formpre14-c.htm
 



UNITED STATES
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
SCHEDULE 14C
 
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
 
Check the appropriate box:
   
X
Preliminary Information Statement
Confidential, for Use of the Commission Only (as permitted by Rule 14c-5(d)(2))
Definitive Information Statement
 
TAPIMMUNE INC.
(Name of Registrant as Specified in the Charter)

 
Payment of Filing Fee (Check the appropriate box):

 
X           No fee required.

 
           Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
           (1)  Title of each class of securities to which transaction applies:                                                                                                

           (2)  Aggregate number of securities to which transaction applies:                                                                                                           

          (3)   Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 
                   (Set forth the amount on which the filing fee is calculated and state how it was determined):

           (4)  Proposed maximum aggregate value of transaction:

           (5)  Total fee paid:
 
           Fee paid previously with preliminary materials.
 
          Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by
      registration statement number, or the Form or Schedule and the date of its filing.
 
             (1)  Amount Previously Paid:
 
             (2)  Form, Schedule or Registration Statement No.:
 
             (3)  Filing Party:

             (4)  Date Filed:

 

 


 
INFORMATION STATEMENT

OF

TAPIMMUNE INC.

800 Bellevue Way NE, Suite 400
Bellevue, WA 98004

We Are Not Asking You For A Proxy, And You Are Requested Not To Send Us A Proxy.

This Information Statement is to notify shareholders of our common stock of actions to be taken by the majority shareholders of our common stock in lieu of a special meeting of shareholders. This Information Statement is being mailed on or about January     , 2010 to all of our shareholders of record at the close of business on January   , 2009 (the "Record Date"). As of the Record Date, there were approximately 38,361,674 shares entitled to vote on the matters set forth herein.

Holders of 21,331,209 shares of our common stock, representing approximately 55.6% of our outstanding common stock, have executed a written consent in lieu of Annual Meeting (the "Written Consent"), with an effective date of December 28, 2009 to
 
 
amend our Articles of Incorporation, in the form of Exhibit A, to increase our authorized share capital from 55 million authorized shares, consisting of 50 million shares of common stock and 5 million shares of preferred stock, to 155,000,000 million authorized shares, consisting of 150,000,000 million shares of common stock and 5 million shares of preferred stock,

 
adopt the 2009 Stock Incentive Plan (the "Plan"), substantially in the form of Exhibit B, pursuant to which our board of directors is given the ability to provide incentives through the issuance of options, stock, restricted stock, and other stock-based awards, representing up to 10,000,000 shares of our common stock, to certain employees, directors, officers and consultants and
 
­●
reduce the exercise price of the options granted under our 2007 Stock Incentive Plan to purchase common shares from $2.50 per common share to $0.97 per common share.
 
The actions described above will take effect approximately 20 days after the mailing of this Information Statement to our shareholders on the Record Date.
Because holders of approximately 21,331,209 of our common stock, representing 55.6% of our outstanding common stock, have executed the Written Consent, no vote or consent of any other shareholder is being, or will be, solicited in connection with the authorization of the matters set forth in the Written Consent. Under Nevada law, the votes represented by the holders signing the Written Consent are sufficient in number to authorize the matters set forth in the Written Consent, without the vote or consent of any of our other shareholders. Nevada statutes provide that any action that is required to be taken, or that may be taken, at any annual or special meeting of shareholders of a Nevada corporation may be taken, without a meeting, without prior notice and without a vote, if a written consent, setting forth the actions taken, is signed by the holders of outstanding capital stock having not less than the minimum number of votes necessary to authorize such action.

This Information Statement is expected to be mailed to shareholders on or about January    , 2009. We will bear all expenses incurred in connection with the distribution of this Information Statement. We will reimburse brokers or other nominees for reasonable expenses they incur in forwarding this material to beneficial owners.  The actions in the Written Consent and the director and officer appointment will take effect on or shortly after [20 days after the mailing of the Definitive Information Statement].

 
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SHAREHOLDERS’ WRITTEN CONSENT
IN LIEU OF SPECIAL MEETING OF
TAPIMMUNE INC.

INFORMATION ON CONSENTING SHAREHOLDERS

Pursuant to our Bylaws and the Nevada Revised Statutes, a vote by the holders of at least a majority of our outstanding capital stock is required to effect the actions described herein.  As of the Record Date, we had 38,361,674 shares entitled to vote on the matters set forth herein of which 19,180,837 shares are required to pass any shareholder resolutions. The majority shareholders, who consist of nine of our current shareholders, are collectively the record and beneficial owners of 21,331,209 of our shares of common stock, which represents 55.6% of the issued and outstanding shares of our common stock on a fully diluted basis. Pursuant to 78.320 of the Nevada Revised Statutes, the majority shareholders voted in favor of the actions described herein in a Written Consent, dated December 28, 2009. There are no cumulative voting rights.  No consideration was paid for the consent.

NOTICE TO SHAREHOLDERS OF ACTION APPROVED BY CONSENTING SHAREHOLDERS

The following corporate action described in this Information Statement (i) was approved by stockholders voting approximately 55.6% of our outstanding capital stock entitled to vote, (ii) will become effective on or shortly after [the twentieth day following the filing of the Definitive Information Statement], (iii) will not result in any appraisal or dissenters’ rights and (iv) may be abandoned by our Board of Directors prior to effectiveness without any further vote of our shareholders.

ACTION I
AMENDMENT TO ARTICLES OF INCORPORATION

The majority shareholders and the Board of Directors have approved an amendment to our Articles of Incorporation, attached hereto as Exhibit A, to increase the number of authorized shares of capital stock from 55,000,000 to 155,000,000.  Our current Articles of Incorporation authorizes 50,000,000 shares of common stock, and the amendment to our Articles of Incorporation would authorize 150,000,000 shares of common stock. Our current Articles of Incorporation authorizes 5,000,000 shares of preferred stock, and the amendment to our Articles of Incorporation would continue to authorize the same amount of preferred stock.

The relative rights and limitations of the shares of common stock would remain unchanged by the amendment to our Articles of Incorporation.

REASON FOR, AND THE EFFECT OF, THE INCREASE IN AUTHORIZED COMMON STOCK

Our management has approved the corporate actions described in this Information Statement in an attempt to allow us to raise additional capital.  We currently have 50,000,000 authorized shares of common stock, of which 38,361,674 are outstanding and over 6,000,000 of which are reserved for issuance upon the exercise of warrants and options or the conversion of debt.  Our management believes that to successfully raise additional capital through equity financing or convertible debt, we will need to have more authorized but unissued and unreserved shares than the under 6,000,000 that are currently authorized but unissued or reserved.  Our management has yet to enter into any arrangements by which it would raise additional capital through an equity or convertible debt issuance that would result in us committing to issue or reserve shares of our common stock that would cause us to exceed our current authorized share capital.

As a result of increasing our authorized common stock, we will be in a better position to raise additional capital.  Any raise of additional capital may have the effect of diluting your percentage ownership of our Company and, depending on the issuance price, the net tangible book value per share of the shares that you purchased.

 
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ACTION II
ADOPTION OF 2009 STOCK INCENTIVE PLAN

The majority shareholders and the Board of Directors have approved a plan that will enable us to grant equity and equity-linked awards to our directors, officers, employees and consultants. This plan is called the "2009 Stock Incentive Plan". The Plan is intended to allow us to provide incentives that will (i) strengthen the desire of highly competent persons to serve as directors, officers and employees of our Company and (ii) further stimulate their efforts on behalf of our Company.

ADDITIONAL INFORMATION CONCERNING THE 2009 STOCK INCENTIVE PLAN

We have summarized below certain key provisions of the 2009 Stock Incentive Plan. This summary may not contain all the information that is important to you. You should review the entire Plan, a copy of the Plan is included as Exhibit B.

Shares Available

The maximum number of shares of our common stock that may be delivered under the Plan is 10,000,000 subject to adjustment for certain specified changes to our capital structure. Some awards under the Plan may link future payments to the awardee to the future value of a specified number of shares of our common stock. The number of shares used for reference purposes in connection with these awards will be considered "delivered" for purposes of computing the maximum number of shares that may be delivered under the Plan. If an award under the Plan terminates without the shares subject thereto being delivered, the shares subject to such award will thereafter be available for further awards under the Plan.

Eligibility

All directors, officers and employees of, and consultants to, our Company are eligible to participate in the Plan.
 
Administration

The administrator of the Plan will be the Board or any committee which the Board designates to serve as the administrator of the Plan. The Board or designated committee serving as administrator (the "Administrator") will, among other things, have the authority to (i) construe the Plan and any award under the Plan, (ii) select the directors, officers, employees and consultants to whom awards may be granted and the time or times at which awards will be granted. (iii) determine the number of shares of our common stock to be covered by or used for reference purposes for any award, (iv) determine and modify from time to time the terms, conditions, and restrictions of any award, (v) approve the form of written instrument evidencing any award, (vi) accelerate or otherwise change the time or times at which an award becomes vested or when an award may be exercised or becomes payable, (vii) waive, in whole or in part, any restriction or condition with respect to any award and (viii) modify, extend or renew outstanding awards, or accept the surrender of outstanding awards and substitute new awards.

The Administrator has not yet made any awards under the Plan. Because the granting of awards is in the sole discretion of the Administrator, the nature and magnitude of future awards cannot currently be determined.

Types of Awards

The types of awards that may be made under the Plan are shares, options, stock appreciation rights, restricted stock awards, stock units and dividend equivalent rights. The Administrator will fix the terms of each award, including, to the extent relevant, the following: (1) exercise price for options, base price for stock appreciation rights, and purchase price, if any, for restricted stock awards, (2) vesting requirements and other conditions to exercise, (3) term and termination, (4) effect, if any, of change of control and (5) method of exercise and of any required payment by the recipient. Additional information concerning the types of awards that may be made is set forth below.

