As filed with the Securities and Exchange Commission on June 16,
2015 Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM S-8
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF 1933
YOU ON DEMAND HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Nevada |
20-1778374 |
(State or other jurisdiction of |
(I.R.S. Employer Identification |
incorporation or organization) |
Number) |
375 Greenwich Street, Suite 516
New York, New
York 10013
(Address of Principal Executive Offices)
YOU On Demand Holdings, Inc. 2010 Equity Incentive Plan
(Full title of the plan)
Paracorp, Inc.
318 North Carson St., Suite 208
Carson City, NV 89701
(888) 972-7273
(Name, address and telephone number (including area code) of
agent for service)
Copy to:
William N. Haddad
Reed Smith LLP
599 Lexington Avenue
New
York, NY 10022
(212) 521-5400
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer or a smaller
reporting company. See definitions of large accelerated filer, accelerated
filer and smaller reporting company in Rule 12b-2 of the Exchange Act (check
one):
Large accelerated filer [ ] |
Accelerated filer [ ] |
Non-accelerated filer [ ] |
Smaller reporting company [X] |
(Do not check if a smaller reporting company) |
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CALCULATION OF REGISTRATION FEE
Title of Securities to be registered |
Amount to be registered(1) |
Proposed maximum offering
price per share(2) |
Proposed maximum aggregate
offering price(2) |
Amount of registration fee
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Common Stock, $0.001 par value per share,
issuable under the YOU On Demand Holdings, Inc. 2010 Equity Incentive Plan |
2,263,811 shares |
$2.37 (a) |
$5,365,232 |
$623.44 |
Common Stock, $0.001 par value per share,
reserved for issuance pursuant to stock option awards outstanding under the
YOU On Demand Holdings, Inc. 2010 Equity Incentive Plan |
1,736,189 shares |
$2.76 (b) |
$4,791,881.64 |
$556.82 |
Total Registration Fee |
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$1,180.26 |
(1) This Registration Statement covers 4,000,000 shares of
common stock, par value $0.001 per share (the Common Stock) of YOU On Demand
Holdings, Inc. (the Company), being newly registered hereunder and issuable
pursuant to the YOU On Demand Holdings, Inc. 2010 Equity Incentive Plan (the
Plan), 1,736,189 shares of which are shares to be issued pursuant to
outstanding options granted under the Plan. Pursuant to Rule 416(a) under the Securities Act of 1933, as amended
(the Securities Act), this Registration Statement also covers an indeterminate
number of additional shares that may be offered or sold under the Plan by reason
of any substitutions or adjustments to shares to account for any change in
capitalization, including any stock dividend, stock split, reverse stock split,
split up, spin-off, recapitalization, or other distribution of stock or property
of the Company, combination or exchange of shares or common stock, dividend in
kind, or other like change in capital structure.
(2) Pursuant to Rule 457(h) of the Securities Act, the proposed
maximum offering price per share and the proposed maximum aggregate offering
price are estimated solely for the purpose of calculating the amount of the
registration fee. The offering price per share and aggregate offering price are
based upon (a) the average of the high and low prices for the Common Stock of the
Company as reported on The NASDAQ CapitalMarket on June 12, 2015 ($2.37), in
accordance with Rule 457(c) of the Securities Act, and (b) $2.76, which is the
weighted-average exercise price for outstanding options granted under the Plan.
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The information required by Part I is included in documents to
be sent or given to participants in the Plan pursuant to Rule 428(b)(1) under
the Securities Act of 1933, as amended (the Securities Act). In accordance
with the rules and regulations of the Securities and Exchange Commission (the
Commission), and the instructions to Form S-8, such documents are not being
filed with the Commission either as a part of this Registration Statement or as
prospectuses or prospectus supplements pursuant to Rule 424 under the Securities
Act. These documents and the documents incorporated by reference in this
Registration Statement pursuant to Item 3 of Part II of this Registration
Statement, taken together, constitute a prospectus that meets the requirements
of Section 10(a) of the Securities Act.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents are hereby
incorporated by reference into this Registration Statement:
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the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2014, filed with the Commission on
March 30, 2015; |
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the Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 2015, filed with the Commission on May 14,
2015; |
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the Company's Current Report on Form 8-K filed
with the Commission on January 2, 2015; |
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the Company's Current Report on Form 8-K filed
with the Commission on May 4, 2015; and |
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the description of the Companys Common Stock,
$0.001 par value per share, contained in our Registration Statement on
Form 8-A, filed on May 29, 2012, pursuant to Section 12(b) of the Exchange
Act, as amended. |
In addition, all documents that the Company files pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, subsequent to the
filing of this Registration Statement and prior to the filing of a
post-effective amendment which indicates that all securities offered hereby have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference into this Registration Statement and to
be a part hereof from the date of filing of such documents.
Any statement contained in the documents incorporated or deemed
to be incorporated by reference in this Registration Statement shall be deemed
to be modified, superseded or replaced for purposes of this Registration
Statement to the extent that a statement contained herein or in any other
subsequently filed document which also is incorporated or deemed to be
incorporated by reference in this Registration Statement modifies, supersedes or
replaces such statement. Any such statement so modified, superseded or replaced
shall not be deemed, except as so modified, superseded or replaced, to
constitute a part of this Registration Statement. Unless expressly incorporated
by reference into this Registration Statement, a report (or portion thereof)
furnished under Item 2.02 or 7.01 of Form 8-K and not deemed filed under such
provisions shall not be incorporated by reference into this Registration
Statement.
Item 4. Description of Securities.
Not required to be filed with this
Registration Statement.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
We are a Nevada corporation and generally governed by the
Nevada Private Corporations Law, Title 78 of the Nevada Revised Statutes, or
NRS.
Section 78.138 of the NRS provides that, unless the
corporations articles of incorporation provide otherwise, a director or officer
will not be individually liable unless it is proven that (i) the directors or
officers acts or omissions constituted a breach of his or her fiduciary duties,
and (ii) such breach involved intentional misconduct, fraud or a knowing
violation of the law.
Section 78.7502 of the NRS permits a company to indemnify its
directors and officers against expenses, judgments, fines, and amounts paid in
settlement actually and reasonably incurred in connection with a threatened,
pending, or completed action, suit, or proceeding, except an action by or on
behalf of the corporation, if the officer or director (i) is not liable pursuant
to NRS 78.138, or (ii) acted in good faith and in a manner the officer or
director reasonably believed to be in or not opposed to the best interests of
the corporation and, if a criminal action or proceeding, had no reasonable cause
to believe the conduct of the officer or director was unlawful. Section 78.7502
of the NRS also requires a corporation to indemnify its officers and directors
if they have been successful on the merits or otherwise in defense of any claim,
issue, or matter resulting from their service as a director or officer.
Section 78.751 of the NRS permits a Nevada company to indemnify
its officers and directors against expenses incurred by them in defending a
civil or criminal action, suit, or proceeding as they are incurred and in
advance of final disposition thereof, upon determination by the stockholders,
the disinterested board members, or by independent legal counsel. Section 78.751
of NRS requires a corporation to advance expenses as incurred upon receipt of an
undertaking by or on behalf of the officer or director to repay the amount if it
is ultimately determined by a court of competent jurisdiction that such officer
or director is not entitled to be indemnified by the company if so provided in
the corporations articles of incorporation, bylaws, or other agreement. Section
78.751 of the NRS further permits the company to grant its directors and
officers additional rights of indemnification under its articles of
incorporation, bylaws or other agreement.
Section 78.752 of the NRS provides that a Nevada company may
purchase and maintain insurance or make other financial arrangements on behalf
of any person who is or was a director, officer, employee or agent of the
company, or is or was serving at the request of the company as a director,
officer, employee or agent of another company, partnership, joint venture, trust
or other enterprise, for any liability asserted against him and liability and
expenses incurred by him in his capacity as a director, officer, employee or
agent, or arising out of his status as such, whether or not the company has the
authority to indemnify him against such liability and expenses.
Our Articles of Incorporation and Bylaws implement the
indemnification and insurance provisions permitted by Chapter 78 of the NRS by
providing that:
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We shall indemnify our directors and officers
to the fullest extent permitted by the NRS against expense, liability and
loss reasonably incurred or suffered by them in connection with their
service as an officer or director; and |
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We may purchase and maintain insurance, or make
other financial arrangements, on behalf of any person who holds or who has
held a position as a director, officer, or representative against
liability, cost, payment, or expense incurred by such person.
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At the present time, there is no pending litigation or
proceeding involving a director, officer, employee or other agent of ours in
which indemnification would be required or permitted. We are not aware of any
threatened litigation or proceeding which may result in a claim for such
indemnification.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
The Exhibits to this Registration
Statement are listed in the Exhibits Index which immediately follows the
signature page hereto.
Item 9. Undertakings.
(a) |
The undersigned registrant hereby undertakes: |
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(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this Registration Statement:
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(i) To include any prospectus required
by Section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this Registration
Statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this Registration Statement or
any material change to such information in this Registration Statement;
provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed with or furnished to the Commission by the Company pursuant to Section 13
or Section 15(d) of the Exchange Act that are incorporated by reference in this
Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby
undertakes that, for purposes of determining any liability under the Securities
Act, each filing of the Company's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act (and, where applicable, each filing of an
employee benefit plans annual report pursuant to section 15(d) of the Exchange
Act) that is incorporated by reference in this Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(h) Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to directors,
officers and controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, the Company has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Company of expenses incurred or paid by a director, officer
or controlling person of the Company in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Company will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Company certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Beijing, China, on June 17, 2015.
YOU ON DEMAND HOLDINGS, INC. |
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By: |
/s/
Weicheng Liu |
Weicheng Liu |
Chief Executive Officer.
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POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Weicheng Liu and Grace He, and
each of them, his or her true and lawful attorneys-in-fact and agents, for him
and in his name, place and stead, with full power to act alone, to sign on his
behalf and in the capacity set forth below, any and all amendments and
post-effective amendments and supplements to this Registration Statement on Form
S-8 and to file each such amendment and post-effective amendment and supplements
to this Registration Statement, with all exhibits thereto, and any and all other
documents in connection therewith, with the Securities and Exchange Commission,
hereby granting unto said attorney-in-fact and agent full power and authority to
do and perform any and all acts and things requisite and necessary or
appropriate to be done in and about the premises as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent may lawfully do or cause to be done by
virtue hereof.
*****
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities indicated on June 17, 2015.
Signature |
Title |
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/s/Xuesong Song |
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Xuesong Song |
Director and Executive Chairman
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/s/
Shane McMahon |
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Shane McMahon |
Chairman of the Board |
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/s/
Weicheng Liu |
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Weicheng Liu |
Chief Executive Officer and
Director
(Principal Executive Officer) |
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/s/
Grace He |
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Grace He |
Vice President of Finance |
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(Principle Financial and
Accounting Officer) |
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/s/
James Cassano |
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James Cassano |
Director |
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/s/
Clifford Higgerson |
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Clifford Higgerson |
Director |
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/s/
Jin Shi |
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Jin Shi |
Director |
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/s/
Arthur Wong |
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Arthur Wong |
Director |
INDEX TO EXHIBITS
*Filed herewith
Exhibit 4.3
YOU ON DEMAND HOLDINGS, INC.
2010 EQUITY INCENTIVE PLAN
1. |
Purposes of the Plan. YOU on Demand Holdings,
Inc., a Nevada corporation (the Company) hereby establishes the
YOU on Demand Holdings, Inc. 2010 Equity Incentive Plan (the
Plan).The purposes of this Plan are to attract and retain the
best available personnel for positions of substantial responsibility, to
provide additional incentive to Employees, Directors and Consultants, and
to promote the long-term growth and profitability of the Company. The Plan
permits the grant of Incentive Stock Options, Nonstatutory Stock Options,
Restricted Stock, Restricted Stock Units, Stock Appreciation Rights,
Performance Units and Performance Shares as the Administrator may
determine. |
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2. |
Definitions. The following definitions will apply
to the terms in the Plan: |
Administrator means the Board or any of its Committees
as will be administering the Plan, in accordance with Section 4.
