UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
SCHEDULE
14A
(Rule
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
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Soliciting Material Pursuant to §240.14a-12
KANDI
TECHNOLOGIES, CORP.
(Name
of
Registrant as Specified in Its Charter)
__________________________________________________________
(Name
of
Person(s) Filing Proxy Statement, if Other Than the Registrant)
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KANDI
TECHNOLOGIES, CORP.
Jinhua
City Industrial Zone
Jinhua,
Zhejiang Province
People’s
Republic of China 321016
November
24, 2008
To
the
Stockholders of Kandi Technologies, Corp.:
The
annual meeting of the stockholders (the “Meeting”) of Kandi Technologies, Corp.
(the “Company”) will be held on December 19, 2008 at 12:00 p.m., local time, at
the offices of K&L Gates LLP, 599 Lexington Avenue, New York, NY
10022.
Details
of the business to be conducted at the Meeting are provided in the enclosed
Notice of Meeting of Stockholders and Proxy Statement, which you are urged
to
read carefully.
On
behalf
of the Board of Directors, I cordially invite all stockholders to attend the
Meeting. It is important that your shares be voted on the matters scheduled
to
come before the Meeting. Whether or not you plan to attend the Meeting, I urge
you to promptly complete, sign, date and return the enclosed proxy card in
the
prepaid envelope provided. If you attend the Meeting, you may revoke such proxy
and vote in person if you wish. Even if you do not attend the Meeting, you
may
revoke such proxy at any time prior to the Meeting by executing another proxy
bearing a later date or providing written notice of such revocation to the
Chief
Executive Officer of the Company.
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Sincerely,
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/s/
Hu Xiaoming
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Hu
Xiaoming
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Chairman
and Chief Executive Officer
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KANDI
TECHNOLOGIES, CORP.
NOTICE
OF
ANNUAL MEETING OF STOCKHOLDERS
To
be Held on December 19, 2008
NOTICE
IS
HEREBY GIVEN that the Annual Meeting of Stockholders (the “Meeting”) of Kandi
Technologies, Corp., a Delaware corporation (the “Company”), will be held at
12:00 p.m., local time, at the
offices of K&L Gates LLP, 599 Lexington Avenue, New York, NY 10022 for the
following purposes:
1. To
elect
a slate of nominees consisting of Hu Xiaoming, Zhu Xiaoying, Zheng Mingyang,
Qian Min, Yao Zhengming, Fong Heung Sang and Hu Wangyuan (each a “Nominee and
collectively, the “Nominees”) to serve as directors of the Company;
2. To
consider and act upon a proposal to adopt the Kandi Technologies, Corp. 2008
Omnibus Long-Term Incentive Plan (the “2008 Omnibus Plan”);
3. To
ratify
the appointment of Weinberg & Company, P.A. as the Company’s independent
registered public accountants for fiscal 2008; and
4. To
consider and vote upon such other matter(s) as may properly come before the
Meeting or any adjournment(s) thereof.
The
Board of Directors recommends that you vote in favor of each
proposal.
Shareholders
of record as of the Record Date (as defined below) are entitled to notice of,
and to vote at, this Meeting or any adjournment or postponement
thereof.
WHETHER
OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE FILL IN, SIGN, DATE
AND
PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENCLOSED RETURN ENVELOPE, SO THAT
A
QUORUM WILL BE PRESENT AND A MAXIMUM NUMBER OF SHARES MAY BE VOTED. IT IS
IMPORTANT AND IN YOUR INTEREST FOR YOU TO SIGN YOUR PROXY AND RETURN IT. THE
PROXY IS REVOCABLE AT ANY TIME PRIOR TO ITS USE.
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By
Order Of The Board Of Directors
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/s/
Hu Xiaoming
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Hu
Xiaoming
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Chairman
and Chief Executive Officer
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November
24, 2008
KANDI
TECHNOLOGIES, CORP.
Jinhua
City Industrial Zone
Jinhua,
Zhejiang Province
People’s
Republic of China 321016
_______________
PROXY
STATEMENT
______________
GENERAL
INFORMATION
This
Proxy Statement and the accompanying proxy are being furnished with respect
to
the solicitation of proxies by the Board of Directors of Kandi Technologies,
Corp., a Delaware corporation (the “Company” or “Kandi”) for the Annual Meeting
of the Stockholders (the “Meeting”) to be held at 12:00 p.m.,
local
time, on December 19, 2008 and at any adjournment or adjournments thereof,
at
the offices of K&L Gates LLP, 599 Lexington Avenue, New York, NY
10022.
The
approximate date on which the Proxy Statement and form of proxy are intended
to
be sent or given to the shareholders is November 24, 2008.
We
will
bear the expense of solicitation of proxies for the Meeting, including the
printing and mailing of this Proxy Statement. We may request persons, and
reimburse them for their expenses with respect thereto, who hold stock in their
name or custody or in the names of nominees for others to forward copies of
such
materials to those persons for whom they hold Common Stock (as defined below)
and to request authority for the execution of the proxies. In addition, some
of
our officers, directors and employees, without additional compensation, may
solicit proxies on behalf of the Board of Directors personally or by mail,
telephone or facsimile.
Record
Date
Only
shareholders of record of our common stock, $.001 par value (the “Common
Stock”), as of the close of business on November 13, 2008 (the “Record Date”)
are entitled to notice and to vote at the Meeting and any adjournment or
adjournments thereof.
Voting
Stock
As
of the
Record Date, there were 19,961,000 shares of Common Stock outstanding. Each
holder of Common Stock on the Record Date is entitled to one vote for each
share
then held on the matter to be voted at the Meeting. No other class of voting
securities was then outstanding.
Quorum
The
presence at the Meeting of a majority of the outstanding shares of Common Stock
as of the Record Date, in person or by proxy, is required for a quorum. Should
you submit a proxy, even though you abstain as to the proposal, or you are
present in person at the Meeting, your shares shall be counted for the purpose
of determining if a quorum is present.
Broker
“non-votes” are included for the purposes of determining whether a quorum of
shares is present at the Meeting. A broker “non-vote” occurs when a nominee
holder, such as a brokerage firm, bank or trust company, holding shares of
record for a beneficial owner, does not vote on a particular proposal because
the nominee holder does not have discretionary voting power with respect to
that
item and has not received voting instructions from the beneficial
owner.
Voting
The
election of directors requires the approval of a plurality of the votes cast
at
the meeting. For purposes of the proposal, abstentions and broker “non-votes”
will have no effect on the outcome.
The
adoption of the Company's 2008 Omnibus Plan must be approved by a majority
of
the votes cast at the Annual Meeting. Abstentions are not counted in determining
the number of votes cast in connection with the adoption of the Company's 2008
Omnibus Plan.
If
you
are the beneficial owner, but not the registered holder of our shares, you
cannot directly vote those shares at the Meeting. You must provide voting
instructions to your nominee holder, such as your brokerage firm or bank.
If
you
wish to vote in person at the Meeting but you are not the record holder, you
must obtain from your record holder a “legal proxy” issued in your name and
bring it to the Meeting.
At
the
Meeting, ballots will be distributed with respect to the proposal to each
shareholder (or the shareholder’s proxy if not the management proxy holders) who
is present and did not deliver a proxy to the management proxy holders or
another person. The ballots shall then be tallied, one vote for each share
owned
of record, the votes being in three categories: “FOR,” “AGAINST” or
“ABSTAIN”.
Proxies
The
form
of proxy solicited by the Board of Directors affords you the ability to specify
a choice among approval of, disapproval of, or abstention with respect to,
the
matters to be acted upon at the Meeting. Shares represented by the proxy will
be
voted and, where the solicited shareholder indicates a choice with respect
to
the matter to be acted upon, the shares will be voted as specified. If no choice
is given, a properly executed proxy will be voted in favor of the
proposal.
Revocability
of Proxies
Even
if
you execute a proxy, you retain the right to revoke it and change your vote
by
notifying us at any time before your proxy is voted. Such revocation may be
affected by execution of a subsequently dated proxy, or by a written notice
of
revocation, sent to the attention of the Secretary at the address of our
principal office set forth above in the Notice to this Proxy Statement or your
attendance and voting at the Meeting. Unless so revoked, the shares represented
by the proxies, if received in time, will be voted in accordance with the
directions given therein.
You
are
requested, regardless of the number of shares you own or your intention to
attend the Meeting, to sign the proxy and return it promptly in the enclosed
envelope.
Interest
of Officers and Directors in Matters to Be Acted Upon
None
of
the officers or directors has any interest in the matters to be acted
upon.
PROPOSAL
ONE
ELECTION
OF DIRECTORS
Kandi’s
Board is currently comprised of seven members. Vacancies on the Board may be
filled only by persons elected by a majority of the remaining directors. A
director elected by the Board to fill a vacancy shall serve for the remainder
of
the term of that director and until the director’s successor is elected and
qualified. This includes vacancies created by an increase in the number of
directors.
The
Board
has recommended for election Hu Xiaoming, Zhu Xiaoying, Zheng Mingyang, Qian
Min, Yao Zhengming, Fong Heung Sang and Hu Wangyuan. If elected at the annual
meeting, these directors would serve until the end of their respective terms
and
until their successors are elected and qualified, or until their earlier death,
resignation or removal.
Directors
are elected by a plurality of the votes present in person or represented by
proxy and entitled to vote at the annual meeting. Shares represented by executed
proxies will be voted, if authority to do so is not withheld, for the election
of Hu Xiaoming, Zhu Xiaoying, Zheng Mingyang, Qian Min, Yao Zhengming, Fong
Heung Sang and Hu Wangyuan. In the event that any nominee should be unavailable
for election as a result of an unexpected occurrence, such shares will be voted
for the election of such substitute nominee as the Board may propose. Each
of Hu
Xiaoming, Zhu Xiaoying, Zheng Mingyang, Qian Min, Yao Zhengming, Fong Heung
Sang
and Hu Wangyuan has agreed to serve if elected, and we have no reason to believe
that they will be unable to serve.
Our
directors and nominees, their ages, positions with Kandi Technologies, Corp.,
the dates of their initial election or appointment as director are as
follows:
Name
|
Position
With the Company
|
Age
|
Director
Since
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Hu
Xiaoming
|
Chief
Executive Officer, President and Chairman of the Board
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51
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June
2007
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Zhu
Xiaoying
|
Chief
Financial Officer and Director
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37
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June
2007
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Hu
Wangyuan
|
Vice
President and Director
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28
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June
2007
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Fong
Heung Sang (1)
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Director
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47
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July
2007
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Zheng
Mingyang (1)(2)(3)
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Director
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54
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June
2007
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Yao
Zhengming (1)(2)(3)
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Director
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50
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May
2008
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Qian
Min (2)(3)
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Director
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46
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May
2008
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__________________
(1)
Member of Audit Committee
(2)
Member of Compensation Committee
(3)
Member of Nominating and Corporate Governance Committee
Hu
Xiaoming,
our
Chief Executive Officer, President and Chairman of the Board, was the Chief
Executive Officer of Zhejiang Kandi Vehicles, Co., Ltd. (“Zhejiang Kandi”), our
PRC-based wholly-owned subsidiary, from March 2002 to June 2007. He was the
General Manager of the Yongkang Vehicle Company from October 1984 to March
2002.
Zhu
Xiaoying,
our
Chief Financial Officer and Director, was the Chief Financial Officer of
Zhejiang Kandi from September 2003 to June 2007. From January 2000 to September
2003, Ms. Zhu was the Accounting Manager for Zhejiang Yonkang Automobile
Manufacture Co.
Hu
Wangyuan,
our
Vice President and Director, was a Vice President at Zhejiang Kandi from
November 2002 to June 2007. Mr. Hu received his MBA at Hong Kong Polytechnic
University in November 2002.
Fong
Heung Sang,
a
director since July 2007, is the Executive Vice President of Corporate
Development of Fuqi International, Inc. From January 2004 to November 2006,
Mr.
Fong was the Managing Partner of Iceberg Financial Consultants, a financial
advisory firm based in China that advises Chinese clients in capital raising
activities in the United States. From December 2001 to December 2003, Mr. Fong
was the Chief Executive Officer of Holley Communications, a Chinese company
that
engaged in CDMA chip and cell phone design. Mr. Fong has also held various
positions with accounting firms in the United States and Hong Kong, including
Deloitte and Touche, Ernst and Young and KPMG. Mr. Fong is also currently
serving as an independent director and audit committee member of a Hong Kong
public company, Universal Technology Inc. Mr. Fong graduated from the Baptist
University in 1982 and has an MBA from the University of Nevada at Reno and
a
Masters in Accounting from the University of Illinois at Urbana
Champaign.
