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March
31,
2008
Dear
Stockholder:
You
are
cordially invited to attend this year’s annual meeting of stockholders on May 5,
2008 at 4:00 p.m. The meeting will be held at the Silicon Valley office of
DLA Piper US LLP, counsel to the company, located at 2000 University Avenue,
East Palo Alto, California 94303.
The
meeting will commence with a discussion and voting on matters set forth in
the
accompanying Notice of Annual Meeting of Stockholders followed by presentations
and a report on Solar Enertech Corp.’s 2007 performance.
The
Notice of Annual Meeting of Stockholders and a Proxy Statement, which more
fully
describe the formal business to be conducted at the meeting, follow this
letter.
A copy of our Annual Report to Stockholders is also enclosed for your
information.
Whether
or not you plan to attend the meeting, your vote is important and we encourage
you to vote promptly.
After
reading the Proxy Statement, please promptly mark, sign and date the enclosed
proxy card and return it in the prepaid envelope provided.
We
look
forward to seeing you at the annual meeting.
Sincerely
yours,
|
|
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Leo
Shi Young
|
President
and Chief Executive Officer
|
1600
ADAMS DRIVE, MENLO PARK, CA 94025
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
Be Held May 5, 2008
TO
THE
STOCKHOLDERS:
Notice
is
hereby given that the annual meeting of the stockholders of Solar Enertech
Corp., a Nevada
corporation
(“Solar Enertech” or the “Company”), will be held on May 5, 2008, at 4:00 p.m.
local time, at the Silicon Valley office of DLA Piper US LLP, counsel to
the
Company, located at 2000 University Avenue, East Palo Alto, California 94303,
for the following purposes:
1.
To
elect
five (5) directors to hold office until their respective successors are elected
and qualified.
2.
To
ratify
the appointment of Ernst & Young Hua Ming as our independent auditors for
the fiscal year ending September 30, 2008.
3.
To
approve the amendment and restatement of our 2007 Equity Incentive Plan.
4.
To
approve an Agreement and Plan of Merger pursuant to which Solar Enertech
will
reincorporate from the State of Nevada to the State of Delaware.
5.
To
approve an increase in the amount of the Company’s authorized shares of common
stock from two hundred million (200,000,000) to four hundred million
(400,000,000).
6.
To
approve any adjournments of the meeting to another time or place, if necessary
in the judgment of the proxy holders, for the purpose of soliciting additional
proxies in favor of any of the foregoing proposals.
7.
To
transact such other business as may properly come before the
meeting.
Stockholders
of record at the close of business on March 7, 2008 are entitled to notice
of,
and to vote at, this meeting and any adjournment or postponement.
Under
Chapter 92A of the Nevada Revised Statutes (“NRS”), stockholders are entitled to
assert dissenter’s rights under NRS 92A.300 to 92A.500 (the “Rights of
Dissenting Owners Statutes”) and obtain the fair value of the stockholder’s
shares if the reincorporation proposal is approved and the stockholder complies
with the Rights of Dissenting Owners Statutes. A copy of NRS 92A.300 to 92A.500
is attached as
Annex
E
to the
accompanying Proxy Statement.
By
order of the Board of Directors,
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Anthea
Chung
|
Secretary
|
March
31,
2008
PROXY
STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
The
accompanying proxy is solicited by the Board of Directors of Solar Enertech
Corp., a Nevada
corporation
(the “Company”), for use at its annual meeting of stockholders to be held on May
5, 2008, or any adjournment or postponement thereof, for the purposes set
forth
in the accompanying Notice of Annual Meeting of Stockholders. This Proxy
Statement and the enclosed proxy are being mailed to stockholders on or
about
March 31, 2008.
Voting
Securities.
Only
stockholders of record as of the close of business on March 7, 2008 will
be
entitled to vote at the meeting and any adjournment thereof. As of that
time, we
had 108,265,463 shares of Common Stock outstanding, all of which are entitled
to
vote with respect to all matters to be acted upon at the annual meeting.
Each
stockholder of record as of that date is entitled to one vote for each
share of
Common Stock held by him or her. The Bylaws of the Company (the “Bylaws”)
provide that a majority of all of the shares of the stock entitled to vote,
whether present in person or represented by proxy, shall constitute a quorum
for
the transaction of business at the meeting. Except as noted below, votes
for and
against, abstentions and “broker non-votes” will each be counted as present for
purposes of determining the presence of a quorum.
Broker
Non-Votes
.
A
broker non-vote occurs when a broker submits a proxy card with respect to
shares
held in a fiduciary capacity (generally referred to as being held in “street
name”) but declines to vote on a particular matter because the broker has not
received voting instructions from the beneficial owner. Under the rules that
govern brokers who are voting with respect to shares held in street name,
brokers have the discretion to vote such shares on routine matters, but not
on
non-routine matters. Routine matters include the election of directors,
increases in authorized common stock for general corporate purposes and
ratification of auditors. Non-routine matters include amendments to stock
plans
and mergers. Since the proposal to amend and restate our 2007 Equity Incentive
Plan (the “2007 Plan”) and the proposal to approve the reincorporation are not
routine matters, for those stockholders who hold their shares in street name,
their brokers will not have the discretion to vote such shares and those
stockholders who hold their shares in street name will need to instruct their
brokers on how their shares shall be voted.