Applicable Laws means the requirements relating to the
administration of equity-based awards under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Awards are, or will be, granted under
the Plan.
Award means, individually or collectively, a grant
under the Plan of Options, SARs, Restricted Stock, Restricted Stock Units,
Performance Units or Performance Shares.
Award Agreement means the written or electronic
agreement setting forth the terms and provisions applicable to each Award
granted under the Plan. The Award Agreement is subject to the terms and
conditions of the Plan.
Board means the Board of Directors of the Company.
Change in Control means the occurrence of any of the
following events:
(i) Any person (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the
"beneficial owner" (as defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of securities of the Company representing fifty percent (50%) or
more of the total voting power represented by the Company's then outstanding
voting securities; provided however, that for purposes of this subsection (i)
any acquisition of securities directly from the Company shall not constitute a
Change in Control; or
(ii) The consummation
of the sale or disposition by the Company of all or substantially all of the
Company's assets;
(iii) A change in the
composition of the Board occurring within a two-year period, as a result of
which fewer than a majority of the directors are Incumbent Directors. Incumbent
Directors means directors who either (A) are Directors as of the effective date
of the Plan, or (B) are elected, or nominated for election, to the Board with
the affirmative votes of at least a majority of the Incumbent Directors at the
time of such election or nomination (but will not include an individual whose
election or nomination is in connection with an actual or threatened proxy
contest relating to the election of directors to the Company); or
(iv) The consummation
of a merger or consolidation of the Company with any other corporation, other
than a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity or its parent) at least fifty percent (50%) of the total
voting power represented by the voting securities of the Company or such
surviving entity or its parent outstanding immediately after such merger or
consolidation.
For avoidance of doubt, a transaction will not constitute a
Change in Control if: (i) its sole purpose is the change the state of the
Companys incorporation, or (ii) its sole purpose is to create a holding company
that will be owned in substantially the same proportions by the persons who held
the Companys securities immediately before such transaction.
Code means the Internal Revenue Code of 1986, as
amended. Any reference in the Plan to a section of the Code will be a reference
to any successor or amended section of the Code.
Committee means a committee of Directors or of other
individuals satisfying Applicable Laws appointed by the Board in accordance with
Section 4 hereof.
Common Stock means the common stock of the Company.
Company means YOU on Demand Holdings, Inc., a Nevada
corporation, or any successor thereto.
Consultant means any person, including an advisor,
engaged by the Company or a Parent or Subsidiary to render services to such
entity.
Director means a member of the Board.
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Disability means total and permanent disability as
determined by the Administrator in its discretion in accordance with uniform and
non-discriminatory standards adopted by the Administrator from time to time.
Employee means any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company.
Neither service as a Director nor payment of a director's fee by the Company
will be sufficient to constitute "employment" by the Company.
Exchange Act means the Securities Exchange Act of
1934, as amended.
Exchange Program means a program under which (i)
outstanding Awards are surrendered or cancelled in exchange for Awards of the
same type (which may have lower exercise prices and different terms), Awards of
a different type and/or cash, and/or (ii) the exercise price of an outstanding
Award is reduced.
Fair Market Value means, as of any date, the value of
Common Stock determined as follows:
(i) If the Common
Stock is listed on any established stock exchange or a national market system,
including without limitation any division or subdivision of the Nasdaq Stock
Market, its Fair Market Value will be the closing sales price for such stock (or
the closing bid, if no sales were reported) as quoted on such exchange or system
on the day of determination, as reported in The Wall Street Journal or such
other source as the Administrator deems reliable;
(ii) If the Common
Stock is regularly quoted by a recognized securities dealer but selling prices
are not reported, including without limitation quotation through the over the
counter bulletin board (OTCBB) quotation service administered by the Financial
Industry Regulatory Authority (FINRA) , the Fair Market Value of a Share will
be the mean between the high bid and low asked prices for the Common Stock on
the day of determination, as reported in The Wall Street Journal or such other
source as the Administrator deems reliable; or
(iii) In the absence
of an established market for the Common Stock, the Fair Market Value will be
determined in good faith by the Administrator, and to the extent Section 15
applies (a) with respect to ISOs, the Fair Market Value shall be determined in a
manner consistent with Code section 422 or (b) with respect to NSOs or SARs, the
Fair Market Value shall be determined in a manner consistent with Code section
409A.
Fiscal Year means the fiscal year of the Company.
Grant Date means, for all purposes, the date on which
the Administrator determines to grant an Award, or such other later date as is
determined by the Administrator, provided that the Administrator cannot grant an
Award prior to the date the material terms of the Award are established. Notice of the
Administrators determination to grant an Award will be provided to each
Participant within a reasonable time after the Grant Date.
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Incentive Stock Option or ISO means an Option that
by its terms qualifies and is otherwise intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code and the regulations
promulgated thereunder.
Nonstatutory Stock Option or NSO means an Option
that by its terms does not qualify or is not intended to qualify as an ISO.
Officer means a person who is an officer of the
Company within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
Option means a stock option granted pursuant to the
Plan.
Optioned Shares means the Common Stock subject to an
Option.
Optionee means the holder of an outstanding Option.
Parent means a parent corporation, whether now or
hereafter existing, as defined in Section 424(e) of the Code.
Participant means the holder of an outstanding Award.
Performance Share means an Award denominated in Shares
which may vest in whole or in part upon attainment of performance goals or other
vesting criteria as the Administrator may determine pursuant to Section 10.
Performance Unit means an Award which may vest in
whole or in part upon attainment of performance goals or other vesting criteria
as the Administrator may determine and which may be settled for cash, Shares or
other securities or a combination of the foregoing pursuant to Section 10.
Period of Restriction means the period during which
Shares of Restricted Stock are subject to forfeiture or restrictions on transfer
pursuant to Section 7.
Plan means this 2010 Equity Incentive Plan.
Restricted Stock means Shares awarded to a Participant
which are subject to forfeiture and restrictions on transferability in
accordance with Section 7.
Restricted Stock Unit means the right to receive one
Share at the end of a specified period of time, which right is subject to
forfeiture in accordance with Section 8 of the Plan.
4
Rule 16b-3 means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3.
Section means a paragraph or section of this Plan.
Section 16(b) means Section 16(b) of the Exchange Act.
Service Provider means an Employee, Director or
Consultant.
Share means a share of the Common Stock, as adjusted
in accordance with Section 13.
Stock Appreciation Right or SAR means the
right to receive payment from the Company in an amount no greater than the
excess of the Fair Market Value of a Share at the date the SAR is exercised over
a specified price fixed by the Administrator in the Award Agreement, which shall
not be less than the Fair Market Value of a Share on the Grant Date. In the case
of a SAR which is granted in connection with an Option, the specified price
shall be the Option exercise price.
Subsidiary means a "subsidiary corporation", whether
now or hereafter existing, as defined in Section 424(f) of the Code.
Ten Percent Owner means any Service Provider who is,
on the grant date of an ISO, the owner of Shares (determined with application of
ownership attribution rules of Code Section 424(d)) possessing more than 10% of
the total combined voting power of all classes of stock of the Company or any of
its Subsidiaries.
3. |
Stock Subject to the Plan. |
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a. |
Stock Subject to the Plan. Subject to the
provisions of Section 13, the maximum aggregate number of Shares that may
be issued under the Plan is three hundred million (300,000,000) Shares.
The Shares may be authorized but unissued, or reacquired Common
Stock. |
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b. |
Lapsed Awards. If an Award expires or becomes
unexercisable without having been exercised in full or, with respect to
Restricted Stock, Restricted Stock Units, Performance Shares or
Performance Units, is forfeited in whole or in part to the Company, the
unpurchased Shares (or for Awards other than Options and SARs, the
forfeited or unissued Shares) which were subject to the Award will become
available for future grant or sale under the Plan (unless the Plan has
terminated). With respect to SARs, only Shares actually issued pursuant to
a SAR will cease to be available under the Plan; all remaining Shares
subject to the SARs will remain available for future grant or sale under
the Plan (unless the Plan has terminated). Shares that have actually been
issued under the Plan under any Award will not be returned to the Plan and
will not become available for future distribution under the Plan;
provided, however, that if Shares issued pursuant to Awards
of Restricted Stock, Restricted Stock Units, Performance
Shares or Performance Units are forfeited to the Company, such Shares will
become available for future grant under the Plan. Shares withheld by the
Company to pay the exercise price of an Award or to satisfy tax
withholding obligations with respect to an Award will become available for
future grant or sale under the Plan. To the extent an Award under the Plan
is paid out in cash rather than Shares, such cash payment will not result
in reducing the number of Shares available for issuance under the
Plan. |
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c. |
Share Reserve. The Company, during the term of
this Plan, will at all times reserve and keep available such number of
Shares as will be sufficient to satisfy the requirements of the
Plan. |
4. |
Administration of the Plan. |
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a. |
Procedure. The Plan shall be administered by the
Board or a Committee (or Committees) appointed by the Board, which
Committee shall be constituted to comply with Applicable Laws. If and so
long as the Common Stock is registered under Section 12(b) or 12(g) of the
Exchange Act, the Board shall consider in selecting the Administrator and
the membership of any committee acting as Administrator the requirements
regarding (i) nonemployee directors within the meaning of Rule 16b-3
under the Exchange Act; (ii) independent directors as described in the
listing requirements for any stock exchange on which Shares are listed;
and (iii) Section 15(b)(i) of the Plan if the Company pays salaries for
which it claims deductions that are subject to the Code section 162(m)
limitation on its U.S. tax returns. The Board may delegate the
responsibility for administering the Plan with respect to designated
classes of eligible Participants to different committees consisting of two
or more members of the Board, subject to such limitations as the Board or
the Administrator deems appropriate. Committee members shall serve for
such term as the Board may determine, subject to removal by the Board at
any time. |
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b. |
Powers of the Administrator. Subject to the
provisions of the Plan and the approval of any relevant authorities, and
in the case of a Committee, subject to the specific duties delegated by
the Board to such Committee, the Administrator will have the authority, in
its discretion: |
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i. to
determine the Fair Market Value; |
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ii. to
select the Service Providers to whom Awards may be granted
hereunder; |
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iii. to
determine the number of Shares to be covered by each Award granted
hereunder; |
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iv. to
approve forms of agreement for use under the Plan; |
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v. to determine the
terms and conditions, not inconsistent with the terms of the Plan, of any Award
granted hereunder. Such terms and conditions include, but are not limited to,
the exercise price, the time or times when Awards may be exercised (which may be
based on continued employment, continued service or performance criteria), any
vesting acceleration (whether by reason of a Change of Control or otherwise) or
waiver of forfeiture restrictions, and any restriction or limitation regarding
any Award or the Shares relating thereto, based in each case on such factors as
the Administrator, in its sole discretion, will determine;
vi. subject to
Section 15(c) of the Plan, to reduce, without prior stockholder approval, the
exercise price of any Award to the then current Fair Market Value of the Common
Stock covered by such Award if the Fair Market Value has declined since the
Grant Date;
vii. to construe
and interpret the terms of the Plan and Awards granted pursuant to the Plan,
including the right to construe disputed or doubtful Plan and Award
provisions;
viii. to prescribe,
amend and rescind rules and regulations relating to the Plan;
ix. to modify or
amend each Award (subject to Section 19(c)) to the extent any modification or
amendment is consistent with the terms of the Plan. The Administrator shall have
the discretion to extend the exercise period of Options generally provided the
exercise period is not extended beyond the earlier of the original term of the
Option or 10 years from the original grant date, or specifically (1) if the
exercise period of an Option is extended (but to no more than 10 years from the
original grant date) at a time when the exercise price equals or exceeds the
fair market value of the Optioned Shares or (2) an Option cannot be exercised
because such exercise would violate Applicable Laws, provided that the exercise
period is not extended more than 30 days after the exercise of the Option would
no longer violate Applicable Laws.
x. to allow
Participants to satisfy withholding tax obligations in such manner as prescribed
in Section 14;
xi. to authorize
any person to execute on behalf of the Company any instrument required to effect
the grant of an Award previously granted by the Administrator;
xii. to delay
issuance of Shares or suspend Participants right to exercise an Award as deemed
necessary to comply with Applicable Laws; and
xiii. to make all
other determinations deemed necessary or advisable for administering the
Plan.