Zheng
Mingyang,
a
Director since June 2007, was the Vice President of Yongkang Automobile
Manufacture Co. from May 1992 to September 2003. Mr. Mingyang has been the
acting General Manager of Meng Deli Electric Appliance Company, Ltd since March
2003, and has been a Director of Zhejiang Kandi Vehicles Company, Ltd since
September 2003.
Yao
Zhengming,
a
Director since May 2008, is the Director of the Development Bureau of the PRC.
Over the course of his career, Mr. Yao worked in several capacities for the
Chinese government, including as Vice Director of the Finance Bureau in Yongkang
(1988-1996), Director of Foreign Trade Bureau (1996-1997), Director of the
Communications Bureau (1998-2003) and Director of the Science and Technology
Bureau (2003-2007). Mr. Yao graduated from the Zhejiang Institute of Finance
and
Economics in January 1980.
Qian
Min,
a
Director since May 2008, is the General Manager of Zheshang Bank Co., Ltd.
Over
the course of his career, Mr. Qian worked as a Director and Vice President
of
the Agricultural Bank of China, Yongkang Branch from 1990 to 2008. Mr. Qian
received his B.A. from the Southwest University of Science and Technology,
located in Minyang, China in 2005.
THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH OF HU
XIAOMING, ZHU XIAOYING, ZHENG MINGYANG, QIAN MIN, YAO ZHENGMING, FONG HEUNG
SANG
AND HU WANGYUAN
PROPOSAL
TWO
ADOPTION
OF COMPANY’S 2008 OMNIBUS PLAN
Upon
recommendation of the Board of Directors of the Company, the Board is hereby
submitting to the shareholders of the Company for their approval the proposed
adoption of the 2008 Omnibus Plan. The proposed plan is included as Appendix
A.
The
principal features of
the
Plan
are described below.
THE
BOARD OF DIRECTORS RECOMMENDS
A
VOTE IN FAVOR OF THIS PROPOSAL.
Summary
of the Plan
The
purpose of the 2008 Omnibus Plan is to assist the Company in attracting,
retaining, and rewarding high-quality executives, employees, directors and
other
persons who provide services to the Company, enabling such persons to acquire
or
increase a proprietary interest in the Company and to strengthen the mutuality
of interests between such persons and to provide annual and long-term incentives
to expend their maximum efforts in the creation of shareholder value. The 2008
Omnibus Plan will be administered by the Compensation Committee, such other
committee as determined by the Board of Directors, or a subcommittee consisting
solely of non-employee, outside directors. The 2008 Omnibus Plan does not limit
the availability of awards to any particular class or classes of Eligible
Employees. If an award were to lapse or rights to an award otherwise were to
terminate, the shares subject to the award would be available for future awards
to the extent permitted by applicable federal securities laws. Awards granted
under the Plan are not transferable, except in the event of the participant's
death. In the event of a change in control, a right to exercise that was not
previously exercisable and vested shall become fully exercisable and vested
at
the time of change in control. The total number of shares reserved and available
for delivery in connection with awards under the Plan shall be
4,000,000.
Awards
to
Eligible Employees under the Plan will be made in the form of stock options,
stock appreciation rights ("SARs"), restricted stock, restricted stock units
("RSUs") and annual incentive and performance awards. The Compensation
Committee, in its sole discretion, designates whom is eligible to receive
awards, determines the form of each award, determines the number of shares
of
stock subject to each award, establishes the exercise price of each award and
such other terms and conditions applicable to the award as the Compensation
Committee deems appropriate.
Stock
option awards can be either incentive or non-incentive. In either case, the
exercise price of the option would not be less than the fair market value of
the
underlying shares as of the date the award is granted. Options would become
exercisable at such times as may be established by the Compensation Committee
when granting the award. No stock option could be exercised more than ten years
after the date the option is granted.
A
SAR
allows the holder, upon exercise, to receive the excess of the fair market
value
of one share of Common Stock of the Company on the date of exercise over the
grant price of the SAR. The Compensation Committee shall determine the
circumstances under which a SAR may be exercised, the month of exercise and
method of settlement. SARs may be awarded independently or in tandem with other
awards.
Restricted
stock awards are awards of shares subject to such restrictions as to
transferability and risk of forfeiture as imposed by the Compensation Committee,
which restrictions may lapse separately under such circumstances such as
achievement of performance goals and/or future service requirements. Except
to
the extent restricted under the terms of the 2008 Omnibus Plan, any employee
granted restricted stock shall have all the rights of a shareholder including
the right to vote and receive dividends.
The
Compensation Committee is authorized to grant RSUs to participants which are
rights to receive stock, cash, or a combination thereof at the end of a
specified deferral period. The Compensation Committee is also authorized to
grant stock as a bonus or to grant stock in lieu of obligations to pay cash
under the 2008 Omnibus Plan or under other compensatory
arrangements.
The
Board
of Directors of the Company may amend or terminate the 2008 Omnibus Plan at
any
time, except that any amendment or alteration to the 2008 Omnibus Plan shall
be
contingent on the approval of the Company's shareholders not later than the
annual meeting next following such Board action if such shareholder approval
is
required by any federal or state law or regulation or the rules of any stock
exchange, provided that, without the consent of an affected Participant, no
such
Board action may materially and adversely affect the rights of such Participant
under any previously granted and outstanding award.
PROPOSAL
THREE
RATIFICATION
OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
The
Audit
Committee of the Board has appointed Weinberg & Company, P.A. as the
Company’s independent registered public accountants for the fiscal year ending
December 31, 2008. Services provided to the Company by Weinberg & Company,
P.A. in fiscal 2007 are described under “Audit-Related
Matters—Auditor Fees and Services,” below.
We
are
asking our stockholders to ratify the selection of Weinberg & Company, P.A.
as our independent registered public accountants. Although ratification is
not
required by our Bylaws or otherwise, the Board is submitting the selection
of
Weinberg & Company, P.A. to our stockholders for ratification as a matter of
good corporate practice.
The
affirmative vote of the holders of a majority of shares represented in person
or
by proxy and entitled to vote on this item will be required for approval.
Abstentions will be counted as represented and entitled to vote and will
therefore have the effect of a negative vote.
THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE
APPOINTMENT OF WEINBERG & COMPANY, P.A. AS THE COMPANY’S INDEPENDENT
REGISTERED PUBLIC ACCOUNTANTS FOR FISCAL 2008.
In
the
event stockholders do not ratify the appointment, the appointment will be
reconsidered by the Audit Committee and the Board. Even if the selection is
ratified, the Audit Committee in its discretion may select a different
registered public accounting firm at any time during the year if it determines
that such a change would be in the best interests of the Company and our
stockholders.
CORPORATE
GOVERNANCE
Meetings
and Certain Committees of the Board
The
Board
of Directors held four meetings during 2008. All current directors attended,
either in person or telephonically, all of the meetings of the Board of
Directors and Board committees of which they are members. We have an Audit
Committee, a Compensation Committee and a Nominating and Corporate Governance
Committee.
Board
Committees
Audit
Committee
The
Audit
Committee is currently comprised of Fong Heung Sang (Chair), Zheng Mingyang
and
Yao Zhengming, each of whom are “independent” as defined by NASDAQ rules, which
is the independence standard that we have chosen to report under. Immediately
following the Meeting, assuming the election of the Nominees, the Audit
Committee will be comprised of Fong Heung Sang (Chair), Zheng Mingyang and
Yao
Zhengming, each of whom will be “independent” as defined by NASDAQ rules.
The
Audit
Committee has an Audit Committee Charter, a copy of which was filed as an
exhibit to the Current Report on Form 8-K, filed by the Company on November
5,
2007. Fong
Heung Sang is
the
designated “financial expert” as defined by the Securities and Exchange
Commission’s (the “SEC”) rules implementing Section 407 of the Sarbanes-Oxley
Act of 2002. The Audit Committee is directly responsible for the appointment,
retention, compensation and oversight of the work of any registered public
accounting firm employed by the Company (including resolution of disagreements
between management and the accounting firm regarding financial reporting) for
the purpose of preparing or issuing an audit report or related work or
performing other audit, review or other services. Any such registered public
accounting firm must report directly to the Audit Committee. The Audit Committee
has the ultimate authority and responsibility to evaluate and, where
appropriate, replace the registered public accounting firm. The Audit Committee
was established on October 31, 2007, and has met four times since that
date.
Compensation
Committee
The
Compensation Committee is responsible for the administration of all salary,
bonus and incentive compensation plans for our officers and key employees.
The
members of the Compensation Committee are Zheng Mingyang (Chair), Yao Zhengming
and Qian Min, all of whom are “independent” directors as defined by NASDAQ
rules, which is the independence standard that we have chosen to report under.
Immediately following the Meeting, assuming the election of the Nominees, the
Compensation Committee will be comprised of Zheng Mingyang (Chair), Yao
Zhengming and Qian Min, each of whom will be “independent” as defined by NASDAQ
rules. The
Compensation Committee was established on October 31, 2007, and has met one
time
since that date. The Compensation Committee reviews and, as it deems
appropriate, recommends to the Board policies, practices and procedures relating
to the compensation of the officers and other managerial employees and the
establishment and administration of employee benefit plans. It advises and
consults with the officers of the Company as may be requested regarding
managerial personnel policies. The Compensation Committee also has such
additional powers as may be conferred upon it from time to time by the
Board.
Nominating
and Governance Committee
Nominating
and Corporate Governance Committee (the “Nominating Committee”) is responsible
for preparing a list of candidates to fill the expiring terms of directors
serving on our Board of Directors. The
Nominating Committee has a Nominating and Corporate Governance Committee
Charter, a copy of which was filed as an exhibit to the Current Report on Form
8-K, filed by the Company on November 5, 2007. The
Nominating Committee submits the list of candidates to the Board of Directors
who determines which candidates will be nominated to serve on the Board of
Directors. The names of nominees are then submitted for election at our Annual
Meeting of Stockholders. The Nominating Committee also submits to the entire
Board of Directors, a list of nominees to fill any interim vacancies on the
Board of Directors resulting from the departure of a member of the Board of
Directors for any reason prior to the expiration of his term. In recommending
nominees to the Board of Directors, the Nominating Committee keeps in mind
the
functions of this body. The Nominating Committee considers various criteria,
including the ability of the individual to meet the NASDAQ “independence”
requirements, general business experience, general financial experience,
knowledge of the Company’s industry (including past industry experience),
education, and demonstrated character and judgment. The Nominating Committee
will consider director nominees recommended by a stockholder if the stockholder
mails timely notice to the Secretary of the Company at its principal offices,
which notice includes (i) the name, age and business address of such nominee,
(ii) the principal occupation of such nominee, (iii) a brief statement as to
such nominee’s qualifications, (iv) a statement that such nominee consents to
his or her nomination and will serve as a director if elected, (v) whether
such
nominee meets the definition of an “independent” director under the NASDAQ
listing standards and (vi) the name, address, class and number of shares of
capital stock of the Company held by the nominating stockholder. Any person
nominated by a stockholder for election to the Board of Directors will be
evaluated based on the same criteria as all other nominees. The Nominating
Committee also oversees our adherence to our corporate governance standards.
The
members of the Nominating Committee are Qian Min (Chair), Zheng Mingyang and
Yao
Zhengming. Immediately following the Meeting, assuming the election of the
Nominees, the Nominating Committee will be comprised of Qian Min (Chair), Zheng
Mingyang and Yao Zhengming, each of whom will be “independent” as defined by
NASDAQ rules. The Nominating Committee was established on October 31, 2007,
and
has met one time since that date.
Director
Nominations and Independence
The
nomination process involves a careful examination of the performance and
qualifications of each incumbent director and potential nominees before deciding
whether such person should be nominated. The Board believes that the business
experience of its directors has been, and continues to be, critical to the
Company’s success. Directors should possess integrity, independence, energy,
forthrightness, analytical skills and commitment to devote the necessary time
and attention to the Company’s affairs. Directors must possess a willingness to
challenge and stimulate management and the ability to work as part of a team
in
an environment of trust.
The
Board
will generally consider all relevant factors, including, among others, each
nominee’s applicable expertise and demonstrated excellence in his or her field,
the usefulness of such expertise to the Company, the availability of the nominee
to devote sufficient time and attention to the affairs of the Company, the
nominee’s reputation for personal integrity and ethics, and the nominee’s
ability to exercise sound business judgment. Other relevant factors, including
age and diversity of skills, will also be considered. Director nominees are
reviewed in the context of the existing membership of the Board (including
the
qualities and skills of the existing directors), the operating requirements
of
the Company and the long-term interests of its stockholders. The Board uses
its
network of contacts when compiling a list of potential director candidates
and
may also engage outside consultants (such as professional search firms).