 
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Stock Options. The Administrator may grant options that are qualified as "incentive stock options" under Section 422 of the Internal Revenue Code ("ISOs") and options that are not so qualified ("non-qualified options"). ISOs are subject to certain special limitations, including the following: (1) the exercise price per share may not be less than 100% of the fair market value per share of our common stock as of the grant date (110% of such fair market value, if the recipient owns more than 10% of the total combined voting power of all classes of our outstanding shares), (2) the term may not exceed 10 years, and (3) the recipient must be an employee of our Company.

Stock Appreciation Rights. A stock appreciation right gives the holder the opportunity to benefit from the appreciation of our common stock over a specified base price determined by the Administrator. Upon exercise of a stock appreciation right, the holder has the right to receive in respect of each share subject thereto a payment equal to the excess, if any, of: (1) the fair market value of a share of our common stock as of the exercise date over (2) the specified base price. At the discretion of the Administrator, any required payment may be made in cash, shares of our common stock, or both.

Restricted Stock Awards. A restricted stock award entitles the recipient to acquire shares of our common stock for no consideration or for the consideration specified by the Administrator. The shares will be subject to such vesting periods and other restrictions and conditions as the Administrator determines.

Stock Units. A stock unit is a bookkeeping account to which there is credited the fair market value of a share of our common stock. The value of the account is subsequently adjusted to reflect changes in the fair market value. Upon exercise of a stock unit, the holder is entitled to receive the value of the account. At the discretion of the Administrator, any required payment may be made in cash, shares of our common stock, or both.

Dividend Equivalent Rights. A dividend equivalent right is an Award entitling the recipient to receive credits based on cash distributions that would have been paid on common shares specified in the dividend equivalent right (or other award to which it relates) if such shares had been issued to and held by the recipient. The Administrator may grant a dividend equivalent right as a component of another Award or as a freestanding Award and it shall specify the terms in such grant.

Certain Corporate Transactions

If certain corporate transactions specified in the Plan occur, the Administrator may make appropriate or equitable adjustments to the Plan and Awards, including (1) the number of shares of stock that can be granted, (2) the number and kind of shares or other securities subject to any then outstanding awards and (3) the exercise price, base price, or purchase price applicable to outstanding Awards under the Plan.

The Administrator may cancel outstanding awards, but not outstanding stock or restricted stock awards, in connection with any merger or consolidation of our Company or any sale or transfer of all or part of our assets or business, or any similar event. The Administrator may determine to make no compensation whatsoever for any canceled awards that are not in-the-money (as defined below) or for any canceled awards to the extent not vested. We are required to provide payment in cash or other property for the in-the-money value of the vested portion of awards that are in-the-money and that are canceled as aforesaid. Awards are in-the-money only to the extent of their then realizable market value, without taking into account the potential future increase in the value of the award (whether under Black-Scholes-type formulas or otherwise).

Amendment

The board may amend the Plan at any time and from time to time, provided that (1) no amendment may deprive any person of any rights granted under the Plan before the effective date of such amendment, without such person's consent; and (2) amendments may be subject to shareholder approval to the extent needed to comply with applicable law and stock exchange requirements.

 
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Term of Plan

No award may be granted under the Plan after the close of business on the day immediately preceding the tenth anniversary of the effective date of the Plan. However, all awards made prior to such time will remain in effect in accordance with their terms.

Certain Federal Income Tax Considerations

Matters Relating to Section 162(m) of the Internal Revenue Code

Under Section 162(m) of the Internal Revenue Code, we are generally precluded from deducting compensation in excess of $1 million per year paid to our chief executive officer and our next four highest paid executive officers. For purposes of this limitation, there is excluded from compensation any payments that an executive receives under performance-based plans that meet certain requirements specified by the Internal Revenue Code. The Plan does not qualify as a performance-based plan and, accordingly, compensation realized in respect of awards will be subject to the Section 162(m) limitation. Consequently, the granting of awards under the Plan, either alone or in conjunction with other compensation, could cause us to have non-deductible compensation expense.

Matters Relating to Change of Control

The Administrator may provide that the vesting of an award be accelerated upon a change of control. In such event, all or a portion of the relevant award may be deemed a "parachute payment." Under provisions of the Internal Revenue Code, (1) the recipient of an "excess parachute payments" (as defined in Section 280G of the Internal Revenue Code) would be required to pay a 20% excise tax thereon (in addition to income tax otherwise owed) and (2) the "excess parachute payment" would not be deductible to our Company. If any of our executive officers is required to pay such an excise tax, we will be required to pay the executive an amount that is sufficient on an after-tax basis to offset such payment.

Non-Qualified Options. No income will be recognized by a participant upon the grant of a non-qualified option. Upon exercise, the participant will generally have ordinary income in the amount equal to the excess of the fair market value of the shares acquired over the exercise price. The income recognized by an employee participant will be subject to tax withholding. Upon a later sale of such shares, the participant will have capital gain or loss in an amount equal to the difference between the amount realized on such sale and the tax basis of the shares sold. We will be entitled to a tax deduction in the same amount as the ordinary income recognized by the participant with respect to shares acquired upon exercise of the non-qualified option.

Incentive Stock Options. No income will be recognized by a participant upon the grant of an incentive stock option. Further, the participant will recognize no income at the time of exercise (although a participant may have income for purposes of alternative minimum tax calculations) and we will not be allowed a deduction for federal income tax purposes in connection with the grant or exercise of an option. If the participant holds the acquired shares two years from the date of grant and one year from the date of exercise the entire gain (or loss) realized when the participant eventually disposes of the stock is treated as long term capital gain (or loss). If the shares are disposed of before such holding period requirements are satisfied, the participant will recognize ordinary income in an amount equal to the lesser of the difference between (1) the exercise price and the fair market value of the shares on the date of exercise or (2) the exercise price and the sales proceeds. Any remaining gain or loss will be treated as capital gain or loss. We will be entitled to a federal income tax deduction equal to the amount of ordinary income recognized by the participant.

 
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INTERESTS OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON

Upon the adoption of the Plan, we intend to use the Plan to compensate our directors, officers, employees and consultants with equity compensation. However, there is no current agreement or obligation obligating us to provide equity compensation and no determination has yet been made regarding potential equity compensation grants.
 
REASON FOR, AND THE EFFECT OF, THE ADOPTION OF THE 2009 STOCK INCENTIVE PLAN

We depend on our key employees.  Due to the specialized nature of our business and the biotech industry in general, our success depends upon our ability to attract and retain qualified scientific and executive personnel.  We will implement the 2009 Stock Incentive Plan to entice potential management candidates and to encourage those working for us to remain in those positions.  We believe that the 2007 Stock Option Plan alone is no longer sufficient to meet these goals.  If the awards under the 2009 Stock Incentive Plan are granted, your ownership interest in our Company and the value of your common stock could be diluted. 

ACTION III
REDUCTION OF EXERCISE PRICE OF OPTIONS ISSUED UNDER 2007 STOCK INCENTIVE PLAN

The majority shareholders and the Board of Directors have approved a reduction in the exercise price of the options granted under our 2007 Stock Incentive Plan from $2.50 per common share to $0.97 per common share, the closing price of the common shares on the Over-the-Counter Bulletin Board on the date of the Board of Directors resolution approving the amendment.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

The following table sets forth the compensation paid to our Principal Executive Officer during our fiscal years ended December 31, 2008 and December 31, 2007:
 
Summary Compensation Table
Name and Principal
Position
Year
Salary
($)
Bonus
($)
Stock
Awards
($)
Option
Awards
($)
All Other
Compen-sation
($)
Total
($)
Denis Corin
President, CEO(1)
2008
2007
132,000
102,546
Nil
40,000
Nil
Nil
Nil
120,000
Nil
Nil
133,332
262,546
(1) Denis Corin resigned as our Chief Executive Officer on July 1, 2009, but remains as our President.  His resignation as our Chief Executive Officer has not affected his compensation levels.

The amounts represent fees paid or accrued by us to the Principal Executive Officer during the past year pursuant to various employment and consulting services agreements, as between us and the Principal Executive Officer, which is described below.  Our Principal Executive Officer is also reimbursed for any out-of-pocket expenses incurred by him in connection with his duties.  We presently have no pension, health, annuity, insurance, profit sharing or similar benefit plans.
 
The following table sets forth information as at December 31, 2008 relating to outstanding equity awards for our Chief Executive Officer:
 
Outstanding Equity Awards at Year End Table
Name
Number of
Securities
Underlying
Unexercised
Options
(exercisable)
Number of
Securities
Underlying
Unexercised
Options
(unexercisable)
Number of
Securities
Underlying
Unexercised
Unearned
Options
Option
Exercise
Price
Option
Expiration
Date
Denis Corin
President, CEO (1)
80,000
Nil
Nil
$2.50 (2)
06/08/17
(1) Denis Corin resigned as our Chief Executive Officer on July 1, 2009, but remains as our President.  His resignation as our Chief Executive Officer has not affected his compensation levels.
(2) To be reduced to $0.97 upon effectiveness of this action.

 
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The following table sets forth information relating to compensation paid to our directors in the fiscal year ended December 31, 2008:
 
Director Compensation Table
Name
Year
Fees
Earned or
Paid in
Cash
Stock
Awards
($)
Option
Awards
($)
All Other
Compensation
($)
Total
($)
Alan P. Lindsay (1)
2008
2007
100,000
99,997
Nil
Nil
Nil
168,000
Nil
Nil
100,000
267,997
Glynn Wilson
2008
2007
42,000
10,500
Nil
Nil
Nil
76,000
Nil
Nil
42,000
86,500
Patrick A. McGowan (1)
2008
2007
34,162
33,589
Nil
Nil
Nil
76,000
Nil
Nil
34,162
109,589
 (1) Resigned as one of our directors on July 1, 2009.