7
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c. |
Effect of Administrator's Decision. The
Administrators decisions, determinations and interpretations will be final and
binding on all Participants and any other holders of Awards. Any decision or
action taken or to be taken by the Administrator, arising out of or in
connection with the construction, administration, interpretation and effect of
the Plan and of its rules and regulations, shall, to the maximum extent
permitted by Applicable Laws, be within its absolute discretion (except as
otherwise specifically provided in the Plan) and shall be final, binding and
conclusive upon the Company, all Participants and any person claiming under or
through any Participant. |
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5. |
Eligibility. NSOs, Restricted Stock, Restricted
Stock Units, SARs, Performance Units and Performance Shares may be granted
to Service Providers. ISOs may be granted as specified in Section
15(a). |
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6. |
Stock Options. |
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a. |
Grant of Options. Subject to the terms and
conditions of the Plan, the Administrator, at any time and from time to time, may
grant Options to Service Providers in such amounts as the Administrator
will determine in its sole discretion. For purposes of the foregoing
sentence, Service Providers shall include prospective employees or
consultants to whom Options are granted in connection with written offers
of employment or engagement of services, respectively, with the Company;
provided that no Option granted to a prospective employee or consultant
may be exercised prior to the commencement of employment or services with
the Company. The Administrator may grant NSOs, ISOs, or any combination of
the two. ISOs shall be granted in accordance with Section 15(a) of the
Plan. |
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b. |
Option Award Agreement. Each Option shall be
evidenced by an Award Agreement that shall specify the type of Option granted,
the Option price, the exercise date, the term of the Option, the number of
Shares to which the Option pertains, and such other terms and conditions
(which need not be identical among Participants) as the Administrator
shall determine in its sole discretion. If the Award Agreement does not
specify that the Option is to be treated as an ISO, the Option shall be
deemed a NSO. |
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c. |
Exercise Price. The per Share exercise price for
the Shares to be issued pursuant to exercise of an Option will be no less than the Fair
Market Value per Share on the Grant Date. |
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d. |
Term of Options. The term of each Option will be
stated in the Award Agreement. Unless terminated sooner in accordance with
the remaining provisions of this Section 6, each Option shall expire
either ten (10) years after the Grant Date, or after a shorter term as may be fixed by the Board. |
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e. |
Time and Form of Payment. |
8
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i. Exercise
Date. Each Award Agreement shall specify how and when Shares covered by an
Option may be purchased. The Award Agreement may specify waiting periods, the
dates on which Options become exercisable or vested and, subject to the
termination provisions of this section, exercise periods. The Administrator may
accelerate the exercisability of any Option or portion thereof. |
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ii. Exercise of
Option. Any Option granted hereunder will be exercisable according to the
terms of the Plan and at such times and under such conditions as determined by
the Administrator and set forth in the Award Agreement. An Option may not be
exercised for a fraction of a Share. An Option will be deemed exercised when the
Company receives: (1) notice of exercise (in such form as the Administrator
specify from time to time) from the person entitled to exercise the Option, and
(2) full payment for the Shares with respect to which the Option is exercised
(together with all applicable withholding taxes). Full payment may consist of
any consideration and method of payment authorized by the Administrator and
permitted by the Award Agreement and the Plan (together with all applicable
withholding taxes). Shares issued upon exercise of an Option will be issued in
the name of the Optionee or, if requested by the Optionee, in the name of the
Optionee and his or her spouse. Until the Shares are issued (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company), no right to vote or receive dividends or any other rights
as a stockholder will exist with respect to the Optioned Shares, notwithstanding
the exercise of the Option. The Company will issue (or cause to be issued) such
Shares promptly after the Option is exercised. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the
Shares are issued, except as provided in Section 13. |
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iii. Payment.
The Administrator will determine the acceptable form of consideration for
exercising an Option, including the method of payment. Such consideration may
consist entirely of: |
(1) cash;
(2) check;
(3) to the extent
not prohibited by Section 402 of the Sarbanes-Oxley Act of 2002, a promissory
note;
(4) other Shares,
provided Shares have a Fair Market Value on the date of surrender equal to the
aggregate exercise price of the Shares as to which said Option will be
exercised;
(5) to the extent
not prohibited by Section 402 of the Sarbanes-Oxley Act of 2002, in accordance
with any broker-assisted cashless exercise procedures approved by the Company
and as in effect from time to time;
9
(6) by asking the
Company to withhold Shares from the total Shares to be delivered upon exercise
equal to the number of Shares having a value equal to the aggregate Exercise
Price of the Shares being acquired;
(7) any combination
of the foregoing methods of payment; or
(8) such other
consideration and method of payment for the issuance of Shares to the extent
permitted by Applicable Laws.
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f. |
Forfeiture of Options. All unexercised Options shall
be forfeited to the Company in accordance with the terms and conditions set
forth in the Award Agreement and again will become available for grant under the
Plan. |
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7. |
Restricted Stock. |
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a. |
Grant of Restricted Stock. Subject to the terms
and conditions of the Plan, the Administrator, at any time and from time to time, may
grant Shares of Restricted Stock to Service Providers in such amounts as
the Administrator will determine in its sole discretion. |
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b. |
Restricted Stock Award Agreement. Each Award of
Restricted Stock will be evidenced by an Award Agreement that will specify the
Period of Restriction, the number of Shares granted, and such other terms
and conditions (which need not be identical among Participants) as the
Administrator will determine in its sole discretion. Unless the
Administrator determines otherwise, the Company as escrow agent will hold
Shares of Restricted Stock until the restrictions on such Shares have
lapsed. |
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c. |
Vesting Conditions and Other Terms. |
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i. Vesting Conditions. The Administrator, in its sole
discretion, may impose such conditions on the vesting of Shares of Restricted
Stock as it may deem advisable or appropriate, including but not limited
to, achievement of Company- wide, business unit, or individual goals
(including, but not limited to, continued employment or service), or any
other basis determined by the Administrator in its discretion. The
Administrator, in its discretion, may accelerate the time at which any
restrictions will lapse or be removed. The Administrator may, in its
discretion, also provide for such complete or partial exceptions to an
employment or service restriction as it deems equitable. |
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ii. Voting Rights. During the Period of Restriction,
Service Providers holding Shares of Restricted Stock granted hereunder may
exercise full voting rights with respect to those Shares, unless the
Administrator determines otherwise. |
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iii. Dividends and Other Distributions. During the
Period of Restriction, Service Providers holding Shares of Restricted Stock will
be entitled to receive all dividends and other distributions paid with respect
to such Shares, unless the Administrator determines otherwise. If any such
dividends or distributions are paid in Shares, the Shares will be subject to the
same restrictions on transferability and forfeitability as the Shares of
Restricted Stock with respect to which they were paid. |
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iv. Transferability. Except as provided in this Section,
Shares of Restricted Stock may not be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated until the end of the applicable Period of
Restriction. |
10
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d. |
Removal of Restrictions. All restrictions imposed
on Shares of Restricted Stock shall lapse and the Period of Restriction shall end upon
the satisfaction of the vesting conditions imposed by the Administrator.
Vested Shares of Restricted Stock will be released from escrow as soon as
practicable after the last day of the Period of Restriction or at such
other time as the Administrator may determine, but in no event later than
the 15th day of the third month following the end of the year
in which vesting occurred. |
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e. |
Forfeiture of Restricted Stock. On the date set
forth in the Award Agreement, the Shares of Restricted Stock for which restrictions have
not lapsed will be forfeited and revert to the Company and again will
become available for grant under the Plan. |
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8. |
Restricted Stock Units. |
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a. |
Grant of Restricted Stock Units. Subject to the
terms and conditions of the Plan, the Administrator, at any time and from time to time, may
grant Restricted Stock Units to Service Providers in such amounts as the
Administrator will determine in its sole discretion. |
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b. |
Restricted Stock Units Award Agreement. Each Award
of Restricted Stock Units will be evidenced by an Award Agreement that will specify
the number of Restricted Stock Units granted, vesting criteria, form of
payout, and such other terms and conditions (which need not be identical
among Participants) as the Administrator will determine in its sole
discretion. |
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c. |
Vesting Conditions. The Administrator shall set
vesting criteria in its discretion, which, depending on the extent to which the criteria are
met, will determine the number of Restricted Stock Units that will be paid
out to the Participant. The Administrator may set vesting criteria based
upon the achievement of Company-wide, business unit, or individual goals
(including, but not limited to, continued employment or service), or any
other basis determined by the Administrator in its discretion. At any time
after the grant of Restricted Stock Units, the Administrator, in its sole
discretion, may reduce or waive any vesting criteria that must be met to
receive a payout. |
11
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d. |
Time and Form of Payment. Upon satisfaction of the
applicable vesting conditions, payment of vested Restricted Stock Units
shall occur in the manner and at the time provided in the Award Agreement,
but in no event later than the 15th day of the third month
following the end of the year in which vesting occurred. Except as
otherwise provided in the Award Agreement, Restricted Stock Units may be
paid in cash, Shares, or a combination thereof at the sole discretion of the
Administrator. Restricted Stock Units that are fully paid in cash will not
reduce the number of Shares available for issuance under the
Plan. |
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e. |
Forfeiture of Restricted Stock Units. All unvested
Restricted Stock Units shall be forfeited to the Company on the date set
forth in the Award Agreement and again will become available for grant
under the Plan. |
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9. |
Stock Appreciation Rights. |
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a. |
Grant of SARs. Subject to the terms and conditions
of the Plan, the Administrator, at any time and from time to time, may
grant SARs to Service Providers in such amounts as the Administrator will
determine in its sole discretion. |
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b. |
Award Agreement. Each SAR grant will be evidenced
by an Award Agreement that will specify the exercise price, the number of
Shares underlying the SAR grant, the term of the SAR, the conditions of
exercise, and such other terms and conditions (which need not be identical
among Participants) as the Administrator will determine in its sole
discretion. |
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c. |
Exercise Price and Other Terms. The per Share
exercise price for the exercise of an SAR will be no less than the Fair
Market Value per Share on the Grant Date. |
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d. |
Time and Form of Payment of SAR Amount. Upon
exercise of a SAR, a Participant will be entitled to receive payment from
the Company in an amount no greater than: (i) the difference between the
Fair Market Value of a Share on the date of exercise over the exercise
price; times (ii) the number of Shares with respect to which the SAR is
exercised. An Award Agreement may provide for a SAR to be paid in cash,
Shares of equivalent value, or a combination thereof. |
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e. |
Forfeiture of SARs. All unexercised SARs shall be
forfeited to the Company in accordance with the terms and conditions set
forth in the Award Agreement and again will become available for grant
under the Plan. |
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10. |
Performance Units and Performance
Shares. |
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a. |
Grant of Performance Units and Performance Shares.
