SYNTAX GROUPS
CORPORATION
2005 STOCK INCENTIVE PLAN
2005 DEFERRED AND RESTRICTED STOCK PLAN
Section 1. General Purpose of Plan;
Definitions.
(a) This plan
is intended to implement and govern the 2005 Stock Option, Deferred
Stock and Restricted Stock Plan (the “Plan”) of Syntax
Groups Corporation, a California corporation (the
“Company”). The Plan was adopted by the Board of
Directors and shareholders of the Company as of June 10, 2005.
The purpose of the Plan is to enable the Company to obtain and
retain competent personnel who will contribute to the
Company’s success by their ability, ingenuity and industry,
and to provide incentives to such personnel and members that are
linked directly to increases in shareholder value, and will
therefore, inure to the benefit of all shareholders of the
Company.
(b) For
purposes of the Plan, the following terms shall be defined as set
forth below:
(1)
“ Administrator ” means the Board, or if the
Board does not administer the Plan, the Committee, in accordance
with Section 2.
(2)
“ Award ” means any award of Deferred Stock,
Restricted Stock, Stock Option, or other award deemed appropriate
by the Board if made pursuant to this agreement and all applicable
laws.
(3)
“ Board ” means the Board of Directors of the
Company.
(4)
“ Cause ” is defined, for purposes of this Plan
only, and unless otherwise specified in an Award, as:
(i) willful failure or refusal to follow material directions
of the Chief Executive Officer, the President, or the Board of
Directors of the Company, (ii) the engaging in misconduct
which is injurious to the Company or any of its divisions,
subsidiaries or affiliates, monetarily or otherwise,
(iii) conviction of a felony, (iv) conviction of a
misdemeanor involving moral turpitude, (v) material breach of
an agreement of confidentiality executed between the Company and
the Participant, as imposed by an employment agreement, consulting
agreement, non-disclosure agreement or otherwise,
(vi) intentional gross misconduct, (vii) dishonesty in
the performance of Participants duties and (viii) material
breach of the Employment Agreement, Consulting Agreement, or other
relationship between the Company and Participant (including,
without limitation, Participant’s failure, gross neglect of
or refusal to substantially perform Participant’s obligations
thereunder, except in the event of disability).
(5)
“ Code ” means the Internal Revenue Code of
1986, as amended from time to time, or any successor
thereto.
(6)
“ Commission ” means the Securities and Exchange
Commission.
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(7)
“ Committee ” means the Compensation Committee
of the Board, or any other Committee the Board may appoint to
administer the Plan. If at any time the Board shall administer the
Plan, then the functions of the Committee specified in the Plan
shall be exercised by the Board.
(8)
“ Company ” means Syntax Groups Corporation, a
corporation organized under the laws of California (or any
successor corporation) and any parent corporation within the
meaning of Section 425(e) of the Code, any subsidiary corporation
with the meaning of Section 424 (f) of the Code or any
majority-owned subsidiary of a parent corporation.
(9)
“ Deferred Stock ” means an award made pursuant
to Section 6 below of the right to receive Stock at the end of
a specified deferral period.
(10)
“ Disability ” means, except as otherwise
provided by the Administrator and except in connection with
exercise of an Incentive Stock Option whereby disability must meet
the meanings set forth in Section 409A(2)(C) of the Code,
permanent and total disability as determined under the
Company’s disability program or policy, or if such disability
program or policy does not exist, then any disability that renders
Participant unable to serve the Company in the capacity for which
such Participant served immediately prior to such
disability.
(11)
“ Effective Date ” shall mean the date provided
pursuant to Section 15.
(12)
“ Eligible Person ” means an employee, director,
consultant or advisor of the Company, whether an individual or
entity, eligible to participate in the Plan pursuant to
Section 4.
(13)
“ Exchange ” shall mean the New York Stock
Exchange, the NASDAQ Stock Market, or other securities trading
exchange that imposes conditions on Company.
(14)
“ Exchange Act ” means the Securities Exchange
Act of 1934, as amended.
