equivalents. Any dividend equivalents distributed under the Plan shall
not be applied against the number of Shares available for Equity Awards.
(d) Code Section 162(m) Limits. For so long as: (x) the Company is a “publicly held
corporation” within the meaning of Code Section 162(m) and (y) the deduction limitations of Code
Section 162(m) are applicable to Awards granted to the
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Company’s Covered Employees under this Plan, then the limits specified below in this Section
5(d) shall be applicable to Awards issued under the Plan that are intended to qualify as
performance-based compensation under Code Section 162(m).
(i) Limits on Options. No Selected Employee shall receive Options to purchase
Shares during any Fiscal Year that in the aggregate cover in excess of 1,250,000 Shares.
(ii) Limits on SARs. No Selected Employee shall receive Awards of SARs during
any Fiscal Year that in the aggregate cover in excess of 1,250,000 Shares.
(iii) Limits on Restricted Stock Grants. No Selected Employee shall receive
Restricted Stock Grants during any Fiscal Year that in the aggregate cover in excess of
1,250,000 Shares.
(iv) Limits on Stock Units. No Selected Employee shall receive Stock Units
during any Fiscal Year that in the aggregate cover in excess of 1,250,000 Shares.
(v) Limit on Total Amount of All Equity Awards. No Selected Employee shall
receive Equity Awards during any Fiscal Year in excess of the aggregate amount of 1,250,000
Shares, whether such Equity Awards are in the form of Options, SARs, Restricted Stock
Grants and/or Stock Units.
(vi) Increased Limits for First Year of Employment. The numerical limits
expressed in the foregoing subparts (i) through (v) shall in each case be increased to
2,500,000 Shares with respect to Equity Awards granted to a Selected Employee during the
Fiscal Year of the Selected Employee’s commencement of employment with the Company or
during the first Fiscal Year that the Selected Employee becomes a Covered Employee.
(vii) Dollar Limit for Cash Awards. The maximum aggregate value of Cash
Awards that may be received by any one Selected Employee with respect to any individual
Fiscal Year is $1,000,000.
SECTION 6. TERMS AND CONDITIONS OF OPTIONS.
(a) Stock Option Agreement. Each Award of an Option under the Plan shall be evidenced
by a Stock Option Agreement between the Optionee and the Company. Such Option shall be subject to
all applicable terms and conditions of the Plan and may be subject to any other terms and
conditions that are not inconsistent with the Plan (including without limitation any Performance
Goals). The provisions of the various Stock Option Agreements entered into under the Plan need not
be identical. The Stock Option Agreement shall also specify whether the Option is an ISO and if
not specified then the Option shall be an NSO.
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(b) Number of Shares. Each Stock Option Agreement shall specify the number of Shares
that are subject to the Option and shall provide for adjustment of such number in accordance with
Section 11.
(c) Exercise Price. An Option’s Exercise Price shall be established by the Committee
and set forth in a Stock Option Agreement. Except with respect to outstanding stock options being
assumed or Options being granted in exchange for cancellation of outstanding options granted by
another issuer as provided under Section 6(e), the Exercise Price of an Option shall not be less
than 100% of the Fair Market Value (110% for ISO Awards to 10-Percent Shareholders) on the date of
Award.
(d) Exercisability and Term. Each Stock Option Agreement shall specify the date when
all or any installment of the Option is to become vested and/or exercisable. The Stock Option
Agreement shall also specify the term of the Option; provided that the term of an Option shall in
no event exceed ten years from the date of Award (and may be for a shorter period of time than ten
years). No Option can be exercised after the expiration date specified in the applicable Stock
Option Agreement. A Stock Option Agreement may provide for accelerated vesting in the event of the
Participant’s death, or Disability or other events. Notwithstanding the previous sentence, an ISO
that is granted to a 10-Percent Shareholder shall have a maximum term of five years.
Notwithstanding any other provision of the Plan, no Option can be exercised after the expiration
date provided in the applicable Stock Option Agreement. A Stock Option Agreement may permit an
Optionee to exercise an Option before it is vested (an “early exercise”), subject to the Company’s
right of repurchase at the original Exercise Price of any Shares acquired under the unvested
portion of the Option which right of repurchase shall lapse at the same rate the Option would have
vested had there been no early exercise. In no event shall the Company be required to issue
fractional Shares upon the exercise of an Option and the Committee may specify a minimum number of
Shares that must be purchased in any one Option exercise.