In
addition, the Board of Directors reviews each nominee’s relationship with the
Company in order to determine whether the nominee can be designated as
independent. The following members of our Board of Directors meet the
independence requirements and standards currently established by NASDAQ: Fong
Heung Sang, Zheng Mingyang, Yao Zhengming and Qian Min.
Stockholder
Communications
The
Board
of Directors welcomes communications from our stockholders, and maintains a
process for stockholders to communicate with the Board of Directors.
Stockholders who wish to communicate with the Board of Directors may send a
letter to the Chairman of the Board of Directors of Kandi Technologies, Corp.,
at Jinhua City Industrial Zone, Jinhua, Zhejiang Province, People’s Republic of
China 321016. The mailing envelope must contain a clear notation indicating
that
the enclosed letter is a “Stockholder-Board Communication.” All such letters
should identify the author as a security holder. All such letters will be
reviewed by the Chairman of the Board of Directors and submitted to the entire
Board of Directors no later than the next regularly scheduled Board of Directors
meeting.
Annual
Meetings
We
have
no policy with respect to director attendance at annual meetings.
Compensation
of Directors
The
Company does not pay compensation to its directors. All directors are reimbursed
for out-of-pocket expenses in connection with attendance at Board of Director’s
and/or committee meetings.
Retirement,
Post-Termination and Change in Control
We
have
no retirement, pension, or profit-sharing programs for the benefit of directors,
officers or other employees, nor do we have post-termination or change in
control arrangements with directors, officers or other employees, but our Board
of Directors may recommend adoption of one or more such programs in the future.
EXECUTIVE
OFFICERS
General
Certain
information concerning our executive officers as of the date of this proxy
statement is set forth below. Officers are elected annually by the Board of
Directors and serve at the discretion of the Board.
Name
|
Age
|
Position
With Our Company
|
Hu
Xiaoming
|
51
|
Chairman
and Chief Executive Officer
|
Zhu
Xiaoying
|
37
|
Chief
Financial Officer
|
Certain
Relationships and Related Transactions.
On
June
29, 2007, Stone Mountain Resources, Inc., a Delaware corporation (“Stone
Mountain”) executed a share exchange agreement (the “Exchange Agreement”) with
Continental Development Limited, a Hong Kong corporation (“Continental”) and
Excelvantage Group Limited (“Excelvantage”), a British Virgin Islands Company
which owned 100% of Continental. Pursuant to the Exchange Agreement, Stone
Mountain issued 12,000,000 shares of its common stock to Excelvantage, in
exchange for 100% of the common stock of Continental. After the closing of
the
Exchange Agreement, Stone Mountain had a total of 19,961,000 shares of common
stock outstanding, with Excelvantage owning 60.12% of the total issued and
outstanding shares of Stone Mountain’s common stock, and the remaining shares
outstanding were held by those who held shares of Stone Mountain’s common stock
prior to the closing.
As
a
result of this transaction, Continental became a wholly owned subsidiary of
Stone Mountain. Thereafter, the business of the Company was that of
Continental’s wholly owned subsidiary, Zhejiang Kandi Vehicles Co., Ltd. On
August 13, 2007, Stone Mountain changed its name to Kandi Technologies, Corp.
Stone
Mountain was a public shell company prior to the closing of the Exchange
Agreement. Stone Mountain was originally incorporated on March 31, 2004 in
the
State of Delaware, and operated as a gold exploration company exploring Nevada
mineral properties, before ceasing operations in May 30, 2007.
Tim
Ho
Man is the only stockholder of Excelvantage. Through his position as the sole
stockholder of Excelvantage, Tim Ho Man has the power to dispose of or direct
the disposition of the one (1) share of Common Stock he owns in Excelvantage.
As
a result, Tim Ho Man may, under the rules of the Securities and Exchange
Commission, be deemed to be the beneficial owner of the shares of Common Stock.
Tim Ho Man disclaims beneficial ownership of the shares of Common Stock reported
as beneficially owned by him, except to the extent of his pecuniary interest
as
a stockholder of Excelvantage Group Limited.
Security
Ownership of Certain Beneficial Owners and Management
The
following table sets forth information regarding the beneficial ownership of
our
common stock as of November 14, 2008 for each person known by us to be the
beneficial owner of more than 5% of our outstanding shares of common stock.
Unless otherwise indicated, we believe that all persons named in the table
have
sole voting and investment power with respect to all shares of common stock
beneficially owned by them.
|
|
Amount
and Nature of Beneficial Ownership(1)
|
Title
of
Class
|
Name
and Address of Beneficial Owner
|
Number
of
Shares (2)
|
Percent
of
Voting
Stock (3)
|
Common
|
Excelvantage
Group Limited
|
12,000,000
|
60.12%
|
Common
|
Tim
Ho Man
|
12,000,000
|
60.12%
|
|
(1) |
On
November 17, 2008, there were 19,961,000 shares of our common stock
outstanding. Each person named above has sole investment and voting
power
with respect to all shares of the common stock shown as beneficially
owned
by the person, except as otherwise indicated
below.
|
|
(2) |
Under
applicable rules promulgated by the U. S. Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934, as amended
(the “Exchange
Act”),
a person is deemed the “beneficial owner” of a security with regard to
which the person, directly or indirectly, has or shares (a) the voting
power, which includes the power to vote or direct the voting of the
security, or (b) the investment power, which includes the power to
dispose
or direct the disposition of the security, in each case irrespective
of
the person’s economic interest in the security. Under these SEC rules, a
person is deemed to beneficially own securities which the person
has the
right to acquire within 60 days through (x) the exercise of any option
or
warrant or (y) the conversion of another
security.
|
|
(3) |
In
determining the percent of our common stock owned by a person (a)
the
numerator is the number of shares of our common stock beneficially
owned
by the person, including shares the beneficial ownership of which
may be
acquired within 60 days upon the exercise of options or warrants
or
conversion of convertible securities, and (b) the denominator is
the total
of (i) the 19,961,000 shares of our common stock outstanding
on November
17, 2008 and (ii) any shares of our common stock which the person
has the
right to acquire within 60 days upon the exercise of options or warrants
or conversion of convertible securities. Neither the numerator nor
the
denominator includes shares which may be issued upon the exercise
of any
other options or warrants or the conversion of any other convertible
securities.
|
As
of
November 7, 2008, none of our officers or directors was a beneficial owner
of
our common stock.
Change
in Control
The
above
referenced Exchange Agreement resulted in a change of control at the Company,
with Excelvantage and Excelvantage’s sole shareholder, Tim Ho Man, owning 60.12%
of the Company’s outstanding equity.
Compensation
of Officers
None
of
our executive officers received compensation in excess of $100,000 for the
fiscal years ended December 31, 2007 or 2006. The following table summarizes
all
compensation received by our previous and current principal executive officer
and principal financial officer for the last two completed fiscal
years:
Name
& Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive Plan Compensation
($)
|
Nonqualified
deferred compensation earnings
($)
|
All
other Compensation
($)
|
Total
($)
|
Hu
Xiaoming, CEO & President (1)
|
2007
|
19,231
|
--
|
--
|
--
|
--
|
--
|
--
|
19,231
|
Peter
Dodge (2)
|
2007
2006
|
0
0
|
--
--
|
--
--
|
--
--
|
--
--
|
--
--
|
--
--
|
0
0
|
(1) |
Mr.
Hu was appointed CEO and President of the Company on June 29,
2007.
|
(2) |
Mr.
Dodge resigned as the Company’s President, Chief Executive Officer, Chief
Financial Officer, Secretary and Treasurer on June 29,
2007.
|
As
of as
of December 31, 2007, the Company did not have any “Grants of Plan-Based
Awards,” “Outstanding Equity Awards at Fiscal Year-End,” “Option Exercises and
Stock Vested,” “Pension Benefits,” or “Nonqualified Deferred Compensation.” Nor
did the Company have any “Post-Employment Payments” to report.
We
currently have no stock option, retirement, pension, or profit-sharing programs
for the benefit of directors, officers or other employees.
Employment
Agreements
While
we
do have employment agreements with our executive officers, the salary for our
executive officers is at the discretion of our Board of Directors. Mr. Hu
Xiaoming’s employment agreement provides for an annual salary of RMB 180,000.
Ms. Zhu Xioying’s employment agreement provides for an annual salary of RMB
120,000. Both employment agreements are for ten year terms, ending June 9,
2014.
Outstanding
Equity Awards at Fiscal Year-End
As
of
December 31, 2007, there were no outstanding equity awards to the named
executive officers requiring tabular disclosure.
Compliance
with Section 16(a) of the Exchange Act
Section
16(a) of the Securities Exchange Act of 1934 requires that the Company’s
directors and executive officers and persons who beneficially own more than
ten
percent (10%) of a registered class of its equity securities, file with the
SEC
reports of ownership and changes in ownership of its common stock and other
equity securities. Executive officers, directors, and greater than ten percent
(10%) beneficial owners are required by SEC regulation to furnish the Company
with copies of all Section 16(a) reports that they file. Based solely upon
a
review of the copies of such reports furnished to us or written representations
that no other reports were required, the Company believes that, during fiscal
year 2007, all filing requirements applicable to its executive officers,
directors, and greater than ten percent (10%) beneficial owners were met except
for the timely filing of Form 3 by Yao Zhengming and Qian Min upon their
appointment as Directors of the Company due to unforeseen delays.
Arrangements
or Understandings
There
was
no arrangement or understanding between any of our directors and any other
person pursuant to which any director was to be selected as a director.
Involvement
in Certain Legal Proceedings
During
the past five (5) years, none of the directors or executive officers has been
involved in any legal proceedings that are material to the evaluation of their
ability or integrity.
Family
Relationships
Hu
Wangyuan, a Company Vice President, is the son of our Chairman and Chief
Executive Office, Hu Xiaoming.
Changes
in Accountants
Effective
on or about August 10, 2007, the Company’s Board of Directors dismissed Gately
& Associates, LLC, the Company’s former independent auditor (the “Former
Auditor”).
The
Former Auditors’ audit report on the Company’s consolidated financial statements
for each of the past two fiscal years, did not contain an adverse opinion or
disclaimer of opinion, and was not qualified or modified as to uncertainty,
audit scope or accounting principles.
During
the Company’s two fiscal years and through the subsequent interim period
preceding the Former Auditor’s dismissal on August 10, 2007, (a) there were no
disagreements between the Company and the Former Auditors on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction
of
the Former Auditors, would have caused the Former Auditors to make reference
to
the subject matter of the disagreement in connection with its report; and (b)
no
reportable events as set forth in Item 304(a)(1)(v)(A) through (D) of Regulation
S-K have occurred.
The
Company engaged Weinberg & Company, P.A. (the “New Auditor”) as its new
independent auditor, effective on or about August 10, 2007. During the Company’s
two fiscal years and subsequent interim period preceding August 10, 2007, the
Company has not consulted with the New Auditors regarding the application of
accounting principles to a specified transaction, either completed or proposed,
or any of the matters or events set forth in Item 304(a)(2) of Regulation S-K.
All
of
the audit services described below were approved by our Board of Directors
prior
to rendering of services by our independent accountants. The Board of Directors
has determined that the payments made to our independent accountants for these
services are compatible with maintaining such auditor's
independence.
Audit-Related
Matters—Auditor Fees and Services
Audit
Fees. The
aggregate fees for each of the last two completed fiscal years rendered by
the
principal accountant for our audits of our annual financial statements and
interim reviews of our financial statements included in our fillings with
Securities and Exchange Commission on Form 10-Ks and 10-Qs services that are
normally provided by the accountant in connection with statutory and regulatory
filings or engagements for those years were approximately:
2007
|
|
$
|
215,083
|
|
|
Weinberg
& Company, P.A.
|
|
2006
|
|
$
|
0
|
|
|
|
|
Audit-Related
Fees. Other
than the amounts reported above, there were no fees for assurance and related
services by our principal accountant for the last two completed fiscal years.
Tax
Fees. There
were no fees for tax compliance, tax advice or tax planning services by our
principal account for the last two completed fiscal years.
All
Other Fees.
There
were no other fees for either audit-related or non-audit services billed by
our
principal accountant for the last two completed fiscal years.
Representatives
of the principal accountants for the current year and for the most recently
completed fiscal year:
a. Are
not
expected to be present at the Meeting;
b. Will
have
the opportunity to make a statement if they desire to do so; and
c. Are
not
expected to be available to respond to appropriate questions.
