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Exhibit 10.18
ECOLOGY COATINGS, INC.
2007 STOCK OPTION AND RESTRICTED STOCK PLAN
1. PURPOSES.
(A) BACKGROUND. This 2007 Stock Option and Restricted Stock Plan
was
adopted on January 10, 2007 by the Board of Directors, subject
to the approval
of the Company's stockholders. Options granted under the Plan
prior to the
stockholders' approval will be effective as of their respective
dates of grant
upon approval of the stockholders.
(B) ELIGIBLE AWARD RECIPIENTS. The persons eligible to receive
Awards are
the Employees, Directors and Consultants of the Company and its
Affiliates.
(C) AVAILABLE AWARDS. The purpose of the Plan is to provide a
means by
which eligible recipients may be given an opportunity to benefit
from increases
in value of the Common Stock through the granting of the
following: (i)
Incentive Stock Options, (ii) Nonqualified Stock Options, (iii)
rights to
acquire restricted stock, and (iv) stock appreciation
rights.
(D) GENERAL PURPOSE. The Company, by means of the Plan, seeks to
retain the
services of the group of persons eligible to receive Awards, to
secure and
retain the services of new members of this group and to provide
incentives for
such persons to exert maximum efforts for the success of the
Company and its
Affiliates.
2. DEFINITIONS.
(A) "AFFILIATE" means any entity that controls, is controlled
by, or is
under common control with the Company.
(B) "AWARD" means any right granted under the Plan, including an
Option, a
right to acquire restricted Common Stock, and a stock
appreciation right.
(C) "AWARD AGREEMENT" means a written agreement between the
Company and a
holder of an Award (other than an Option) evidencing the terms
and conditions of
an individual Award grant.
(D) "BOARD" means the board of directors of the Company.
(E) "CODE" means the Internal Revenue Code of 1986, as amended,
and the
rules and regulations promulgated thereunder.
(F) "COMMITTEE" means a pre-existing or newly formed committee
of members
of the Board appointed by the Board in accordance with
subsection 3(c).
(G) "COMMON STOCK" means shares of the Company's common stock,
no par value
per share, and other rights with respect to such shares.
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(H) "COMPANY" means Ecology Coatings, Inc., a California
corporation.
(I) "CONSULTANT" means any person who is not an Employee or
Director and
who is retained by the Company or an Affiliate pursuant to a
consulting
agreement.
(J) "CONTINUOUS SERVICE" means that the Participant's service
with the
Company or an Affiliate, whether as an Employee, Director or
Consultant is not
interrupted or terminated. Unless otherwise provided in an Award
Agreement or
Option Agreement, as applicable, the Participant's Continuous
Service shall not
be deemed to have terminated merely because of a change in the
capacity in which
the Participant renders service to the Company or an Affiliate
as an Employee,
Director or Consultant or a change in the entity for which the
Participant
renders such service, provided, that there is no interruption or
termination of
the Participant's service to the Company or an Affiliate as an
Employee,
Director or Consultant. The Board, in its sole discretion, may
determine whether
Continuous Service shall be considered interrupted in the case
of any leave of
absence, including sick leave, military leave or any other
personal leave.
(K) "COVERED EMPLOYEE" means the Company's chief executive
officer and the
four (4) other highest compensated officers of the Company for
whom total
compensation is required to be reported to stockholders under
the Exchange Act,
as determined for purposes of Section 162(m) of the Code.
(L) "DIRECTOR" means a member of the Board of Directors of the
Company.
(M) "DISABILITY" means the Participant's inability, due to
illness,
accident, injury, physical or mental incapacity or other
disability, to carry
out effectively the duties and obligations to the Company and
its Affiliates
performed by such person immediately prior to such disability
for a period of at
least six (6) months, as determined in the good faith judgment
of the Board.
(N) "DOLLARS" or "$" means United States dollars.
(O) "EMPLOYEE" means any person employed by the Company or an
Affiliate.
Service as a Director or payment of a Director's fee by the
Company or an
Affiliate alone shall not be sufficient to constitute
"employment" by the
Company or an Affiliate.
(P) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(Q) "FAIR MARKET VALUE" means, as of any date, the value of the
Common
Stock determined as follows:
(I) If the Common Stock is listed on any established stock
exchange,
or traded on the Nasdaq National Market, the Nasdaq SmallCap
Market or the
Nasdaq OTC Bulletin Board, the Fair Market Value of the Common
Stock shall be
the closing sales price for such stock (or the closing bid, if
no sales were
reported) as quoted on such exchange or market (or the exchange
or market with
the greatest volume of trading in Common Stock if such stock is
traded on more
than one such exchange or market) on the last market trading day
prior to the
day of determination, as reported by such exchange or market or
such other
source as the Board reasonably deems reliable.