(e) Modifications or Assumption of Options. Within the limitations of the Plan, the
Committee may modify, extend or assume outstanding Options or may accept the cancellation of
outstanding stock options (whether granted by the Company or by another issuer) in return for the
grant of new Options for the same or a different number of Shares and at the same or a different
Exercise Price. For avoidance of doubt, the Committee may not Re-Price outstanding Options without
approval from the Company’s shareholders. No modification of an Option shall, without the consent
of the Optionee, impair his or her rights or increase his or her obligations under such Option.
(f) Assignment or Transfer of Options. Except as otherwise provided in the applicable
Stock Option Agreement and then only to the extent permitted by applicable law, no Option shall be
transferable by the Optionee other than by will or by the laws of descent and distribution. Except
as otherwise provided in the applicable Stock Option Agreement, an Option may be exercised during
the lifetime of the Optionee only by Optionee or by the guardian or legal representative of the
Optionee. No Option or interest therein may be assigned, pledged or hypothecated by the Optionee
during his or
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her lifetime, whether by operation of law or otherwise, or be made subject to execution,
attachment or similar process.
SECTION 7. PAYMENT FOR OPTION SHARES.
(a) General Rule. The entire Exercise Price of Shares issued upon exercise of Options
shall be payable in cash at the time when such Shares are purchased by the Optionee, except as
follows and if so provided for in an applicable Stock Option Agreement:
(i) In the case of an ISO granted under the Plan, payment shall be made only pursuant
to the express provisions of the applicable Stock Option Agreement. The Stock Option
Agreement may specify that payment may be made in any form(s) described in this Section 7.
(ii) In the case of an NSO granted under the Plan, the Committee may, in its
discretion at any time, accept payment in any form(s) described in this Section 7.
(b) Surrender of Stock. To the extent that the Committee makes this Section 7(b)
applicable to an Option in a Stock Option Agreement, payment for all or a part of the Exercise
Price may be made with Shares which have already been owned by the Optionee for such duration as
shall be specified by the Committee. Such Shares shall be valued at their Fair Market Value on the
date when the new Shares are purchased under the Plan.
(c) Cashless Exercise. To the extent that the Committee makes this Section 7(c)
applicable to an Option in a Stock Option Agreement, payment for all or a part of the Exercise
Price may be made through Cashless Exercise.
(d) Net Exercise. To the extent that the Committee makes this Section 7(d) applicable
to an Option in a Stock Option Agreement, payment for all or a part of the Exercise Price may be
made through Net Exercise.
(e) Other Forms of Payment. To the extent that the Committee makes this Section 7(e)
applicable to an Option in a Stock Option Agreement, payment may be made in any other form that is
consistent with applicable laws, regulations and rules and approved by the Committee.
SECTION 8. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS.
(a) SAR Agreement. Each Award of a SAR under the Plan shall be evidenced by a SAR
Agreement between the Participant and the Company. Such SAR shall be subject to all applicable
terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan
(including without limitation any Performance Goals). A SAR Agreement may provide for a maximum
limit on the amount of any payout notwithstanding the Fair Market Value on the date of exercise of
the SAR. The provisions of the various SAR Agreements entered into under the Plan need not be
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identical. SARs may be granted in consideration of a reduction in the Participant’s other
compensation.
(b) Number of Shares. Each SAR Agreement shall specify the number of Shares to which
the SAR pertains and is subject to adjustment of such number in accordance with Section 11.
(c) Exercise Price. Each SAR Agreement shall specify the Exercise Price. Except with
respect to outstanding stock appreciation rights being assumed or SARs being granted in exchange
for cancellation of outstanding stock appreciation rights granted by another issuer as provided
under Section 8(f), the Exercise Price of a SAR shall not be less than 100% of the Fair Market
Value on the date of Award.
(d) Exercisability and Term. Each SAR Agreement shall specify the date when all or
any installment of the SAR is to become exercisable. The SAR Agreement shall also specify the term
of the SAR which shall not exceed ten years from the date of Award. No SAR can be exercised after
the expiration date specified in the applicable SAR Agreement. A SAR Agreement may provide for
accelerated exercisability in the event of the Participant’s death, or Disability or other events
and may provide for expiration prior to the end of its term in the event of the termination of the
Participant’s Service. A SAR may be included in an ISO only at the time of Award but may be
included in an NSO at the time of Award or at any subsequent time, but not later than six months
before the expiration of such NSO. A SAR granted under the Plan may provide that it will be
exercisable only in the event of a Change in Control.
