Exhibit
4.1
PACIFIC
ETHANOL, INC.
2006
STOCK INCENTIVE PLAN
ARTICLE
ONE
GENERAL
PROVISIONS
This
2006
Stock Incentive Plan is intended to promote the interests of Pacific Ethanol,
Inc. by providing eligible persons in the Corporation’s service with the
opportunity to acquire a proprietary or economic interest, or otherwise increase
their proprietary or economic interest, in the Corporation as an incentive
for
them to remain in such service and render superior performance during such
service. Capitalized terms not otherwise defined herein shall have the meanings
assigned to such terms in the attached Appendix.
| II. |
Structure
of the Plan.
|
A. The
Plan
is divided into two equity-based incentive programs:
| |
·
|
the
Discretionary Grant Program, under which eligible persons may, at
the
discretion of the Plan Administrator, be granted options to purchase
shares of Common Stock or stock appreciation rights tied to the value
of
such Common Stock; and
|
| |
·
|
the
Stock Issuance Program, under which eligible persons may be issued
shares
of Common Stock pursuant to restricted stock or restricted stock
unit
awards or other stock-based awards, made by and at the discretion
of the
Plan Administrator, that vest upon the completion of a designated
service
period and/or the attainment of pre-established performance milestones,
or
under which shares of Common Stock may be issued through direct purchase
or as a bonus for services rendered to the Corporation (or any Parent
or
Subsidiary).
|
B. The
provisions of Articles
One and Four
shall
apply to all equity programs under the Plan and shall govern the interests
of
all persons under the Plan.
| III. |
Administration
of the Plan.
|
A. The
Compensation Committee shall have sole and exclusive authority to administer
the
Discretionary Grant and Stock Issuance Programs, provided, however, that the
Board may retain, reassume or exercise from time to time the power to administer
those programs with respect to all persons. However, any discretionary Awards
to
members of the Compensation Committee must be authorized and approved by a
disinterested majority of the Board.
B. The
Plan
Administrator shall, within the scope of its administrative functions under
the
Plan, have full power and authority (subject to the provisions of the Plan)
to
establish such rules and regulations as it may deem appropriate for proper
administration of the Discretionary Grant and Stock Issuance Programs and to
make such determinations under, and issue such interpretations of, the
provisions of those programs and any outstanding Awards thereunder as it may
deem necessary or advisable. Decisions of the Plan Administrator within the
scope of its administrative functions under the Plan shall be final and binding
on all parties who have an interest in the Discretionary Grant and Stock
Issuance Programs under its jurisdiction or any Award thereunder.
C. Service
on the Compensation Committee shall constitute service as a Board member, and
members of each such committee shall accordingly be entitled to full
indemnification and reimbursement as Board members for their service on such
committee. No member of the Compensation Committee shall be liable for any
act
or omission made in good faith with respect to the Plan or any Award under
the
Plan.
A. The
persons eligible to participate in the Discretionary Grant and Stock Issuance
Programs are as follows:
(i) Employees;
(ii) non-employee
members of the Board or the board of directors of any Parent or Subsidiary;
and
(iii) Consultants.
B. The
Plan
Administrator shall, within the scope of its administrative jurisdiction under
the Plan, have full authority to determine (i) with respect to Awards made
under
the Discretionary Grant Program, which eligible persons are to receive such
Awards, the time or times when those Awards are to be made, the number of shares
to be covered by each such Award, the status of any awarded option as either
an
Incentive Option or a Non-Statutory Option, the exercise price per share in
effect for each Award (subject to the limitations set forth in Article Two),
the
time or times when each Award is to vest and become exercisable and the maximum
term for which the Award is to remain outstanding, and (ii) with respect to
Awards under the Stock Issuance Program, which eligible persons are to receive
such Awards, the time or times when the Awards are to be made, the number of
shares subject to each such Award, the vesting schedule (if any) applicable
to
the shares subject to such Award, and the cash consideration (if any) payable
for such shares.
C. The
Plan
Administrator shall have the absolute discretion to grant options or stock
appreciation rights in accordance with the Discretionary Grant Program and
to
effect stock issuances or other stock-based awards in accordance with the Stock
Issuance Program.
| V. |
Stock
Subject to the Plan.
|
A. The
stock
issuable under the Plan shall be shares of authorized but unissued or reacquired
Common Stock, including shares repurchased by the Corporation on the open
market. Subject to any additional shares authorized by the vote of the Board
and
approved by the stockholders, as of July 19, 2006, the number of shares of
Common Stock reserved for issuance over the term of the Plan shall not exceed
2,000,000 shares. Any or all of the shares of Common Stock reserved for issuance
under the Plan shall be authorized for issuance pursuant to Incentive Options
or
other Awards.
B. No
one
person participating in the Plan may be granted Awards for more than 250,000
shares of Common Stock in the aggregate per calendar year.
C. Shares
of
Common Stock subject to outstanding Awards under the Plan shall be available
for
subsequent issuance under the Plan to the extent (i) those Awards expire or
terminate for any reason prior to the issuance of the shares of Common Stock
subject to those Awards or (ii) the Awards are cancelled in accordance with
the
cancellation-regrant provisions of Article Two.
Unvested shares issued under the Plan and subsequently cancelled or repurchased
by the Corporation at the original exercise or issue price paid per share
pursuant to the Corporation’s repurchase rights under the Plan shall be added
back to the number of shares of Common Stock reserved for issuance under the
Plan and shall accordingly be available for subsequent reissuance under the
Plan. In addition, should the exercise price of an option under the Plan be
paid
with shares of Common Stock, the authorized reserve of Common Stock under the
Plan shall be reduced only by the net number of shares issued under the
exercised stock option. Should shares of Common Stock otherwise issuable under
the Plan be withheld by the Corporation in satisfaction of the withholding
taxes
incurred in connection with the issuance, exercise or vesting of an Award under
the Plan, the number of shares of Common Stock available for issuance under
the
Plan shall be reduced only by the net number of shares issued with respect
to
that Award.
D. If
any
change is made to the Common Stock by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation’s
receipt of consideration, appropriate adjustments shall be made by the Plan
Administrator to (i) the maximum number and/or class of securities issuable
under the Plan, (ii) the maximum number and/or class of securities for which
any
one person may be granted Awards under the Plan per calendar year, (iii) the
number and/or class of securities and the exercise or base price per share
(or
any other cash consideration payable per share) in effect under each outstanding
Award under the Discretionary Grant Program, and (iv) the number and/or class
of
securities subject to each outstanding Award under the Stock Issuance Program
and the cash consideration (if any) payable per share thereunder. To the extent
such adjustments are to be made to outstanding Awards, those adjustments shall
be effected in a manner that shall preclude the enlargement or dilution of
rights and benefits under those Awards. The adjustments determined by the Plan
Administrator shall be final, binding and conclusive.
ARTICLE
TWO
DISCRETIONARY
GRANT PROGRAM
Each
option shall be evidenced by one or more documents in the form approved by
the
Plan Administrator; provided, however, that each such document shall comply
with
the terms specified below. Each document evidencing an Incentive Option shall,
in addition, be subject to the provisions of the Plan applicable to such
options.