Performance Units or Performance Shares may be granted to Service
Providers at any time and from time to time, as will be determined by the
Administrator, in its sole discretion. The Administrator will have
complete discretion in determining the number of Performance Units and
Performance Shares granted to each Participant. |
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b. |
Award Agreement. Each Award of Performance
Units and Shares will be evidenced by an Award Agreement that will specify
the initial value, the Performance Period, the number of Performance Units
or Performance Shares granted, and such other terms and conditions (which
need not be identical among Participants) as the Administrator will
determine in its sole discretion. |
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c. |
Value of Performance Units and Performance
Shares. Each Performance Unit will have an initial value that is
established by the Administrator on or before the Grant Date. Each
Performance Share will have an initial value equal to the Fair Market
Value of a Share on the Grant Date. |
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d. |
Vesting Conditions and Performance Period. The
Administrator will set performance objectives or other vesting provisions
(including, without limitation, continued status as a Service Provider) in
its discretion which, depending on the extent to which they are met, will
determine the number or value of Performance Units or Performance Shares
that will be paid out to the Service Providers. The time period during
which the performance objectives or other vesting provisions must be met
will be called the Performance Period. The Administrator may set
performance objectives based upon the achievement of Company-wide,
divisional, or individual goals or any other basis determined by the
Administrator in its discretion. |
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e. |
Time and Form of Payment. After the applicable
Performance Period has ended, the holder of Performance Units or
Performance Shares will be entitled to receive a payout of the number of
vested Performance Units or Performance Shares by the Participant over the
Performance Period, to be determined as a function of the extent to which
the corresponding performance objectives or other vesting provisions have
been achieved. Vested Performance Units or Performance Shares will be paid
as soon as practicable after the expiration of the applicable Performance
Period, but in no event later than the 15th day of the third
month following the end of the year the applicable Performance Period
expired. An Award Agreement may provide for the satisfaction of
Performance Unit or Performance Share Awards in cash or Shares (which have
an aggregate Fair Market Value equal to the value of the vested
Performance Units or Performance Shares at the close of the applicable
Performance Period) or in a combination thereof. |
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f. |
Forfeiture of Performance Units and Performance
Shares. All unvested Performance Units or Performance Shares will be
forfeited to the Company on the date set forth in the Award Agreement, and
again will become available for grant under the Plan. |
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11. |
Leaves of Absence/Transfer Between Locations.
Unless the Administrator provides otherwise or as required by Applicable
Laws, vesting of Awards will be suspended during any unpaid leave of
absence. An Employee will not cease to be an Employee in the case of (i)
any leave of absence approved by the Company or (ii) transfers between
locations of the Company or between the Company, its Parent, or any
Subsidiary. |
13
12. |
Transferability of Awards. Unless determined otherwise by the Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent
or distribution and may be exercised, during the lifetime of the Participant, only by the Participant. If the Administrator makes an Award transferable, such Award will contain such additional terms and conditions as the Administrator deems
appropriate.
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13. |
Adjustments; Dissolution or Liquidation; Merger or Change in Control.
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a. |
Adjustments. In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or
enlargement of the benefits or potential benefits intended to be made available under the Plan, shall appropriately adjust the number and class of Shares that may be delivered under the Plan and/or the number, class, and price of Shares covered by
each outstanding Award. |
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b. |
Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator will notify each Participant as soon as practicable prior to the effective date of such proposed transaction. To the
extent it has not been previously exercised, an Award will terminate immediately prior to the consummation of such proposed action. |
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c. |
Change in Control. In the event of a merger or Change in Control, any or all outstanding Awards may be assumed by the successor corporation, which assumption shall be binding on all Participants. In the alternative, the successor
corporation may substitute equivalent Awards (after taking into account the existing provisions of the Awards). The successor corporation may also issue, in place of outstanding Shares of the Company held by the Participant, substantially similar
shares or other property subject to vesting requirements and repurchase restrictions no less favorable to the Participant than those in effect prior to the merger or Change in Control. |
In the event that the successor corporation does not assume or substitute for the Award, unless the Administrator provides otherwise, the Participant will fully vest in and have the right to exercise all of his or her outstanding Options and SARs,
including Shares as to which such Awards would not otherwise be vested or exercisable, all restrictions on Restricted Stock and Restricted Stock Units will lapse, and, with respect to Performance Shares and Performance Units, all Performance Goals
or other vesting criteria will be deemed achieved at target levels and all other terms and conditions met. In addition, if an Option or SAR is not assumed or substituted in the event of a Change in Control, the Administrator will notify the
Participant in writing or electronically that the Option or SAR will be exercisable for a period of time determined by the Administrator
in its sole discretion, and the Option or SAR will terminate upon the expiration of such period.
14
For the purposes of this Section 13(c), an Award will be considered assumed if, following the Change in Control, the Award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the Change in Control, the
consideration (whether stock, cash, or other securities or property) or, in the case of a SAR upon the exercise of which the Administrator determines to pay cash or a Performance Share or Performance Unit which the Administrator can determine to pay
in cash, the fair market value of the consideration received in the merger or Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator
may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of an Option or SAR or upon the payout of a Restricted Stock Unit, Performance Share or Performance Unit, for each Share subject to
such Award (or in the case of Restricted Stock Units and Performance Units, the number of implied shares determined by dividing the value of the Restricted Stock Units and Performance Units, as applicable, by the per share consideration received by
holders of Common Stock in the Change in Control), to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the Change in Control.
Notwithstanding anything in this Section 13(c) to the contrary, an Award that vests, is earned or paid-out upon the satisfaction of one or more performance goals will not be considered assumed if the Company or its successor modifies any of such
performance goals without the Participant's consent; provided, however, a modification to such performance goals only to reflect the successor corporation's post-Change in Control corporate structure will not be deemed to invalidate an otherwise
valid Award assumption.
14. |
Tax Withholding.
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a. |
Withholding Requirements. Prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof), the Company will have the power and the right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy federal, state, local, foreign or other taxes required by Applicable Laws to be withheld with respect to such Award (or exercise thereof).
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b. |
Withholding Arrangements. The Administrator, in its sole discretion and pursuant to such procedures as it may specify from time to time, may permit a Participant to satisfy such tax withholding obligation, in whole or in
part by (without limitation) (i) paying cash, (ii) electing to have the Company withhold otherwise deliverable Shares having a Fair Market Value equal to the amount required to be withheld, or
(iii) delivering to the Company already-owned Shares having a Fair Market Value equal to the amount required to be withheld. The amount of the withholding requirement will be deemed to include any amount which the Administrator agrees may be
withheld at the time the election is made. The Fair Market Value of the Shares to be withheld or delivered will be determined as of the date that the taxes are required to be withheld.
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15
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15. |
Provisions Applicable In the Event the Company or the Service Provider is Subject to U.S. Taxation.
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a. |
Grant of Incentive Stock Options. If the Administrator grants Options to Employees subject to U.S. taxation, the Administrator may grant such Employee an ISO and the following terms shall also apply:
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i. |
Maximum Amount. Subject to the provisions of Section 13, to the extent consistent with Section 422 of the Code, not more than an aggregate of three hundred million (300,000,000) Shares may be issued as ISOs under the Plan.
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ii. |
General Rule. Only Employees shall be eligible for the grant of ISOs.
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iii. |
Continuous Employment. The Optionee must remain in the continuous employ of the Company or its Subsidiaries from the date the ISO is granted until not more than three months before the date on which it is exercised. A leave of absence approved by the Company may exceed ninety (90) days if
reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then three (3) months following the ninety-first (91st) day of such
leave any ISO held by the Optionee will cease to be treated as an ISO.
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iv. |
Award Agreement.
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(1) The Administrator shall designate Options granted as ISOs in the Award Agreement. Notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which ISOs are exercisable for the first time by the Optionee during any calendar year (under all
plans of the Company and any Parent or Subsidiary) exceeds one hundred thousand dollars ($100,000), Options will not qualify as an ISO. For purposes of this section, ISOs will be taken into account in the order in which they were granted. The
Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted.
(2) The Award Agreement shall specify the term of the ISO. The term shall not exceed ten (10) years from the Grant Date or five (5) years from the Grant Date for Ten Percent Owners.
16
(3) The Award Agreement shall specify an exercise price of not less than the Fair Market Value per Share on the Grant Date or one hundred ten percent (110%) of the Fair Market Value per Share on the Grant Date for Ten Percent Owners.
(4) The Award Agreement shall specify that an ISO is not transferable except by will, beneficiary designation or the laws of descent and distribution.
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v. |
Form of Payment. The consideration to be paid for the Shares to be issued upon exercise of an ISO, including the method of payment, shall be determined by the Administrator at the time of grant in accordance with Section 6(e)(iii).
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vi. |
Disability”, for purposes of an ISO, means total and permanent disability as defined in Section 22(e)(3) of the Code.
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vii. |
Notice. In the event of any disposition of the Shares acquired pursuant to the exercise of an ISO within two years from the Grant Date or one year from the exercise date, the Optionee will notify the Company thereof in writing within
thirty (30) days after such disposition. In addition, the Optionee shall provide the Company with such information as the Company shall reasonably request in connection with determining the amount and character of Optionee’s income, the
Company’s deduction, and the Company’s obligation to withhold taxes or other amounts incurred by reason of a disqualifying disposition, including the amount thereof.
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b. |
Performance-based Compensation. If the Company pays salaries for which it claims deductions that are subject to the Code section 162(m) limitation on its U.S. tax returns, then the following terms shall be applied in a manner consistent
with the requirements of, and only to the extent required for compliance with, the exclusion from the limitation on deductibility of compensation under Code Section 162(m):
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i. |
Outside Directors. The Board shall consider in selecting the Administrator and the membership of any committee acting as Administrator the provisions regarding “outside directors” within the meaning of Code Section 162(m).
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ii. |
Maximum Amount. |
(1) Subject to the provisions of Section 13, the maximum number of Shares that can be awarded to any individual Participant in the aggregate in any one fiscal year of the Company is one hundred million (100,000,000) Shares;
17
(2) For Awards denominated in Shares and satisfied in cash, the maximum Award to any individual Participant in the aggregate in any one fiscal year of the Company is the Fair Market Value of fifty million (50,000,000) Shares on the Grant Date;
and
(3) The maximum amount payable pursuant to any cash Awards to any individual Participant in the aggregate in any one fiscal year of the Company is the Fair Market Value of fifty million (50,000,000) Shares on the Grant Date.
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iii. |
Performance Criteria. All performance criteria must be objective and be established in writing prior to the beginning of the performance period or at later time as permitted by Code Section 162(m). Performance criteria may include
alternative and multiple performance goals and may be based on one or more business and/or financial criteria. In establishing the performance goals, the Committee in its discretion may include one or any combination of the following criteria in
either absolute or relative terms, for the Company or any Subsidiary:
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(1) Increased revenue;
(2) Net income measures (including but not limited to income after
capital costs and income before or after taxes);
(3) Stock price measures (including but not limited to growth measures
and total stockholder return);
(4) Market share;
(5) Earnings
per Share (actual or targeted growth);
(6) Earnings before interest, taxes, depreciation, and amortization (“EBITDA);
(7) Cash flow measures (including but not limited to net cash flow and
net cash flow before financing activities);
(8) Return measures (including but not limited to return on equity,
return on average assets, return on capital, risk-adjusted return on capital,
return on investors capital and return on average equity);
(9) Operating measures (including operating income, funds from
operations, cash from operations, after-tax operating income, sales volumes,
production volumes, and production efficiency);
(10) Expense measures (including but not limited to overhead cost and
general and administrative expense);
(11) Margins;
(12) Stockholder value;
18
(13) Total stockholder return;
(14) Proceeds from dispositions;
(15) Production volumes;
(16) Total market value; and
(17) Corporate values measures (including but not limited to ethics compliance, environmental, and safety).
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c. |
Stock Options and SARs Exempt from Code section 409A. If the Administrator grants Options or SARs to Employees subject to U.S. taxation the Administrator may not modify or amend the Options or SARs to the extent that the
modification or amendment adds a feature allowing for additional deferral within the meaning of Code section 409A.