Corin Executive Services Agreements

On November 17, 2006, our Board of Directors, in consultation with our Compensation Committee, completed an executive services agreement with Denis Corin, our President.  The terms of the agreement, as determined by our Compensation Committee, provides for, among other matters, the provision for monthly consulting fees of approximately $4,300 (CAN$5,000) during an eight-month initial term, and the granting of an aggregate of not less than 40,000 stock options to acquire a similar number of our common shares at an exercise price of $2.50 per common share for a period of not less than five years from the date of grant, an exercise price which would be reduced $0.97 per common share upon the effectiveness of the actions described herein.
 
On June 30, 2007, with an effective date of May 1, 2007, our Board of Directors approved an amended executive services agreement with Mr. Corin with a one year term.  The amended agreement, provides for an increase in the month consulting fees to $10,000 USD per month through the term of the agreement, and an increase providing for the granting of an aggregate of not less than 80,000 stock options to acquire a similar number of our common shares at an exercise price of $2.50 per common share for a period of not less than five years from the date of grant, an exercise price which would be reduced $0.97 per common share upon the effectiveness of the actions described herein.
 
Compensation Committee

Our compensation committee is comprised of our three directors.  All compensation is recommended and resolved by the compensation committee and board of directors.

REASON FOR, AND THE EFFECT OF, THE DECREASE IN EXERCISE PRICE

We depend on our key employees.  Due to the specialized nature of our business and the biotech industry in general, our success depends upon our ability to attract and retain qualified scientific and executive personnel.  We established the 2007 Stock Incentive Plan to entice potential management candidates and to encourage those working for us to remain in those positions.  We believe that the current exercise price of $2.50 under the plan is no longer sufficient to meet these goals as our share price has been significantly below the exercise price for some time and that the new exercise price of $0.97 will help us achieve the initial purpose of the 2007 Stock Incentive Plan.


 
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INTEREST OF CERTAIN PERSONS IN OR IN OPPOSITION TO MATTERS TO BE ACTED UPON
 
Except as set out below, none of the following persons has any substantial interest, direct or indirect, by security holdings or otherwise in any matter to be acted upon: (i) any director or officer of our Company, (ii) any proposed nominee for election as a director of our Company and (iii) any associate of affiliate of any of the foregoing persons.  No director has advised that he intends to oppose any of the actions set out in this Information Statement.

Our director, Denis Corin, has a substantial interest in the corporate action to reduce the exercise price of the options granted under the 2007 Stock Option Plan.  As of the date hereof, Mr. Corin has a beneficial interest in 100,000 vested options exercisable at $2.50 and Glynn Wilson has 40,000 vested options exercisable at $2.50.  Upon the effectiveness of this corporate action, the exercise price on Mr. Corin’s and Mr. Wilson’s vested options will be reduced to $0.97.
 
 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
  
The following table sets forth, as of December 31, 2009, certain information with respect to the beneficial ownership of our 38,361,674 shares of outstanding common stock by each stockholder known by us to be the beneficial owner of more than 5% of our common stock and by each of our current directors, our chief executive officer and our four most highly compensated executive officers (other than our chief executive officer) as at December 31, 2008. Each person has sole voting and investment power with respect to the shares of common stock, except as otherwise indicated. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated.

Title of Class
Name of Beneficial Owner
Shares of Common Stock
 
Percent of Class
         
Common
Denis Corin (1)
2,231,450
 
5.8%
Common
Tracy A. Moore
50,000
 
0.1%
Common
Glynn Wilson
900,000
 
2.3%
Common
Patrick Kephart (2)
2,318,830
 
6.0%
Common
Alan Lindsay (3)
2,282,880
 
5.9%
Common
New Paradigm Capital
4,077,100
 
10.6%
Common
Michelle Stannard
2,496,892
 
6.5%
Common
Steven Sanders
2,185,283
 
5.7%
Common
Douglas Brown
2,606,345
 
6.8%
Common
St. George Trust Company Ltd.
5,335,640
 
13.9%
 
Directors and Officers as a group
 
 
3,131,450
 
 
8.2%
(1)  Includes shares held by Lee-Anne Corin, the spouse of Denis Corin.
(2)  Includes shares held by KEPFAM Holdings LLLP. 
(3)  Includes shares held by Alan Lindsay & Associates.

ADDITIONAL AVAILABLE INFORMATION
  
We are subject to the information and reporting requirements of the Securities Exchange Act of 1934, and in accordance with such Act we file periodic reports, documents and other information with the Securities and Exchange Commission relating to our business, financial statements and other matters, such reports and other information may be inspected and are available for copying at the offices of the Securities and Exchange Commission, 100 F Street, N.E., Washington, D.C. 20549 or may be accessed at www.sec.gov. 

 
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EXHIBIT A
 
CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORPORATION
FOR NEVADA PROFIT CORPORATIONS
(PURSUANT TO NRS 78.385 AND 78.390 - AFTER ISSUANCE OF STOCK)


1. Name of corporation: TapImmune Inc.

2. The articles have been amended as follows (provide article numbers, if available):
 
 
3:  The number of authorized shares with a par value of $0.001 per share is 150,000,000 common shares and 5,000,000 preferred shares.
 
3. The vote by which the shareholders holding shares in the corporation entitling them to exercise at least a majority of the voting power, or such greater proportion of the voting power as may be required in the case of a vote by classes or series, or as may be required by the provisions of the articles of incorporation have voted in favor of the amendment is:   21,331,209 of 38,361,674 shares outstanding (55.6%).

4. Effective date of filing (optional): - --------------------------------------------------------

5. Officer Signature (required): - ------------------------------------------------
 

 

 

 
 
EXHIBIT B
 
TAPIMMUNE INC.

2009 STOCK INCENTIVE PLAN
1.
PURPOSE
1.1                      The purpose of this Stock Incentive Plan (the “Plan”) is to advance the interests of TapImmune Inc. (the “Company”) by encouraging Eligible Participants (as herein defined) to acquire shares of the Company, thereby increasing their proprietary interest in the Company, encouraging them to remain associated with the Company and furnish them with additional incentive in their efforts on behalf of the Company in the conduct of their affairs.
1.2                      This Plan is specifically designed for Eligible Participants of the Company who are residents of the United States and/or subject to taxation in the United States, although Awards (as herein defined) under this Plan may be issued to other Eligible Participants.
1.3                      This Plan supersedes and replaces, in its entirety, the Company’s existing 2007 Stock Incentive Plan, dated as originally ratified by the Board of Directors of the Company on June 8, 2007, except that any “Awards” theretofore granted by the Company under its 2007 Stock Incentive Plan are necessarily brought forward by the Company and covered now by the terms and conditions of this Plan.
2.
DEFINITIONS
2.1                      As used herein, the following definitions shall apply:
 
(a)
Administrator” means the Committee or otherwise the Board;
 
(b)
Affiliate” and “Associate” have the meanings ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act;
 
(c)
Applicable Laws” means the legal requirements relating to the administration of stock incentive plans, if any, under applicable provisions of federal securities laws, state corporate laws, state or provincial securities laws, the Code, the rules of any applicable stock exchange or national market system, and the rules of any foreign jurisdiction applicable to Awards granted to residents therein;
 
(d)
Award” means the grant of an Option, SAR, Restricted Stock, unrestricted Shares, Restricted Stock Unit, Deferred Stock Unit or other right or benefit under this Plan;
 
(e)
Award Agreement” means the written agreement evidencing the grant of an Award executed by the Company and the Grantee, including any amendments thereto;
(f)            “Award Right” means each right to acquire a Share pursuant to an Award;
(g)           “Board” means the Board of Directors of the Company;
 
(h)
Cause” means, with respect to the termination by the Company or a Related Entity of the Grantee’s Continuous Service, that such termination is for “Cause” as such term is expressly defined in a then-effective written agreement between the Grantee and the Company or such Related Entity, or in the absence of such then-effective written agreement and definition, is based on, in the determination of the Administrator, the Grantee’s:
 
(i)
refusal or failure to act in accordance with any specific, lawful direction or order of the Company or a Related Entity;
 
(ii)
unfitness or unavailability for service or unsatisfactory performance (other than as a result of Disability);
 
(iii)
performance of any act or failure to perform any act in bad faith and to the detriment of the Company or a Related Entity;
 
(iv)
dishonesty, intentional misconduct or material breach of any agreement with the Company or a Related Entity; or
 
(v)
commission of a crime involving dishonesty, breach of trust, or physical or emotional harm to any person;
B-1

 
 
(i)
Change of Control” means, except as provided below, a change in ownership or control of the Company effected through any of the following transactions:
 
(i)
the direct or indirect acquisition by any person or related group of persons (other than an acquisition from or by the Company or by a Company-sponsored employee benefit plan or by a person that directly or indirectly controls, is controlled by, or is under common control with, the Company) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than 50% of the total combined voting power of the Company’s outstanding securities pursuant to a tender or exchange offer made directly to the Company’s shareholders which a majority of the Continuing Directors who are not Affiliates or Associates of the offeror do not recommend such shareholders accept;
 
(ii)
a change in the composition of the Board over a period of 36 months or less such that a majority of the Board members (rounded up to the next whole number) ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who are Continuing Directors;
 
(iii)
the sale or exchange by the Company (in one or a series of transactions) of all or substantially all of its assets to any other person or entity; or
 
(iv)
approval by the shareholders of the Company of a plan to dissolve and liquidate the Company.
Notwithstanding the foregoing, the following transactions shall not constitute a “Change of Control”:
 