A. Exercise
Price.
1. The
exercise price per share shall be fixed by the Plan Administrator but shall
not
be less than 85% of the Fair Market Value per share of Common Stock on the
option grant date.
2. The
exercise price shall become immediately due upon exercise of the option and
shall be payable in one or more of the following forms that the Plan
Administrator may deem appropriate in each individual instance:
(i) cash
or
check made payable to the Corporation;
(ii) shares
of
Common Stock valued at Fair Market Value on the Exercise Date and held for
the
period (if any) necessary to avoid any additional charges to the Corporation’s
earnings for financial reporting purposes; or
(iii) to
the
extent the option is exercised for vested shares, through a special sale and
remittance procedure pursuant to which the Optionee shall concurrently provide
irrevocable instructions to (a) a brokerage firm to effect the immediate sale
of
the purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares plus all applicable federal,
state and local income and employment taxes required to be withheld by the
Corporation by reason of such exercise and (b) the Corporation to deliver the
certificates for the purchased shares directly to such brokerage firm to
complete the sale.
Except
to
the extent such sale and remittance procedure is utilized, payment of the
exercise price for the purchased shares must be made on the Exercise Date.
B. Exercise
and Term of Options.
Each
option shall be exercisable at such time or times, during such period and for
such number of shares as shall be determined by the Plan Administrator and
set
forth in the documents evidencing the option. However, no option shall have
a
term in excess of ten years measured from the option grant date.
C. Effect
of Termination of Service.
1. The
following provisions shall govern the exercise of any options held by the
Optionee at the time of cessation of Service or death:
(i) Any
option outstanding at the time of the Optionee’s cessation of Service for any
reason shall remain exercisable for such period of time thereafter as shall
be
determined by the Plan Administrator and set forth in the documents evidencing
the option or as otherwise specifically authorized by the Plan Administrator
in
its sole discretion pursuant to an express written agreement with Optionee,
but
no such option shall be exercisable after the expiration of the option
term.
(ii) Any
option held by the Optionee at the time of death and exercisable in whole or
in
part at that time may be subsequently exercised by the personal representative
of the Optionee’s estate or by the person or persons to whom the option is
transferred pursuant to the Optionee’s will or the laws of inheritance or by the
Optionee’s designated beneficiary or beneficiaries of that option.
(iii) During
the applicable post-Service exercise period, the option may not be exercised
in
the aggregate for more than the number of vested shares for which that option
is
at the time exercisable. No additional shares shall vest under the option
following the Optionee’s cessation of Service, except to the extent (if any)
specifically authorized by the Plan Administrator in its sole discretion
pursuant to an express written agreement with Optionee. Upon the expiration
of
the applicable exercise period or (if earlier) upon the expiration of the option
term, the option shall terminate and cease to be outstanding for any shares
for
which the option has not been exercised.
2. The
Plan
Administrator shall have complete discretion, exercisable either at the time
an
option is granted or at any time while the option remains outstanding, to:
(i) extend
the period of time for which the option is to remain exercisable following
the
Optionee’s cessation of Service from the limited exercise period otherwise in
effect for that option to such greater period of time as the Plan Administrator
shall deem appropriate, but in no event beyond the expiration of the option
term, and/or
(ii) permit
the option to be exercised, during the applicable post-Service exercise period,
not only with respect to the number of vested shares of Common Stock for which
such option is exercisable at the time of the Optionee’s cessation of Service
but also with respect to one or more additional installments in which the
Optionee would have vested had the Optionee continued in Service.
D. Stockholder
Rights.
The
holder of an option shall have no stockholder rights with respect to the shares
subject to the option until such person shall have exercised the option, paid
the exercise price and become a holder of record of the purchased shares.
E. Repurchase
Rights.
The
Plan Administrator shall have the discretion to grant options that are
exercisable for unvested shares of Common Stock. Should the Optionee cease
Service while holding such unvested shares, the Corporation shall have the
right
to repurchase, at the exercise price paid per share, any or all of those
unvested shares. The terms upon which such repurchase right shall be exercisable
(including the period and procedure for exercise and the appropriate vesting
schedule for the purchased shares) shall be established by the Plan
Administrator and set forth in the document evidencing such repurchase
right.
F. Transferability
of Options.
The
transferability of options granted under the Plan shall be governed by the
following provisions:
(i) Incentive
Options.
During
the lifetime of the Optionee, Incentive Options shall be exercisable only by
the
Optionee and shall not be assignable or transferable other than by will or
the
laws of inheritance following the Optionee’s death.
(ii) Non-Statutory
Options.
Non-Statutory Options shall be subject to the same limitation on transfer as
Incentive Options, except that the Plan Administrator may structure one or
more
Non-Statutory Options so that the option may be assigned in whole or in part
during the Optionee’s lifetime to one or more Family Members of the Optionee or
to a trust established exclusively for the Optionee and/or one or more such
Family Members, to the extent such assignment is in connection with the
Optionee’s estate plan or pursuant to a domestic relations order. The assigned
portion may only be exercised by the person or persons who acquire a proprietary
interest in the option pursuant to the assignment. The terms applicable to
the
assigned portion shall be the same as those in effect for the option immediately
prior to such assignment and shall be set forth in such documents issued to
the
assignee as the Plan Administrator may deem appropriate.
(iii) Beneficiary
Designations.
Notwithstanding the foregoing, the Optionee may designate one or more persons
as
the beneficiary or beneficiaries of his or her outstanding options under this
Article Two
(whether
Incentive Options or Non-Statutory Options), and those options shall, in
accordance with such designation, automatically be transferred to such
beneficiary or beneficiaries upon the Optionee’s death while holding those
options. Such beneficiary or beneficiaries shall take the transferred options
subject to all the terms and conditions of the applicable agreement evidencing
each such transferred option, including (without limitation) the limited time
period during which the option may be exercised following the Optionee’s
death.
The
terms
specified below, together with any additions, deletions or changes thereto
imposed from time to time pursuant to the provisions of the Code governing
Incentive Options, shall be applicable to all Incentive Options. Except as
modified by the provisions of this Section II,
all the
provisions of Articles
One, Two and Four
shall be
applicable to Incentive Options. Options that are specifically designated as
Non-Statutory Options when issued under the Plan shall not be subject to the
terms of this Section II.
A. Eligibility.
Incentive Options may only be granted to Employees.
B. Exercise
Price.
The
exercise price per share shall not be less than 100% of the Fair Market Value
per share of Common Stock on the option grant date.
C. Dollar
Limitation.
The
aggregate Fair Market Value of the shares of Common Stock (determined as of
the
respective date or dates of grant) for which one or more options granted to
any
Employee under the Plan (or any other option plan of the Corporation or any
Parent or Subsidiary) may for the first time become exercisable as Incentive
Options during any one calendar year shall not exceed the sum of One Hundred
Thousand Dollars ($100,000). To the extent the Employee holds two or more such
options which become exercisable for the first time in the same calendar year,
then for purposes of the foregoing limitation on the exercisability of those
options as Incentive Options, such options shall be deemed to become first
exercisable in that calendar year on the basis of the chronological order in
which they were granted, except to the extent otherwise provided under
applicable law or regulation.