(e) Exercise of SARs. If, on the date when a SAR expires, the Exercise Price under
such SAR is less than the Fair Market Value on such date but any portion of such SAR has not been
exercised or surrendered, then such SAR may automatically be deemed to be exercised as of such date
with respect to such portion to the extent so provided in the applicable SAR agreement. Upon
exercise of a SAR, the Participant (or any person having the right to exercise the SAR after
Participant’s death) shall receive from the Company (i) Shares, (ii) cash or (iii) any combination
of Shares and cash, as the Committee shall determine. The amount of cash and/or the Fair Market
Value of Shares received upon exercise of SARs shall, in the aggregate, be equal to the amount by
which the Fair Market Value (on the date of surrender) of the Shares subject to the SARs exceeds
the Exercise Price of the Shares.
(f) Modification or Assumption of SARs. Within the limitations of the Plan, the
Committee may modify, extend or assume outstanding SARs or may accept the cancellation of
outstanding SARs (including stock appreciation rights granted by another issuer) in return for the
grant of new SARs for the same or a different number of Shares and at the same or a different
Exercise Price. For avoidance of doubt, the Committee may not Re-Price outstanding SARs without
approval from the Company’s shareholders. No modification of a SAR shall, without the consent of
the Participant, impair his or her rights or increase his or her obligations under such SAR.
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(g) Assignment or Transfer of SARs. Except as otherwise provided in the applicable
SAR Agreement and then only to the extent permitted by applicable law, no SAR shall be transferable
by the Participant other than by will or by the laws of descent and distribution. Except as
otherwise provided in the applicable SAR Agreement, a SAR may be exercised during the lifetime of
the Participant only by the Participant or by the guardian or legal representative of the
Participant. No SAR or interest therein may be assigned, pledged or hypothecated by the
Participant during his or her lifetime, whether by operation of law or otherwise, or be made
subject to execution, attachment or similar process.
SECTION 9. TERMS AND CONDITIONS FOR RESTRICTED STOCK GRANTS.
(a) Restricted Stock Grant Agreement. Each Restricted Stock Grant awarded under the
Plan shall be evidenced by a Restricted Stock Grant Agreement between the Participant and the
Company. Each Restricted Stock Grant shall be subject to all applicable terms and conditions of
the Plan and may be subject to any other terms and conditions that are not inconsistent with the
Plan (including without limitation any Performance Goals). The provisions of the Restricted Stock
Grant Agreements entered into under the Plan need not be identical.
(b) Number of Shares and Payment. Each Restricted Stock Grant Agreement shall specify
the number of Shares to which the Restricted Stock Grant pertains and is subject to adjustment of
such number in accordance with Section 11. Restricted Stock Grants may be issued with or without
cash consideration under the Plan.
(c) Vesting Conditions. Each Restricted Stock Grant may or may not be subject to
vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions
specified in the Restricted Stock Grant Agreement. A Restricted Stock Grant Agreement may provide
for accelerated vesting in the event of the Participant’s death, or Disability or other events.
(d) Voting and Dividend Rights. The holder of a Restricted Stock Grant (irrespective
of whether the Shares subject to the Restricted Stock Grant are vested or unvested) awarded under
the Plan shall have the same voting, dividend and other rights as the Company’s other shareholders.
However, any dividends received on Shares that are unvested (whether such dividends are in the
form of cash or Shares) may be subject to the same vesting conditions and restrictions as the
Restricted Stock Grant with respect to which the dividends were paid. Such additional Shares
issued as dividends that are subject to the Restricted Stock Grant shall not reduce the number of
Shares available for issuance under Section 5.
(e) Modification or Assumption of Restricted Stock Grants. Within the limitations of
the Plan, the Committee may modify or assume outstanding Restricted Stock Grants or may accept the
cancellation of outstanding Restricted Stock Grants (including stock granted by another issuer) in
return for the grant of new Restricted Stock Grants for the same or a different number of Shares.