(15)
“ Fair Market Value ” means, as of any given
date, with respect to any Awards granted hereunder, at the
discretion of the Administrator and subject to such limitations as
the Administrator may impose, (A) the closing sales price of
the Stock on such date, or (B) the average of the closing
sales price of the Stock on each day on which the Stock was traded
over a period of up to twenty trading days immediately prior to
such date, or (C) if the Stock is not publicly traded, the
fair market value of the Stock as otherwise determined by the
Administrator in the good faith exercise of its
discretion.
(16)
“ Incentive Stock Option ” means any Stock
option intended to be designated as an “incentive stock
option” within the meaning of Section 422 of the
Code.
(17)
“ Initial Public Offering ” means the first day
as of which sales of Common Stock are made to the public pursuant
to the first underwritten public offering of the Common
Stock.
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(18)
“ Non-Qualified Stock Option ” means any Stock
Option that is not an Incentive Stock Option, including any Stock
Option that provides (as of the time such option is granted) that
it will not be treated as an Incentive Stock Option.
(19)
“ Participant ” means any Eligible Person
selected by the Administrator pursuant to the Administrator’s
authority in Section 2 below to receive Awards.
(20)
“ Restricted Period ” means the period set by
the Administrator as it pertains to Deferred Stock or Restricted
Stock awards pursuant to Section 6.
(21)
“ Restricted Stock ” means an award of shares of
Stock granted pursuant to Section 6 subject to restrictions that
will lapse with the passage of time or upon the attainment of
performance objectives.
(22)
“ Securities Act ” means the Securities Act of
1933, as amended.
(23)
“ Stock ” means the common or preferred stock of
the Company, subject to the Company’s stockholders’
agreement then in effect.
(24)
“ Stock Option ” means a right to purchase
shares of Stock granted pursuant to Section 5. For the
purposes of the Plan, a Stock Option may be either (i) an
“Incentive Stock Option” (ISO) within the meaning
of Section 422 of the Code or (ii) an option which is not
an Incentive Stock Option (a “Nonstatutory Stock
Option” (NSO)), as chosen by the Administrator in its sole
discretion.
Section 2. Administration.
(a) The Plan
shall be administered by the Board or by a Committee appointed by
the Board, which shall serve at the pleasure of the Board;
provided , however , that if the Stock is registered
under Section 12 of the Exchange Act then the Plan shall be
administered, and each grant shall be approved, by (i) the
Board or (ii) a Committee appointed by the Board whereby each
Committee member consists of (x) an “independent
director” under rules adopted by the applicable Exchange;
(y) a “non-employee director” for purposes of such
Rule 16b-3 under the Exchange Act and (iv) an
“outside director” under Section 162(m) of the Code. No
member of the Committee shall be liable for any action or
determination made in good faith by the Committee with respect to
the Plan or any Award.
(b) The
Administrator shall have the power and authority to grant to
Eligible Persons, pursuant to the terms of the Plan: (i) Stock
Options, (ii) Deferred Stock, (iii) Restricted Stock, or
(iv) any combination of the foregoing.
In particular, the
Administrator shall have the authority:
(1) to
select those employees, directors, consultants or advisors of the
Company who are Eligible Persons;
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(2) to
determine whether and to what extent Awards or a combination of
Awards are to be granted to Eligible Persons of the
Company;
(3) to
determine the number of shares of Stock to be covered by each such
Award;
(4) to
determine the terms and conditions, not inconsistent with the terms
of the Plan, of any such Award including, but not limited to,
(i) the restricted period applicable to Deferred Stock or
Restricted Stock awards, (ii) the date or dates on which
restrictions applicable to such Deferred Stock or Restricted Stock
shall lapse during such period, and (iii) when and in what
increments shares covered by Stock Options may be purchased,
subject to applicable rules and regulations and restrictions set
forth herein; and
(5) to
determine the terms and conditions, not inconsistent with the terms
of the Plan, which shall govern all written instruments evidencing
any Award.
(c) The
Administrator shall have the authority, in its discretion, to
adopt, alter and repeal such administrative rules, guidelines and
practices governing the Plan as it shall from time to time deem
advisable; to interpret the terms and provisions of the Plan and
any Award issued under the Plan (and any agreements relating
thereto); and to otherwise supervise the administration of the
Plan.
(d) All
decisions made by the Administrator pursuant to the provisions of
the Plan shall be final and binding on all persons, including the
Company and the Participants.
Section 3. Stock Subject to
Plan.