(i)
the closing of any public offering of the Company’s securities pursuant to an effective registration statement filed under the United States Securities Act of 1933, as amended;
 
(ii)
the closing of a public offering of the Company’s securities through the facilities of any stock exchange; or
 
(iii)
with respect to an Award that is subject to Section 409A of the Code, and payment or settlement of such Award is to be accelerated in connection with an event that would otherwise constitute a Change of Control, no event set forth previously in this definition shall constitute a Change of Control for purposes of this Plan or any Award Agreement unless such event also constitutes a “change in the ownership”, a “change in the effective control” or a “change in the ownership of a substantial portion of the assets of the corporation” as defined under Section 409A of the Code and Treasury guidance formulated thereunder, which guidance currently provides that:
 
(A)
a change in ownership of a corporation shall be deemed to have occurred if any one person or more than one person acting as a group acquires stock of a corporation that constitutes more than 50% of the total Fair Market Value or total voting power of the stock of the corporation. Stock acquired by any person or group of people who already owns more than 50% of such total Fair Market Value or total voting power of stock shall not trigger a change in ownership;
 
(B)
a change in the effective control of a corporation generally shall be deemed to have occurred if within a 12-month period either:
 
(I)
any one person or more than one person acting as a group acquires ownership of stock possessing 35% or more of the total voting power of the stock of the corporation; or
 
(II)
a majority of the members of the corporation’s board of directors is replaced by directors whose appointment or election is not endorsed by a majority of the members of the corporation’s board of directors prior to the date of the appointment or election; and
 
(C)
a change in the ownership of a substantial portion of the corporation’s assets generally is deemed to occur if within a 12-month period any person, or more than one person acting as a group, acquires assets from the corporation that have a total gross fair market value at least equal to 40% of the total gross fair market value of all the corporation’s assets immediately prior to such acquisition.  The gross fair market value of assets is determined without regard to any liabilities;
(j)            “Code” means the United States Internal Revenue Code of 1986, as amended;
 
(k)
Committee” means the Compensation Committee or any other committee appointed by the Board to administer this Plan in accordance with the provisions of this Plan; provided, however, that:
 
(i)
the Committee shall consist of two or more members of the Board;
 
(ii)
the directors appointed to serve on the Committee shall be “non-employee directors” (within the meaning of Rule 16b-3 promulgated under the Exchange Act) and “outside directors” (within the meaning of Section 162(m) of the Code) to the extent that Rule 16b-3 and, if necessary for relief from the limitation under Section 162(m) of the Code and such relief is sought by the Company, Section 162(m) of the Code, respectively, are applicable;
 
(iii)
the mere fact that a Committee member shall fail to qualify under either of the foregoing requirements set forth in Section 2.1(k)(ii) shall not invalidate any Award made by the Committee which Award is otherwise validly made under the Plan; and
 
(iv)
members of the Committee may be appointed from time to time by, and shall serve at the pleasure of, the Board;
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(l)            “Common Stock” means the common stock of the Company;
(m)          “Company” means TapImmune Inc., a Nevada corporation;
 
(n)
Consultant” means any person (other than an Employee) who is engaged by the Company or any Related Entity to render consulting or advisory services to the Company or such Related Entity;
 
(o)
Continuing Directors” means members of the Board who either (i) have been Board members continuously for a period of at least 36 months, or (ii) have been Board members for less than 36 months and were appointed or nominated for election as Board members by at least a majority of the Board members described in clause (i) who were still in office at the time such appointment or nomination was approved by the Board;
 
(p)
Continuous Service” means that the provision of services to the Company or a Related Entity in any capacity of Employee, Director or Consultant that is not interrupted or terminated. Continuous Service shall not be considered interrupted in the case of (i) any approved leave of absence, (ii) transfers between locations of the Company or among the Company, any Related Entity, or any successor, in any capacity of Employee, Director or Consultant, or (iii) any change in status as long as the individual remains in the service of the Company or a Related Entity in any capacity of Employee, Director or Consultant (except as otherwise provided in the Award Agreement). An approved leave of absence shall include sick leave, maternity or paternity leave, military leave, or any other authorized personal leave. For purposes of Incentive Stock Options, no such leave may exceed 90 calendar days, unless reemployment upon expiration of such leave is guaranteed by statute or contract;
(q)           “Corporate Transaction” means any of the following transactions:
 
(i)
a merger or consolidation in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the jurisdiction in which the Company is organized;
 
(ii)
the sale, transfer or other disposition of all or substantially all of the assets of the Company (including the capital stock of the Company’s subsidiary corporations) in connection with the complete liquidation or dissolution of the Company; or
 
(iii)
any reverse merger in which the Company is the surviving entity but in which securities possessing more than 50% of the total combined voting power of the Company’s outstanding securities are transferred to a person or persons different from those who held such securities immediately prior to such merger;
 
(r)
Covered Employee” means an Employee who is a “covered employee” under Section 162(m)(3) of the Code;
 
(s)
Deferred Stock Units” means Awards that are granted to Directors and are subject to the additional provisions set out in Subpart A which is attached hereto and which forms a material part hereof;
 
(t)
Director” means a member of the Board or the board of directors of any Related Entity;
 
(u)
Disability” or “Disabled” means that a Grantee is unable to carry out the responsibilities and functions of the position held by the Grantee by reason of any medically determinable physical or mental impairment.  A Grantee shall not be considered to have incurred a Disability unless he or she furnishes proof of such impairment sufficient to satisfy the Administrator in its discretion.  Notwithstanding the above, (i) with respect to an Incentive Stock Option, Disability or Disabled shall mean permanent and total disability as defined in Section 22(e)(3) of the Code and (ii) to the extent an Option is subject to Section 409A of the Code, and payment or settlement of the Option is to be accelerated solely as a result of the Eligible Participant’s Disability, Disability shall have the meaning ascribed thereto under Section 409A of the Code and the Treasury guidance promulgated thereunder;
 
(v)
Disinterested Shareholder Approval” means approval by a majority of the votes cast by all the Company’s shareholders at a duly constituted shareholders’ meeting, excluding votes attached to shares beneficially owned by Insiders;
 
(w)
Eligible Participant” means any person who is an Officer, a Director, an Employee or a Consultant, including individuals who are foreign nationals or are employed or reside outside the United States;
 
(x)
Employee” means any person who is a full-time or part-time employee of the Company or any Related Entity;
 
(y)
Exchange Act” means the United States Securities Exchange Act of 1934, as amended;
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(z)
Fair Market Value” means, as of any date, the value of a Share determined in good faith by the Administrator.  By way of illustration, but not limitation, for the purpose of this definition, good faith shall be met if the Administrator employs the following methods:
 
(i)
Listed Stock. If the Common Stock is traded on any established stock exchange or quoted on a national market system, Fair Market Value shall be (A) the closing sales price for the Common Stock as quoted on that stock exchange or system for the date the value is to be determined (the “Value Date”) as reported in The Wall Street Journal or a similar publication, or (B) if the rules of the applicable stock exchange require, the volume-weighted average trading price for five days prior to the date the Board approves the grant of the Award.  If no sales are reported as having occurred on the Value Date, Fair Market Value shall be that closing sales price for the last preceding trading day on which sales of Common Stock is reported as having occurred.  If no sales are reported as having occurred during the five trading days before the Value Date, Fair Market Value shall be the closing bid for Common Stock on the Value Date.  If the Common Stock is listed on multiple exchanges or systems, Fair Market Value shall be based on sales or bids on the primary exchange or system on which Common Stock is traded or quoted.  If the rules of any applicable stock exchange or system require a different method of calculating Fair Market Value, then such method as is required by those rules;
 
(ii)
Stock Quoted by Securities Dealer. If Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported on any established stock exchange or quoted on a national market system, Fair Market Value shall be the mean between the high bid and low asked prices on the Value Date.  If no prices are quoted for the Value Date, Fair Market Value shall be the mean between the high bid and low asked prices on the last preceding trading day on which any bid and asked prices were quoted;
 
(iii)
No Established Market. If Common Stock is not traded on any established stock exchange or quoted on a national market system and is not quoted by a recognized securities dealer, the Administrator will determine Fair Market Value in good faith.  The Administrator will consider the following factors, and any others it considers significant, in determining Fair Market Value: (A) the price at which other securities of the Company have been issued to purchasers other than Employees, Directors, or Consultants; (B) the Company’s net worth, prospective earning power, dividend-paying capacity, and non-operating assets, if any; and (C) any other relevant factors, including the economic outlook for the Company and the Company’s industry, the Company’s position in that industry, the Company’s goodwill and other intellectual property, and the values of securities of other businesses in the same industry;
 
(iv)
Additional Valuation.  For publicly traded companies, any valuation method permitted under Section 20.2031-2 of the Estate Tax Regulations; or
 
(v)
Non-Publicly Traded Stock.  For non-publicly traded stock, the Fair Market Value of the Common Stock at the Grant Date based on an average of the Fair Market Values as of such date set forth in the opinions of completely independent and well-qualified experts (the Participant’s status as a majority or minority shareholder may be taken into consideration).
Regardless of whether the Common Stock offered under the Award is publicly traded, a good faith attempt under this definition shall not be met unless the Fair Market Value of the Common Stock on the Grant Date is determined with regard to nonlapse restrictions (as defined in Section 1.83-3(h) of the Treasury Regulations) and without regard to lapse restrictions (as defined in Section 1.83-3(i) of the Treasury Regulations);
 
(aa)
Grantee” means an Eligible Participant who receives an Award pursuant to an Award Agreement;
 
(bb)
Grant Date” means the date the Administrator approves that grant of an Award.  However, if the Administrator specifies that an Award’s Grant Date is a future date or the date on which a condition is satisfied, the Grant Date for such Award is that future date or the date that the condition is satisfied;
 