D. 10%
Stockholder.
If any
Employee to whom an Incentive Option is granted is a 10% Stockholder, then
the
exercise price per share shall not be less than 110% of the Fair Market Value
per share of Common Stock on the option grant date, and the option term shall
not exceed five years measured from the option grant date.
| III. |
Stock
Appreciation Rights.
|
A. Authority.
The
Plan Administrator shall have full power and authority, exercisable in its
sole
discretion, to grant stock appreciation rights in accordance with this
Section III
to
selected Optionees or other individuals eligible to receive option grants under
the Discretionary Grant Program.
B. Types.
Three
types of stock appreciation rights shall be authorized for issuance under this
Section III:
(i)
tandem stock appreciation rights (“Tandem
Rights”),
(ii)
standalone stock appreciation rights (“Standalone
Rights”)
and
(iii) limited stock appreciation rights (“Limited
Rights”).
C. Tandem
Rights.
The
following terms and conditions shall govern the grant and exercise of Tandem
Rights.
1. One
or
more Optionees may be granted a Tandem Right, exercisable upon such terms and
conditions as the Plan Administrator may establish, to elect between the
exercise of the underlying stock option for shares of Common Stock or the
surrender of that option in exchange for a distribution from the Corporation
in
an amount equal to the excess of (i) the Fair Market Value (on the option
surrender date) of the number of shares in which the Optionee is at the time
vested under the surrendered option (or surrendered portion thereof) over (ii)
the aggregate exercise price payable for such vested shares.
2. No
such
option surrender shall be effective unless it is approved by the Plan
Administrator, either at the time of the actual option surrender or at any
earlier time. If the surrender is so approved, then the distribution to which
the Optionee shall accordingly become entitled under this Section III
may be
made in shares of Common Stock valued at Fair Market Value on the option
surrender date, in cash, or partly in shares and partly in cash, as the Plan
Administrator shall in its sole discretion deem appropriate.
3. If
the
surrender of an option is not approved by the Plan Administrator, then the
Optionee shall retain whatever rights the Optionee had under the surrendered
option (or surrendered portion thereof) on the option surrender date and may
exercise such rights at any time prior to the later of (i) five business days
after the receipt of the rejection notice or (ii) the last day on which the
option is otherwise exercisable in accordance with the terms of the instrument
evidencing such option, but in no event may such rights be exercised more than
ten years after the date of the option grant.
D. Standalone
Rights.
The
following terms and conditions shall govern the grant and exercise of Standalone
Rights under this Article Two:
1. One
or
more individuals eligible to participate in the Discretionary Grant Program
may
be granted a Standalone Right not tied to any underlying option under this
Discretionary Grant Program. The Standalone Right shall relate to a specified
number of shares of Common Stock and shall be exercisable upon such terms and
conditions as the Plan Administrator may establish. In no event, however, may
the Standalone Right have a maximum term in excess of ten years measured from
the grant date. Upon exercise of the Standalone Right, the holder shall be
entitled to receive a distribution from the Corporation in an amount equal
to
the excess of (i) the aggregate Fair Market Value (on the exercise date) of
the
shares of Common Stock underlying the exercised right over (ii) the aggregate
base price in effect for those shares.
2. The
number of shares of Common Stock underlying each Standalone Right and the base
price in effect for those shares shall be determined by the Plan Administrator
in its sole discretion at the time the Standalone Right is granted. In no event,
however, may the base price per share be less than the Fair Market Value per
underlying share of Common Stock on the grant date.
3. Standalone
Rights shall be subject to the same transferability restrictions applicable
to
Non-Statutory Options and may not be transferred during the holder’s lifetime,
except to one or more Family Members of the holder or to a trust established
exclusively for the holder and/or such Family Members, to the extent such
assignment is in connection with the holder’s estate plan or pursuant to a
domestic relations order covering the Standalone Right as marital property.
In
addition, one or more beneficiaries may be designated for an outstanding
Standalone Right in accordance with substantially the same terms and provisions
as set forth in Section I.F
of this
Article Two.
4. The
distribution with respect to an exercised Standalone Right may be made in shares
of Common Stock valued at Fair Market Value on the exercise date, in cash,
or
partly in shares and partly in cash, as the Plan Administrator shall in its
sole
discretion deem appropriate.
5. The
holder of a Standalone Right shall have no stockholder rights with respect
to
the shares subject to the Standalone Right unless and until such person shall
have exercised the Standalone Right and become a holder of record of shares
of
Common Stock issued upon the exercise of such Standalone Right.
E. Limited
Rights.
The
following terms and conditions shall govern the grant and exercise of Limited
Rights under this Article Two:
1. One
or
more Section 16 Insiders may, in the Plan Administrator’s sole discretion,
be granted Limited Rights with respect to their outstanding options under this
Article Two.
2. Upon
the
occurrence of a Hostile Take-Over, the Section 16 Insider shall have the
unconditional right (exercisable for a 30-day period following such Hostile
Take-Over) to surrender each option with such a Limited Right to the
Corporation. The Section 16 Insider shall in return be entitled to a cash
distribution from the Corporation in an amount equal to the excess of (i) the
Take-Over Price of the number of shares in which the Optionee is at the time
vested under the surrendered option (or surrendered portion thereof) over (ii)
the aggregate exercise price payable for those vested shares. Such cash
distribution shall be made within five days following the option surrender
date.
3. The
Plan
Administrator shall pre-approve, at the time such Limited Right is granted,
the
subsequent exercise of that right in accordance with the terms of the grant
and
the provisions of this Section III.
No
additional approval of the Plan Administrator or the Board shall be required
at
the time of the actual option surrender and cash distribution. Any unsurrendered
portion of the option shall continue to remain outstanding and become
exercisable in accordance with the terms of the instrument evidencing such
grant.
F. Post-Service
Exercise.
The
provisions governing the exercise of Tandem, Standalone and Limited Stock
Appreciation Rights following the cessation of the recipient’s Service or the
recipient’s death shall be substantially the same as those set forth in
Section I.C
of this
Article Two
for the
options granted under the Discretionary Grant Program.
G. Net
Counting.
Upon
the exercise of any Tandem, Standalone or Limited Right under this Section III,
the
share reserve under Section V
of
Article One
shall
only be reduced by the net number of shares actually issued by the Corporation
upon such exercise, and not by the gross number of shares as to which such
Tandem, Standalone or Limited Right is exercised.
| IV. |
Change
in Control/ Hostile Take-Over.
|
A. No
Award
outstanding under the Discretionary Grant Program at the time of a Change in
Control shall vest and become exercisable on an accelerated basis if and to
the
extent that: (i) such Award is, in connection with the Change in Control,
assumed by the successor corporation (or parent thereof) or otherwise continued
in full force and effect pursuant to the terms of the Change in Control
transaction, (ii) such Award is replaced with a cash retention program of the
successor corporation that preserves the spread existing at the time of the
Change in Control on the shares of Common Stock as to which the Award is not
otherwise at that time vested and exercisable and provides for subsequent payout
of that spread in accordance with the same exercise/vesting schedule applicable
to those shares, or (iii) the acceleration of such Award is subject to other
limitations imposed by the Plan Administrator. However, if none of the foregoing
conditions are satisfied, each Award outstanding under the Discretionary Grant
Program at the time of the Change in Control but not otherwise vested and
exercisable as to all the shares at the time subject to that Award shall
automatically accelerate so that each such Award shall, immediately prior to
the
effective date of the Change in Control, vest and become exercisable as to
all
the shares of Common Stock at the time subject to that Award and may be
exercised as to any or all of those shares as fully vested shares of Common
Stock.