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16. |
No Effect on Employment or Service. Neither the Plan nor any Award will confer upon any Participant any right with respect to continuing the Participant's relationship as a Service Provider with the Company or any Parent or
Subsidiary of the Company, nor will they interfere in any way with the Participant's right or the Company's or its Parent’s or Subsidiary’s right to terminate such relationship at any time, with or without cause, to the extent permitted
by Applicable Laws.
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17. |
Effective Date. The Plan’s effective date is the date on which it is adopted by the Board, so long as it is approved by the Company’s stockholders at any time within 12 months of such adoption. Upon approval of
the Plan by the stockholders of the Company, all Awards issued pursuant to the Plan on or after the Effective Date shall be fully effective as if the stockholders of the Company had approved the Plan on the Effective Date. If the stockholders fail
to approve the Plan within one year before or after the Effective Date, any Awards made hereunder shall be null and void and of no effect.
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18. |
Term of Plan. The Plan will terminate 10 years following the earlier of (i) the date it was adopted by the Board or (ii) the date it became effective upon approval by stockholders of the Company, unless sooner terminated by
the Board pursuant to Section 19.
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19. |
Amendment and Termination of the Plan.
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a. |
Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan.
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b. |
Stockholder Approval. The Company will obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.
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c. |
Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan will impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company. Termination of the Plan will not affect the Administrator's ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the
date of such termination.
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20. |
Conditions Upon Issuance of Shares.
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a. |
Legal Compliance. The Administrator may delay or suspend the issuance and delivery of Shares, suspend the exercise of Options or SARs, or suspend the Plan as necessary to comply Applicable Laws. Shares will not be issued pursuant to the exercise of an Award unless the exercise of such Award and the
issuance and delivery of such Shares will comply with Applicable Laws and will be further subject to the approval of counsel for the Company with respect to such compliance.
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b. |
Investment Representations. As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation is required.
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21. |
Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance
and sale of any Shares hereunder, will relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority will not have been obtained.
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22. |
Exchange Programs. The Administrator may authorize the Company, without prior stockholder approval, to institute one or more Exchange Programs. An Exchange Program may, at the discretion of the Administrator, be offered to
individual Participants selected by the Administrator on a case-by-case basis, or to a class of Participants identified by the Administrator. The terms and conditions of any Exchange Program will be determined by the Administrator in its sole
discretion, not inconsistent with the terms of the Plan, including without limitation, Section 15(c); provided however, that no Exchange Program may adversely affect the rights of a Participant under an outstanding Award unless the Participant
consents in writing to be bound by the terms and conditions of the Exchange Program..
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23. |
Substitution and Assumption of Awards. The Administrator may make Awards under the Plan that assume, substitute or replace performance shares, phantom shares, stock awards, stock options, stock appreciation rights or
similar awards granted by another entity (including a Parent or Subsidiary), if such assumption, substitution or replacement is in connection with an asset acquisition, stock acquisition, merger, consolidation or similar transaction involving the
Company (and/or its Parent or Subsidiary) and such other entity (and/or its affiliate). The Administrator may also cause the Plan to assume an equity-based award granted by the Company prior to the adoption and approval of the Plan or substitute or
replace such prior award with a similar type of Award under this Plan. Notwithstanding any provision of the Plan (other than the maximum number of shares of Common Stock that may be issued under the
Plan), ,(i) in the case of an Award that assumes, substitutes or replaces
an award of another entity pursuant to a corporate transaction, such Award
shall be subject to the same terms and conditions as the original award,
with such adjustments or modifications as the Administrator deems
necessary and appropriate to give effect to the relevant provisions of any
agreement entered into in connection with the such corporate transaction
or (ii) in the case of an Award that assumes, substitutes or replaces a
prior Company award, such Award shall be subject to the same terms and
conditions as the original award, except to the extent that any such term
or condition is inconsistent with the Plan, in which event the terms of
the Plan shall control. Notwithstanding the foregoing, in no event may the
assumption, substitution or replacement of a prior Company award with an
Award under the Plan adversely affect the Participants rights under the
prior Company award unless the Participant consents in writing to such
assumption, substitution or replacement. Shares issued pursuant to
assumed, substituted or replaced awards shall count against the total
number of shares authorized to be issued under the Plan pursuant to
Section 3.
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24. |
Governing Law. The Plan and all Agreements shall
be construed in accordance with and governed by the laws of the State of
Nevada. |
Adopted by the Board of Directors on December 3, 2010
21
YOU ON DEMAND HOLDINGS, INC.
2010 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
Unless
otherwise defined herein, the terms in the Stock Option Agreement (the Option
Agreement) have the same meanings as defined in the YOU On Demand Holdings,
Inc. 2010 Equity Incentive Plan (the Plan).
I. |
NOTICE OF STOCK OPTION GRANT
Optionee:
Address: |
You
have been granted an Option to purchase Common Stock of the Company, subject to
the terms and conditions of the Plan and this Option Agreement, as follows:
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Grant Date: |
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Vesting Commencement Date: |
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Exercise Price per Share: |
[No
less than grant date fair market value] |
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Total Number of Shares Granted: |
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Total Exercise Price: |
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Type of Option: |
[Nonstatutory Stock Option (unless granted to an employee
subject to U.S. tax, then could be a ISO)] |
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Expiration Date: |
Ten
(10) years after Grant Date |
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Vesting Schedule: |
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Termination Period: |
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To
the extent vested, this Option will be exercisable for three (3) months after
Optionee ceases to be a Service Provider, unless termination is due to
Optionees death or Disability, in which case this Option will be exercisable
for twelve (12) months after Optionee ceases to be a Service Provider.
Notwithstanding the foregoing sentence, in no event may this Option be exercised
after any termination of the Optionee as a Service Provider determined by the
Companys Board to be for Cause or after the Expiration Date as provided above
and this Option may be subject to earlier termination as provided in the
Plan.
Cause
has the meaning ascribed to such term or words of similar import in Optionees
written employment or service contract with the Company or its Parent or any
Subsidiary and, in the absence of such agreement or definition, means Optionees
(i) conviction of, or plea of nolo contendere to, a felony or any other crime
involving moral turpitude; (ii) fraud on or misappropriation of any funds or
property of the Company or its subsidiaries, or any affiliate, customer or
vendor; (iii) personal dishonesty, incompetence, willful misconduct, willful
violation of any law, rule or regulation (other than minor traffic violations or
similar offenses), or breach of fiduciary duty which involves personal profit;
(iv) willful misconduct in connection with Optionees duties or willful failure
to perform Optionees responsibilities in the best interests of the Company or
its subsidiaries; (v) illegal use or distribution of drugs; (vi) violation of
any rule, regulation, procedure or policy of the Company or its subsidiaries; or
(vii) breach of any provision of any employment, non-disclosure,
non-competition, non-solicitation or other similar agreement executed by
Optionee for the benefit of the Company or its subsidiaries, all as determined
by the Companys Board, which determination will be conclusive.
II.
AGREEMENT
1.
Grant of Option. The Administrator grants to the Optionee named in the
Notice of Stock Option Grant in Part I of this Option Agreement, an Option to
purchase the number of Shares set forth in the Notice of Stock Option Grant, at
the exercise price per Share set forth in the Notice of Stock Option Grant (the
Exercise Price), and subject to the terms and conditions of the Plan, which is
incorporated herein by reference. In the event of a conflict between the terms
and conditions of the Plan and this Option Agreement, the terms and conditions
of the Plan prevail.
If
designated in the Notice of Stock Option Grant as an Incentive Stock Option,
this Option is intended to qualify as an Incentive Stock Option as defined in
Code section 422. Nevertheless, to the extent that it exceeds the $100,000 rule
of Code section 422(d), this Option will be treated as a Nonstatutory Stock
Option.
2. Exercise of Option.
(a)
Right to Exercise. This Option is exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Stock Option Grant
and with the applicable provisions of the Plan and this Option Agreement.
(b)
Method of Exercise. This Option is exercisable by (i) delivery of an
exercise notice in the form attached as Exhibit A (the Exercise Notice)
or in a manner and pursuant to procedures as the Administrator may determine,
which will state the election to exercise the Option, the number of Shares with
respect to which the Option is being exercised, and other representations and
agreements as may be required by the Company and (ii) paying the Company in full
the aggregate Exercise Price as to all Shares being acquired, together with any
applicable tax withholding.
This
Option will be deemed to be exercised upon receipt by the Company of a fully
executed Exercise Notice accompanied by the aggregate Exercise Price, together
with any applicable tax withholding.
-2-
No
Shares will be issued pursuant to the exercise of an Option unless the issuance
and exercise of Shares complies with Applicable Laws. Assuming compliance, for
income tax purposes the Shares will be considered transferred to the Optionee on
the date on which the Option is exercised with respect to the Shares.
3.
Method of Payment. The aggregate Exercise Price may be paid by any of the
following, or a combination thereof, at the election of the Optionee:
(a) cash;
(b) check;
(c) promissory note;
(d) other Shares, provided Shares have
a Fair Market Value on the date of surrender equal to the aggregate exercise
price of the Shares as to which said Option will be exercised;
(e) by asking the Company to withhold
Shares from the total Shares to be delivered upon exercise equal to the number
of Shares having a value equal to the aggregate Exercise Price of the Shares
being acquired;
(f) any combination of the foregoing
methods of payment; or
(g) such other consideration and
method of payment for the issuance of Shares to the extent permitted by
Applicable Laws.
4.
Restrictions on Exercise. This Option may not be exercised (a) until such
time as the Plan has been approved by the stockholders of the Company, or (b) if
the issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any Applicable
Laws. The Company will be relieved of any liability with respect to any delayed
issuance of shares or its failure to issue shares if such delay or failure is
necessary to comply with Applicable Laws.
5.
Non-Transferability of Option. This Option may not be transferred in any
manner otherwise than by will or by the laws of descent or distribution and may
be exercised during the lifetime of Optionee only by Optionee. The terms of the
Plan and this Option Agreement are binding upon the executors, administrators,
heirs, successors and assigns of the Optionee.
6.
Term of Option. This Option may be exercised only within the term set out
in the Notice of Stock Option Grant, and may be exercised during the term only
in accordance with the Plan and the terms of this Option.
7. Tax Obligations.
(a)
Withholding Taxes. Optionee agrees to arrange for the satisfaction of all
Federal, state, local and foreign income and employment tax withholding
requirements applicable to the Option exercise. Optionee acknowledges and agrees
that the Company may refuse to honor the exercise and refuse to deliver the Shares if withholding
amounts are not delivered at the time of exercise.
-3-
(b)
Notice of Disqualifying Disposition of ISO Shares. If the Option granted
to Optionee is an ISO, and if Optionee sells or otherwise disposes of any of the
Shares acquired pursuant to the ISO on or before the later of (i) the date two
(2) years after the Grant Date, or (ii) the date one (1) year after the date of
exercise, the Optionee must immediately notify the Company of the disposition in
writing. Optionee agrees that Optionee may be subject to income tax withholding
by the Company on the compensation income recognized by the Optionee.
(c)
Code Section 409A. Under Code section 409A, an Option that vests after
December 31, 2004 that was granted with a per Share exercise price that is
determined by the Internal Revenue Service (the IRS) to be less than the Fair
Market Value of a Share on the Grant Date (a discount option) may be
considered deferred compensation. An Option that is a discount option may result
in (i) income recognition by the Optionee prior to the exercise of the Option,
(ii) an additional twenty percent (20%) tax, and (iii) potential penalty and
interest charges. Optionee acknowledges that the Company cannot and has not
guaranteed that the IRS will agree that the per Share Exercise Price of this
Option equals or exceeds Fair Market Value of a Share on the Grant Date in a
later examination. Optionee agrees that if the IRS determines that the Option
was granted with a per Share exercise price that was less than the Fair Market
Value of a Share on the Grant Date, Optionee will be solely responsible for any
and all resulting tax consequences.