(a) The total
number of shares of Common Stock reserved and available for
issuance under this Plan shall be 1,000,000 shares. Such shares may
consist of treasury Stock or authorized but unissued
shares.
(b) To the
extent that (i) a Stock Option expires or is otherwise
terminated without being exercised or (ii) any shares of Stock
subject to any Deferred Stock or Restricted Stock award granted
hereunder are forfeited, such shares shall again be available for
issuance in connection with future Awards under the Plan. If any
shares of Stock have been pledged as collateral for indebtedness
incurred by a Participant in connection with the exercise of a
Stock Option and such shares are returned to the Company in
satisfaction of such indebtedness, such shares shall again be
available for issuance in connection with future Awards under the
Plan. If the exercise price of any Stock Option award, or the
withholding obligation arising from a Stock Option granted under
the Plan is satisfied by tendering shares of Stock to the Company
(by either actual delivery of by attestation), only the number of
shares of Stock issued, not of the shares of Stock tendered, shall
be deemed delivered for purposes of determining the maximum number
of shares of Stock available for delivery under the
Plan.
(c) In the
event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split, reverse stock split
or other change in corporate structure affecting the Stock, an
appropriate substitution or adjustment shall be made in
(i) the aggregate number of shares reserved for issuance under
the Plan, and (ii) the kind, number and option price of shares
subject to outstanding Awards granted under the Plan as may be
determined by the Administrator, in its sole discretion, provided
that the number of shares subject to any
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Award shall
always be a whole number. Such other substitutions or adjustments
shall be made as may be determined by the Administrator, in its
sole discretion; provided , however , that with
respect to Incentive Stock Options, such adjustment shall be made
in accordance with Section 424 of the Code.
Officers,
employees and directors of, and consultants and advisors providing
services to, the Company shall be eligible to be granted Awards
hereunder, including Deferred Stock, Restricted Stock and Stock
Options (Non-Qualified only). Officers and other key employees
(defined by Treasury Regulation Section 1.421-7(h)) of
the Company shall also be eligible to be granted Incentive Stock
Options hereunder. The Participants under the Plan shall be
selected from time to time by the Administrator, in its sole
discretion, from among the Eligible Persons recommended by the
senior management of the Company, and the Administrator shall
determine, in its sole discretion, the number of shares covered by
each Award.
Section 5. Stock Options for Eligible
Persons.
(a) Stock
Options may be granted to Eligible Persons alone or in addition to
other Awards granted under the Plan. Any Stock Option granted under
the Plan shall be in such form as the Administrator may from time
to time approve, and the provisions of Stock Option awards need not
be the same with respect to each optionee. Recipients of Stock
Options shall enter into a stock option agreement with the Company,
in such form as the Administrator shall determine, which agreement
shall set forth provisions, among other things the exercise price
of the option, the term of the option and exercisability of the
option granted thereunder. The prospective recipient of a Stock
Option shall not have any rights with respect to such Award, unless
and until such recipient has executed an agreement evidencing the
Award (a “Stock Option Agreement” and has delivered a
fully executed copy thereof to the Company, within a period of
sixty days (or such other period as the Administrator may specify)
after the Award date.
The Stock Options
granted under the Plan to Eligible Persons may be of two types: (x)
Incentive Stock Options and (y) Non-Qualified Stock
Options.
(b) The
Administrator shall have the authority under this Section 5 to
grant any optionee Incentive Stock Options, Non-Qualified Stock
Options, or both types of Stock Options; provided ,
however , that Incentive Stock Options may not be granted to
any individual who is not an employee of the Company. To the extent
that any Stock Option does not qualify as an Incentive Stock
Option, it shall constitute a separate Non-Qualified Stock Option.
More than one option may be granted to the same optionee and be
outstanding concurrently hereunder.
(c) Unless
the Administrator shall deem otherwise on an individualized basis,
Stock Options granted under the Plan shall be subject to the
following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of the Plan,
as the Administrator shall, in its sole discretion, deem
desirable:
(i)
Option Price . The option price per share of Stock
purchasable under an Incentive Stock Option shall be determined by
the Administrator, in its sole discretion, at the time of grant but
shall be
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not less than
100% of the Fair Market Value of the Stock on such date, and shall
not, in any event, be less than the par value of the Stock, if any.