Policy
on Audit Committee Pre-Approval of Audit and Non-Audit Services of Independent
Accountant
The
Audit
Committee’s policy is to pre-approve all audit and non-audit services provided
by the independent accountants. These services may include audit services,
audit-related services, tax fees, and other services. Pre-approval is generally
provided for up to one year and any pre-approval is detailed as to the
particular service or category of services and is subject to a specific budget.
The Audit Committee has delegated pre-approval authority to certain committee
members when expedition of services is necessary. The independent accountants
and management are required to periodically report to the full Audit Committee
regarding the extent of services provided by the independent accountants in
accordance with this pre-approval delegation, and the fees for the services
performed to date.
Compensation
Committee Report
The
Compensation Committee has reviewed the Compensation Discussion and Analysis
and
discussed that analysis with management. Based on its review and discussions
with management, the Compensation Committee recommended to the Board of
Directors that the Compensation Discussion and Analysis be included in the
Company's 2008 Proxy Statement. This report is provided by the following
directors, who comprise the Compensation Committee
|
Zheng
Mingyang
|
|
Yao
Zhengming
|
|
Qian
Min
|
Audit
Committee Report
The
Audit
Committee has reviewed and discussed the audited financial statements with
our
management. The Audit Committee has discussed with our independent auditors
the
matters required to be discussed by Statement on Auditing Standards No. 61
(Codification of Statements on Auditing Standards, AU Section 380). The Audit
Committee has received the written disclosures and the letter from the
independent auditors required by Independence Standards Board Standard No.
1,
and has discussed with the independent auditors the independent auditors'
independence. Additionally, the Audit Committee has reviewed fees charged by
the
independent auditors and has monitored whether the non-audit services provided
by its independent auditors are compatible with maintaining the independence
of
such auditors. Based upon its reviews and discussions, the Audit Committee
recommended to our Board of Directors that the audited financial statements
be
included in our Annual Report on Form 10-K for the fiscal year ended December
31, 2007 for filing with the SEC and the Board approved that recommendation.
|
Fong
Heung Sang
|
|
Zheng
Mingyang
|
|
Yao
Zhengming
|
Delivery
of Documents to Shareholders Sharing an Address
Only
one
Proxy Statement is being delivered to two or more security holders who share
an
address, unless the Company has received contrary instruction from one or more
of the security holders. The Company will promptly deliver, upon written or
oral
request, a separate copy of the Proxy Statement to a security holder at a shared
address to which a single copy of the document was delivered. If you would
like
to request additional copies of the Proxy Statement, or if in the future you
would like to receive multiple copies of information or proxy statements, or
annual reports, or, if you are currently receiving multiple copies of these
documents and would, in the future, like to receive only a single copy, please
so instruct the Company, by writing to us at
Jinhua
City Industrial Zone, Jinhua, Zhejiang Province, People’s Republic of China
321016.
Submission
of Shareholder Proposals
If
you
wish to have a proposal included in our proxy statement and form of proxy for
next year’s annual meeting in accordance with Rule 14a-8 under the Exchange Act,
your proposal must be received by us at our principal executive offices on
or
before October 19, 2009. A proposal which is received after that date or which
otherwise fails to meet the requirements for shareholder proposals established
by the SEC will not be included. The submission of a shareholder proposal does
not guarantee that it will be included in the proxy statement.
Other
Matters
As
of the
date of this Proxy Statement, the Board of Directors has no knowledge of any
business which will be presented for consideration at the Meeting other than
the
Election of the Directors. Should any other matter be properly presented, it
is
intended that the enclosed proxy will be voted in accordance with the best
judgment of the persons voting the proxies.
We
file
annual, quarterly and special reports, proxy statements and other information
with the SEC. The public may read and copy any materials that we have filed
with
the SEC at the SEC’s Public Reference Room at 100 F Street, N.E.,
Washington, D.C. 20549. The public may obtain information on the operation
of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC
also
maintains an Internet site that contains the reports, proxy and information
statements and other information regarding Kandi that we have filed
electronically with the SEC. The address of the SEC’s Internet site is
http://www.sec.gov.
Annual
Report
A
copy of
the Company’s Annual Report on Form 10-K for the year ended December 31, 2007,
which has been filed with the SEC pursuant to the 1934 Act, is being mailed
to
you along with this Proxy Statement. Additional copies of this Proxy Statement
and/or the Annual Report, as well as copies of any Quarterly Report may be
obtained without charge upon written request to Kandi Technologies, Corp.,
Jinhua City Industrial Zone, Jinhua, Zhejiang Province, People’s Republic of
China, 321016, or on the SEC’s internet website at www.sec.gov.
|
BY
ORDER OF THE BOARD OF DIRECTORS
|
|
|
|
|
|
/s/
Hu Xiaoming
|
|
Hu
Xiaoming
|
|
Chairman
and Chief Executive Officer
|
November
24, 2008
PROXY
KANDI
TECHNOLOGIES, CORP.
PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL
MEETING OF STOCKHOLDERS
To
Be Held on December 19, 2008
The
stockholder(s) whose signature(s) appear(s) on the reverse side of this proxy
form hereby appoint(s) Hu Xiaoming and Zhu Xiaoying, INDIVIDUALLY or any of
them
as proxies, with full power of substitution, and hereby authorize(s) them to
represent and vote all shares of Common Stock of the Company which the
stockholder(s) would be entitled to vote on all matters which may come before
the Annual Meeting of Stockholders to be held at 12:00 p.m., local time, at
the
offices of K&L Gates LLP, 599 Lexington Avenue, New York, NY
10022.
This
proxy will be voted in accordance with the instructions indicated on the reverse
side of this card. If no instructions are given, this proxy will be voted FOR
the proposals and in the proxies’ discretion upon such other business as may
properly come before the meeting and any adjournments or postponements thereof.
(To
Be Signed on Reverse Side.)
Please
date, sign and mail your proxy card in the
envelope
provided as soon as possible.
â
Please
detach along perforated line and mail in the envelope provided. â
|
|
FOR
THE MATTER SET FORTH BELOW, THE BOARD OF DIRECTORS RECOMMENDS A VOTE
“FOR”
THE MATTER SUBMITTED. PLEASE SIGN, DATE, AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE INK AS SHOWN HERE
S
|
|
|
|
1.
|
|
ELECTION
OF DIRECTORS.
Hu
Xiaoming, Zhu Xiaoying, Zheng Mingyang, Qian Min, Yao Zhengming,
Fong
Heung Sang and Hu Wangyuan
|
|
|
o FOR
all nominees, listed above (except as specified
below).
o WITHHOLD
AUTHORITY to vote for all nominees listed
above.
|
2.
|
|
ADOPTION
OF THE KANDI
TECHNOLOGIES, CORP. 2008 OMNIBUS LONG-TERM INCENTIVE PLAN (THE “2008
OMNIBUS PLAN”).
|
|
|
o FOR
the adoption of the 2008 Omnibus Plan.
o AGAINST
the adoption of the 2008 Omnibus Plan.
o ABSTAIN.
|
3.
|
|
RATIFICATION
OF WEINBERG & COMPANY, P.A. AS INDEPENDENT AUDITOR FOR KANDI
TECHNOLOGIES, CORP. FOR THE YEAR 2008:
|
|
|
o FOR
ratification of the independent auditor.
o AGAINST
ratification of independent auditor.
o ABSTAIN.
|
INSTRUCTIONS:
TO WITHHOLD AUTHORITY FOR ANY INDICATED NOMINEE, WRITE THE NAME(S) OF THE
NOMINEE(S) IN THE SPACE PROVIDED:
Signature
of Stockholder
|
|
|
|
|
|
Date:
|
|
|
|
|
|
Signature
of Stockholder
|
|
|
|
|
|
Date:
|
|
|
NOTE:
Please sign exactly as your name or names appear on this Proxy. When shares
are
held jointly, each holder should sign. When signing as executor, administrator,
attorney, trustee or guardian, please give full title as such. If the signer
is
a corporation, please sign full corporate name by duly authorized officer,
giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person.
APPENDIX
A
Kandi
Technologies, Corp. 2008 Omnibus Long-Term Incentive Plan
KANDI
TECHNOLOGIES, CORP.
2008
OMNIBUS LONG-TERM INCENTIVE PLAN
Kandi
Technologies, Corp., a Delaware corporation (the “Company”), sets forth herein
the terms of its 2008 Omnibus Long-Term Incentive Plan (the “Plan”), as follows:
The
Plan
is intended to enhance the Company’s and its Affiliates’ (as defined herein)
ability to attract and retain highly qualified officers, directors, key
employees and other persons, and to motivate such officers, directors, key
employees and other persons to serve the Company and its Affiliates and to
expend maximum effort to improve the business results and earnings of the
Company, by providing to such persons an opportunity to acquire or increase
a
direct proprietary interest in the operations and future success of the Company.
To this end, the Plan provides for the grant of stock options, stock
appreciation rights, restricted stock, restricted stock units, unrestricted
stock and cash awards. Any of these awards may, but need not, be made as
performance incentives to reward attainment of annual or long-term performance
goals in accordance with the terms hereof. Stock options granted under the
Plan
may be non-qualified stock options or incentive stock options, as provided
herein.
For
purposes of interpreting the Plan and related documents (including Award
Agreements), the following definitions shall apply:
2.1. “Affiliate”
means
any company or other trade or business that “controls,” is “controlled by” or is
“under common control” with the Company within the meaning of Rule 405 of
Regulation C under the Securities Act, including, without limitation, any
Subsidiary.
2.2. “Annual
Incentive Award” means
an
Award made subject to attainment of performance goals (as described in
Section 13) over a performance period of a duration as specified by the
Committee.
2.3. “Award”
means a
grant of an Option, Stock Appreciation Right, Restricted Stock, Restricted
Stock
Unit, Unrestricted Stock, or cash award under the Plan.
2.4. “Award
Agreement”
means a
written agreement between the Company and a Grantee, or notice from the Company
to a Grantee, that evidences and sets out the terms and conditions of an
Award.
2.5. “Board”
means
the Board of Directors of the Company.
2.6. “Cause”
means,
as determined by the Committee and unless otherwise provided in an applicable
agreement with the Company or an Affiliate at or before the Grant Date: (i)
engaging in any act, omission or misconduct that is injurious to the Company
or
its Affiliates; (ii) gross negligence or willful misconduct in connection
with
the performance of duties; (iii) conviction of a criminal offense (other
than minor traffic offenses); (iv) fraud, embezzlement or misappropriation
of
funds or property of the Company or an Affiliate; (v) material breach of
any term of any employment, consulting or other services, confidentiality,
intellectual property or non-competition agreements, if any, between the
Service
Provider and the Company or an Affiliate; (vi) the entry of an order duly
issued
by any regulatory agency (including federal, state and local regulatory agencies
and self-regulatory bodies) having jurisdiction over the Company or an Affiliate
requiring the removal from any office held by the Service Provider with the
Company or prohibiting a Service Provider from participating in the business
or
affairs of the Company or any Affiliate; or (vii) the revocation or threatened
revocation of any of the Company’s or an Affiliate’s government licenses,
permits or approvals, which is primarily due to the Service Provider’s action or
inaction and such revocation or threatened revocation would be alleviated
or
mitigated in any material respect by the termination of the Service Provider’s
Services.
2.7. “Change
in Control”
shall
have the meaning set forth in Section 15.2.
2.8. “Code”
means
the Internal Revenue Code of 1986, as now in effect or as hereafter amended.
2.9. “Committee”
means
the Compensation Committee of the Board, or such other committee as determined
by the Board. The Compensation Committee of the Board may, in its discretion,
designate a subcommittee of its members to serve as the Committee (to the
extent
the Board has not designated another person, committee or entity as the
Committee) or to cause the Committee to (i) consist solely of persons who
are
“Nonemployee Directors” as defined in Rule 16b-3 issued under the Exchange Act,
(ii) consist solely of persons who are Outside Directors, or (iii) satisfy
the
applicable requirements of any stock exchange on which the Common Stock may
then
be listed.
2.10. “Company”
means
Kandi Technologies, Corp., a Delaware corporation, or any successor
corporation.
2.11. “Common
Stock” or “Stock”
means
share of common stock of the Company, par value $0.001 per share.
2.12. “Covered
Employee”
means
a
Grantee who is a “covered employee” within the meaning of Section 162(m)(3)
of the Code, as qualified by Section 13.4 herein.
2.13. “Disability”
means
the Grantee is unable to perform each of the essential duties of such Grantee’s
position by reason of a medically determinable physical or mental impairment
which is potentially permanent in character or which can be expected to last
for
a continuous period of not less than 12 months; provided,
however,
that,
with respect to rules regarding expiration of an Incentive Stock Option
following termination of the Grantee’s Service, Disability has the meaning as
set forth in Section 22(e)(3) of the Code.