No modification of a Restricted
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Stock Grant shall, without the consent of the Participant, impair his or her rights or
increase his or her obligations under such Restricted Stock Grant.
(f) Assignment or Transfer of Restricted Stock Grants. Except as provided in Section
14, or in a Restricted Stock Grant Agreement, or as required by applicable law, a Restricted Stock
Grant awarded under the Plan shall not be anticipated, assigned, attached, garnished, optioned,
transferred or made subject to any creditor’s process, whether voluntarily, involuntarily or by
operation of law. Any act in violation of this Section 9(f) shall be void. However, this Section
9(f) shall not preclude a Participant from designating a beneficiary pursuant to Section 4(e) nor
shall it preclude a transfer of Restricted Stock Grant Awards by will or pursuant to Section 4(e).
SECTION 10. TERMS AND CONDITIONS OF STOCK UNITS.
(a) Stock Unit Agreement. Each Award of Stock Units under the Plan shall be evidenced
by a Stock Unit Agreement between the Participant and the Company. Such Stock Units shall be
subject to all applicable terms of the Plan and may be subject to any other terms that are not
inconsistent with the Plan (including without limitation any Performance Goals). The provisions of
the various Stock Unit Agreements entered into under the Plan need not be identical. Stock Units
may be granted in consideration of a reduction in the Participant’s other compensation.
(b) Number of Shares and Payment. Each Stock Unit Agreement shall specify the number
of Shares to which the Stock Unit Grant pertains and is subject to adjustment of such number in
accordance with Section 11. To the extent that an Award is granted in the form of Stock Units, no
cash consideration shall be required of the Award recipients.
(c) Vesting Conditions. Each Award of Stock Units may or may not be subject to
vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions
specified in the Stock Unit Agreement. A Stock Unit Agreement may provide for accelerated vesting
in the event of the Participant’s death, or Disability or other events.
(d) Voting and Dividend Rights. The holders of Stock Units shall have no voting
rights. Prior to settlement or forfeiture, any Stock Unit awarded under the Plan may, at the
Committee’s discretion, carry with it a right to dividend equivalents. Such right entitles the
holder to be credited with an amount equal to all cash or Common Stock dividends paid on one Share
while the Stock Unit is outstanding. Dividend equivalents may be converted into additional Stock
Units. Settlement of dividend equivalents may be made in the form of cash, in the form of Shares,
or in a combination of both. Prior to vesting of the Stock Units, any dividend equivalents accrued
on such unvested Stock Units may be subject to the same vesting conditions and restrictions as the
Stock Units to which they attach.
(e) Modification or Assumption of Stock Units. Within the limitations of the Plan,
the Committee may modify or assume outstanding Stock Units or may accept the cancellation of
outstanding Stock Units (including stock units granted by another issuer)
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in return for the grant of new Stock Units for the same or a different number of Shares. No
modification of a Stock Unit shall, without the consent of the Participant, impair his or her
rights or increase his or her obligations under such Stock Unit.
(f) Assignment or Transfer of Stock Units. Except as provided in Section 14, or in a
Stock Unit Agreement, or as required by applicable law, Stock Units shall not be anticipated,
assigned, attached, garnished, optioned, transferred or made subject to any creditor’s process,
whether voluntarily, involuntarily or by operation of law. Any act in violation of this Section
10(f) shall be void. However, this Section 10(f) shall not preclude a Participant from designating
a beneficiary pursuant to Section 4(e) nor shall it preclude a transfer of Stock Units pursuant to
Section 4(e).
(g) Form and Time of Settlement of Stock Units. Settlement of vested Stock Units may
be made in the form of (a) cash, (b) Shares or (c) any combination of both, as determined by the
Committee. The actual number of Stock Units eligible for settlement may be larger or smaller than
the number included in the original Award. Methods of converting Stock Units into cash may include
(without limitation) a method based on the average Fair Market Value of Shares over a series of
trading days. Except as otherwise provided in a Stock Unit Agreement or a timely completed
deferral election, vested Stock Units shall be settled within thirty days after vesting. The
distribution may occur or commence when all vesting conditions applicable to the Stock Units have
been satisfied or have lapsed, or it may be deferred, in accordance with applicable law, to a later
specified date. The amount of a deferred distribution may be increased by an interest factor or by
dividend equivalents. Until an Award of Stock Units is settled, the number of such Stock Units
shall be subject to adjustment pursuant to Section 11.