(cc)
Incentive Stock Option” means an Option within the meaning of Section 422 of the Code;
(dd)         “Insider” means:
(i)           a Director or Senior Officer of the Company;
 
(ii)
a Director or Senior Officer of a person that is itself an Insider or Subsidiary of the Company;
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(iii)           a person that has
(A)           direct or indirect beneficial ownership of,
(B)           control or direction over, or
 
(C)
a combination of direct or indirect beneficial ownership of and control or direction over,
securities of the Company carrying more than 10% of the voting rights attached to all the Company’s outstanding voting securities, excluding, for the purpose of the calculation of the percentage held, any securities held by the person as underwriter in the course of a distribution; or
 
(iv)
the Company itself, if it has purchased, redeemed or otherwise acquired any securities of its own issue, for so long as it continues to hold those securities;
 
(ee)
Named Executive Officer” means, if applicable, an Eligible Participant who, as of the date of vesting and/or payout of an Award, is one of the group of Covered Employees as defined;
 
(ff)
Non-Qualified Stock Option” means an Option which is not an Incentive Stock Option;
 
(gg)
Officer” means a person who is an officer, including a Senior Officer, of the Company or a Related Entity within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder;
 
(hh)
Option” means an option to purchase Shares pursuant to an Award Agreement granted under the Plan;
 
(ii)
Parent” means a “parent corporation”, whether now or hereafter existing, as defined in Section 424(e) of the Code;
 
(jj)
Performance-Based Compensation” means compensation qualifying as “performance-based compensation” under Section 162(m) of the Code;
(kk)         “Plan” means this 2009 Stock Incentive Plan as amended from time to time;
 
(ll)
Related Entity” means any Parent or Subsidiary, and includes any business, corporation, partnership, limited liability company or other entity in which the Company, a Parent or a Subsidiary holds a greater than 50% ownership interest, directly or indirectly;
 
(mm)
Related Entity Disposition” means the sale, distribution or other disposition by the Company of all or substantially all of the Company’s interests in any Related Entity effected by a sale, merger or consolidation or other transaction involving that Related Entity or the sale of all or substantially all of the assets of that Related Entity;
 
(nn)
Restricted Stock” means Shares issued under the Plan to the Grantee for such consideration, if any, and subject to such restrictions on transfer, rights of first refusal, repurchase provisions, forfeiture provisions, and other terms and conditions as, established by the Administrator and specified in the related Award Agreement;
 
(oo)
Restricted Stock Unit” means a notional account established pursuant to an Award granted to a Grantee, as described in this Plan, that is (i) valued solely by reference to Shares, (ii) subject to restrictions specified in the Award Agreement, and (iii) payable only in Shares;
 
(pp)
Restriction Period” means the period during which the transfer of Shares of Restricted Stock is limited in some way (based on the passage of time, the achievement of performance objectives, or the occurrence of other events as determined by the Administrator, in its sole discretion) or the Restricted Stock is not vested;
 
(qq)
SAR” means a stock appreciation right entitling the Grantee to Shares or cash compensation, as established by the Administrator, measured by appreciation in the value of Common Stock;
 
(rr)
SEC” means the United States Securities Exchange Commission;
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(ss)           “Senior Officer” means:
 
(i)
the chair or vice chair of the Board, the president, the chief executive officer, the chief financial officer, a vice-president, the secretary, the treasurer or the general manager of the Company or a Related Entity;
 
(ii)
any individual who performs functions for a person similar to those normally performed by an individual occupying any office specified in Section 2.1(ss)(i) above; and
 
(iii)
the five highest paid employees of the Company or a Related Entity, including any individual referred to in Section 2.1(ss)(i) or 2.1(ss)(ii) and excluding a commissioned salesperson who does not act in a managerial capacity;
(tt)           “Share” means a share of the Common Stock; and
 
(uu)
Subsidiary” means a “subsidiary corporation”, whether now or hereafter existing, as defined in Section 424(f) of the Code.
3.
STOCK SUBJECT TO THE PLAN
Number of Shares Available
3.1
(a)Subject to the provisions of Section 18, the maximum aggregate number of Shares which may be issued pursuant to all Awards (including Incentive Stock Options) under this Plan is 10,000,000 (the “Maximum Number”).  See Section 29 for Reservation of Shares.
 
(b)
Shares that have been issued under the Plan pursuant to an Award shall not be returned to the Plan and shall not become available for future issuance under the Plan except that Shares (i) covered by an Award (or portion of an Award) which is forfeited or cancelled, expires or is settled in cash, or (ii) withheld to satisfy a Grantee’s minimum tax withholding obligations, shall be deemed not to have been issued for purposes of determining the Maximum Number of Shares which may be issued under the Plan.  Also, only the net numbers of Shares that are issued pursuant to the exercise of an Award shall be counted against the Maximum Number.
 
(c)
However, in the event that prior to the Award’s cancellation, termination, expiration, forfeiture or lapse, the holder of the Award at any time received one or more elements of beneficial ownership pursuant to such Award (as defined by the SEC, pursuant to any rule or interpretations promulgated under Section 16 of the Exchange Act), the Shares subject to such Award shall not again be made available for regrant under the Plan.
Shares to Insiders
3.2                      Subject to Section 15.1(b) and 15.1(c), no Insider of the Company is eligible to receive an Award where:
(a)           the Insider is not a Director or Senior Officer of the Company;
 
(b)
any Award, together with all of the Company’s other previously established or proposed Awards under the Plan could result at any time in:
 
(i)
the number of Shares reserved for issuance pursuant to Options granted to Insiders exceeding 50% of the outstanding issue of Common Stock; or
 
(ii)
the issuance to Insiders pursuant to the exercise of Options, within a one year period of a number of Shares exceeding 50% of the outstanding issue of the Common Stock;
provided, however, that this restriction on the eligibility of Insiders to receive an Award shall cease to apply if it is no longer required under any Applicable Laws.
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Limitations on Award
3.3                      Unless and until the Administrator determines that an Award to a Grantee is not designed to qualify as Performance-Based Compensation, the following limits (the “Award Limits”) shall apply to grants of Awards to Grantees subject to the Award Limits by Applicable Laws under this Plan:
 
(a)
Options and SARs.  Notwithstanding any provision in the Plan to the contrary (but subject to adjustment as provided in Section 18), the maximum number of Shares with respect to one or more Options and/or Stock Appreciation Rights that may be granted during any one calendar year under the Plan to any one Grantee shall be 5,000,000; all of which may be granted as Incentive Stock Options); and
 
(b)
Other Awards.  The maximum aggregate grant with respect to Awards of Restricted Stock, unrestricted Shares, Restricted Stock Units and Deferred Stock Units (or used to provide a basis of measurement for or to determine the value of Restricted Stock Units and Deferred Stock Units) in any one calendar year to any one Grantee (determined on the date of payment of settlement) shall be 5,000,000.
4.
ADMINISTRATION
Authority of Plan Administrator
4.1                      Authority to control and manage the operation and administration of this Plan shall be vested in the Administrator.
Powers of the Administrator
4.2                      Subject to Applicable Laws and the provisions of the Plan or subplans hereof (including any other powers given to the Administrator hereunder), and except as otherwise provided by the Board, the Administrator shall have the exclusive power and authority, in its discretion:
 
(a)
to construe and interpret this Plan and any agreements defining the rights and obligations of  the Company and Grantees under this Plan;
 
(b)
to select the Eligible Participants to whom Awards may be granted from time to time hereunder;
(c)           to determine whether and to what extent Awards are granted hereunder;
 
(d)
to determine the number of Shares or the amount of other consideration to be covered by each Award granted hereunder;
 
(e)
to approve forms of Award Agreements for use under the Plan, which need not be identical for each Grantee;
 
(f)
to determine the terms and conditions of any Award granted under the Plan, including, but not limited to, the exercise price, grant price or purchase price based on the Fair Market Value of the same, any restrictions or limitations on the Award, any schedule for lapse of forfeiture restrictions or restrictions on the exercisability of the Award, and acceleration or waivers thereof, based in each case on such considerations as the Committee in its sole discretion determines that is not inconsistent with any rule or regulation under any tax or securities laws or includes an alternative right that does not disqualify an Incentive Stock Option under applicable regulations;
 
(g)
to amend the terms of any outstanding Award granted under the Plan, provided that any amendment that would adversely affect the Grantee’s rights under an existing Award shall not be made without the Grantee’s consent unless as a result of a change in Applicable Law;
 
(h)
to suspend the right of a holder to exercise all or part of an Award for any reason that the Administrator considers in the best interest of the Company;
 
(i)
subject to regulatory approval, amend or suspend the Plan, or revoke or alter any action taken in connection therewith, except that no general amendment or suspension of the Plan, shall, without the written consent of all Grantees, alter or impair any Award granted under the Plan unless as a result of a change in the Applicable Law;
 
(j)
to establish additional terms, conditions, rules or procedures to accommodate the rules or laws of applicable foreign jurisdictions and to afford Grantees favorable treatment under such laws; provided, however, that no Award shall be granted under any such additional terms, conditions, rules or procedures with terms or conditions which are inconsistent with the provisions of the Plan;
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(k)           to further define the terms used in this Plan;
 
(l)
to correct any defect or supply any omission or reconcile any inconsistency in this Plan or in any Award Agreement;
(m)          to provide for rights of refusal and/or repurchase rights;
 
(n)
to amend outstanding Award Agreements to provide for, among other things, any change or modification which the Administrator could have provided for upon the grant of an Award or in furtherance of the powers provided for herein that does not disqualify an Incentive Stock Option under applicable regulations unless the Grantee so consents;
 
(o)
to prescribe, amend and rescind rules and regulations relating to the administration of this Plan; and
 