2.14. “Effective
Date”
means
the date set forth in Section
16.10
herein.
2.15. “Exchange
Act”
means
the Securities Exchange Act of 1934, as now in effect or as hereafter amended.
2.16. “Fair
Market Value”
of a
share of Common Stock as of a particular date shall mean (i) the closing
sale
price reported for a share of Common Stock on such date on the national
securities exchange or national market system on which such stock is principally
traded, or if such date is not a trading day, the trading day immediately
preceding such date on which a sale was reported, or (ii) if the shares of
Common Stock are not then listed on a national securities exchange or national
market system, or the value of such shares is not otherwise determinable,
such
value as determined by the Board in good faith in its sole discretion (but
in
any event not less than fair market value within the meaning of Section 409A).
2.17. “Family
Member”
means a
person who is a spouse, former spouse, child, stepchild, grandchild, parent,
stepparent, grandparent, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother, sister, brother-in-law, or sister-in-law,
including adoptive relationships, of the applicable individual, any person
sharing the applicable individual’s household (other than a tenant or employee),
a trust in which any one or more of these persons have more than fifty percent
of the beneficial interest, a foundation in which any one or more of these
persons (or the applicable individual) control the management of assets,
and any
other entity in which one or more of these persons (or the applicable
individual) own more than fifty percent of the voting interests.
2.18. “Grant
Date”
means,
as determined by the Committee, the latest to occur of (i) the date as of
which the Committee approves an Award, (ii) the date on which the recipient
of an Award first becomes eligible to receive an Award under Section 6
hereof, or (iii) such other date as may be specified by the Committee in
the Award Agreement.
2.19. “Grantee”
means a
person who receives or holds an Award under the Plan.
2.20. “Incentive
Stock Option”
means an
“incentive stock option” within the meaning of Section 422 of the Code, or
the corresponding provision of any subsequently enacted tax statute, as amended
from time to time.
2.21. “Non-Qualified
Stock Option”
means an
Option that is not an Incentive Stock Option.
2.22. “Option”
means
an
option to purchase one or more shares of Stock pursuant to the Plan.
2.23. “Option
Price”
means
the exercise price for each share of Stock subject to an Option.
2.24. “Outside
Director”
means a
member of the Board who is not an officer or employee of the Company or an
Affiliate, determined in accordance with the requirements of Section 162(m)
of
the Code.
2.25. “Performance
Award”
means an
Award made subject to the attainment of performance goals (as described in
Section 13) over a performance period of up to ten (10) years.
2.26. “Plan”
means
this Kandi Technologies, Corp. 2008 Omnibus Long-Term Incentive Plan.
2.27. “Purchase
Price”
means
the purchase price for each share of Stock pursuant to a grant of Restricted
Stock or Unrestricted Stock.
2.28. “Reporting
Person”
means a
person who is required to file reports under Section 16(a) of the Exchange
Act.
2.29. “Restricted
Stock”
means
shares of Stock, awarded to a Grantee pursuant to Section 10 hereof.
2.30. “Restricted
Stock Unit”
means a
bookkeeping entry representing the equivalent of shares of Stock, awarded
to a
Grantee pursuant to Section 10 hereof.
2.31. “SAR
Exercise Price”
means
the per share exercise price of a SAR granted to a Grantee under Section 9
hereof.
2.32. “Section
409A”
shall
mean Section 409A of the Code and all formal guidance and regulations
promulgated thereunder.
2.33. “Securities
Act”
means
the Securities Act of 1933, as now in effect or as hereafter amended.
2.34. “Separation
from Service”
means a
termination of Service by a Service Provider, as determined by the Committee,
which determination shall be final, binding and conclusive; provided if any
Award governed by Section 409A is to be distributed on a Separation from
Service, then the definition of Separation from Service for such purposes
shall
comply with the definition provided in Section 409A.
2.35. “Service”
means
service as a Service Provider to the Company or an Affiliate. Unless otherwise
stated in the applicable Award Agreement, a Grantee’s change in position or
duties shall not result in interrupted or terminated Service, so long as
such
Grantee continues to be a Service Provider to the Company or an Affiliate.
2.36. “Service
Provider”
means an
employee, officer or director of the Company or an Affiliate, or a consultant
or
adviser currently providing services to the Company or an Affiliate.
2.37. “Stock
Appreciation Right” or “SAR”
means a
right granted to a Grantee under Section 9 hereof.
2.38. “Subsidiary”
means
any “subsidiary corporation” of the Company within the meaning of
Section 424(f) of the Code.
2.39. “Termination
Date”
means
the date upon which an Option shall terminate or expire, as set forth in
Section 8.3 hereof.
2.40. “Ten
Percent Stockholder”
means an
individual who owns more than ten percent (10%) of the total combined
voting power of all classes of outstanding stock of the Company, its parent
or
any of its Subsidiaries. In determining stock ownership, the attribution
rules
of Section 424(d) of the Code shall be applied.
2.41. “Unrestricted
Stock”
means an
Award pursuant to Section 11 hereof.
3.
|
ADMINISTRATION
OF THE PLAN
|
3.1. General.
The
Committee shall have such powers and authorities related to the administration
of the Plan as are consistent with the Company’s certificate of incorporation
and bylaws and applicable law. The Committee shall have full power and authority
to take all actions and to make all determinations required or provided for
under the Plan, any Award or any Award Agreement, and shall have full power
and
authority to take all such other actions and make all such other determinations
not inconsistent with the specific terms and provisions of the Plan that
the
Committee deems to be necessary or appropriate to the administration of the
Plan. The interpretation and construction by the Committee of any provision
of
the Plan, any Award or any Award Agreement shall be final, binding and
conclusive. Without limitation, the Committee shall have full and final
authority, subject to the other terms and conditions of the Plan, to:
(i)
designate Grantees;
(ii)
determine the type or types of Awards to be made to a Grantee;
(iii)
determine the number of shares of Stock to be subject to an Award;
(iv)
establish the terms and conditions of each Award (including, but not limited
to,
the Option Price of any Option, the nature and duration of any restriction
or
condition (or provision for lapse thereof) relating to the vesting, exercise,
transfer, or forfeiture of an Award or the shares of Stock subject thereto,
and
any terms or conditions that may be necessary to qualify Options as Incentive
Stock Options);
(v)
prescribe the form of each Award Agreement; and
(vi)
amend, modify, or supplement the terms of any outstanding Award including
the
authority, in order to effectuate the purposes of the Plan, to modify Awards
to
foreign nationals or individuals who are employed outside the United States
to recognize differences in local law, tax policy, or custom.
Notwithstanding
the foregoing, no amendment or modification may be made to an outstanding
Option
or SAR that (i) causes the Option or SAR to become subject to
Section 409A, (ii) reduces the Option Price or SAR Exercise Price,
either by lowering the Option Price or SAR Exercise Price or by canceling
the
outstanding Option or SAR and granting a replacement Option or SAR with a
lower
Option Price or SAR Exercise Price or (iii) would be treated as a repricing
under the rules of the exchange upon which the Company’s Stock trades, without,
with respect to item (i), the Grantee’s written prior approval, and with respect
to items (ii) and (iii), without the approval of the stockholders of the
Company, provided, that, appropriate adjustments may be made to outstanding
Options and SARs pursuant to Section 15.
The
Company may retain the right in an Award Agreement to cause a forfeiture
of the
gain realized by a Grantee on account of actions taken by the Grantee in
violation or breach of or in conflict with any employment agreement,
non-competition agreement, any agreement prohibiting solicitation of employees
or clients of the Company or any Affiliate thereof or any confidentiality
obligation with respect to the Company or any Affiliate thereof or otherwise
in
competition with the Company or any Affiliate thereof, to the extent specified
in such Award Agreement applicable to the Grantee. Furthermore, the Company
may
annul an Award if the Grantee is terminated for Cause as defined in the
applicable Award Agreement or the Plan, as applicable. The grant of any Award
may be contingent upon the Grantee executing the appropriate Award Agreement.
3.2. Deferral
Arrangement.
The
Committee may permit or require the deferral of any Award payment into a
deferred compensation arrangement, subject to such rules and procedures as
it
may establish and in accordance with Section 409A, which may include
provisions for the payment or crediting of interest or dividend equivalents,
including converting such credits into deferred Stock units.
3.3. No
Liability.
No
member
of the Board or of the Committee shall be liable for any action or determination
made in good faith with respect to the Plan, any Award or Award Agreement.
3.4. Book
Entry.
Notwithstanding
any other provision of this Plan to the contrary, the Company may elect to
satisfy any requirement under this Plan for the delivery of stock certificates
through the use of book-entry.
4.
|
STOCK
SUBJECT TO THE PLAN
|
Subject
to adjustment as provided in Section 15
hereof,
the maximum number of shares of Stock available for issuance under the Plan
shall be 4,000,000. All such shares of Stock available for issuance under
the
Plan shall be available for issuance pursuant to Incentive Stock Options.
Stock
issued or to be issued under the Plan shall be authorized but unissued shares;
or, to the extent permitted by applicable law, issued shares that have been
reacquired by the Company. The maximum number of Common Stock that will be
awarded to any one Grantee during any calendar year shall not exceed
1,000,000.
The
Committee may adopt reasonable procedures for making adjustments in accordance
with Section 15.
If the
Option Price of any Option granted under the Plan, or if pursuant to
Section 16.3
the
withholding obligation of any Grantee with respect to an Option or other
Award,
is satisfied by tendering shares of Stock to the Company (by either actual
delivery or by attestation) or by withholding shares of Stock, the number
of
shares of Stock issued net of the shares of Stock tendered or withheld shall
be
deemed delivered for purposes of determining the maximum number of shares
of
Stock available for delivery under the Plan. To the extent that an Award
under
the Plan is canceled, expired, forfeited, settled in cash, settled by issuance
of fewer shares than the number underlying the Award, or otherwise terminated
without delivery of shares to the Grantee, the shares retained by or returned
to
the Company will be available under the Plan; and shares that are withheld
from
such an Award or separately surrendered by the Grantee in payment of any
exercise price or taxes relating to such an Award shall be deemed to constitute
shares not delivered to the Grantee and will be available under the Plan.
In
addition, in the case of any Award granted in assumption of or in substitution
for an award of a company or business acquired by the Company or a Subsidiary
or
Affiliate or with which the Company or a Subsidiary or Affiliate combines,
shares issued or issuable in connection with such substitute Award shall
not be
counted against the number of shares reserved under the Plan.
5.
|
EFFECTIVE
DATE,
DURATION AND AMENDMENTS
|
5.1. Term.
The
Plan
shall be effective as of the Effective Date and shall terminate on the ten
(10) year anniversary of the Effective Date, and may be terminated on any
earlier date as provided in Section 5.2.
5.2. Amendment
and Termination of the Plan.
The
Board
may, at any time and from time to time, amend, suspend, or terminate the
Plan as
to any Awards which have not been made. An amendment shall be contingent
on
approval of the Company’s stockholders to the extent stated by the Board,
required by applicable law or required by applicable stock exchange listing
requirements. No Awards shall be made after termination of the Plan. No
amendment, suspension, or termination of the Plan shall, without the consent
of
the Grantee, impair rights or obligations under any Award theretofore awarded.
6.
|
AWARD
ELIGIBILITY AND LIMITATIONS
|
6.1. Service
Providers and Other Persons.
Subject
to this Section 6,
Awards
may be made to any Service Provider, including any Service Provider who is
an
officer or director of the Company or of any Affiliate, as the Committee
shall
determine and designate from time to time in its discretion.
6.2. Successive
Awards.
An
eligible person may receive more than one Award, subject to such restrictions
as
are provided herein.
6.3. Stand-Alone,
Additional, Tandem, and Substitute Awards.
Awards
may, in the discretion of the Committee, be granted either alone or in addition
to, in tandem with, or in substitution or exchange for, any other Award or
any
award granted under another plan of the Company, any Affiliate, or any business
entity to be acquired by the Company or an Affiliate, or any other right
of a
Grantee to receive payment from the Company or any Affiliate. Such additional,
tandem, and substitute or exchange Awards may be granted at any time. If
an
Award is granted in substitution or exchange for another Award, the Committee
shall have the right to require the surrender of such other Award in
consideration for the grant of the new Award. The Board shall have the right,
in
its discretion, to make Awards in substitution or exchange for any other
award
under another plan of the Company, any Affiliate, or any business entity
to be
acquired by the Company or an Affiliate. In addition, Awards may be granted
in
lieu of cash compensation, including in lieu of cash amounts payable under
other
plans of the Company or any Affiliate, in which the value of Stock subject
to
the Award is equivalent in value to the cash compensation (for example,
Restricted Stock Units or Restricted Stock).