(h) Creditors’ Rights. A holder of Stock Units shall have no rights other than those
of a general creditor of the Company. Stock Units represent an unfunded and unsecured obligation
of the Company, subject to the terms and conditions of the applicable Stock Unit Agreement.
SECTION 11. ADJUSTMENTS.
(a) Adjustments. In the event of a subdivision of the outstanding Shares, a
declaration of a dividend payable in Shares, a declaration of a dividend payable in a form other
than Shares in an amount that has a material effect on the price of Shares, a combination or
consolidation of the outstanding Shares (by reclassification or otherwise) into a lesser number of
Shares, a stock split, a reverse stock split, a reclassification or other distribution of the
Shares without the receipt of consideration by the Company, of or on the Common Stock, a
recapitalization, a combination, a spin-off or a similar occurrence, the Committee shall make
equitable and proportionate adjustments to:
(i) the Share limits on Equity Awards specified in Section 5(a);
(ii) the number and kind of securities available for Equity Awards (and which can be
issued as ISOs) under Section 5;
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(iii) the Share limits on Equity Awards issued under the Plan that are intended to
qualify as performance-based compensation under Code Section 162(m) under Section 5(d);
(iv) the number and kind of securities covered by each outstanding Equity Award;
(v) the Exercise Price under each outstanding SAR and Option; and
(vi) the number and kind of outstanding securities issued under the Plan.
(b) Participant Rights. Except as provided in this Section 11, a Participant shall
have no rights by reason of any issue by the Company of stock of any class or securities
convertible into stock of any class, any subdivision or consolidation of shares of stock of any
class, the payment of any stock dividend or any other increase or decrease in the number of shares
of stock of any class. If by reason of an adjustment pursuant to this Section 11, a Participant’s
Equity Award covers additional or different shares of stock or securities, then such additional or
different shares and the Equity Award in respect thereof shall be subject to all of the terms,
conditions and restrictions which were applicable to the Equity Award and the Shares subject to the
Equity Award prior to such adjustment.
(c) Fractional Shares. Any adjustment of Shares pursuant to this Section 11 shall be
rounded down to the nearest whole number of Shares. Under no circumstances shall the Company be
required to authorize or issue fractional shares. To the extent permitted by applicable law, no
consideration shall be provided as a result of any fractional shares not being issued or
authorized.
SECTION 12. EFFECT OF A CHANGE IN CONTROL.
(a) Merger or Reorganization. In the event that the Company is a party to a merger or
other reorganization, outstanding Awards shall be subject to the agreement of merger or
reorganization. Such agreement may provide, without limitation, that subject to the consummation
of the merger or other reorganization, for the assumption (or substitution) of outstanding Awards
by the surviving corporation or its parent, for their continuation by the Company (if the Company
is a surviving corporation), for accelerated vesting or for their cancellation with or without
consideration, in all cases without the consent of the Participant.
(b) Acceleration. Except as otherwise provided in the applicable Award Agreement (and
in such case the applicable Award agreement shall govern), in the event that a Change in Control
occurs and there is no assumption, substitution or continuation of Awards pursuant to Section
12(a), the Committee may in its discretion provide that all Awards shall vest and become
exercisable as of immediately before such Change in Control. For avoidance of doubt,
“substitution” includes, without limitation, an Award being replaced by a cash award that provides
an equivalent intrinsic value (wherein for
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Equity Awards intrinsic value equals the difference between the market value of a Share and
any per Share exercise price).
SECTION 13. LIMITATIONS ON RIGHTS.
(a) Retention Rights. Neither the Plan nor any Award granted under the Plan shall be
deemed to give any individual a right to remain in Service as an Employee, Consultant, Director or
Non-Employee Director or to receive any other Awards under the Plan. The Company and its Parents
and Subsidiaries and Affiliates reserve the right to terminate the Service of any person at any
time, and for any reason, subject to applicable laws, the Company’s Articles of Incorporation and
Bylaws and a written employment agreement (if any).