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(II) In the absence of such markets for the Common Stock, the
Fair
Market Value shall be determined in good faith by the Board.
(R) "INCENTIVE STOCK OPTION" means an option designated as an
incentive
stock option in an Option Agreement and that is granted in
accordance with the
requirements of, and that conforms to the applicable provisions
of, Section 422
of the Code.
(S) "INDEPENDENT DIRECTOR" means (i) a Director who satisfies
the
definition of Independent Director or similar definition under
the applicable
stock exchange or Nasdaq rules and regulations upon which the
Common Stock is
traded from time to time and (ii) a Director who either (A) is
not a current
employee of the Company or an "affiliated corporation" (within
the meaning of
Treasury Regulations promulgated under Section 162(m) of the
Code), is not a
former employee of the Company or an "affiliated corporation"
receiving
compensation for prior services (other than benefits under a tax
qualified
pension plan), was not an officer of the Company or an
"affiliated corporation"
at any time and is not currently receiving direct or indirect
remuneration from
the Company or an "affiliated corporation" for services in any
capacity other
than as a Director or (B) is otherwise considered an "outside
director" for
purposes of Section 162(m) of the Code.
(T) "NONQUALIFIED STOCK OPTION" means an option that is not
designated in
an Option Agreement as an Incentive Stock Option or was not
granted in
accordance with the requirements of, and does not conform to the
applicable
provisions of, Section 422 of the Code.
(U) "OFFICER" means a person who is an officer of the Company
within the
meaning of Section 16 of the Exchange Act and the rules and
regulations
promulgated thereunder.
(V) "OPTION" means an Incentive Stock Option or a Nonqualified
Stock Option
granted pursuant to the Plan.
(W) "OPTION AGREEMENT" means a written agreement between the
Company and an
Optionholder evidencing the terms and conditions of an
individual Option grant.
(X) "OPTIONHOLDER" means a person to whom an Option is granted
pursuant to
the Plan or, if applicable, such other person who holds an
outstanding Option.
(Y) "PARTICIPANT" means a person to whom an Award is granted
pursuant to
the Plan or, if applicable, such other person who holds an
outstanding Award.
(Z) "PLAN" means this Ecology Coatings, Inc. 2007 Stock Option
and
Restricted Stock Plan.
(AA) "RULE 16B-3" means Rule 16b-3 promulgated under the
Exchange Act or
any successor to Rule 16b-3, as in effect from time to time.
(BB) "SECURITIES ACT" means the Securities Act of 1933, as
amended.
(CC) "TEN PERCENT STOCKHOLDER" means a person who owns (or is
deemed to own
pursuant to Section 424(d) of the Code) stock possessing more
than ten percent
(10%) of the
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total combined voting power of all classes of stock of the
Company or any parent
corporation or any subsidiary corporation, both as defined in
Section 424 of the
Code.
3. ADMINISTRATION.
(A) ADMINISTRATION BY BOARD. The Board shall administer the Plan
unless and
until the Board delegates administration to a Committee, as
provided in
subsection 3(c). The Board may, at any time and for any reason
in its sole
discretion, rescind some or all of such delegation.
(B) POWERS OF BOARD. The Board shall have the power, subject to,
and within
the limitations of, the express provisions of the Plan:
(I) To determine from time to time which of the persons eligible
under
the Plan shall be granted Awards; when and how each Award shall
be granted; what
type or combination of types of Award shall be granted; the
provisions of each
Award granted (which need not be identical), including the time
or times when a
person shall be permitted to receive Common Stock pursuant to an
Award; and the
number of shares of Common Stock with respect to which an Award
shall be granted
to each such person.
(II) To construe and interpret the Plan, Awards granted under
it,
Option Agreements and Award Agreements, and to establish, amend
and revoke rules
and regulations for their administration. The Board, in the
exercise of this
power, may correct any defect, omission or inconsistency in the
Plan or in any
Option Agreement or Award Agreement, in a manner and to the
extent it shall deem
necessary or expedient to make the Plan fully effective.
(III) To amend the Plan, an Award, an Award Agreement or an
Option
Agreement as provided in Section 12, provided, that the Board
shall not amend
the exercise price of an option, the Fair Market Value of an
Award or extend the
term of an Option or Award without obtaining the approval of the
stockholders if
required by the rules of any stock exchange upon which the
Common Stock is
listed.