B. All
outstanding repurchase rights under the Discretionary Grant Program shall also
terminate automatically, and the shares of Common Stock subject to those
terminated rights shall immediately vest in full, in the event of any Change
in
Control, except to the extent: (i) those repurchase rights are assigned to
the
successor corporation (or parent thereof) or otherwise continue in full force
and effect pursuant to the terms of the Change in Control transaction or (ii)
such accelerated vesting is precluded by other limitations imposed by the Plan
Administrator.
C. Immediately
following the consummation of the Change in Control, all outstanding Awards
under the Discretionary Grant Program shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
parent thereof) or otherwise expressly continued in full force and effect
pursuant to the terms of the Change in Control transaction.
D. Each
option that is assumed in connection with a Change in Control or otherwise
continued in effect shall be appropriately adjusted, immediately after such
Change in Control, to apply to the number and class of securities that would
have been issuable to the Optionee in consummation of such Change in Control
had
the option been exercised immediately prior to such Change in Control. In the
event outstanding Standalone Rights are to be assumed in connection with a
Change in Control transaction or otherwise continued in effect, the shares
of
Common Stock underlying each such Standalone Right shall be adjusted immediately
after such Change in Control to apply to the number and class of securities
into
which those shares of Common Stock would have been converted in consummation
of
such Change in Control had those shares actually been outstanding at that time.
Appropriate adjustments to reflect such Change in Control shall also be made
to
(i) the exercise price payable per share under each outstanding option, provided
the aggregate exercise price payable for such securities shall remain the same,
(ii) the base price per share in effect under each outstanding Standalone Right,
provided the aggregate base price shall remain the same, (iii) the maximum
number and/or class of securities available for issuance over the remaining
term
of the Plan, and (iv) the maximum number and/or class of securities for which
any one person may be granted Awards under the Plan per calendar year. To the
extent the actual holders of the Corporation’s outstanding Common Stock receive
cash consideration for their Common Stock in consummation of the Change in
Control, the successor corporation may, in connection with the assumption or
continuation of the outstanding Awards under the Discretionary Grant Program,
substitute, for the securities underlying those assumed Awards, one or more
shares of its own common stock with a fair market value equivalent to the cash
consideration paid per share of Common Stock in such Change in Control
transaction.
E. The
Plan
Administrator shall have the discretionary authority to structure one or more
outstanding Awards under the Discretionary Grant Program so that those Awards
shall, immediately prior to the effective date of a Change in Control or a
Hostile Take-Over, vest and become exercisable as to all the shares at the
time
subject to those Awards and may be exercised as to any or all of those shares
as
fully vested shares of Common Stock, whether or not those Awards are to be
assumed or otherwise continued in full force and effect pursuant to the express
terms of such transaction. In addition, the Plan Administrator shall have the
discretionary authority to structure one or more of the Corporation’s repurchase
rights under the Discretionary Grant Program so that those rights shall
immediately terminate at the time of such Change in Control or consummation
of
such Hostile Take-Over and shall not be assignable to successor corporation
(or
parent thereof), and the shares subject to those terminated rights shall
accordingly vest in full at the time of such Change in Control or consummation
of such Hostile Take-Over.
F. The
Plan
Administrator shall have full power and authority to structure one or more
outstanding Awards under the Discretionary Grant Program so that those Awards
shall immediately vest and become exercisable as to all of the shares at the
time subject to those Awards in the event the Optionee’s Service is subsequently
terminated by reason of an Involuntary Termination within a designated period
(not to exceed 18 months) following the effective date of any Change in Control
or a Hostile Take-Over in which those Awards do not otherwise vest on an
accelerated basis. Any Awards so accelerated shall remain exercisable as to
fully vested shares until the expiration or sooner termination of their term.
In
addition, the Plan Administrator may structure one or more of the Corporation’s
repurchase rights under the Discretionary Grant Program so that those rights
shall immediately terminate with respect to any shares held by the Optionee
at
the time of his or her Involuntary Termination, and the shares subject to those
terminated repurchase rights shall accordingly vest in full at that time.
G. The
portion of any Incentive Option accelerated in connection with a Change in
Control shall remain exercisable as an Incentive Option only to the extent
the
applicable One Hundred Thousand Dollar ($100,000) limitation is not exceeded.
To
the extent such dollar limitation is exceeded, the accelerated portion of such
option shall be exercisable as a Non-Statutory Option under the federal tax
laws.
H. Awards
outstanding under the Discretionary Grant Program shall in no way affect the
right of the Corporation to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.
| V. |
Exchange/
Repricing Programs.
|
A. The
Plan
Administrator shall have the authority to effect, at any time and from time
to
time, with the consent of the affected holders, the cancellation of any or
all
outstanding options or stock appreciation rights under the Discretionary Grant
Program and to grant in exchange one or more of the following: (i) new options
or stock appreciation rights covering the same or a different number of shares
of Common Stock but with an exercise or base price per share not less than
the
Fair Market Value per share of Common Stock on the new grant date or (ii) cash
or shares of Common Stock, whether vested or unvested, equal in value to the
value of the cancelled options or stock appreciation rights.
B. The
Plan
Administrator shall also have the authority, exercisable at any time and from
time to time, with or, if the affected holder is not a Section 16 Insider,
then
without, the consent of the affected holders, to reduce the exercise or base
price of one or more outstanding stock options or stock appreciation rights
to a
price not less than the then current Fair Market Value per share of Common
Stock
or issue new stock options or stock appreciation rights with a lower exercise
or
base price in immediate cancellation of outstanding stock options or stock
appreciation rights with a higher exercise or base price.
ARTICLE
THREE
STOCK
ISSUANCE PROGRAM
A. Issuances.
Shares
of Common Stock may be issued under the Stock Issuance Program through direct
and immediate issuances without any intervening option grants. Each such stock
issuance shall be evidenced by a Stock Issuance Agreement that complies with
the
terms specified below. Shares of Common Stock may also be issued under the
Stock
Issuance Program pursuant to restricted stock awards or restricted stock units,
awarded by and at the discretion of the Plan Administrator, that entitle the
recipients to receive the shares underlying those awards or units upon the
attainment of designated performance goals and/or the satisfaction of specified
Service requirements or upon the expiration of a designated time period
following the vesting of those awards or units.
B. Issue
Price.
1. The
price
per share at which shares of Common Stock may be issued under the Stock Issuance
Program shall be fixed by the Plan Administrator, but shall not be less than
100% of the Fair Market Value per share of Common Stock on the issuance date.