(b) Regulatory Requirements. Any other provision of the Plan notwithstanding, the
obligation of the Company to issue Shares or other securities under the Plan shall be subject to
all applicable laws, rules and regulations and such approval by any regulatory body as may be
required. The Company reserves the right to restrict, in whole or in part, the delivery of Shares
or other securities pursuant to any Equity Award prior to the satisfaction of all legal
requirements relating to the issuance of such Shares or other securities, to their registration,
qualification or listing or to an exemption from registration, qualification or listing.
(c) Dissolution. To the extent not previously exercised or settled, Options, SARs,
unvested Stock Units and unvested Restricted Stock Grants shall terminate immediately prior to the
dissolution or liquidation of the Company and shall be forfeited to the Company.
(d) Clawback Policy. The Company may (i) cause the cancellation of any Award, (ii)
require reimbursement of any Award by a Participant and (iii) effect any other right of recoupment
of equity or other compensation provided under this Plan or otherwise in accordance with Company
policies and/or applicable law (each, a “Clawback Policy”). In addition, a Participant may be
required to repay to the Company certain previously paid compensation, whether provided under this
Plan or an Award Agreement or otherwise, in accordance with the Clawback Policy.
SECTION 14. TAXES.
(a) General. A Participant shall make arrangements satisfactory to the Company for
the satisfaction of any withholding tax obligations that arise in connection with his or her Award.
The Company shall not be required to issue any Shares or make any cash payment under the Plan
until such obligations are satisfied.
(b) Share Withholding. The Committee in its discretion may permit or require a
Participant to satisfy all or part of his or her withholding or income tax obligations by having
the Company withhold all or a portion of any Shares that otherwise would be issued to him or her or
by surrendering all or a portion of any Shares that he or she previously acquired (or by stock
attestation). Such Shares shall be valued based on the value of the actual trade or, if there is
none, the Fair Market Value as of the previous day.
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Any payment of taxes by assigning Shares to the Company may be subject to restrictions,
including, but not limited to, any restrictions required by rules of the SEC. The Committee may
also, in its discretion, permit or require a Participant to satisfy withholding or income tax
obligations (up to the maximum amount permitted by applicable law) related to an Equity Award
through a sale of Shares underlying the Equity Award or, in the case of Options, through Net
Exercise or Cashless Exercise.
SECTION 15. DURATION AND AMENDMENTS.
(a) Term of the Plan. The Plan, as set forth herein, is effective on the Adoption
Date but is conditioned upon and subject to the approval of the Company’s shareholders. No
settlement of Awards or exercise of Options or SARs may occur before the Shareholder Approval Date.
If the Company’s shareholders do not approve the Plan on or before the first anniversary of the
Adoption Date, then the Plan shall terminate and be null and void and any Awards granted under the
Plan shall be then forfeited without consideration (except for repayment of any amounts that
Participants had previously paid to the Company to acquire Shares underlying the forfeited Awards).
In any event, the Plan shall terminate no later than on the day before the tenth anniversary of
the Adoption Date. The Plan may be terminated by the Board on any earlier date pursuant to Section
15(b). This Plan will not in any way affect outstanding awards that were issued under the Prior
Equity Compensation Plans or other Company equity compensation plans.
(b) Right to Amend or Terminate the Plan. The Board may amend or terminate the Plan
at any time and for any reason. No Awards shall be granted under the Plan after the Plan’s
termination. An amendment of the Plan shall be subject to the approval of the Company’s
shareholders only to the extent required by applicable laws, regulations or rules. In addition, no
such amendment or termination shall be made which would impair the rights of any Participant,
without such Participant’s written consent, under any then-outstanding Award, provided that no such
Participant consent shall be required with respect to any amendment or alteration if the Committee
determines in its sole discretion that such amendment or alteration either (i) is required or
advisable in order for the Company, the Plan or the Award to satisfy or conform to any law or
regulation or to meet the requirements of any accounting standard, or (ii) is not reasonably likely
to significantly diminish the benefits provided under such Award, or that any such diminishment has
been adequately compensated. In the event of any conflict in terms between the Plan and any Award
agreement, the terms of the Plan shall prevail and govern.
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SECTION 16. EXECUTION.
To record the adoption of this Plan by the Board, the Company has caused its duly authorized
Officer to execute this Plan on behalf of the Company.
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LIFEVANTAGE CORPORATION
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/s/
Carrie E. McQueen
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By |
Carrie E. McQueen |
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Title |
Chief Financial Officer |
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