Each
Award shall be evidenced by an Award Agreement, in such form or forms as
the
Committee shall from time to time determine. Without limiting the foregoing,
an
Award Agreement may be provided in the form of a notice which provides that
acceptance of the Award constitutes acceptance of all terms of the Plan and
the
notice. Award Agreements granted from time to time or at the same time need
not
contain similar provisions but shall be consistent with the terms of the
Plan.
Each Award Agreement evidencing an Award of Options shall specify whether
such
Options are intended to be Non-Qualified Stock Options or Incentive Stock
Options, and in the absence of such specification such options shall be deemed
Non-Qualified Stock Options.
8.
|
TERMS
AND CONDITIONS OF OPTIONS
|
8.1. Option
Price.
The
Option Price of each Option shall be fixed by the Committee and stated in
the
related Award Agreement. The Option Price of each Incentive Stock Option
shall
be at least the Fair Market Value of a share of Stock on the Grant Date;
provided,
however,
that
(i) in the event that a Grantee is a Ten Percent Stockholder as of the
Grant Date, the Option Price of an Option granted to such Grantee that is
intended to be an Incentive Stock Option shall be not less than 110 percent
of
the Fair Market Value of a share of Stock on the Grant Date, and (ii) with
respect to Awards made in substitution for or in exchange for awards made
by an
entity acquired by the Company or an Affiliate, the Option Price does not
need
to be at least the Fair Market Value on the Grant Date. In no case shall
the
Option Price of any Option be less than the par value of a share of
Stock.
8.2. Vesting.
Subject
to Section 8.3
hereof,
each Option shall become exercisable at such times and under such conditions
(including without limitation performance requirements) as shall be determined
by the Committee and stated in the Award Agreement. For purposes of this
Section 8.2,
fractional numbers of shares of Stock subject to an Option shall be rounded
down
to the next nearest whole number.
8.3. Term.
Each
Option shall terminate, and all rights to purchase shares of Stock thereunder
shall cease, upon the expiration of ten years
from the Grant Date, or under such circumstances and on such date prior thereto
as is set forth in the Plan or as may be fixed by the Committee and stated
in
the related Award Agreement (the “Termination Date”); provided,
however,
that in
the event that the Grantee is a Ten Percent Stockholder, an Option granted
to
such Grantee that is intended to be an Incentive Stock Option at the Grant
Date
shall not be exercisable after the expiration of five years from its Grant
Date.
8.4. Separation
from Service.
Except
as
otherwise provided in an Award Agreement, if a Grantee’s employment with or
service to the Company or Affiliate terminates for any reason other than
Cause,
(i) Op-tions granted to such Grantee, to the extent that they are exercisable
at
the time of such termination, shall remain exercisable for a period of not
more
than 90 days after such termination (one year in the case of termination
by
reason of death or Disability), on which date they shall expire, and (ii)
Options granted to such Grantee, to the extent that they were not exercisable
at
the time of such termi-nation, shall expire on the date of such termina-tion.
In
the event of the termination of a Grantee’s employment or service for Cause, all
out-standing Options granted to such Grantee shall expire on the date of
such
termina-tion. Not-with-standing the forego-ing, no Option shall be exercis-able
after the expiration of its term.
8.5. Limitations
on Exercise of Option.
Notwithstanding
any other provision of the Plan, in no event may any Option be exercised,
in
whole or in part, (i) prior to the date the Plan is approved by the
stockholders of the Company as provided herein or (ii) after the occurrence
of an event referred to in Section 15
hereof
which results in termination of the Option.
8.6. Method
of Exercise.
An
Option
that is exercisable may be exercised by the Grantee’s delivery to the Company of
written notice of exercise on any business day, at the Company’s principal
office, on the form specified by the Company. Such notice shall specify the
number of shares of Stock with respect to which the Option is being exercised
and shall be accompanied by payment in full of the Option Price of the shares
for which the Option is being exercised plus the amount (if any) of federal
and/or other taxes which the Company may, in its judgment, be required to
withhold with respect to an Award. Except as otherwise provided by the
Committee, payments hereunder shall be made in cash or cash equivalents
acceptable to the Company. Notwithstanding anything contained herein to the
contrary, the Committee may, solely in its discretion, approve payment in
whole
or in part by an alternative method, including (i) by means of any cashless
exercise procedure approved by the Committee, (ii) in the form of unrestricted
shares of Stock already owned by the Grantee on the date of surrender to
the
extent the shares of Stock have a Fair Market Value on the date of surrender
equal to the aggregate Option Price of the shares as to which such Option
shall
be exercised, provided
that,
in
the case of an Incentive Stock Option, the right to make payment in the form
of
already owned shares of Stock may be authorized only at the time of grant,
or
(iii) any combination of the foregoing.
8.7. Rights
of Holders of Options.
Unless
otherwise stated in the related Award Agreement, an individual holding or
exercising an Option shall have none of the rights of a stockholder (for
example, the right to receive cash or dividend payments or distributions
attributable to the subject shares of Stock or to direct the voting of the
subject shares of Stock ) until the shares of Stock covered thereby are fully
paid and issued to him. Except as provided in Section 15
hereof,
no adjustment shall be made for dividends, distributions or other rights
for
which the record date is prior to the date of such issuance.
8.8. Delivery
of Stock Certificates.
Promptly
after the exercise of an Option by a Grantee and the payment in full of the
Option Price, such Grantee shall be entitled to the issuance of a stock
certificate or certificates evidencing his or her ownership of the shares
of
Stock subject to the Option.
8.9. Transferability
of Options.
Except
as
provided in Section 8.10,
during
the lifetime of a Grantee, only the Grantee (or, in the event of legal
incapacity or incompetence, the Grantee’s guardian or legal representative) may
exercise an Option. Except as provided in Section 8.10,
no
Option shall be assignable or transferable by the Grantee to whom it is granted,
other than by will or the laws of descent and distribution.
8.10. Family
Transfers.
If
authorized in the applicable Award Agreement, a Grantee may transfer, not
for
value, all or part of an Option which is not an Incentive Stock Option to
any
Family Member. For the purpose of this Section 8.10,
a “not
for value” transfer is a transfer which is (i) a gift, (ii) a transfer
under a domestic relations order in settlement of marital property rights;
or
(iii) a transfer to an entity in which more than fifty percent of the
voting interests are owned by Family Members (or the Grantee) in exchange
for an
interest in that entity. Following a transfer under this Section 8.10,
any
such Option shall continue to be subject to the same terms and conditions
as
were applicable immediately prior to transfer. Subsequent transfers of
transferred Options are prohibited except to Family Members of the original
Grantee in accordance with this Section 8.10
or by
will or the laws of descent and distribution. Notwithstanding the foregoing,
the
Committee may also provide that Options may be transferred to persons other
than
Family Members. The events of termination of Service of Section 8.4
hereof
shall continue to be applied with respect to the original Grantee, following
which the Option shall be exercisable by the transferee only to the extent,
and
for the periods specified, in Section 8.4.
8.11. Limitations
on Incentive Stock Options.
An
Option
shall constitute an Incentive Stock Option only (i) if the Grantee of such
Option is an employee of the Company or any Subsidiary of the Company;
(ii) to the extent specifically provided in the related Award Agreement;
and (iii) to the extent that the aggregate Fair Market Value (determined at
the time the Option is granted) of the shares of Stock with respect to which
all
Incentive Stock Options held by such Grantee become exercisable for the first
time during any calendar year (under the Plan and all other plans of the
Grantee’s employer and its Affiliates) does not exceed $100,000. This limitation
shall be applied by taking Options into account in the order in which they
were
granted.
9.
|
TERMS
AND CONDITIONS OF STOCK APPRECIATION RIGHTS
|
9.1. Right
to Payment.
A
SAR
shall confer on the Grantee a right to receive, upon exercise thereof, the
excess of (i) the Fair Market Value of one share of Stock on the date of
exercise over (ii) the SAR Exercise Price, as determined by the Committee.
The Award Agreement for an SAR shall specify the SAR Exercise Price, which
shall
be fixed on the Grant Date. SARs may be granted alone or in conjunction with
all
or part of an Option or at any subsequent time during the term of such Option
or
in conjunction with all or part of any other Award. A SAR granted in tandem
with
an outstanding Option following the Grant Date of such Option may have a
grant
price that is equal to the Option Price.
9.2. Other
Terms.
The
Committee shall determine at the Grant Date or thereafter, the time or times
at
which and the circumstances under which a SAR may be exercised in whole or
in
part (including based on achievement of performance goals and/or future service
requirements), the time or times at which SARs shall cease to be or become
exercisable following termination of Service or upon other conditions, the
method of exercise, whether or not a SAR shall be in tandem or in combination
with any other Award, and any other terms and conditions of any SAR.
9.3. Term
of SARs.
The
term of a SAR granted under the Plan shall be determined by the Committee,
in
its sole discretion; provided, however, that such term shall not exceed
ten years.
9.4. Payment
of SAR Amount.
Upon
exercise of a SAR, a Grantee shall be entitled to receive payment from the
Company in an amount determined by multiplying:
(i)
the
difference between the Fair Market Value of a Share on the date of exercise
over
the SAR Exercise Price; by
(ii)
the
number of Shares with respect to which the SAR is exercised.
SARs
may
be settled in cash or
Stock,
as determined by the Committee and set forth in the Award
Agreement.
10.
|
TERMS
AND CONDITIONS OF RESTRICTED STOCK AND RESTRICTED STOCK UNITS
|
10.1. Restrictions.
At
the
time of grant, the Committee may, in its sole discretion, establish a period
of
time (a “restricted period”) and any additional restrictions including the
satisfaction of corporate or individual performance objectives applicable
to an
Award of Restricted Stock or Restricted Stock Units in accordance with
Section 13.1
and
13.2.
Each
Award of Restricted Stock or Restricted Stock Units may be subject to a
different restricted period and additional restrictions. Neither Restricted
Stock nor Restricted Stock Units may be sold, transferred, assigned, pledged
or
otherwise encumbered or disposed of during the restricted period or prior
to the
satisfaction of any other applicable restrictions.
10.2. Restricted
Stock Certificates.
The
Company shall issue stock, in the name of each Grantee to whom Restricted
Stock
has been granted, stock certificates or other evidence of ownership representing
the total number of shares of Restricted Stock granted to the Grantee, as
soon
as reasonably practicable after the Grant Date. The Committee may provide
in an
Award Agreement that either (i) the Secretary of the Company shall hold
such certificates for the Grantee’s benefit until such time as the Restricted
Stock is forfeited to the Company or the restrictions lapse, or (ii) such
certificates shall be delivered to the Grantee, provided,
however,
that
such certificates shall bear a legend or legends that comply with the applicable
securities laws and regulations and makes appropriate reference to the
restrictions imposed under the Plan and the Award Agreement.
10.3. Rights
of Holders of Restricted Stock.
Unless
the Committee otherwise provides in an Award Agreement, holders of Restricted
Stock shall have the right to vote such Stock and the right to receive any
dividends declared or paid with respect to such Stock. The Committee may
provide
that any dividends paid on Restricted Stock must be reinvested in shares
of
Stock, which may or may not be subject to the same restrictions applicable
to
such Restricted Stock. All distributions, if any, received by a Grantee with
respect to Restricted Stock as a result of any stock split, stock dividend,
combination of shares, or other similar transaction shall be subject to the
restrictions applicable to the original Award.
10.4. Rights
of Holders of Restricted Stock Units.
|
10.4.1.
|
Settlement
of Restricted Stock Units.
|
Restricted
Stock Units may be settled in cash or Stock, as determined by the Committee
and
set forth in the Award Agreement. The Award Agreement shall also set forth
whether the Restricted Stock Units shall be settled (i) within the time
period specified in Section 16.9.1
for
short
term deferrals or (ii) otherwise within the requirements of
Section 409A, in which case the Award Agreement shall specify upon which
events such Restricted Stock Units shall be settled.
|
10.4.2.
|
Voting
and Dividend Rights.
|
Holders
of Restricted Stock Units shall have no rights as stockholders of the Company.