2. Shares
of
Common Stock may be issued under the Stock Issuance Program for any of the
following items of consideration that the Plan Administrator may deem
appropriate in each individual instance:
(i) cash
or
check made payable to the Corporation;
(ii) past
services rendered to the Corporation (or any Parent or Subsidiary);
or
(iii) any
other
valid form of consideration permissible under the Delaware Corporations Code
at
the time such shares are issued.
C. Vesting
Provisions.
1. Shares
of
Common Stock issued under the Stock Issuance Program may, in the discretion
of
the Plan Administrator, be fully and immediately vested upon issuance or may
vest in one or more installments over the Participant’s period of Service and/or
upon attainment of specified performance objectives. The elements of the vesting
schedule applicable to any unvested shares of Common Stock issued under the
Stock Issuance Program shall be determined by the Plan Administrator and
incorporated into the Stock Issuance Agreement. Shares of Common Stock may
also
be issued under the Stock Issuance Program pursuant to restricted stock awards
or restricted stock units that entitle the recipients to receive the shares
underlying those awards and/or units upon the attainment of designated
performance goals or the satisfaction of specified Service requirements or
upon
the expiration of a designated time period following the vesting of those awards
or units, including (without limitation) a deferred distribution date following
the termination of the Participant’s Service.
2. The
Plan
Administrator shall also have the discretionary authority, consistent with
Code
Section 162(m), to structure one or more Awards under the Stock Issuance
Program so that the shares of Common Stock subject to those Awards shall vest
(or vest and become issuable) upon the achievement of certain pre-established
corporate performance goals based on one or more of the following criteria:
(i)
return on total stockholders’ equity; (ii) net income per share of Common Stock;
(iii) net income or operating income; (iv) earnings before interest, taxes,
depreciation, amortization and stock-compensation costs, or operating income
before depreciation and amortization; (v) sales or revenue targets; (vi) return
on assets, capital or investment; (vii) cash flow; (viii) market share; (ix)
cost reduction goals; (x) budget comparisons; (xi) implementation or completion
of projects or processes strategic or critical to the Corporation’s business
operations; (xii) measures of customer satisfaction; (xiii) any combination
of,
or a specified increase in, any of the foregoing; and (xiv) the formation of
joint ventures, research and development collaborations, marketing or customer
service collaborations, or the completion of other corporate transactions
intended to enhance the Corporation’s revenue or profitability or expand its
customer base; provided, however, that for purposes of items (ii), (iii) and
(vii) above, the Plan Administrator may, at the time the Awards are made,
specify certain adjustments to such items as reported in accordance with
generally accepted accounting principles in the U.S. (“GAAP”),
which
will exclude from the calculation of those performance goals one or more of
the
following: certain charges related to acquisitions, stock-based compensation,
employer payroll tax expense on certain stock option exercises, settlement
costs, restructuring costs, gains or losses on strategic investments,
non-operating gains or losses, certain other non-cash charges, valuation
allowance on deferred tax assets, and the related income tax effects, purchases
of property and equipment, and any extraordinary non-recurring items as
described in Accounting Principles Board Opinion No. 30 or its successor,
provided that such adjustments are in conformity with those reported by the
Corporation on a non-GAAP basis. In addition, such performance goals may be
based upon the attainment of specified levels of the Corporation’s performance
under one or more of the measures described above relative to the performance
of
other entities and may also be based on the performance of any of the
Corporation’s business groups or divisions thereof or any Parent or Subsidiary.
Performance goals may include a minimum threshold level of performance below
which no award will be earned, levels of performance at which specified portions
of an award will be earned, and a maximum level of performance at which an
award
will be fully earned. The Plan Administrator may provide that, if the actual
level of attainment for any performance objective is between two specified
levels, the amount of the award attributable to that performance objective
shall
be interpolated on a straight-line basis.
3. Any
new,
substituted or additional securities or other property (including money paid
other than as a regular cash dividend) that the Participant may have the right
to receive with respect to the Participant’s unvested shares of Common Stock by
reason of any stock dividend, stock split, recapitalization, combination of
shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without the Corporation’s receipt of consideration shall be
issued subject to (i) the same vesting requirements applicable to the
Participant’s unvested shares of Common Stock and (ii) such escrow arrangements
as the Plan Administrator shall deem appropriate.
4. The
Participant shall have full stockholder rights with respect to any shares of
Common Stock issued to the Participant under the Stock Issuance Program, whether
or not the Participant’s interest in those shares is vested. Accordingly, the
Participant shall have the right to vote such shares and to receive any regular
cash dividends paid on such shares. The Participant shall not have any
stockholder rights with respect to the shares of Common Stock subject to a
restricted stock unit award until that award vests and the shares of Common
Stock are actually issued thereunder. However, dividend-equivalent units may
be
paid or credited, either in cash or in actual or phantom shares of Common Stock,
on outstanding restricted stock unit or restricted stock awards, subject to
such
terms and conditions as the Plan Administrator may deem
appropriate.
5. Should
the Participant cease to remain in Service while holding one or more unvested
shares of Common Stock issued under the Stock Issuance Program or should the
performance objectives not be attained with respect to one or more such unvested
shares of Common Stock, then except as set forth in Section
I.C.6
of this
Article
Three,
those
shares shall be immediately surrendered to the Corporation for cancellation,
and
the Participant shall have no further stockholder rights with respect to those
shares. To the extent the surrendered shares were previously issued to the
Participant for consideration paid in cash, cash equivalent or otherwise, the
Corporation shall repay to the Participant the same amount and form of
consideration as the Participant paid for the surrendered shares.
6. The
Plan
Administrator may in its discretion waive the surrender and cancellation of
one
or more unvested shares of Common Stock that would otherwise occur upon the
cessation of the Participant’s Service or the non-attainment of the performance
objectives applicable to those shares. Any such waiver shall result in the
immediate vesting of the Participant’s interest in the shares of Common Stock as
to which the waiver applies. Such waiver may be effected at any time, whether
before or after the Participant’s cessation of Service or the attainment or
non-attainment of the applicable performance objectives. However, no vesting
requirements tied to the attainment of performance objectives may be waived
with
respect to shares that were intended at the time of issuance to qualify as
performance-based compensation under Code Section 162(m), except in the
event of the Participant’s Involuntary Termination or as otherwise provided in
Section II.E
of this
Article Three.
7. Outstanding
restricted stock awards or restricted stock units under the Stock Issuance
Program shall automatically terminate, and no shares of Common Stock shall
actually be issued in satisfaction of those awards or units, if the performance
goals or Service requirements established for such awards or units are not
attained or satisfied. The Plan Administrator, however, shall have the
discretionary authority to issue vested shares of Common Stock under one or
more
outstanding restricted stock awards or restricted stock units as to which the
designated performance goals or Service requirements have not been attained
or
satisfied. However, no vesting requirements tied to the attainment of
performance goals may be waived with respect to awards or units which were
at
the time of grant intended to qualify as performance-based compensation under
Code Section 162(m), except in the event of the Participant’s Involuntary
Termination or as otherwise provided in Section II.E
of this
Article Three.
| II. |
Change
in Control/ Hostile Take-Over.
|
A. All
of
the Corporation’s outstanding repurchase rights under the Stock Issuance Program
shall terminate automatically, and all the shares of Common Stock subject to
those terminated rights shall immediately vest in full, in the event of any
Change in Control, except to the extent (i) those repurchase rights are to
be
assigned to the successor corporation (or parent thereof) or otherwise continued
in full force and effect pursuant to the express terms of the Change in Control
transaction or (ii) such accelerated vesting is precluded by other limitations
imposed in the Stock Issuance Agreement.