The option price per share of Stock purchasable under a
Non-Qualified Stock Option may be less than 100% of such Fair
Market Value, but in no event less than 85% of such Fair Market
Value. If an employee owns or is deemed to own (by reason of the
attribution rules applicable under Section 424(d) of the Code) more
than 10% of the combined voting power of all classes of stock of
the Company and an Incentive Stock Option is granted to such
employee, the option price of such Stock Option (to the extent
required by the Code at the time of grant) shall be no less than
110% of the Fair Market Value of the Stock on the date such Stock
Option is granted.
(ii)
Option Term . The term of each Stock Option shall be fixed
by the Administrator, but no Stock Option shall be exercisable more
than ten years after the date such Stock Option is granted;
provided , however , that if an employee owns or is
deemed to own (by reason of the attribution rules of Section 424(d)
of the Code) more than 10% of the combined voting power of all
classes of stock (as defined in Section 422(b)(6)) and an
Incentive Stock Option is granted to such employee, the term of
such Incentive Stock Option (to the extent required by the Code at
the time of grant) shall be no more than five years from the date
of grant.
(iii)
Exercisability . Stock Options shall be exercisable at such
time or times and subject to such terms and conditions as shall be
determined by the Administrator at or after grant; provided
, however , that, except as provided herein, agreed to in
the Stock Option Agreement, or unless otherwise determined by the
Administrator at or after grant, Stock Options shall be exercisable
up to ten (10) years following the date of grant of the
option. Subject to the provisions of this Plan, the Administrator,
in its sole and absolute discretion, may also determine all of the
terms and conditions of each Award granted under this Plan, which
may include, among other things:
(a) a
provision conditioning or accelerating the receipt of benefits
pursuant to such Award, either automatically or in the discretion
of the Administrator, upon the occurrence of specified events,
including, without limitation, the achievement of performance
goals, the exercise or settlement of a previous Award, the
satisfaction of an event or condition within the control of the
recipient of the Award or within the control of others, a change of
control of the Company (as defined by the Administrator or as set
forth in the agreement evidencing the Award), an acquisition of a
specified percentage of the voting power of the Company, the
dissolution or liquidation of the Company or a sale of
substantially all of the property and assets of the
Company;
(b) a
right to repurchase the Stock acquired upon exercise of an Award if
the Participant’s employment or association with the Company
or any of its subsidiaries is terminated for any reason, or in
other circumstances, at the exercise price thereof, the Fair Market
Value thereof (or the higher or lower thereof, as may be prescribed
by the Administrator) or such other price as may be prescribed by
the Administrator. Each certificate representing Common or
Preferred Stock subject to such provisions shall bear a legend to
the effect that such shares are subject to certain repurchase
rights of the Company; provided, however, that the failure to
include such a legend shall not affect the exercisability of such
repurchase right; or
(c) a
provision that upon a termination of employment or consulting
relationship for Cause, the Participant will not be entitled to
exercise any Awards or rights therein, whether vested or unvested,
at any time after such termination.
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(iv)
Method of Exercise . Subject to Subsection 5(c)(iii), Stock
Options may be exercised in whole or in part at any time during the
option period by giving written notice of exercise to the Company
specifying the number of shares to be purchased, accompanied by
payment in full of the purchase price in cash or a cash equivalent,
as determined by the Administrator. The Administrator may also, in
its sole discretion, accept payment in whole or in part on behalf
of the Company (i) in the form of unrestricted Stock already
owned by the optionee, or, in the case of the exercise of a
Non-Qualified Stock Option, Restricted Stock subject to an Award
hereunder (based, in each case, on the Fair Market Value of the
Stock), (ii) by cancellation of any indebtedness owed by the
Company to the optionee, (iii) by a full recourse promissory
note executed by the optionee, (iv) by requesting that the
Company withhold whole shares of Stock then issuable upon exercise
of the Stock Option (based on the Fair Market Value of the Stock),
(v) by arrangement with a broker which is acceptable to the
Administrator where payment of the option price is made pursuant to
an irrevocable direction to the broker to deliver all or part of
the proceeds from the sale of the shares underlying the option to
the Company, or (vi) by any combination of the foregoing;
provided , however , that in the case of an Incentive
Stock Option, the right to make payment in the form
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