The Committee may provide in an Award Agreement that the holder of such
Restricted Stock Units shall be entitled to receive, upon the Company’s payment
of a cash dividend on its outstanding Stock, a cash payment for each Restricted
Stock Unit held equal to the per-share dividend paid on the Stock, which
may be
deemed reinvested in additional Restricted Stock Units at a price per unit
equal
to the Fair Market Value of a share of Stock on the date that such dividend
is
paid to shareholders.
|
10.4.3.
|
Creditor’s
Rights.
|
A
holder
of Restricted Stock Units shall have no rights other than those of a general
creditor of the Company. Restricted Stock Units represent an unfunded and
unsecured obligation of the Company, subject to the terms and conditions
of the
applicable Award Agreement.
10.5. Termination
of Service.
Unless
the Committee otherwise provides in an Award Agreement or in writing after
the
Award Agreement is issued, upon the termination of a Grantee’s Service, any
Restricted Stock or Restricted Stock Units held by such Grantee that have
not
vested, or with respect to which all applicable restrictions and conditions
have
not lapsed, shall immediately be deemed forfeited, and the Grantee shall
have no
further rights with respect to such Award.
10.6. Purchase
of Restricted Stock.
The
Grantee shall be required, to the extent required by applicable law, to purchase
the Restricted Stock from the Company at a Purchase Price equal to the greater
of (i) the aggregate par value of the shares of Stock represented by such
Restricted Stock or (ii) the Purchase Price, if any, specified in the
related Award Agreement. If specified in the Award Agreement, the Purchase
Price
may be deemed paid by Services already rendered. The Purchase Price shall
be
payable in a form described in Section 12
or,
in
the discretion of the Committee, in consideration for past Services rendered.
10.7. Delivery
of Stock.
Upon
the
expiration or termination of any restricted period and the satisfaction of
any
other conditions prescribed by the Committee, the restrictions applicable
to
shares of Restricted Stock or Restricted Stock Units settled in Stock shall
lapse, and, unless otherwise provided in the Award Agreement, a stock
certificate for such shares shall be delivered, free of all such restrictions,
to the Grantee or the Grantee’s beneficiary or estate, as the case may be.
11.
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TERMS
AND CONDITIONS OF UNRESTRICTED STOCK AWARDS
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The
Committee may, in its sole discretion, grant (or sell at par value or such
other
higher purchase price determined by the Committee) an Award of Unrestricted
Stock to any Grantee pursuant to which such Grantee may receive shares of
Stock
free of any restrictions (“Unrestricted Stock”) under the Plan. Awards of
Unrestricted Stock may be granted or sold as described in the preceding sentence
in respect of past Services rendered and other valid consideration, or in
lieu
of, or in addition to, any cash compensation due to such Grantee. Unless
otherwise provided by the Committee, Awards of Unrestricted Stock shall be
paid
within the time period specified in Section 16.9.1
for
short-term deferrals.
12.
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FORM OF PAYMENT FOR OPTIONS AND RESTRICTED
STOCK
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12.1. General
Rule.
Payment
of the Option Price for the shares purchased pursuant to the exercise of
an
Option or the Purchase Price for Restricted Stock shall be made in cash or
in
cash equivalents acceptable to the Company, except as provided in this
Section 12.
12.2. Surrender
of Stock.
To
the
extent the Award Agreement so provides, payment of the Option Price for shares
purchased pursuant to the exercise of an Option or the Purchase Price for
Restricted Stock may be made all or in part through the tender to the Company
of
shares of Stock, which shares shall be valued, for purposes of determining
the
extent to which the Option Price or Purchase Price has been paid thereby,
at
their Fair Market Value on the date of exercise or surrender.
12.3. Cashless
Exercise.
With
respect to an Option only (and not with respect to Restricted Stock), to
the
extent permitted by law and to the extent the Award Agreement so provides,
payment of the Option Price may be made all or in part by delivery (on a
form
acceptable to the Committee) of an irrevocable direction to a licensed
securities broker acceptable to the Company to sell shares of Stock and to
deliver all or part of the sales proceeds to the Company in payment of the
Option Price and any withholding taxes described in Section 16.3.
12.4. Other
Forms of Payment.
To
the
extent the Award Agreement so provides, payment of the Option Price or the
Purchase Price may be made in any other form that is consistent with applicable
laws, regulations and rules.
13.
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TERMS
AND CONDITIONS OF PERFORMANCE AND ANNUAL INCENTIVE AWARDS
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13.1. Performance
Conditions.
The
right
of a Grantee to exercise or receive a grant or settlement of any Award, and
the
timing thereof, may be subject to such performance conditions as may be
specified by the Committee. The Committee may use such business criteria
and
other measures of performance as it may deem appropriate in establishing
any
performance conditions, and may exercise its discretion to reduce the amounts
payable under any Award subject to performance conditions, except as limited
under Sections
13.2 hereof
in
the case of a Performance Award or Annual Incentive Award intended to qualify
under Code Section 162(m).
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13.2.
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Performance
or Annual Incentive Awards Granted to Designated Covered Employees.
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If
and to
the extent that the Committee determines that a Performance or Annual Incentive
Award to be granted to a Grantee who is designated by the Committee as likely
to
be a Covered Employee should qualify as “performance-based compensation” for
purposes of Code Section 162(m), the grant, exercise and/or settlement of
such Performance or Annual Incentive Award shall be contingent upon achievement
of pre-established performance goals and other terms set forth in this
Section 13.2.
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13.2.1.
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Performance
Goals Generally.
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The
performance goals for such Performance or Annual Incentive Awards shall consist
of one or more business criteria and a targeted level or levels of performance
with respect to each of such criteria, as specified by the Committee consistent
with this Section 13.2.
Performance goals shall be objective and shall otherwise meet the requirements
of Code Section 162(m) and regulations thereunder including the requirement
that the level or levels of performance targeted by the Committee result
in the
achievement of performance goals being “substantially uncertain.” The Committee
may determine that such Performance or Annual Incentive Awards shall be granted,
exercised and/or settled upon achievement of any one performance goal or
that
two or more of the performance goals must be achieved as a condition to grant,
exercise and/or settlement of such Performance or Annual Incentive Awards.
Performance goals may differ for Performance or Annual Incentive Awards granted
to any one Grantee or to different Grantees.
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13.2.2.
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Business
Criteria.
|
One
or
more of the following business criteria for the Company, on a consolidated
basis, and/or specified subsidiaries or business units of the Company (except
with respect to the total stockholder return and earnings per share criteria),
shall be used exclusively by the Committee in establishing performance goals
for
such Performance or Annual Incentive Awards: (i) total stockholder return;
(ii) such total stockholder return as compared to total return (on a
comparable basis) of a publicly available index such as, but not limited
to, the
Standard & Poor’s 500 Stock Index; (iii) net income;
(iv) pretax earnings; (v) earnings before interest expense, taxes,
depreciation and amortization; (vi) pretax operating earnings after
interest expense and before bonuses, service fees, and extraordinary or special
items; (vii) operating margin; (viii) earnings per share;
(ix) return on equity; (x) return on capital; (xi) return on
investment; (xii) operating earnings; (xiii) working capital;
(xiv) ratio of debt to stockholders’ equity and (xv) revenue.
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13.2.3.
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Timing
for Establishing Performance Goals.
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Performance
goals shall be established not later than 90 days after the beginning of
any
performance period applicable to such Performance or Annual Incentive Awards,
or
at such other date as may be required or permitted for “performance-based
compensation” under Code Section 162(m).
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13.2.4.
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Settlement
of Performance or Annual Incentive Awards; Other Terms.
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Settlement
of such Performance or Annual Incentive Awards shall be in cash, Stock, other
Awards or other property, in the discretion of the Committee. The Committee
may,
in its discretion, reduce the amount of a settlement otherwise to be made
in
connection with such Performance or Annual Incentive Awards. The Committee
shall
specify the circumstances in which such Performance or Annual Incentive Awards
shall be paid or forfeited in the event of termination of Service by the
Grantee
prior to the end of a performance period or settlement of Performance Awards.
13.3. Written
Determinations.
All
determinations by the Committee as to the establishment of performance goals,
the amount of any Performance Award pool or potential individual Performance
Awards and as to the achievement of performance goals relating to Performance
Awards, and the amount of any Annual Incentive Award pool or potential
individual Annual Incentive Awards and the amount of final Annual Incentive
Awards, shall be made in writing in the case of any Award intended to qualify
under Code Section 162(m). To the extent permitted by Code
Section 162(m), the Committee may delegate any responsibility relating to
such Performance Awards or Annual Incentive Awards.
13.4. Status
of Section 13.2 Awards Under Code Section 162(m).
It
is the
intent of the Company that Performance Awards and Annual Incentive Awards
under
Section 13.2
hereof
granted to persons who are designated by the Committee as likely to be Covered
Employees within the meaning of Code Section 162(m) and regulations
thereunder shall, if so designated by the Committee, constitute “qualified
performance-based compensation” within the meaning of Code Section 162(m)
and regulations thereunder. Accordingly, the terms of Section 13.2,
including the definitions of Covered Employee and other terms used therein,
shall be interpreted in a manner consistent with Code Section 162(m) and
regulations thereunder. The foregoing notwithstanding, because the Committee
cannot determine with certainty whether a given Grantee will be a Covered
Employee with respect to a fiscal year that has not yet been completed, the
term
Covered Employee as used herein shall mean only a person designated by the
Committee, at the time of grant of Performance Awards or an Annual Incentive
Award, as likely to be a Covered Employee with respect to that fiscal year.
If
any provision of the Plan or any agreement relating to such Performance Awards
or Annual Incentive Awards does not comply or is inconsistent with the
requirements of Code Section 162(m) or regulations thereunder, such
provision shall be construed or deemed amended to the extent necessary to
conform to such requirements.
14.1. General.
The
Company shall not be required to sell or issue any shares of Stock under
any
Award if the sale or issuance of such shares would constitute a violation
by the
Grantee, any other individual exercising an Option, or the Company of any
provision of any law or regulation of any governmental authority, including
without limitation any federal or state securities laws or regulations. If
at
any time the Company shall determine, in its discretion, that the listing,
registration or qualification of any shares subject to an Award upon any
securities exchange or under any governmental regulatory body is necessary
or
desirable as a condition of, or in connection with, the issuance or purchase
of
shares hereunder, no shares of Stock may be issued or sold to the Grantee
or any
other individual exercising an Option pursuant to such Award unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Company,
and
any delay caused thereby shall in no way affect the date of termination of
the
Award. Specifically, in connection with the Securities Act, upon the exercise
of
any Option or the delivery of any shares of Stock underlying an Award, unless
a
registration statement under such Act is in effect with respect to the shares
of
Stock covered by such Award, the Company shall not be required to sell or
issue
such shares unless the Committee has received evidence satisfactory to it
that
the Grantee or any other individual exercising an Option may acquire such
shares
pursuant to an exemption from registration under the Securities Act. Any
determination in this connection by the Committee shall be final, binding,
and
conclusive. The Company may, but shall in no event be obligated to, register
any
securities covered hereby pursuant to the Securities Act. The Company shall
not
be obligated to take any affirmative action in order to cause the exercise
of an
Option or the issuance of shares of Stock pursuant to the Plan to comply
with
any law or regulation of any governmental authority. As to any jurisdiction
that
expressly imposes the requirement that an Option shall not be exercisable
until
the shares of Stock covered by such Option are registered or are exempt from
registration, the exercise of such Option (under circumstances in which the
laws
of such jurisdiction apply) shall be deemed conditioned upon the effectiveness
of such registration or the availability of such an exemption.
14.2. Rule
16b-3.
During
any time when the Company has a class of equity security registered under
Section 12 of the Exchange Act, it is the intent of the Company that Awards
and the exercise of Options granted hereunder will qualify for the exemption
provided by Rule 16b-3 under the Exchange Act. To the extent that any provision
of the Plan or action by the Board or Committee does not comply with the
requirements of Rule 16b-3, it shall be deemed inoperative to the extent
permitted by law and deemed advisable by the Board, and shall not affect
the
validity of the Plan. In the event that Rule 16b-3 is revised or replaced,
the
Board may exercise its discretion to modify this Plan in any respect necessary
to satisfy the requirements of, or to take advantage of any features of,
the
revised exemption or its replacement.
15.
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EFFECT
OF CHANGES IN CAPITALIZATION
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15.1. Changes
in Stock.