(p)
to take such other action, not inconsistent with the terms of the Plan, as the Administrator deems appropriate.
Effect of Administrator’s Decision
4.3                      All decisions, determinations and interpretations of the Administrator shall be conclusive and binding on all persons.  The Administrator shall not be liable for any decision, action or omission respecting this Plan, or any Awards granted or Shares sold under this Plan.  In the event an Award is granted in a manner inconsistent with the provisions of this Section 4, such Award shall be presumptively valid as of its grant date to the extent permitted by the Applicable Laws.
Action by Committee
4.4                      Except as otherwise provided by committee charter or other similar corporate governance documents, for purposes of administering the Plan, the following rules of procedure shall govern the Committee.  A majority of the Committee shall constitute a quorum. The acts of a majority of the members present at any meeting at which a quorum is present, and acts approved unanimously in writing by the members of the Committee in lieu of a meeting, shall be deemed the acts of the Committee.  Each member of the Committee is entitled to, in good faith, rely or act upon any report or other information furnished to that member by any officer or other employee of the Company or any Parent or Affiliate, the Company’s independent certified public accountants, or any executive compensation consultant or other professional retained by the Company to assist in the administration of the Plan.
Limitation on Liability
4.5                      To the extent permitted by applicable law in effect from time to time, no member of the Administrator shall be liable for any action or omission of any other member of the Administrator nor for any act or omission on the member’s own part, excepting only the member’s own wilful misconduct or gross negligence, arising out of or related to this Plan.  The Company shall pay expenses incurred by, and satisfy a judgment or fine rendered or levied against, a present or former member of the Administrator in any action against such person (whether or not the Company is joined as a party defendant) to impose liability or a penalty on such person for an act alleged to have been committed by such person while a member of the Administrator arising with respect to this Plan or administration thereof or out of membership on the Administrator or by the Company, or all or any combination of the preceding, provided, the member was acting in good faith, within what such member reasonably believed to have been within the scope of his or her employment or authority and for a purpose which he or she reasonably believed to be in the best interests of the Company or its stockholders.  Payments authorized hereunder include amounts paid and expenses incurred in settling any such action or threatened action.  The provisions of this Section 4.5 shall apply to the estate, executor, administrator, heirs, legatees or devisees of a member of the Administrator, and the term “person” as used on this Section 4.5 shall include the estate, executor, administrator, heirs, legatees, or devisees of such person.
5.
ELIGIBILITY
Except as otherwise provided, all types of Awards may be granted to Eligible Participants. An Eligible Participant who has been granted an Award may be, if he or she continues to be eligible, granted additional Awards.
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6.
AWARDS
Type of Awards
6.1                      The Administrator is authorized to award any type of arrangement to an Eligible Participant that is not inconsistent with the provisions of the Plan and that by its terms involves or might involve the issuance of:
(a)           Shares, including unrestricted Shares;
(b)           Options;
 
(c)
SARs or similar rights with a fixed or variable price related to the Fair Market Value of the Shares and with an exercise or conversion privilege related to the passage of time, the occurrence of one or more events, or the satisfaction of performance criteria or other conditions;
 
(d)
any other security with the value derived from the value of the Shares, such as Restricted Stock and Restricted Stock Units;
(e)           Deferred Stock Units;
(f)            Dividend Equivalent Rights, as defined in Section 13; or
(g)           any combination of the foregoing.
Designation of Award
6.2                      Each type of Award shall be designated in the Award Agreement.  In the case of an Option, the Option shall be designated as either an Incentive Stock Option or a Non-Qualified Stock Option.  But see Section 7.3(a) regarding exceeding the Incentive Stock Option threshold.
7.
GRANT OF OPTIONS; TERMS AND CONDITIONS OF GRANT
Grant of Options
7.1
 (a)
One or more Options may be granted to any Eligible Participant.  Subject to the express provisions of this Plan, the Administrator shall determine from the Eligible Participants those individuals to whom Options under this Plan may be granted.  The Shares underlying a grant of an Option may be in the form of Restricted Stock or unrestricted Stock.
 
(b)
Further, subject to the express provisions of this Plan, the Administrator shall specify the Grant Date, the number of Shares covered by the Option, the exercise price and the terms and conditions for exercise of the Options.  As soon as practicable after the Grant Date, the Company shall provide the Grantee with a written Award Agreement in the form approved by the Administrator, which sets out the Grant Date, the number of Shares covered by the Option, the exercise price and the terms and conditions for exercise of the Option.
 
(c)
The Administrator may, in its absolute discretion, grant Options under this Plan at any time and from time to time before the expiration of this Plan.
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General Terms and Conditions
7.2                      Except as otherwise provided herein, the Options shall be subject to the following terms and conditions and such other terms and conditions not inconsistent with this Plan as the Administrator may impose:
 
(a)
Exercise of Option. The Administrator may determine in its discretion whether any Option shall be subject to vesting and the terms and conditions of any such vesting.  The Award Agreement shall contain any such vesting schedule;
 
(b)
Option Term.  Each Option and all rights or obligations thereunder shall expire on such date as shall be determined by the Administrator, but not later than ten years after the Grant Date (five years in the case of an Incentive Stock Option when the Optionee beneficially owns more than 10% of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary (a “Ten Percent Stockholder”), as determined with reference to Rule 13d-3 of the Exchange Act), and shall be subject to earlier termination as hereinafter provided;
 
(c)
Exercise Price.  The Exercise Price of any Option shall be determined by the Administrator when the Option is granted, at such Exercise Price as may be determined by the Administrator in the Administrator’s sole and absolute discretion; provided, however, that the Exercise Price of any Incentive Stock Option granted to a Ten Percent Stockholder shall not be less than the Fair Market Value of the Shares on the Grant Date.  Payment for the Shares purchased shall be made in accordance with Section 16 of this Plan.  The Administrator is authorized to issue Options, whether Incentive Stock Options or Non-qualified Stock Options, at an option price which is lower than or in excess of the Fair Market Value on the Grant Date, to determine the terms and conditions of any Award granted under the Plan including, but not limited to, the exercise price, grant price or purchase price, any restrictions or limitations on the Award, any schedule for lapse of forfeiture restrictions or restrictions on the exercisability of the Award, and acceleration or waivers thereof, based in each case on such considerations as the Committee in its sole discretion determines that is not inconsistent with any rule or regulation under any tax or securities laws or includes an alternative right that does not disqualify an Incentive Stock Option under applicable regulations;
 
(d)
Method of Exercise.  Options may be exercised only by delivery to the Company of a stock option exercise agreement (the “Exercise Agreement”) in a form approved by the Administrator (which need not be the same for each Grantee), stating the number of Shares being purchased, the restrictions imposed on the Shares purchased under such Exercise Agreement, if any, and such representations and agreements regarding the Grantee’s investment intent and access to information and other matters, if any, as may be required or desirable by the Company to comply with applicable securities laws, together with payment in full of the exercise price for the number of Shares being purchased;
(e)           Exercise After Certain Events.
(i)           Termination of Continuous Services.
(A)           Options.
 
(I)
Termination of Continuous Services.  If for any reason other than Disability or death, a Grantee terminates Continuous Services with the Company or a Subsidiary, vested Options held at the date of such termination may be exercised, in whole or in part, either (i) at any time within three months after the date of such termination, or (ii) during any lesser period as specified in the Award Agreement or (iii) during any lesser period as may be determined by the Administrator, in its sole and absolute discretion, prior the date of such termination (but in no event after the earlier of (A) the expiration date of the Option as set forth in the Award Agreement and (B) ten years from the Grant Date (five years for a Ten Percent Stockholder if the Option is an Incentive Stock Option)).
 
(II)
Continuation of Services as Consultant/Advisor.  If a Grantee granted an Incentive Stock Option terminates employment but continues as a Consultant (no termination of Continuous Services), the Grantee need not exercise an Incentive Stock Option within either of the termination periods provided for immediately hereinabove but shall be entitled to exercise, in whole or in part, either (i) at any time within three months after the then date of termination of Continuous Services to the Company or a Subsidiary, or (ii) during any lesser period as specified in the Award Agreement or (iii) during any lesser period as may be determined by the Administrator, in its sole and absolute discretion, prior the date of such then termination of Continuous Services to the Company or the Subsidiary (one year in the event of Disability or death) (but in no event after the earlier of (A) the expiration date of the Option as set forth in the Award Agreement and (B) ten years from the Grant Date (five years for a Ten Percent Stockholder if the Option is an Incentive Stock Option)).  However, if the Grantee does not exercise within three months of termination of employment, pursuant to Section 422 of the Code the Option shall not qualify as an Incentive Stock Option.
 
(B)
Disability and Death.  If a Grantee becomes Disabled while rendering Continuous Services to the Company or a Subsidiary, or dies while employed by the Company or Subsidiary or within three months thereafter, vested Options then held may be exercised by the Grantee, the Grantee’s personal representative, or by the person to whom the Option is transferred by the laws of descent and distribution, in whole or in part, at any time within one year after the termination because of the Disability or death or any lesser period specified in the Award Agreement (but in no event after the earlier of (i) the expiration date of the Option as set forth in the Award Agreement, and (ii) ten years from the Grant Date (five years for a Ten Percent Stockholder if the Option is an Incentive Stock Option).
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Limitations on Grant of Incentive Stock Options
 7.3 
(a)
Threshold. The aggregate Fair Market Value (determined as of the Grant Date) of the Shares for which Incentive Stock Options may first become exercisable by any Grantee during any calendar year under this Plan, together with that of Shares subject to Incentive Stock Options first exercisable by such Grantee under any other plan of the Company or any Parent or Subsidiary, shall not exceed $100,000.  For purposes of this Section 7.3(a), all Options in excess of the $100,000 threshold shall be treated as Non-Qualified Stock Options notwithstanding the designation as Incentive Stock Options.  For this purpose, Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares shall be determined as of the date the Option with respect to such Shares is granted.
 