B. Each
outstanding Award under the Stock Issuance Program that is assumed in connection
with a Change in Control or otherwise continued in effect shall be adjusted
immediately after the consummation of that Change in Control to apply to the
number and class of securities into which the shares of Common Stock subject
to
the Award immediately prior to the Change in Control would have been converted
in consummation of such Change in Control had those shares actually been
outstanding at that time, and appropriate adjustments shall also be made to
the
cash consideration (if any) payable per share thereunder, provided the aggregate
amount of such consideration shall remain the same. If any such Award is not
so
assumed or otherwise continued in effect or replaced with a cash retention
program which preserves the Fair Market Value of the shares underlying the
Award
at the time of the Change in Control and provides for the subsequent payout
of
that value in accordance with the vesting schedule in effect for the Award
at
the time of such Change in Control, such Award shall vest, and the shares of
Common Stock subject to that Award shall be issued as fully-vested shares,
immediately prior to the consummation of the Change in Control.
C. The
Plan
Administrator shall have the discretionary authority to structure one or more
unvested Awards under the Stock Issuance Program so that the shares of Common
Stock subject to those Awards shall automatically vest (or vest and become
issuable) in whole or in part immediately upon the occurrence of a Change in
Control or upon the subsequent termination of the Participant’s Service by
reason of an Involuntary Termination within a designated period (not to exceed
18 months) following the effective date of that Change in Control transaction.
D. The
Plan
Administrator shall also have the discretionary authority to structure one
or
more unvested Awards under the Stock Issuance Program so that the shares of
Common Stock subject to those Awards shall automatically vest (or vest and
become issuable) in whole or in part immediately upon the occurrence of a
Hostile Take-Over or upon the subsequent termination of the Participant’s
Service by reason of an Involuntary Termination within a designated period
(not
to exceed 18 months) following the effective date of that Hostile Take-Over.
E. The
Plan
Administrator’s authority under Paragraphs C and D of this Section II
shall
also extend to any Award intended to qualify as performance-based compensation
under Code Section 162(m), even though the automatic vesting of those
Awards pursuant to Paragraph C or D of this Section II
may
result in their loss of performance-based status under Code Section 162(m).
F. Awards
outstanding under the Stock Issuance Program shall in no way affect the right
of
the Corporation to adjust, reclassify, reorganize or otherwise change its
capital or business structure or to merge, consolidate, dissolve, liquidate
or
sell or transfer all or any part of its business or assets.
ARTICLE
FOUR
MISCELLANEOUS
A. The
Corporation’s obligation to deliver shares of Common Stock upon the issuance,
exercise or vesting of Awards under the Plan shall be subject to the
satisfaction of all applicable federal, state and local income and employment
tax withholding requirements.
B. Subject
to applicable laws, rules and regulations and policies of the Corporation,
the
Plan Administrator may, in its discretion, provide any or all Optionees or
Participants to whom Awards are made under the Plan with the right to utilize
any or all of the following methods to satisfy all or part of the Withholding
Taxes to which those holders may become subject in connection with the issuance,
exercise or vesting of those Awards.
(i) Stock
Withholding:
The
election to have the Corporation withhold, from the shares of Common Stock
otherwise issuable upon the issuance, exercise or vesting of those Awards a
portion of those shares with an aggregate Fair Market Value equal to the
percentage of the Withholding Taxes (not to exceed 100%) designated by the
Optionee or Participant and make a cash payment equal to such Fair Market Value
directly to the appropriate taxing authorities on such individual’s behalf. The
shares of Common Stock so withheld shall not reduce the number of shares of
Common Stock authorized for issuance under the Plan.
(ii) Stock
Delivery:
The
election to deliver to the Corporation, at the time the Award is issued,
exercised or vests, one or more shares of Common Stock previously acquired
by
such the Optionee or Participant (other than in connection with the issuance,
exercise or vesting triggering the Withholding Taxes) with an aggregate Fair
Market Value equal to the percentage of the Withholding Taxes (not to exceed
100%) designated by such holder. The shares of Common Stock so delivered shall
not be added to the shares of Common Stock authorized for issuance under the
Plan.
(iii) Sale
and Remittance:
The
election to deliver to the Corporation, to the extent the Award is issued or
exercised for vested shares, through a special sale and remittance procedure
pursuant to which the Optionee or Participant shall concurrently provide
irrevocable instructions to a brokerage firm to effect the immediate sale of
the
purchased or issued shares and remit to the Corporation, out of the sale
proceeds available on the settlement date, sufficient funds to cover the
Withholding Taxes required to be withheld by the Corporation by reason of such
issuance, exercise or vesting.
| II. |
Share
Escrow/Legends.
|
Unvested
shares issued under the Plan may, in the Plan Administrator’s discretion, be
held in escrow by the Corporation until the Participant’s interest in such
shares vests or may be issued directly to the Participant with restrictive
legends on the certificates evidencing those unvested shares.
| III. |
Effective
Date and Term of the Plan.
|
A. The
Plan
was adopted by the Board on July 19, 2006, subject to stockholder approval
within twelve months after that date. Should stockholder approval not be
obtained within such period, the Plan will be terminated.
B. The
Plan
shall become effective on the Plan Effective Date. Awards may be granted under
the Discretionary Grant Program and the Stock Issuance Program at any time
on or
after the Plan Effective Date.
C. The
Plan
shall terminate upon the earliest to occur of (i) July 19, 2007, if stockholder
approval of the Plan has not yet been obtained, (ii) July 19, 2016, (iii) the
date on which all shares available for issuance under the Plan shall have been
issued as fully-vested shares, (iv) the termination of all outstanding Awards
in
connection with a Change in Control or (v) such other date as the Board in
its
sole discretion terminates the Plan. If the Plan terminates on July 19, 2016
or
on such other date as the Board terminates the Plan, then all Awards outstanding
at that time shall continue to have force and effect in accordance with the
provisions of the documents evidencing such Awards.
| IV. |
Amendment,
Suspension or Termination of the Plan.
|
The
Board
may suspend or terminate the Plan at any time, without notice, and in its sole
discretion. The Board shall have complete and exclusive power and authority
to
amend or modify the Plan in any or all respects. However, no such amendment
or
modification shall materially impair the rights and obligations with respect
to
Awards at the time outstanding under the Plan unless the Optionee or the
Participant consents to such amendment or modification. In addition, stockholder
approval will be required for any amendment to the Plan that (i) materially
increases the number of shares of Common Stock available for issuance under
the
Plan, (ii) materially expands the class of individuals eligible to receive
option grants or other awards under the Plan, (iii) materially increases the
benefits accruing to the Optionees and Participants under the Plan or materially
reduces the price at which shares of Common Stock may be issued or purchased
under the Plan, (iv) materially extends the term of the Plan, (v) expands the
types of awards available for issuance under the Plan or (vi) is required under
applicable laws, rules or regulations to be approved by
stockholders.