If
the
number of outstanding shares of Stock is increased or decreased or the shares
of
Stock are changed into or exchanged for a different number or kind of shares
or
other securities of the Company on account of any recapitalization,
reclassification, stock split, reverse split, combination of shares, exchange
of
shares, stock dividend or other distribution payable in capital stock, or
other
increase or decrease in such shares effected without receipt of consideration
by
the Company occurring after the Effective Date, the number and kinds of shares
for which grants of Options and other Awards may be made under the Plan shall
be
adjusted proportionately and accordingly by the Company; provided that any
such
adjustment shall comply with Section 409A. In addition, the number and kind
of shares for which Awards are outstanding shall be adjusted proportionately
and
accordingly so that the proportionate interest of the Grantee immediately
following such event shall, to the extent practicable, be the same as
immediately before such event. Any such adjustment in outstanding Options
or
SARs shall not change the aggregate Option Price or SAR Exercise Price payable
with respect to shares that are subject to the unexercised portion of an
outstanding Option or SAR, as applicable, but shall include a corresponding
proportionate adjustment in the Option Price or SAR Exercise Price per share.
The conversion of any convertible securities of the Company shall not be
treated
as an increase in shares effected without receipt of consideration.
Notwithstanding the foregoing, in the event of any distribution to the Company’s
stockholders of securities of any other entity or other assets (including
an
extraordinary cash dividend but excluding a non-extraordinary dividend payable
in cash or in stock of the Company) without receipt of consideration by the
Company, the Company shall in such manner as the Company deems appropriate,
adjust (i) the number and kind of shares subject to outstanding Awards
and/or (ii) the exercise price of outstanding Options and Stock
Appreciation Rights to reflect such distribution.
15.2. Definition
of Change in Control.
Unless
an
Award Agreement provides for a different meaning, a “Change in Control” shall
mean the occurrence of any of the following:
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(i)
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Any
‘person’ (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act) becomes the ‘beneficial owner’ (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the
Company
representing more than fifty percent (50%) of the total voting power
represented by the Company’s then-outstanding voting securities,
provided,
however,
that a Change in Control shall not be deemed to occur if an employee
benefit plan (or a trust forming a part thereof) maintained by
the
Company, directly or indirectly, becomes the beneficial owner of more than
fifty percent (50%) of the then-outstanding voting securities of the
Company after such acquisition;
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(ii)
|
A
majority of the members of the Board is replaced during any 12-month
period commencing on the Effective Date, by directors whose appointment
or
election is not endorsed by a majority of the members of the Board
prior
to the date of the appointment;
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(iii)
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The
consummation of a merger or consolidation of the Company with any
other
corporation, other than a merger or consolidation which would result
in
(a) the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding
or
being converted into voting securities of the surviving entity)
at least
fifty percent (50%) of the total voting power represented by the
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; or (b) the directors
of the Company immediately prior thereto continuing to represent
at least
fifty percent (50%) of the directors of the Company or such surviving
entity immediately after such merger or consolidation; or
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(iv)
|
The
consummation of the sale or disposition by the Company of all or
substantially all of the Company’s assets.
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Notwithstanding
the foregoing, if it is determined that an Award hereunder is subject to
the
requirements of Section 409A, the Company will not be deemed to have undergone
a
Change in Control unless the Company is deemed to have undergone a change
in
control pursuant to the definition in Section 409A.
15.3. Effect
of Change in Control; Corporate Transactions
The
Committee shall determine the effect of a Change in Control upon Awards,
and
such effect may be set forth in the appropriate Award Agreement. Unless
an
Award Agreement explicitly provides otherwise, if the Company is to be
consolidated with or acquired by another entity in a merger, sale of all
or
substantially all of the Company’s assets other than a transaction to merely
change the state of incorporation (a “Corporate Transaction”), the Committee or
the board of directors of any entity assuming the obligations of the Company
hereunder (the “Successor Board”), shall, as to outstanding Options and/or SARs,
either (i) make appropriate provision for the continuation of such Options
and/or SARs by substituting on an equitable basis for the Shares then subject
to
such Options and/or SARs either the consideration payable with respect to
the
outstanding shares of Common Stock in connection with the Corporate Transaction
or securities of any successor or acquiring entity; or (ii) upon written
notice to the Grantees, provide that all Options and/or SARs must be exercised
(either to the extent then exercisable or, at the discretion of the Committee
or, upon a change of control of the Company, all Options and/or SARs being
made
fully exercisable for purposes of this Section 15.3), within a specified
number
of days of the date of such notice, at the end of which period the Options
and/or SARs shall terminate; or (iii) terminate all Options and/or SARs in
exchange for a cash payment equal to the excess of the Fair Market Value
of the
Shares subject to such Options and/or SARs (either to the extent then
exercisable or, at the discretion of the Committee, all Options and/or SARs
being made fully exercisable for purposes of this Section 15.3) over the
exercise price thereof.
Unless
an
Award Agreement explicitly provides otherwise, with respect to outstanding
grants of Restricted Stock, Restricted Stock Units and/or Unrestricted Stock,
the Committee or the Successor Board, shall either (i) make appropriate
provisions for the continuation of such grants of Restricted Stock, Restricted
Stock Units and/or Unrestricted Stock by substituting on an equitable basis
for
the Shares then subject to such Restricted Stock, Restricted Stock Units
and/or
Unrestricted Stock either the consideration payable with respect to the
outstanding Shares of Common Stock in connection with the Corporate Transaction
or securities of any successor or acquiring entity; or (ii) upon written
notice
to the Grantees, provide that all grants of Restricted Stock, Restricted
Stock
Units and/or Unrestricted Stock must be accepted (to the extent then subject
to
acceptance) within a specified number of days of the date of such notice,
at the
end of which period the offer of the Restricted Stock, Restricted Stock Units
and/or Unrestricted Stock shall terminate; or (iii) terminate all grants
of
Restricted Stock, Restricted Stock Units and/or Unrestricted Stock in exchange
for a cash payment equal to the excess of the Fair Market Value of the Shares
subject to such Restricted Stock, Restricted Stock Units and/or Unrestricted
Stock over the purchase price thereof, if any. In addition, in the event
of a
Corporate Transaction, the Administrator may waive any or all Company repurchase
rights with respect to outstanding Restricted Stock and/or Restricted Stock
Units.
15.4. Reorganization
Which Does Not Constitute a Change in Control.
If
the
Company undergoes any reorganization, merger, or consolidation of the Company
with one or more other entities which does not constitute a Change in Control,
any Option or SAR theretofore granted pursuant to the Plan shall pertain
to and
apply to the securities to which a holder of the number of shares of Stock
subject to such Option or SAR would have been entitled immediately following
such reorganization, merger, or consolidation, with a corresponding
proportionate adjustment of the Option Price or SAR Exercise Price per share
so
that the aggregate Option Price or SAR Exercise Price thereafter shall be
the
same as the aggregate Option Price or SAR Exercise Price of the shares remaining
subject to the Option or SAR immediately prior to such reorganization, merger,
or consolidation. Subject to any contrary language in an Award Agreement,
any
restrictions applicable to such Award shall apply as well to any replacement
shares received by the Grantee as a result of the reorganization, merger
or
consolidation.
15.5. Adjustments.
Adjustments
under this Section 15
related
to shares of Stock or securities of the Company shall be made by the Committee,
whose determination in that respect shall be final, binding and conclusive.
No
fractional shares or other securities shall be issued pursuant to any such
adjustment, and any fractions resulting from any such adjustment shall be
eliminated in each case by rounding downward to the nearest whole share.
15.6. No
Limitations on Company.
The
making of Awards pursuant to the Plan shall not affect or limit in any way
the
right or power of the Company to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure or to merge,
consolidate, dissolve, or liquidate, or to sell or transfer all or any part
of
its business or assets.
16.1. Disclaimer
of Rights.
No
provision in the Plan or in any Award Agreement shall be construed to confer
upon any individual the right to remain in the employ or service of the Company
or any Affiliate, or to interfere in any way with any contractual or other
right
or authority of the Company either to increase or decrease the compensation
or
other payments to any individual at any time, or to terminate any employment
or
other relationship between any individual and the Company. In addition,
notwithstanding anything contained in the Plan to the contrary, unless otherwise
stated in the applicable Award Agreement, no Award granted under the Plan
shall
be affected by any change of duties or position of the Grantee, so long as
such
Grantee continues to be a Service Provider, if applicable. The obligation
of the
Company to pay any benefits pursuant to this Plan shall be interpreted as
a
contractual obligation to pay only those amounts described herein, in the
manner
and under the conditions prescribed herein. The Plan shall in no way be
interpreted to require the Company to transfer any amounts to a third party
trustee or otherwise hold any amounts in trust or escrow for payment to any
Grantee or beneficiary under the terms of the Plan.
16.2. Nonexclusivity
of the Plan.
Neither
the adoption of the Plan nor the submission of the Plan to the stockholders
of
the Company for approval shall be construed as creating any limitations upon
the
right and authority of the Board to adopt such other incentive compensation
arrangements (which arrangements may be applicable either generally to a
class
or classes of individuals or specifically to a particular individual or
particular individuals), including, without limitation, the granting of stock
options as the Board in its discretion determines desirable.
16.3. Withholding
Taxes.
The
Company or an Affiliate, as the case may be, shall have the right to deduct
from
payments of any kind otherwise due to a Grantee any federal, state, or local
taxes of any kind required by law to be withheld (i) with respect to the
vesting of or other lapse of restrictions applicable to an Award, (ii) upon
the issuance of any shares of Stock upon the exercise of an Option, or
(iii) pursuant to an Award. At the time of such vesting, lapse, or
exercise, the Grantee shall pay to the Company or the Affiliate, as the case
may
be, any amount that the Company or the Affiliate may reasonably determine
to be
necessary to satisfy such withholding obligation. Subject to the prior approval
of the Company or the Affiliate, which may be withheld by the Company or
the
Affiliate, as the case may be, in its sole discretion, the Grantee may elect
to
satisfy such obligations, in whole or in part, (i) by causing the Company
or the Affiliate to withhold shares of Stock otherwise issuable to the Grantee
or (ii) by delivering to the Company or the Affiliate shares of Stock
already owned by the Grantee. The shares of Stock so delivered or withheld
shall
have an aggregate Fair Market Value equal to such withholding obligations.
The
Fair Market Value of the shares of Stock used to satisfy such withholding
obligation shall be determined by the Company or the Affiliate as of the
date
that the amount of tax to be withheld is to be determined. A Grantee who
has
made an election pursuant to this Section 16.3
may
satisfy his or her withholding obligation only with shares of Stock that
are not
subject to any repurchase, forfeiture, unfulfilled vesting, or other similar
requirements.
16.4. Captions.
The
use
of captions in this Plan or any Award Agreement is for the convenience of
reference only and shall not affect the meaning of any provision of the Plan
or
any Award Agreement.
16.5. Other
Provisions.
Each
Award Agreement may contain such other terms and conditions not inconsistent
with the Plan as may be determined by the Committee, in its sole discretion.
16.6. Number
and Gender.
With
respect to words used in this Plan, the singular form shall include the plural
form, the masculine gender shall include the feminine gender, etc., as the
context requires.
16.7. Severability.
If
any
provision of the Plan or any Award Agreement shall be determined to be illegal
or unenforceable by any court of law in any jurisdiction, the remaining
provisions hereof and thereof shall be severable and enforceable in accordance
with their terms, and all provisions shall remain enforceable in any other
jurisdiction.
16.8. Governing
Law.
The
validity and construction of this Plan and the instruments evidencing the
Awards
hereunder shall be governed by the laws of the State of Delaware, without
regard
to any choice of law principles thereof or of any other jurisdiction.
16.9. Section 409A.
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16.9.1.
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Short-Term
Deferrals.
|
For
each
Award intended to comply with the short-term deferral exception provided
for
under Section 409A, the related Award Agreement shall provide that such
Award shall be paid out by the later of (i) the 15th
day of
the third month following the Grantee’s first taxable year in which the Award is
no longer subject to a substantial risk of forfeiture or (ii) the
15th
day of
the third month following the end of the Company’s first taxable year in which
the Award is no longer subject to a substantial risk of forfeiture.
To
the
extent that the Board determines that a Grantee would be subject to the
additional 20% tax imposed on certain deferred compensation arrangements
pursuant to Section 409A as a result of any provision of any Award, to the
extent permitted by Section 409A, such provision shall be deemed amended to
the minimum extent necessary to avoid application of such additional tax.
The
Board shall determine the nature and scope of such amendment.
16.10. Stockholder
Approval; Effective Date of Plan.
The
Plan
shall be effective as of November 12, 2008, the date of its approval by the
Board (the "Effective Date"). Any Option that is designated as an Incentive
Stock Option shall be a Non-Qualified Stock Option if the Plan is not approved
by the shareholders of the Company within twelve (12) months after the Effective
Date of the Plan. No award that is intended to qualify as performance-based
compensation within the meaning of section 162(m) of the Code shall be effective
unless and until the Plan is approved by the stockholders of the
Company.