(IV) Generally, to exercise such powers and to perform such acts
as
the Board deems necessary or expedient to promote the best
interests of the
Company which are not in conflict with the provisions of the
Plan.
(C) DELEGATION TO COMMITTEE.
(I) GENERAL. The Board may delegate administration of the Plan
and its
powers and duties thereunder to a Committee or Committees, and
the term
"Committee" shall apply to any person or persons to whom such
authority has been
delegated. Upon such delegation, the Committee shall have the
powers theretofore
possessed by the Board, including the power to delegate to a
subcommittee any of
the administrative powers the Committee is authorized to
exercise (and
references in this Plan to the Board shall thereafter be deemed
to include the
Committee or subcommittee), subject, however, to such
resolutions, not
inconsistent with the provisions of the Plan, as may be adopted
from time to
time by the Board. In its absolute discretion, the Board may at
any time and
from time to time exercise any and all rights and duties of the
Committee under
this Plan, except respecting matters under Rule 16b-3 of the
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Exchange Act or Section 162(m) of the Code, or any rules or
regulations issued
thereunder, which are required to be determined in the sole
discretion of the
Committee.
(II) COMMITTEE COMPOSITION. A Committee shall consist solely of
two or
more Directors. After the Company appoints or elects at least
two Independent
Directors, the Committee shall consist solely of two or more
Independent
Directors. Within the scope of its authority, the Board or the
Committee may (1)
delegate to a committee of one or more members of the Board who
are not
Independent Directors the authority to grant Awards to eligible
persons who are
either (a) not then Covered Employees and are not expected to be
Covered
Employees at the time of recognition of income resulting from
such Award or (b)
not persons with respect to whom the Company wishes to comply
with Section
162(m) of the Code, and/or (2) delegate to a committee of one or
more members of
the Board who are not Independent Directors or to the Company's
Chief Executive
Officer the authority to grant Awards to eligible persons who
are not then
subject to Section 16 of the Exchange Act.
(D) EFFECT OF BOARD'S DECISION; NO LIABILITY. All
determinations,
interpretations and constructions made by the Board in good
faith shall not be
subject to review by any person and shall be final, binding and
conclusive on
all persons. No member of the Board or the Committee or any
person to whom
duties hereunder have been delegated shall be liable for any
action,
interpretation or determination made in good faith, and such
persons shall be
entitled to full indemnification and reimbursement consistent
with applicable
law and in the manner provided in the Company's Articles of
Incorporation and
Bylaws, as the same may be amended from time to time, or as
otherwise provided
in any agreement between any such member and the Company.
4. STOCK SUBJECT TO THE PLAN.
(A) STOCK RESERVE. Subject to the provisions of Section 11
relating to
adjustments upon changes in Common Stock, the shares of Common
Stock that may be
issued pursuant to Awards shall not exceed in the aggregate four
million five
hundred thousand (4,500,000) shares of Common Stock.
(B) REVERSION OF STOCK TO THE STOCK RESERVE. If any Award shall
for any
reason expire or otherwise terminate, in whole or in part,
without having been
exercised in full, the shares of Common Stock not acquired under
such Award
shall revert to and again become available for issuance under
the Plan.
(C) SOURCE OF STOCK. The Common Stock subject to the Plan may be
unissued
stock or reacquired stock, bought on the market or
otherwise.
5. ELIGIBILITY.
(A) ELIGIBILITY FOR SPECIFIC AWARDS. Incentive Stock Options may
be granted
only to Employees. Awards other than Incentive Stock Options may
be granted to
Employees, Directors and Consultants.
(B) TEN PERCENT STOCKHOLDERS. A Ten Percent Stockholder shall
not be
granted an Incentive Stock Option unless the exercise price of
such Option is at
least one hundred ten
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percent (110%) of the Fair Market Value of the Common Stock at
the date of grant
and the Option is not exercisable after the expiration of five
(5) years from
the date of grant.
6. OPTION PROVISIONS.
Each Option Agreement shall be subject to the terms and
conditions of this
Plan. Each Option and Option Agreement shall be in such form and
shall contain
such terms and conditions as the Board shall deem appropriate.
All Options shall
be separately designated Incentive Stock Options or Nonqualified
Stock Options
at the time of grant, and, if certificates are issued, a
separate certificate or
certificates will be issued for the shares of Common Stock
purchased on exercise
of each type of Option. The provisions of separate Options need
not be
identical.
(A) PROVISIONS APPLICABLE TO ALL OPTIONS.
(I) CONSIDERATION. The purchase price of the shares of Common
Stock
acquired pursuant to an Option shall be paid in (i) cash in
Dollars at the time
the Op
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