 
(b)
Compliance with Section 422 of the Code.  There shall be imposed in the Award Agreement relating to Incentive Stock Options such terms and conditions as are required in order that the Option be an “incentive stock option” as that term is defined in Section 422 of the Code.
 
(c)
Requirement of Employment.  No Incentive Stock Option may be granted to any person who is not an Employee of the Company or a Parent or Subsidiary of the Company.
8.
RESTRICTED STOCK AWARDS
Grant of Restricted Stock Awards
8.1                      Subject to the terms and provisions of this Plan, the Administrator is authorized to make awards of Restricted Stock to any Eligible Participant in such amounts and subject to such terms and conditions as may be selected by the Administrator.  The restrictions may lapse separately or in combination at such times, under such circumstances, in such instalments, time-based or upon the satisfaction of performance goals or otherwise, as the Administrator determines at the time of the grant of the Award or thereafter. (See Performance Goals, Section 14.4).  All awards of Restricted Stock shall be evidenced by Award Agreements.
Consideration
8.2                      Restricted Stock may be issued in connection with:
(a)           Services.  Services rendered to the Company or an Affiliate (i.e. bonus); and/or
 
(b)
Purchase Price.  A purchase price, as specified in the Award Agreement related to such Restricted Stock, equal to not be less than 100% of the Fair Market Value of the Shares underlying the Restricted Stock on the date of issuance.
Voting and Dividends
8.3                      Unless the Administrator in its sole and absolute discretion otherwise provides in an Award Agreement, holders of Restricted Stock shall have the right to vote such Restricted Stock and the right to receive any dividends declared or paid with respect to such Restricted Stock.  The Administrator 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 vesting conditions and 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.
Forfeiture
8.4                      In the case of an event of forfeiture pursuant to the Award Agreement, including failure to satisfy the restriction period or a performance objective during the applicable restriction period, any Restricted Stock that has not vested prior to the event of forfeiture shall automatically expire, and all of the rights, title and interest of the Grantee thereunder shall be forfeited in their entirety including but not limited to any right to vote and receive dividends with respect to the Restricted Stock.  Notwithstanding the foregoing, the Administrator may provide in any Award Agreement that restrictions or forfeiture conditions relating to Restricted Stock shall be waived in whole or in part in the event of terminations resulting from specified causes, and the Administrator may in other cases waive in whole or in part restrictions or forfeiture conditions relating to Restricted Stock, provided such waiver is in accordance with the Applicable Laws.
Certificates for Restricted Stock
8.5                      Restricted Stock granted under this Plan may be evidenced in such manner as the Administrator shall determine, including by way of certificates.  The Administrator 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, (see Escrow; Pledge of Shares, Section 23) 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 make appropriate reference to the restrictions imposed under this Plan and the Award Agreement.
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9.
UNRESTRICTED STOCK AWARDS
The Administrator may, in its sole discretion, grant (or sell at not less than 100% of the Fair Market Value or such other higher purchase price determined by the Administrator in the Award Agreement) an Award of unrestricted Shares to any Grantee pursuant to which such Grantee may receive Shares free of any restrictions under this Plan.
10.
RESTRICTED STOCK UNITS
Grant of Restricted Stock Units
10.1                      Subject to the terms and provisions of this Plan, the Administrator is authorized to make awards of Restricted Stock Units to any Eligible Participant in such amounts and subject to such terms and conditions as may be selected by the Administrator.  These restrictions may lapse separately or in combination at such times, under such circumstances, in such instalments, time-based or upon the satisfaction of performance goals or otherwise, as the Administrator determines at the time of the grant of the Award or thereafter. (See Performance Goals, Section 14.4).  All awards of Restricted Stock Units shall be evidenced by Award Agreements.
Number of Restricted Stock Units
10.2                      The Award Agreement shall specify the number of Share equivalent units granted and such other provisions as the Administrator determines.
Consideration
10.3                      Restricted Stock Units may be issued in connection with:
(a)           Services.  Services rendered to the Company or an Affiliate (i.e. bonus); and/or
 
(b)
Purchase Price.  A purchase price as specified in the Award Agreement related to such Restricted Stock Units, equal to not be less than 100% of the Fair Market Value of the Shares underlying the Restricted Stock Units on the date of issuance.
No Voting Rights
10.4                      The holders of Restricted Stock Units shall have no rights as stockholders of the Company.
Dividend Equivalency
10.5                      The Administrator, in its sole and absolute discretion, may provide in an Award Agreement evidencing a grant of Restricted Stock Units that the holder shall be entitled to receive, upon the Company’s payment of a cash dividend on its outstanding Shares, a cash payment for each Restricted Stock Unit.  (See Section 13, Dividend Equivalent Right).  Such Award Agreement may also provide that such cash payment shall be deemed reinvested in additional Restricted Stock Units at a price per unit equal to the Fair Market Value of a Share on the date that such dividend is paid.
Creditor’s Rights
10.6                      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.
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Settlement of Restricted Stock Units
10.7                      Each Restricted Stock Unit shall be paid and settled by the issuance of Restricted Stock or unrestricted Shares in accordance with the Award Agreement and if such settlement is subject to Section 409A of the Code only upon any one or more of the following as provided for in the Award Agreement:
(a)           a specific date or date determinable by a fixed schedule;
 
(b)
upon the Eligible Participant’s termination of Continuous Services to the extent the same constitutes a separation from services for purposes of Section 409A of the Code except that if an Eligible Participant is a “key employee” as defined in Section 409A of the Code for such purposes, then payment or settlement shall occur 6 months following such separation of service;
(c)           as a result of the Eligible Participant’s death or Disability; or
 
(d)
in connection with or as a result of a Change of Control in compliance with Section 409A of the Code.
Forfeiture
10.8                      Upon failure to satisfy any requirement for settlement as set forth in the Award Agreement, including failure to satisfy any restriction period or performance objective, any Restricted Stock Units held by the Grantee shall automatically expire, and all of the rights, title and interest of the Grantee thereunder shall be forfeited in their entirety including but not limited to any right to receive dividends with respect to the Restricted Stock Units.
11.
DIRECTOR SHARES AND DIRECTOR DEFERRED STOCK UNITS
The grant of Awards of Shares to Directors and the election by Directors to defer the receipt of the Awards of Shares (the “Deferred Stock Units”) shall be governed by the provisions of Subpart A which is attached hereto.  The provisions of Subpart A are attached hereto as part of this Plan and are incorporated herein by reference.
12.
STOCK APPRECIATION RIGHTS
Awards of SARs
12.1                      An SAR is an award to receive a number of Shares (which may consist of Restricted Stock), or cash, or Shares and cash, as determined by the Administrator in accordance with Section 12.4 below, for services rendered to the Company.  A SAR may be awarded pursuant to an Award Agreement that shall be in such form (which need not be the same for each Grantee) as the Administrator shall from time to time approve, and shall comply with and be subject to the terms and conditions of this Plan.  A SAR may vary from Grantee to Grantee and between groups of Grantees, and may be based upon performance objectives (See Performance Goals in Section 14.4).
Term
12.2                      The term of a SAR shall be set forth in the Award Agreement as determined by the Administrator.
Exercise
12.3                      A Grantee desiring to exercise a SAR shall give written notice of such exercise to the Company, which notice shall state the proportion of Shares and cash that the Grantee desires to receive pursuant to the SAR exercised, subject to the discretion of the Administrator.  Upon receipt of the notice from the Grantee, subject to the Administrator’s election to pay cash as provided in Section 12.4 below, the Company shall deliver to the person entitled thereto (i) a certificate or certificates for Shares and/or (ii) a cash payment, in accordance with Section 12.4below.  The date the Company receives written notice of such exercise hereunder is referred to in this Section 12 as the “exercise date”.
Number of Shares or Amount of Cash
12.4                      Subject to the discretion of the Administrator to substitute cash for Shares, or some portion of the Shares for cash, the amount of Shares that may be issued pursuant to the exercise of a SAR shall be determined by dividing: (i) the total number of Shares as to which the SAR is exercised, multiplied by the amount by which the Fair Market Value of the Shares on the exercise date exceeds the Fair Market Value of a Share on the date of grant of the SAR; by (ii) the Fair Market Value of a Share on the exercise date; provided, however, that fractional Shares shall not be issued and in lieu thereof, a cash adjustment shall be paid.  In lieu of issuing Shares upon the exercise of a SAR, the Administrator in its sole discretion may elect to pay the cash equivalent of the Fair Market Value of the Shares on the exercise date for any or all of the Shares that would otherwise be issuable upon exercise of the SAR.
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Effect of Exercise
12.5                      A partial exercise of a SAR shall not affect the right to exercise the remaining SAR from time to time in accordance with this Plan and the applicable Award Agreement with respect to the remaining shares subject to the SAR.
Forfeiture
12.6                      In the case of an event of forfeiture pursuant to the Award Agreement, including failure to satisfy any restriction period or a performance objective, any SAR that has not vested prior to the date of termination shall automatically expire, and all of the rights, title and interest of the Grantee thereunder shall be forfeited in their entirety.
13.
DIVIDEND EQUIVALENT RIGHT
A dividend equivalent right is an Award entitling the recipient to receive credits based on cash distributions that would have been paid on the Shares specified in the dividend equivalent right (or other Award to which it relates) if such Shares had been issued to and held by the recipient (a “Dividend Equivalent Right”).  A Dividend Equivalent Right may be granted hereunder to any Grantee as a component of another Award or as a freestanding Award.  The terms and conditions of Dividend Equivalent Right shall be specified in the grant.  Dividend equivalents credited to the holder of a Dividend Equivalent Right may be paid currently or may be deemed to be reinvested in additional Shares, which may thereafter accrue additional equivalents.  Any such reinvestment shall be at Fair Market Value on the date of reinvestment. Dividend Equivalent Rights may be settled in cash or Shares or a combination thereof, in a single instalment or instalments, all determined in the sole discretion of the Administrator.  A Dividend Equivalent Right granted as a component of another Award may provide that such Dividend Equivalent Right shall be settled upon exercise, settlement, or payment of, or lapse of restrictions on, such other Award, and that such Dividend Equivalent Right shall expire or be forfeited or annulled under the same conditions as such other Award.  A Dividend Equivalent Right granted as a component of another Award may also contain terms and conditions different from such other Award.
14.
TERMS AND CONDITIONS OF AWARDS
In General
14.1                      Subject to the terms of the Plan and Applicable Laws, the Administrator shall determine the provisions, terms, and conditions of each Award including, but not limited to, the Award vesting schedule, repurchase provisions, rights of first refusal, forfeiture provisions, form of payment (cash, Shares, or other consideration) upon settlement of the Award, payment contingencies, and satisfaction of any performance criteria.
Term of Award
14.2                      The term of each Award shall be the term stated in the Award Agreement.
Transferability
 14.3
(a)
Limits on Transfer.  No right or interest of a Grantee in any unexercised or restricted Award may be pledged, encumbered or hypothecated to or in favor of any party other than to the Company or a Related Entity or Affiliate.  No Award shall be sold, assigned, transferred or disposed of by a Grantee other than by the laws of descent and distribution or, in the case of an Incentive Stock Option, pursuant to a domestic relations order that would satisfy Section 414(p)(1)(A) of the Code if such Section applied to an Award under the Plan; provided, however, that the Administrator may (but need not) permit other transfers where the Administrator concludes that such transferability (i) does not result in accelerated taxation or other adverse tax consequences, (ii) does not cause any Option intended to be an Incentive Stock Option to fail to be described in Section 422(b) of the Code, and (iii) is otherwise appropriate and desirable, taking into account any factors deemed relevant, including, without limitation, state or federal tax or securities laws applicable to transferable Awards.
 