Any
cash
proceeds received by the Corporation from the sale of shares of Common Stock
under the Plan shall be used for general corporate purposes.
| VI. |
Regulatory
Approvals.
|
A. The
implementation of the Plan, the grant of any Award and the issuance of shares
of
Common Stock in connection with the issuance, exercise or vesting of any Award
made under the Plan shall be subject to the Corporation’s procurement of all
approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the Awards made under the Plan and the shares of Common Stock
issuable pursuant to those Awards.
B. No
shares
of Common Stock or other assets shall be issued or delivered under the Plan
unless and until there shall have been compliance with all applicable
requirements of federal and state securities laws, including the filing and
effectiveness of the Form S-8 registration statement for the shares of Common
Stock issuable under the Plan, and all applicable listing requirements of the
NASDAQ Global Market, if applicable, and any stock exchange or other market
on
which Common Stock is then quoted or listed for trading.
| VII. |
No
Employment/ Service Rights.
|
Nothing
in the Plan shall confer upon the Optionee or the Participant any right to
continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent
or
Subsidiary employing or retaining such person) or of the Optionee or the
Participant, which rights are hereby expressly reserved by each, to terminate
such person’s Service at any time for any reason, with or without cause.
| VIII. |
Non-Exclusivity
of the Plan.
|
Nothing
contained in the Plan is intended to amend, modify, or rescind any previously
approved compensation plans, programs or options entered into by the
Corporation. This Plan shall be construed to be in addition to and independent
of any and all other arrangements. Neither the adoption of the Plan by the
Board
nor the submission of the Plan to the stockholders of the Corporation for
approval shall be construed as creating any limitations on the power or
authority of the Board to adopt, with or without stockholder approval, such
additional or other compensation arrangements as the Board may from time to
time
deem desirable.
All
questions and obligations under the Plan and agreements issued pursuant to
the
Plan shall be construed and enforced in accordance with the laws of the State
of
Delaware.
| X. |
Information
to Optionees and Participants.
|
Optionees
and Participants under the Plan who do not otherwise have access to financial
statements of the Corporation will receive the Corporation’s financial
statements at least annually.
APPENDIX
The
following definitions shall be in effect under the Plan:
A. “Award”
means
any of the following stock or stock-based awards authorized for issuance or
grant under the Plan: stock option, stock appreciation right, direct stock
issuance, restricted stock or restricted stock unit award or other stock-based
award.
B. “Board”
means
the Corporation’s board of directors.
C. “Change
in Control”
shall
be deemed to have occurred if, in a single transaction or series of related
transactions:
(i) any
person (as such term is used in Section 13(d) and 14(d) of the 1934 Act, or
persons acting as a group, other than a trustee or fiduciary holding securities
under an employment benefit program, is or becomes a “beneficial owner” (as
defined in Rule 13-3 under the 1934 Act), directly or indirectly of securities
of the Corporation representing 51% or more of the combined voting power of
the
Corporation, or
(ii) there
is
a merger, consolidation, or other business combination transaction of the
Corporation with or into an other corporation, entity or person, other than
a
transaction in which the holders of at least a majority of the shares of voting
capital stock of the Corporation outstanding immediately prior to such
transaction continue to hold (either by such shares remaining outstanding or
by
their being converted into shares of voting capital stock of the surviving
entity) a majority of the total voting power represented by the shares of voting
capital stock of the Corporation (or surviving entity) outstanding immediately
after such transaction, or
(iii) all
or
substantially all of the Corporation’s assets are sold.
D. “Code”
means
the Internal Revenue Code of 1986, as amended.
E. “Common
Stock”
means
the Corporation’s common stock, $0.001 par value per share.
F. “Compensation
Committee”
means
a
committee of the Board comprised solely of two or more Eligible Directors who
are appointed by the Board to administer the Discretionary Grant and Stock
Issuance Programs, who are “outside directors” within the meaning of Section
162(m) of the Code and who are “non-employee directors” within the meaning of
Rule 16b-3(b)(3)(i).
G. “Consultant”
means
a
consultant or other independent advisor who is under written contract with
the
Corporation (or any Parent or Subsidiary) to provide consulting or advisory
services to the Corporation (or any Parent or Subsidiary) and whose securities
issued pursuant to the Plan could be registered on Form S-8.
H. “Corporation”
means
Pacific Ethanol, Inc., a Delaware corporation, and any corporate successor
to
all or substantially all of the assets or voting stock of Pacific Ethanol,
Inc.
that shall by appropriate action adopt the Plan.
I. “Discretionary
Grant Program”
means
the discretionary grant program in effect under Article Two
of the
Plan pursuant to which stock options and stock appreciation rights may be
granted to one or more eligible individuals.
J. “Eligible
Director”
means
a
Board member who is not, at the time of such determination, an employee of
the
Corporation (or any Parent or Subsidiary).
K. “Employee”
means
an individual who is in the employ of the Corporation (or any Parent or
Subsidiary), subject to the control and direction of the employer entity as
to
both the work to be performed and the manner and method of
performance.
L. “Exercise
Date”
means
the date on which the Corporation shall have received written notice of the
option exercise.
M. “Fair
Market Value”
per
share of Common Stock on any relevant date shall be determined in accordance
with the following provisions:
(i) If
the
Common Stock is at the time traded on the NASDAQ Global Market, then the Fair
Market Value shall be the closing selling price per share of Common Stock at
the
close of regular hours trading (i.e., before after- hours trading begins) on
the
NASDAQ Global Market on the date in question, as such price is reported by
the
National Association of Securities Dealers. If there is no closing selling
price
for the Common Stock on the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for which such quotation
exists.
(ii) If
the
Common Stock is not traded on the NASDAQ Global Market but is at the time listed
or quoted on any other market or exchange, then the Fair Market Value shall
be
the closing selling price per share of Common Stock at the close of regular
hours trading (i.e., before after-hours trading begins) on the date in question
on the market or exchange determined by the Plan Administrator to be the primary
market for the Common Stock, as such price is officially quoted in the composite
tape of transactions on such exchange. If there is no closing selling price
for
the Common Stock on the date in question, then the Fair Market Value shall
be
the closing selling price on the last preceding date for which such quotation
exists.
(iii) In
the
absence of an established market for the Common Stock, the Fair Market Value
shall be determined in good faith by the Plan Administrator.
In
addition, with respect to any Incentive Option, the Fair Market Value shall
be
determined in a manner consistent with any regulations issued by the Secretary
of the Treasury for the purpose of determining fair market value of securities
subject to an Incentive Option plan under the Code.
N. “Family
Member”
means,
with respect to a particular Optionee or Participant, any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law or sister-in-law, including adoptive relationships.