8. No Guarantee of Continued
Service. OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES
PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A
SERVICE PROVIDER AT THE WILL OF THE COMPANY (OR THE PARENT OR SUBSIDIARY
EMPLOYING OR RETAINING OPTIONEE) AND NOT THROUGH THE ACT OF BEING HIRED, BEING
GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER. OPTIONEE FURTHER ACKNOWLEDGES
AND AGREES THAT THIS OPTION AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER
AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR
IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING
PERIOD, FOR ANY PERIOD, OR AT ALL, AND WILL NOT INTERFERE IN ANY WAY WITH
OPTIONEES RIGHT OR THE RIGHT OF THE COMPANY (OR THE PARENT OR SUBSIDIARY
EMPLOYING OR RETAINING OPTIONEE) TO TERMINATE OPTIONEES RELATIONSHIP AS A
SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.
9.
Notices. All notices or other communications which are required or
permitted hereunder will be in writing and sufficient if (i) personally
delivered or sent by telecopy, (ii) sent by nationally-recognized overnight
courier or (iii) sent by registered or certified mail, postage prepaid, return
receipt requested, addressed as follows: if to the Optionee, to the address (or
telecopy number) set forth on the Notice of Stock Option Grant; and
-4-
if
to the Company, to the attention of the ______________ at the address set forth
below:
[Company Address]
or to any other address as the party to whom notice is to be
given may have furnished to the other party in writing in accordance herewith.
Any communication will be deemed to have been given (i) when delivered, if
personally delivered, or when telecopied, if telecopied, (ii) on the first
Business Day (as hereinafter defined) after dispatch, if sent by
nationally-recognized overnight courier and (iii) on the fourth Business Day
following the date on which the piece of mail containing the communication is
posted, if sent by mail. As used herein, Business Day means a day that is not
a Saturday, Sunday or a day on which banking institutions in the city to which
the notice or communication is to be sent are not required to be open.
10.
Specific Performance. Optionee expressly agrees that the Company
will be irreparably damaged if the provisions of this Option Agreement and the
Plan are not specifically enforced. Upon a breach or threatened breach of the
terms, covenants and/or conditions of this Option Agreement or the Plan by the
Optionee, the Company will, in addition to all other remedies, be entitled to a
temporary or permanent injunction, without showing any actual damage, and/or
decree for specific performance, in accordance with the provisions hereof and
thereof. The Administrator has the power to determine what constitutes a breach
or threatened breach of this Option Agreement or the Plan. The Administrators
determinations will be final and conclusive and binding upon the Optionee.
11.
No Waiver. No waiver of any breach or condition of this Option
Agreement will be deemed to be a waiver of any other or subsequent breach or
condition, whether of like or different nature.
12.
Optionee Undertaking. The Optionee agrees to take whatever additional
actions and execute whatever additional documents the Company may in its
reasonable judgment deem necessary or advisable in order to carry out or effect
one or more of the obligations or restrictions imposed on the Optionee pursuant
to the express provisions of this Option Agreement.
13.
Modification of Rights. The rights of the Optionee are subject to
modification and termination in certain events as provided in this Option
Agreement and the Plan.
14.
Governing Law. This Agreement is governed by, and construed in
accordance with, the laws of the State of Nevada, without giving effect to its
conflict or choice of law principles that might otherwise refer construction or
interpretation of this Agreement to the substantive law of another
jurisdiction.
15.
Counterparts; Facsimile Execution. This Option Agreement may be
executed in one or more counterparts, each of which will be deemed to be an
original, but all of which together constitute one and the same instrument.
Facsimile execution and delivery of this Option Agreement is legal, valid and
binding execution and delivery for all purposes.
-5-
16.
Entire Agreement. The Plan, this Option Agreement, and upon execution,
the Exercise Notice, constitute the entire agreement of the parties with respect
to the subject matter hereof and supersede in their entirety all prior
undertakings and agreements of the Company and Optionee with respect to the
subject matter hereof, and may not be modified adversely to the Optionees
interest except by means of a writing signed by the Company and Optionee.
17.
Severability. In the event one or more of the provisions of this Option
Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
will not affect any other provisions of this Option Agreement, and this Option
Agreement will be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.
18.
WAIVER OF JURY TRIAL. THE OPTIONEE EXPRESSLY, IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS OPTION AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
Optionee
acknowledges receipt of a copy of the Plan and represents that he or she is
familiar with the terms and provisions thereof, and accepts this Option subject
to all of the terms and provisions thereof. Optionee has reviewed the Plan and
this Option in their entirety, has had an opportunity to obtain the advice of
counsel prior to executing this Option and fully understands all provisions of
the Option. Optionee agrees to accept as binding, conclusive and final all
decisions or interpretations of the Administrator upon any questions arising
under the Plan or this Option. Optionee further agrees to notify the Company
upon any change in the residence address indicated below.
OPTIONEE |
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YOU ON DEMAND HOLDINGS, INC. |
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Signature |
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-6-
EXHIBIT A
2010 EQUITY INCENTIVE PLAN
EXERCISE NOTICE
YOU On Demand Holdings, Inc.
[Address]
Attention: _______________, _________________
1.
Exercise of Option. Effective as of today, _____________, _____, the
undersigned (Optionee) elects to exercise Optionees option to purchase
_________ shares of the Common Stock (the Shares) of YOU On Demand Holdings,
Inc. (the Company) under and pursuant to the YOU On Demand Holdings, Inc. 2010
Equity Incentive Plan (the Plan) and the Stock Option Agreement dated
____________, ____ (the Option Agreement).
2.
Delivery of Payment. Optionee herewith delivers to the Company the full
purchase price of the Shares, as set forth in the Option Agreement, and any and
all withholding taxes due in connection with the exercise of the Option.
3.
Representations of Optionee. Optionee acknowledges that Optionee has
received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.
4.
Rights as Stockholder. Until the issuance of the Shares (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a stockholder exists with respect to the Optioned Stock,
notwithstanding the exercise of the Option. Subject to the requirements of
Section 6 below, the Shares will be issued to the Optionee as soon as
practicable after the Option is exercised in accordance with the Option
Agreement. No adjustment will be made for a dividend or other right for which
the record date is prior to the date of issuance except as provided in the Plan.
5.
Tax Consultation. Optionee understands that Optionee may suffer adverse
tax consequences as a result of Optionees purchase or disposition of the
Shares. Optionee represents that Optionee has consulted with any tax consultants
Optionee deems advisable in connection with the purchase or disposition of the
Shares and that Optionee is not relying on the Company for any tax advice.
6.
Refusal to Transfer. The Company will not (i) transfer on its books any
Shares that have been sold or otherwise transferred in violation of any of the
provisions of this Exercise Notice, or (ii) be required to treat as owner of such Shares or to
accord the right to vote or pay dividends to any purchaser or other transferee
to whom such Shares have been so transferred.
7.
Successors and Assigns. The Company may assign any of its rights under
this Exercise Notice to single or multiple assignees, and this Exercise Notice
inures to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth, this Exercise Notice is binding
upon Optionee and his or her heirs, executors, administrators, successors and
assigns.
8.
Interpretation. Any dispute regarding the interpretation of this Exercise
Notice will be submitted by Optionee or by the Company forthwith to the
Administrator for review at its next regular meeting. The resolution of disputes
by the Administrator will be final and binding on all parties.
9.
Governing Law; Severability. This Exercise Notice is be governed by, and
construed in accordance with, the laws of the State of Nevada, without giving
effect to its conflict or choice of law principles that might otherwise refer
construction or interpretation of this Exercise to the substantive law of
another jurisdiction. In the event that any provision hereof becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Exercise Notice will continue in full force and effect.
10.
Notices. Any notice required or permitted hereunder will be
provided in writing and deemed effective if provided in the manner specified in
the Option Agreement.
11.
Further Instruments. The parties agree to execute any further
instruments and to take any further action as may be reasonably necessary to
carry out the purposes and intent of the Option Agreement and this Exercise
Notice.
-2-
12. Entire
Agreement. The Plan and Option Agreement are incorporated herein by
reference. This Exercise Notice, the Plan, and the Option Agreement constitute
the entire agreement of the parties with respect to the subject matter hereof
and supersede in their entirety all prior undertakings and agreements of the
Company and Optionee with respect to the subject matter hereof, and may not be
modified adversely to the Optionees interest except by means of a writing
signed by the Company and Optionee.
Submitted by: |
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Accepted by: |
OPTIONEE |
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YOU ON DEMAND HOLDINGS, INC. |
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Date Received |
-3-
YOU ON DEMAND HOLDINGS, INC.
2010 EQUITY INCENTIVE PLAN
NOTICE OF RESTRICTED SHARES GRANT
Capitalized but otherwise undefined terms in this Notice of Restricted Shares
Grant and the attached Restricted Shares Grant Agreement shall have the same
defined meanings as in the YOU On Demand Holdings, Inc. 2010 Equity Incentive
Plan (the Plan).
Grantee Name: _______________________________ |
Address: _______________________________ |
You have been granted Restricted Shares subject to the terms and conditions of
the Plan and the attached Restricted Shares Grant Agreement, as follows:
Date of Grant: |
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Vesting Commencement Date: |
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Exercise Price per Share: |
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Total Number of Shares Granted: |
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Total Purchase Price: |
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Agreement Date |
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Vesting Schedule: |
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YOU ON DEMAND HOLDINGS, INC.
2010 EQUITY INCENTIVE PLAN
RESTRICTED SHARES GRANT AGREEMENT
This RESTRICTED SHARES GRANT AGREEMENT (Agreement), dated as of the
Agreement Date specified on the Notice of Restricted Shares Grant is made by and
between YOU ON DEMAND HOLDINGS, INC., a Nevada corporation (the Company), and
the grantee named in the Notice of Restricted Shares Grant (the
Grantee, which term as used herein shall be deemed to include any successor to
Grantee by will or by the laws of descent and distribution, unless the context
shall otherwise require).
BACKGROUND
Pursuant to the Plan, the Company, acting through the Administrator, approved
the issuance to Grantee, effective as of the date set forth above, of an award
of the number of Restricted Shares as is set forth in the attached Notice of
Restricted Shares Grant (which is expressly incorporated herein and made a part
hereof, the Notice of Restricted Shares Grant) at the purchase price per share
of Restricted Shares (the Purchase Price), if any, set forth in the attached
Notice of Restricted Shares Grant, upon the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the mutual premises and
undertakings hereinafter set forth, the parties agree as follows:
1. Grant and
Purchase of Restricted Shares. The Company hereby grants to Grantee, and
Grantee hereby accepts the number of Restricted Shares set forth in the Notice
of Restricted Shares Grant, subject to the payment by Grantee of the total
purchase price, if any, set forth in the Notice of Restricted Shares Grant.
2. Stockholder
Rights.
(a)
Voting Rights. Until such time as all or any part of the Restricted
Shares are forfeited to the Company under this Agreement, if ever, Grantee (or
any successor in interest) has the rights of a stockholder, including voting
rights, with respect to the Restricted Shares subject, however, to the transfer
restrictions or any other restrictions set forth in the Plan.
(b)
Dividends and Other Distributions. During the Period of Restriction,
Participants holding Restricted Shares are entitled to all regular cash
dividends or other distributions paid with respect to all Shares while they are
so held. If any such dividends or distributions are paid in Shares, such Shares
will be subject to the same restrictions on transferability and forfeitability
as the Restricted Shares with respect to which they were paid.
2
3. Vesting of
Restricted Shares.
(a)
The Restricted Shares are restricted and subject to forfeiture until vested. The
Restricted Shares which have vested and are no longer subject to forfeiture are
referred to as Vested Shares. All Restricted Shares which have not become
Vested Shares are referred to as Nonvested Shares.
(b) Restricted Shares will vest and
become nonforfeitable in accordance with the vesting schedule contained in the
Notice of Restricted Shares Grant except that 100% of Grantees Nonvested Shares
will vest in full upon a Change of Control.