(b)
Beneficiaries.  Notwithstanding Section 14.3(a), a Grantee may, in the manner determined by the Administrator, designate a beneficiary to exercise the rights of the Grantee and to receive any distribution with respect to any Award upon the Grantee’s death.  A beneficiary, legal guardian, legal representative or other person claiming any rights under the Plan is subject to all terms and conditions of the Plan and any Award Agreement applicable to the Grantee, except to the extent the Plan and such Award Agreement otherwise provide, and to any additional restrictions deemed necessary or appropriate by the Administrator.  If no beneficiary has been designated or survives the Grantee, payment shall be made to the Grantee’s estate. Subject to the foregoing, a beneficiary designation may be changed or revoked by a Grantee at any time, provided the change or revocation is filed with the Administrator.
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Performance Goals
14.4                       In order to preserve the deductibility of an Award under Section 162(m) of the Code, the Administrator may determine that any Award granted pursuant to this Plan to a Grantee that is or is expected to become a Covered Employee shall be determined solely on the basis of (a) the achievement by the Company or Subsidiary of a specified target return, or target growth in return, on equity or assets, (b) the Company’s stock price, (c) the Company’s total shareholder return (stock price appreciation plus reinvested dividends) relative to a defined comparison group or target over a specific performance period, (d) the achievement by the Company or a Parent or Subsidiary, or a business unit of any such entity, of a specified target, or target growth in, net income, earnings per share, earnings before income and taxes, and earnings before income, taxes, depreciation and amortization, or (e) any combination of the goals set forth in (a) through (d) above.  If an Award is made on such basis, the Administrator shall establish goals prior to the beginning of the period for which such performance goal relates (or such later date as may be permitted under Section 162(m) of the Code or the regulations thereunder but not later than 90 days after commencement of the period of services to which the performance goal relates), and the Administrator has the right for any reason to reduce (but not increase) the Award, notwithstanding the achievement of a specified goal.  Any payment of an Award granted with performance goals shall be conditioned on the written certification of the Administrator in each case that the performance goals and any other material conditions were satisfied.
In addition, to the extent that Section 409A is applicable, (i) performance-based compensation shall also be contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least 12 consecutive months in which the Eligible Participant performs services and (ii) performance goals shall be established not later than 90 calendar days after the beginning of any performance period to which the performance goal relates, provided that the outcome is substantially uncertain at the time the criteria are established.
Acceleration
14.5                      The Administrator may, in its sole discretion (but subject to the limitations of and compliance with Section 409A of the Code and Section 14.7 in connection therewith), at any time (including, without limitation, prior to, coincident with or subsequent to a Change of Control) determine that (a) all or a portion of a Grantee’s Awards shall become fully or partially exercisable, and/or (b) all or a part of the restrictions on all or a portion of the outstanding Awards shall lapse, in each case, as of such date as the Administrator may, in its sole discretion, declare.  The Administrator may discriminate among Grantees and among Awards granted to a Grantee in exercising its discretion pursuant to this Section 14.5.
Compliance with Section 162(m) of the Code
14.6                      Notwithstanding any provision of this Plan to the contrary, if the Administrator determines that compliance with Section 162(m) of the Code is required or desired, all Awards granted under this Plan to Named Executive Officers shall comply with the requirements of Section 162(m) of the Code.  In addition, in the event that changes are made to Section 162(m) of the Code to permit greater flexibility with respect to any Award or Awards under this Plan, the Administrator may make any adjustments it deems appropriate.
Compliance with Section 409A of the Code
14.7                      Notwithstanding any provision of this Plan to the contrary, if any provision of this Plan or an Award Agreement contravenes any regulations or Treasury guidance promulgated under Section 409A of the Code or could cause an Award to be subject to the interest and penalties under Section 409A of the Code, such provision of this Plan or any Award Agreement shall be modified to maintain, to the maximum extent practicable, the original intent of the applicable provision without violating the provisions of Section 409A of the Code.  In addition, in the event that changes are made to Section 409A of the Code to permit greater flexibility with respect to any Award under this Plan, the Administrator may make any adjustments it deems appropriate.
Section 280G of the Code
14.8                      Notwithstanding any other provision of this Plan to the contrary, unless expressly provided otherwise in the Award Agreement, if the right to receive or benefit from an Award under this Plan, either alone or together with payments that a Grantee has a right to receive from the Company, would constitute a “parachute payment” (as defined in Section 280G of the Code), all such payments shall be reduced to the largest amount that shall result in no portion being subject to the excise tax imposed by Section 4999 of the Code.
Exercise of Award Following Termination of Continuous Service
14.9                      An Award may not be exercised after the termination date of such Award set forth in the Award Agreement and may be exercised following the termination of a Grantee’s Continuous Service only to the extent provided in the Award Agreement.  Where the Award Agreement permits a Grantee to exercise an Award following the termination of the Grantee’s Continuous Service for a specified period, the Award shall terminate to the extent not exercised on the last day of the specified period or the last day of the original term of the Award, whichever occurs first.
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Cancellation of Awards
14.10                      In the event a Grantee’s Continuous Services has been terminated for “Cause”, he or she shall immediately forfeit all rights to any and all Awards outstanding.  The determination that termination was for Cause shall be final and conclusive.  In making its determination, the Board shall give the Grantee an opportunity to appear and be heard at a hearing before the full Board and present evidence on the Grantee’s behalf.  Should any provision to this Section 14.10. be held to be invalid or illegal, such illegality shall not invalidate the whole of this Section 14, but, rather, this Plan shall be construed as if it did not contain the illegal part or narrowed to permit its enforcement, and the rights and obligations of the parties shall be construed and enforced accordingly.
15.
ADDITIONAL TERMS IF THE COMPANY BECOMES LISTED ON A STOCK EXCHANGE
15.1                      In the event the Shares become listed on a stock exchange, and to the extent required by the rules of such stock exchange, then the following terms and conditions shall apply to an Award in addition to those contained herein, as applicable:
 
(a)
the exercise price of an Award must not be lower than 100% of the Fair Market Value (without discount) of the Shares on the stock exchange at the time the Award is granted;
 
(b)
the number of securities issuable to Insiders, at any time, under all of the Company’s security based compensation arrangements (whether entered into prior to or subsequent to such listing), cannot exceed 10% of the Company’s total issued and outstanding Common Stock, unless the Company obtains Disinterested Shareholder Approval; and
 
(c)
the number of securities issued to Insiders, within any one year period, under all of the Company’s security based compensation arrangements (whether entered into prior to or subsequent to such listing), cannot exceed 10% of the issued and outstanding Common Stock, unless the Company obtains Disinterested Shareholder Approval.
16.
PAYMENT FOR SHARE PURCHASES
Payment
16.1                      Payment for Shares purchased pursuant to this Plan may be made:
 
(a)
Cash.  By cash, cashier’s check or wire transfer or, at the discretion of the Administrator expressly for the Grantee and where permitted by law as follows:
 
(b)
Surrender of Shares.  By surrender of shares of Common Stock of the Company that have been owned by the Grantee for more than six months, or lesser period if the surrender of shares is otherwise exempt from Section 16 of the Exchange Act, (and, if such shares were purchased from the Company by use of a promissory note, such note has been fully paid with respect to such shares);
 
(c)
Deemed Net-Stock Exercise.  By forfeiture of Shares equal to the value of the exercise price pursuant to a “deemed net-stock exercise” by requiring the Grantee to accept that number of Shares determined in accordance with the following formula, rounded down to the nearest whole integer:
           a = b x ((c-d)/c)       
where:
 
a  =
net Shares to be issued to Grantee;