O. “Hostile
Take-Over”
means
either of the following events effecting a change in control or ownership of
the
Corporation:
(i) the
acquisition, directly or indirectly, by any person or related group of persons
(other than the Corporation or a person that directly or indirectly controls,
is
controlled by, or is under common control with, the Corporation) of beneficial
ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities
possessing more than 50% of the total combined voting power of the Corporation’s
outstanding securities pursuant to a tender or exchange offer made directly
to
the Corporation’s stockholders that the Board does not recommend such
stockholders to accept, or
(ii) a
change
in the composition of the Board over a period of 36 consecutive months or less
such that a majority of the Board members ceases, by reason of one or more
contested elections for Board membership, to be composed of individuals who
either (A) have been Board members continuously since the beginning of such
period or (B) have been elected or nominated for election as Board members
during such period by at least a majority of the Board members described in
clause (A) who were still in office at the time the Board approved such election
or nomination.
P. “Incentive
Option”
means
an option that satisfies the requirements of Code Section 422.
Q. “Involuntary
Termination”
means
the termination of the Service of any individual that occurs by reason
of:
(i) if
such
individual is providing services to the Corporation pursuant to a written
contract that defines “cause” or “misconduct” or similar reasons such individual
could be dismissed or discharged by the Corporation, then such individual’s
involuntary dismissal or discharge by the Corporation other than for any of
such
reasons and other than for Misconduct shall be an Involuntary
Termination;
(ii) if
such
individual is not providing services to the Corporation pursuant to a written
contract that defines “cause” or “misconduct” or similar reasons such individual
could be dismissed or discharged by the Corporation, then such individual’s
involuntary dismissal or discharge by the Corporation for reasons other than
Misconduct shall be an Involuntary Termination;
(iii) if
such
individual is providing services to the Corporation pursuant to a written
contract that defines “good reason” or similar reasons such individual could
voluntarily resign, then such individual’s voluntary resignation for any of such
reasons shall be an Involuntary Termination; or
(iv) if
such
individual is providing services to the Corporation pursuant to a written
contract that does not define “good reason” or similar reasons such individual
could voluntarily resign, then such individual’s voluntary resignation following
(A) a change in his or her position with the Corporation that materially reduces
his or her duties and responsibilities or the level of management to which
he or
she reports, (B) a reduction in his or her level of compensation (including
base
salary, fringe benefits and target bonus under any corporate-performance based
bonus or incentive programs) by more than 15% or (C) a relocation of such
individual’s place of employment by more than 50 miles, provided and only if
such change, reduction or relocation is effected by the Corporation without
the
individual’s consent, shall be an Involuntary Termination.
R. “Misconduct”
means
the commission of: any act of fraud, embezzlement or dishonesty by the Optionee
or Participant; any unauthorized use or disclosure by such person of
confidential information or trade secrets of the Corporation (or any Parent
or
Subsidiary); any illegal or improper conduct or intentional misconduct, gross
negligence or recklessness by such person that has adversely affected or, in
the
determination of the Plan Administrator, is likely to adversely affect, the
business, reputation, goodwill or affairs of the Corporation (or any Parent
or
Subsidiary) in a material manner; any conduct that provides a basis for the
Corporation to terminate for “cause,” “misconduct” or similar reasons the
written contract pursuant to which the Optionee or Participant is providing
Services to the Corporation; resignation by the Optionee or Participant on
fewer
than 30 days’ prior written notice and in violation of an agreement to remain in
Service of the Corporation, in anticipation of a termination for “cause,”
“misconduct” or similar reasons under the agreement, or in lieu of a formal
discharge for “cause,” “misconduct” or similar reasons. The foregoing definition
shall not in any way preclude or restrict the right of the Corporation (or
any
Parent or Subsidiary) to discharge or dismiss any Optionee, Participant or
other
person in the Service of the Corporation (or any Parent or Subsidiary) for
any
other acts or omissions, but such other acts or omissions shall not be deemed,
for purposes of the Plan, to constitute grounds for termination for
Misconduct.
S. “1934
Act”
means
the Securities Exchange Act of 1934, as amended.
T. “Non-Statutory
Option”
means
an option not intended to satisfy the requirements of Code
Section 422.
U. “Optionee”
means
any person to whom an option is granted under the Discretionary Grant
Program.
V. “Parent”
means
any corporation (other than the Corporation) in an unbroken chain of
corporations ending with the Corporation, provided each corporation in the
unbroken chain (other than the Corporation) owns, at the time of the
determination, 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.
W. “Participant”
means
any person who is issued shares of Common Stock or restricted stock units or
other stock-based awards under the Stock Issuance Program.
X. “Permanent
Disability”
or
“Permanently
Disabled”
means
the inability of the Optionee or the Participant to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment expected to result in death or to be of continuous duration of twelve
months or more.
Y. “Plan”
means
the Corporation’s 2006 Stock Incentive Plan, as set forth in this
document.
Z. “Plan
Administrator”
means
the particular entity, whether the Compensation Committee or the Board, which
is
authorized to administer the Discretionary Grant and Stock Issuance Programs
with respect to one or more classes of eligible persons, to the extent such
entity is carrying out its administrative functions under those programs with
respect to the persons then subject to its jurisdiction.
AA. “Plan
Effective Date”
means
the date that stockholder approval of the Plan is obtained in accordance with
Section
III.A.
of
Article
Four.
BB. “Section 16
Insider”
means
an officer or director of the Corporation subject to the short-swing profit
liability provisions of Section 16 of the 1934 Act.
CC. “Service”
means
the performance of services for the Corporation (or any Parent or Subsidiary)
by
a person in the capacity of an Employee, an Eligible Director or a Consultant,
except to the extent otherwise specifically provided in the documents evidencing
the Award made to such person. For purposes of the Plan, an Optionee or
Participant shall be deemed to cease Service immediately upon the occurrence
of
the either of the following events: (i) the Optionee or Participant no longer
performs services in any of the foregoing capacities for the Corporation or
any
Parent or Subsidiary or (ii) the entity for which the Optionee or Participant
is
performing such services ceases to remain a Parent or Subsidiary of the
Corporation, even though the Optionee or Participant may subsequently continue
to perform services for that entity.
DD. ““Stock
Issuance Agreement”
means
the agreement entered into by the Corporation and the Participant at the time
of
issuance of shares of Common Stock under the Stock Issuance
Program.
EE. “Stock
Issuance Program”
means
the stock issuance program in effect under Article Three
of the
Plan.
FF. “Subsidiary”
means
any corporation (other than the Corporation) in an unbroken chain of
corporations beginning with the Corporation, provided each corporation (other
than the last corporation) in the unbroken chain owns, at the time of the
determination, 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.
GG. “Take-Over
Price”
means
the greater of (i) the Fair Market Value per share of Common Stock on the date
the option is surrendered to the Corporation in connection with a Hostile
Take-Over or, if applicable, (ii) the highest reported price per share of Common
Stock paid by the tender offeror in effecting such Hostile Take-Over through
the
acquisition of such Common Stock. However, if the surrendered option is an
Incentive Option, the Take-Over Price shall not exceed the clause (i) price
per
share.
HH. “10%
Stockholder”
means
the owner of stock (as determined under Code Section 424(d)) possessing
more than 10% of the total combined voting power of all classes of stock of
the
Corporation (or any Parent or Subsidiary).
II. “Withholding
Taxes”
means
the federal, state and local income and employment taxes to which the Optionee
or Participant may become subject in connection with the issuance, exercise
or
vesting of the Award made to him or her under the Plan.
-21-