(c) Definitions. Terms used in section
3 and 4 have the following meanings:
(i)
Cause has the meaning ascribed to such term or words of similar import in
Grantees written employment or service contract with the Company or its
subsidiaries and, in the absence of such agreement or definition, means
Grantees (i) conviction of, or plea of nolo contendere to, a felony or crime
involving moral turpitude; (ii) fraud on or misappropriation of any funds or
property of the Company or its subsidiaries, or any affiliate, customer or
vendor; (iii) personal dishonesty, incompetence, willful misconduct, willful
violation of any law, rule or regulation (other than minor traffic violations or
similar offenses), or breach of fiduciary duty which involves personal profit;
(iv) willful misconduct in connection with Grantees duties or willful failure
to perform Grantees responsibilities in the best interests of the Company or
its subsidiaries; (v) illegal use or distribution of drugs; (vi) violation of
any rule, regulation, procedure or policy of the Company or its subsidiaries; or
(vii) breach of any provision of any employment, non-disclosure,
non-competition, non-solicitation or other similar agreement executed by Grantee
for the benefit of the Company or its subsidiaries, all as determined by the
Board of Directors of the Company, which determination will be conclusive.
(ii)
Retirement means Grantees retirement from Company employ at age 65 as
determined in accordance with the policies of the Company or its subsidiaries in
good faith by the Board of Directors of the Company, which determination will be
final and binding on all parties concerned.
(d)
Nonvested Shares may not be sold, transferred, assigned, pledged, or otherwise
disposed of, directly or indirectly, whether by operation of law or otherwise.
The restrictions set forth in this Section will terminate upon a Change of
Control.
4. Forfeiture
of Nonvested Shares. Except as provided herein, if Grantee's service
with the Company ceases for any reason other than Grantees (a) death, (b)
Disability, (c) Retirement, or (d) termination by the Company without Cause, any
Nonvested Shares will be automatically forfeited to the Company, subject to the
re-payment by the Company at the lesser of (1) the original purchase price paid
by the Participant pursuant to the Award Agreement or (2) the Shares Fair
Market Value on the date of repurchase.
(a)
Legend. Each certificate representing Restricted Shares granted pursuant
to the Notice of Restricted Shares Grant may bear a legend substantially as
follows:
3
THE SALE OR OTHER TRANSFER OF THE SHARES REPRESENTED BY THIS
CERTIFICATE, WHETHER VOLUNTARY, INVOLUNTARY OR BY OPERATION OF LAW, IS SUBJECT
TO CERTAIN RESTRICTIONS ON TRANSFER AS SET FORTH IN THE YOU ON DEMAND HOLDINGS,
INC. 2010 EQUITY INCENTIVE PLAN AND IN A RESTRICTED SHARE GRANT AGREEMENT. A
COPY OF SUCH PLAN AND SUCH AGREEMENT MAY BE OBTAINED FROM YOU ON DEMAND
HOLDINGS, INC.
(b)
Escrow of Nonvested Shares. The Company has the right to retain the
certificates representing Nonvested Shares in the Companys possession until
such time as all restrictions applicable to such Shares have been satisfied.
(c)
Removal of Restrictions. The Participant is entitled to have the legend
removed from certificates representing Vested Shares.
5.
Recapitalizations, Exchanges, Mergers, Etc. The provisions of this
Agreement apply to the full extent set forth herein with respect to any and all
shares of capital stock of the Company or successor of the Company which may be
issued in respect of, in exchange for, or in substitution for the Restricted
Shares by reason of any stock dividend, split, reverse split, combination,
recapitalization, reclassification, merger, consolidation or otherwise which
does not terminate this Agreement. Except as otherwise provided herein, this
Agreement is not intended to confer upon any other person except the parties
hereto any rights or remedies hereunder.
6. Grantee
Representations.
Grantee
represents to the Company the following:
(a)
Restrictions on Transfer. Grantee acknowledges that the Restricted Shares
to be issued to Grantee must be held indefinitely unless subsequently registered
and qualified under the Securities Act or unless an exemption from registration
and qualification is otherwise available. In addition, Grantee understands that
the certificate representing the Restricted Shares will be imprinted with a
legend which prohibits the transfer of such Restricted Shares unless they are
sold in a transaction in compliance with the Securities Act or are registered
and qualified or such registration and qualification are not required in the
opinion of counsel acceptable to the Company.
(b)
Relationship to the Company; Experience. Grantee either has a preexisting
business or personal relationship with the Company or any of its officers,
directors or controlling persons or, by reason of Grantees business or
financial experience or the business or financial experience of Grantees
personal representative(s), if any, who are unaffiliated with and who are not
compensated by the Company or any affiliate or selling agent, directly or
indirectly, has the capacity to protect Grantees own interests in connection
with Grantees acquisition of the Restricted Shares to be issued to Grantee
hereunder. Grantee and/or Grantees personal representative(s) have such
knowledge and experience in financial, tax and business matters to enable Grantee and/or them to utilize the information made
available to Grantee and/or them in connection with the acquisition of the
Restricted Shares to evaluate the merits and risks of the prospective investment
and to make an informed investment decision with respect thereto.
4
(c)
Grantees Liquidity. In reaching the decision to invest in the Restricted
Shares, Grantee has carefully evaluated Grantees financial resources and
investment position and the risks associated with this investment, and Grantee
acknowledges that Grantee is able to bear the economic risks of the investment.
Grantee (i) has adequate means of providing for Grantees current needs and
possible personal contingencies, (ii) has no need for liquidity in Grantees
investment, (iii) is able to bear the substantial economic risks of an
investment in the Restricted Shares for an indefinite period and (iv) at the
present time, can afford a complete loss of such investment. Grantees
commitment to investments which are not readily marketable is not
disproportionate to Grantees net worth and Grantees investment in the
Restricted Shares will not cause Grantees overall commitment to become
excessive.
(d)
Access to Data. Grantee acknowledges that during the course of this
transaction and before deciding to acquire the Restricted Shares, Grantee has
been provided with financial and other written information about the Company.
Grantee has been given the opportunity by the Company to obtain any information
and ask questions concerning the Company, the Restricted Shares, and Grantees
investment that Grantee felt necessary; and to the extent Grantee availed
himself of that opportunity, Grantee has received satisfactory information and
answers concerning the business and financial condition of the Company in
response to all inquiries in respect thereof.
(e)
Risks. Grantee acknowledges and understands that (i) an investment in the
Company constitutes a high risk, (ii) the Restricted Shares are highly
speculative, and (iii) there can be no assurance as to what investment return,
if any, there may be. Grantee is aware that the Company may issue additional
securities in the future which could result in the dilution of Grantees
ownership interest in the Company.
(f)
Valid Agreement. This Agreement when executed and delivered by Grantee
will constitute a valid and legally binding obligation of Grantee which is
enforceable in accordance with its terms.
(g)
Residence. The address set forth on the Notice of Restricted Shares Grant
is Grantees current address and accurately sets forth Grantees place of
residence.
(h)
Tax Consequences. Grantee has reviewed with Grantees own tax advisors
the federal, state, local and foreign tax consequences of this investment and
the transactions contemplated by this Agreement. Grantee is relying solely on
such advisors and not on any statements or representations of the Company or any
of its agents. Grantee understands that Grantee (and not the Company) is
responsible for Grantees own tax liability that may arise as a result of the
transactions contemplated by this Agreement. Grantee understands that Section 83
of the Internal Revenue Code of 1986, as amended (the Code), taxes as ordinary
income the difference between the purchase price for the Restricted Shares and
the fair market value of the Restricted Shares as of the date any restrictions
on the Restricted Shares lapse. Grantee understands that Grantee may elect to be
taxed at the time the Restricted Shares is purchased rather than when and as the restrictions lapse by filing an
election under Section 83(b) of the Code with the Internal Revenue Service
within 30 days from the date of purchase. The form for making this election is
attached as Exhibit A hereto.
5
GRANTEE ACKNOWLEDGES THAT IT IS GRANTEES SOLE RESPONSIBILITY
AND NOT THE COMPANYS TO FILE TIMELY ANY ELECTION UNDER SECTION 83(b), EVEN IF
GRANTEE REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON
GRANTEES BEHALF.
7. No
Employment Contract Created. The issuance of the Restricted Shares is
not be construed as granting to Grantee any right with respect to continuance of
employment or any service with the Company or any of its subsidiaries. The right
of the Company or any of its subsidiaries to terminate at will Grantee's
employment or terminate Grantees service at any time (whether by dismissal,
discharge or otherwise), with or without cause, is specifically reserved,
subject to any other written employment or other agreement to which the Company
and Grantee may be a party.
8. Tax
Withholding. The Company has the power and the right to deduct or
withhold, or require Grantee to remit to the Company, an amount sufficient to
satisfy Federal, state and local taxes (including the Grantees FICA obligation)
required by law to be withheld with respect to the grant and vesting of the
Restricted Shares.
9.
Interpretation. The Restricted Shares are being issued pursuant to
the terms of the Plan, and are to be interpreted in accordance therewith. The
Administrator will interpret and construe this Agreement and the Plan, and any
action, decision, interpretation or determination made in good faith by the
Administrator will be final and binding on the Company and Grantee.
10. Notices.
All notices or other communications which are required or permitted
hereunder will be in writing and sufficient if (i) personally delivered or sent
by telecopy, (ii) sent by nationally-recognized overnight courier or (iii) sent
by registered or certified mail, postage prepaid, return receipt requested,
addressed as follows: if to Grantee, to the address (or telecopy number) set
forth on the Notice of Restricted Shares Grant; and
if
to the Company, to the attention of the ______________at the address set forth
below:
YOU On Demand Holdings,
Inc.
[Company Address]
or to such other address as the party to whom notice is to be
given may have furnished to the other party in writing in accordance herewith.
Any such communication will be deemed to have been given (i) when delivered, if
personally delivered, or when telecopied, if telecopied, (ii) on the first
Business Day (as hereinafter defined) after dispatch, if sent by
nationally-recognized overnight courier and (iii) on the fifth Business Day
following the date on which the piece of mail containing such communication is posted, if sent by mail.
As used herein, Business Day means a day that is not a Saturday, Sunday or a
day on which banking institutions in the city to which the notice or
communication is to be sent are not required to be open.
6
11. Specific
Performance. Grantee expressly agrees that the Company will be
irreparably damaged if the provisions of this Agreement and the Plan are not
specifically enforced. Upon a breach or threatened breach of the terms,
covenants and/or conditions of this Agreement or the Plan by Grantee, the
Company will, in addition to all other remedies, be entitled to a temporary or
permanent injunction, without showing any actual damage, and/or decree for
specific performance, in accordance with the provisions hereof and thereof. The
Administrator has the power to determine what constitutes a breach or threatened
breach of this Agreement or the Plan. Any such determinations will be final and
conclusive and binding upon Grantee.
12. No Waiver.
No waiver of any breach or condition of this Agreement will be deemed to be
a waiver of any other or subsequent breach or condition, whether of like or
different nature.
13. Grantee
Undertaking. Grantee hereby agrees to take whatever additional
actions and execute whatever additional documents the Company may in its
reasonable judgment deem necessary or advisable in order to carry out or effect
one or more of the obligations or restrictions imposed on Grantee pursuant to
the express provisions of this Agreement.
14. Modification of
Rights. The rights of Grantee are subject to modification and
termination in certain events as provided in this Agreement and the Plan.
15. Governing
Law. This Agreement is governed by, and construed in accordance
with, the laws of the State of Nevada, without giving effect to its conflict or
choice of law principles that might otherwise refer construction or
interpretation of this Agreement to the substantive law of another
jurisdiction.
16. Counterparts; Facsimile
Execution. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original, but all of which
together will constitute one and the same instrument. Facsimile execution and
delivery of this Agreement is legal, valid and binding execution and delivery
for all purposes.
17. Entire
Agreement. This Agreement (including the Notice of Restricted
Shares Grant) and the Plan, constitute the entire agreement between the parties
with respect to the subject matter hereof, and supersede all previously written
or oral negotiations, commitments, representations and agreements with respect
thereto.
18.
Severability. In the event one or more of the provisions of
this Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
will not affect any other provisions of this Agreement, and this Agreement will
be construed as if such invalid, illegal or unenforceable provision had never
been contained herein.
7
19. WAIVER OF JURY
TRIAL. THE GRANTEE HEREBY EXPRESSLY, IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY
COUNTERCLAIM THEREIN.
[Signature Page Follows]
8
IN
WITNESS WHEREOF, the parties hereto have executed this Restricted Share
Grant Agreement as of the date first written above.
YOU ON DEMAND HOLDINGS, INC.
By:
_____________________________________________
Name:
Title:
GRANTEE:
________________________________________________
Name:
9
SPOUSE'S CONSENT TO AGREEMENT
(Required where
Grantee resides in a community property state)
I
acknowledge that I have read the Agreement and the Plan and that I know and
understand the contents of both. I am aware that my spouse has agreed therein to
the imposition of certain forfeiture provisions and restrictions on
transferability with respect to the Restricted Shares that are the subject of
the Agreement, including with respect to my community interest therein, if any,
on the occurrence of certain events described in the Agreement. I hereby consent
to and approve of the provisions of the Agreement, and agree that I will abide
by the Agreement and bequeath any interest in the Restricted Shares which
represents a community interest of mine to my spouse or to a trust subject to my
spouse's control or for my spouse's benefit or the benefit of our children if I
predecease him.
Dated: _________________________ |
|
|
Signature |
|
|
|
|
|
|
|
Print Name |
10
Exhibit A
ELECTION UNDER SECTION 83(b)
OF THE INTERNAL
REVENUE CODE OF 1986
The
undersigned taxpayer hereby elects, pursuant to Sections 55 and 83(b) of the
Internal Revenue Code of 1986, as amended, to include in taxpayers gross income
or alternative minimum taxable income, as the case may be, for the current
taxable year the amount of any compensation taxable to taxpayer in connection
with taxpayers receipt of the property described below.
1.
The name, address, taxpayer identification number and taxable year of the
undersigned are as follows:
|
TAXPAYER: |
SPOUSE: |
NAME: |
|
|
ADDRESS: |
|
|
IDENTIFICATION NO.: |
|
|
TAXABLE YEAR: |
|
|
2.
The property with respect to which the election is made is described as follows:
____ shares (the Shares) of the Common Stock of YOU On Demand Holdings, Inc.
(the Company).
|
3. |
The date on which the property was transferred
is:___________________, ______. |
|
|
|
|
4. |
The property is subject to the following
restrictions: |
|
|
|
|
|
The Shares may not be transferred and are subject to
forfeiture under the terms of an agreement between the taxpayer and the
Company. These restrictions lapse upon the satisfaction of certain
conditions contained in such agreement. |
5.
The fair market value at the time of transfer, determined without regard to any
restriction other than a restriction which by its terms will never lapse, of
such property is: $_________________.
6.
The amount (if any) paid for such property is: $_________________.
The
undersigned has submitted a copy of this statement to the person for whom the
services were performed in connection with the undersigneds receipt of the
above-described property. The transferee of such property is the person
performing the services in connection with the transfer of said property.
The
undersigned understands that the foregoing election may not be revoked except
with the consent of the Commissioner.
Dated: ______________________, _____
__________________________________________
Taxpayer
The
undersigned spouse of taxpayer joins in this election.
Dated: ______________________, _____
__________________________________________
Spouse of Taxpayer
11
50 West Liberty Street, Suite 1000, Reno, Nevada
89501-1950 |
3960 Howard Hughes Parkway, Suite 500, Las
Vegas, Nevada 89169 |
Telephone: 775-323-1980 Fax: 775-323-2339 |
Telephone: 702-387-6073 Fax: 702-990-3564
|
www.shermanhoward.com
|
Exhibit 5.1
June 17, 2015
YOU On Demand Holdings, Inc.
375 Greenwich Street
Suite
516
New York, New York 10013
|
Re: |
YOU On Demand Holdings, Inc./Registration
Statement on Form S-8 |
Ladies and Gentlemen:
We have acted as special Nevada
counsel to YOU On Demand Holdings, Inc., a Nevada corporation (the Company),
in connection with the registration by the Company of 4,000,000 shares (the
Shares) of its common stock, $0.001 par value (the Common Stock) that may be
issued pursuant to the Companys 2010 Equity Incentive Plan (the Plan) on Form
S-8 (the Registration Statement) under the Securities Act of 1933, as amended
(Securities Act), as filed with the Securities and Exchange Commission
(Commission).
For purposes of these opinions,
we have examined originals or copies, certified or otherwise identified to our
satisfaction, of:
(a) the Registration Statement;
(b) Articles of Incorporation of
the Company filed with the Nevada Secretary of State on October 19, 2004
(Original Articles), as amended by (i) Articles of Merger Pursuant to NRS
92A.200 filed with the Nevada Secretary of State on December 15, 2004 (Articles
of Merger), (ii) Certificate of Amendment to Articles of Incorporation For
Nevada Profit Corporations filed with the Nevada Secretary of State on January
27, 2005 (First Amendment), (iii) Certificate of Amendment to Articles of
Incorporation For Nevada Profit Corporations filed with the Nevada Secretary of
State on May 7, 2007 (Second Amendment), (iv) Certificate of Amendment to
Articles of Incorporation For Nevada Profit Corporations filed with the Nevada
Secretary of State on July 8, 2010 (Third Amendment), (v) Certificate of
Designation For Nevada Profit Corporations filed with the Nevada Secretary of
State on July 30, 2010 (Series A
Designation”), (vi) Certificate of Designation For Nevada Profit Corporations filed with the Nevada Secretary of State on July 30, 2010 (“Series B Designation”), (vii) Certificate of Correction filed with the Nevada Secretary of
State on November 22, 2010 (“First Certificate of Correction”), (viii) Certificate of Amendment to Articles of Incorporation For Nevada Profit Corporations filed with the Nevada Secretary of State on February 23, 2011 (“Fourth
Amendment”), (ix) Certificate of Amendment to Articles of Incorporation For Nevada Profit Corporations filed with the Nevada Secretary of State on February 9, 2012 (“Fifth Amendment”), (x) Certificate of Designation For Nevada
Profit Corporations filed with the Nevada Secretary of State on August 30, 2012 (“Series C Designation”), (xi) Certificate of Correction filed with the Nevada Secretary of State on July 5, 2013 (“Second Certificate of
Correction”); (xii) Certificate of Designation for Nevada Profit Corporations as filed with the Nevada Secretary of State on July 5, 2013 (“Series D Designation”); and (xiii) Certificate of Designation for Nevada Profit
Corporations as filed with the Nevada Secretary of State on January 31, 2014 (“Series E Designation” and collectively with the Original Articles, the Articles of Merger, the First Amendment, the Second Amendment, the Third Amendment, the
Series A Designation, the Series B Designation, the First Certificate of Correction, the Fourth Amendment, the Fifth Amendment, the Series C Designation, the Second Certificate of Correction, and the Series D Designation, the “Articles of
Incorporation”);
June 17, 2015
Page 2
(c) Second Amended and Restated Bylaws of the Company, adopted on January 31, 2014,
as amended on March 26, 2015;
(d) the Plan;
(e) a specimen certificate representing the Common Stock;
(f) certain resolutions of the Board of Directors of the Company relating to the adoption of the Plan, the issuance of the Shares, the registration of the Shares under the Securities Act, and such other matters as
relevant; and
(g) certain resolutions of the stockholders of the Company approving the Plan.
We also have examined originals or copies, certified or otherwise identified to our satisfaction, of such records of the Company and such agreements, certificates of public officials, certificates of officers or other
representatives of the Company and others, and such other documents, certificates, and records as we have deemed necessary or appropriate as a basis for the opinions set forth herein.
In our examination we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, and the conformity to original documents
of all documents submitted to us as facsimile, electronic,
certified, or photostatic copies. We have relied upon the accuracy and completeness of the information, factual matters, representations, and warranties contained in such documents. In our examination of documents, we have assumed that the parties
thereto, other than the Company, had the power, corporate or other, to enter into and perform all obligations thereunder and, other than with respect to the Company, the due authorization by all requisite action, corporate or other, the execution
and delivery by all parties of the documents, and the validity and binding effect thereof on such parties.
June 17, 2015
Page 3
In rendering the opinions set forth below, we have also assumed that:
(a) at or prior to the time of issuance and delivery, the Shares will be registered by the transfer agent and registrar of such Shares;
(b) the Company will keep reserved a sufficient number of shares of its Common Stock to satisfy its obligations for issuances of Shares under the Plan;
(c) upon issuance of any of the Shares, the total number of shares of the Company’s Common Stock issued and outstanding will not exceed the total number of shares of Common Stock that the Company is then
authorized to issue under its Articles of Incorporation; and
(d) each stock grant, stock option, or other security exercisable or exchangeable for a Share under the Plan has been, or will be, duly authorized, validly granted, and duly exercised or exchanged in accordance with the
terms of the Plan, at the time of any grant of a Share or exercise of such stock option or other security under the Plan.
The opinions set forth below are also subject to the further qualification that the enforcement of any agreements or instruments referenced herein and to which the Company is a party may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting creditors’ rights generally and by general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law).
Based on such examination, we are of the opinion that:
(a) the Shares that have been or may be issued under the Plan are duly authorized shares of the Company’s Common Stock; and
(b) if, as, and when issued against receipt of the consideration therefor in accordance
with the provisions of the Plan and in accordance with the Registration Statement, the Shares will be validly issued, fully paid, and nonassessable.
The opinions expressed herein are limited to the matters specifically set forth herein and no other opinion shall be inferred beyond the matters expressly stated. We disclaim any undertaking to advise you of any
subsequent changes in the facts stated or assumed herein or
any changes in applicable law that may come to our attention subsequent to the date the Registration Statement is declared effective.
June 17, 2015
Page 4
While certain members of this firm are admitted to practice in certain jurisdictions other than Nevada, in rendering the foregoing opinions we have not examined the laws of any jurisdiction other than Nevada.
Accordingly, the opinions we express herein are limited to matters involving the laws of the State of Nevada (excluding securities laws). We express no opinion regarding the effect of the laws of any other jurisdiction or state, including any
federal securities laws related to the issuance and sale of the Shares.
We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and we consent to the reference of our name under the caption “Legal Matters” in the Prospectus forming a part of the Registration Statement. In
giving the foregoing consent, we do not hereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission thereunder.
Very truly yours,
/s/ Sherman & Howard L.L.C.
SHERMAN & HOWARD L.L.C.
Consent of Independent Registered Public Accounting Firm
The Board of Directors
YOU On Demand Holdings, Inc.
We consent to the use of our report with respect to the consolidated balance sheet of YOU On Demand Holdings, Inc. as of December 31, 2014, and the related consolidated statements of operations, comprehensive loss,
equity and cash flows for the year ended December 31, 2014 incorporated herein by reference.
Our report dated March 30, 2015 contains an explanatory paragraph that states that the Company incurred net losses from continuing operations and had a significant accumulated deficit that raise substantial doubt about
its ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ KPMG Huazhen (SGP)
Beijing, China
June 17, 2015
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in this Registration Statement on Form S-8 of our report dated March 31, 2014 relating to the consolidated financial statements of YOU On Demand Holdings, Inc. and its Subsidiaries (the “Company”) as of December 31, 2013 and for the year then ended.
/s/ UHY LLP
New York, New York
June 17, 2015
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