Solicitation
of Proxies.
We
will
bear the cost of soliciting proxies. In addition to soliciting stockholders
by
mail through our employees, we will request banks, brokers and other custodians,
nominees and fiduciaries to solicit customers for whom they hold our
stock
and
will reimburse them for their reasonable, out-of-pocket costs. We may use
the
services of our officers, directors and others to solicit proxies, personally
or
by telephone, without additional compensation.
Voting
of Proxies.
All
valid
proxies received before the meeting will be exercised. All shares represented
by
a proxy will be voted, and where a proxy specifies a stockholder’s choice with
respect to any matter to be acted upon, the shares will be voted in accordance
with that specification. If no choice is indicated on the proxy, the shares
will
be voted in favor of the proposal. A stockholder giving a proxy has the power
to
revoke his or her proxy at any time before it is exercised by delivering
to the
Secretary of the Company a written instrument revoking the proxy or a duly
executed proxy with a later date, or by attending the meeting and voting
in
person.
PROPOSAL
NO. 1
ELECTION
OF DIRECTORS
The
Bylaws provide that the Board of Directors of the Company shall be set at
one
unless and until changed by the Board of Directors. Since the adoption of
the
Bylaws, the Board of Directors of the Company has increased the authorized
number of directors to be five members. At each annual meeting of stockholders,
directors are elected.
The
terms
of all of the directors will expire on the date of the upcoming annual meeting.
Despite the expiration of a director’s term, the director continues to serve
until his or her successor is elected and qualified or until there is a decrease
in the authorized number of directors. Accordingly, five persons are to be
elected to serve as directors. Management’s nominees for election by the
stockholders to those five positions are current members of the Board of
Directors: Leo Shi Young, Shi Jian Yin, Kevin Koy, Robert Coackley and Donald
Morgan. If elected, the nominees will serve as directors until our annual
meeting of stockholders in 2009 and until their successors are elected and
qualified. If any of the nominees declines to serve or becomes unavailable
for
any reason, or if a vacancy occurs before the election (although we know
of no
reason to anticipate that this will occur), the proxies may be voted for
such
substitute nominees as we may designate.
If
a
quorum is present and voting, the directors receiving the highest number
of
votes will be elected. Abstentions and broker non-votes have no effect on
the
vote. The Company’s Articles of Incorporation does not provide for cumulative
voting in the election of directors.
The
Board of Directors recommends a vote “FOR” the nominees named
above
.
The
following table sets forth, for our current directors, including the nominees
to
be elected at this meeting, information with respect to their ages and
background. There are no family relationships among our executive officers
and
directors.
Name
|
|
Position
|
|
Age
|
|
Director
Since
|
|
|
|
|
|
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|
Leo
Shi Young
|
|
Director,
President and Chief Executive Officer
|
|
53
|
|
2006
|
|
|
|
|
|
|
|
Shi
Jian Yin
|
|
Director,
Vice-President and Chief Operating Officer
|
|
51
|
|
2006
|
|
|
|
|
|
|
|
Donald
Morgan
|
|
Director
|
|
62
|
|
2007
|
|
|
|
|
|
|
|
Kevin
Koy
|
|
Director
|
|
48
|
|
2007
|
|
|
|
|
|
|
|
Robert
Coackley
|
|
Director
|
|
72
|
|
2008
|
MR.
LEO
SHI YOUNG, Director, President and Chief Executive Officer since April 2006
Prior
to
becoming our President and Chief Executive Officer, Mr. Young was the
co-founder, President and Chief Executive Officer of InfoTech Essentials
Inc.,
an energy-saving technology company in China from 2001 to 2006. Mr. Young
was a
senior member of the California trade delegation to China in 2005, headed
by
Governor Arnold Schwarzenegger, and currently serves as an organizing committee
member of China’s National Renewable Energy Forum. Mr. Young holds an MBA from
Fordham University, New York (2005); an MA from the School of the Art Institute
of Chicago (1985); and a BA from Tsinghua University of Beijing
(1982).
MR.
SHI
JIAN YIN, Director, Vice President and Chief Operating Officer since May
2006
Prior
to
joining us in May of 2006, Mr. Yin was the founder and General Manager
of
Shanghai TopSolar Inc. Mr. Yin’s business experience includes management
positions at Shanghai Jiaotong University Gofly Group Co., Ltd., Shanghai
Fenghuang Co., Ltd., Beijing Green Environment Technology Co., Ltd., as
well as
a number of senior positions at Shanghai Fenghuang Co., Ltd. Mr. Yin was
awarded
two Science and Technology Awards by the Chinese government for his research
accomplishments. Mr. Yin earned his MBA (1992) and BA (1988) from Shanghai
University of Communications, majoring in Engineering and Material Science.
KEVIN
KOY, Director since September 2007
Mr.
Koy
joined our board in September 2007. Mr. Koy has over 20 years experience
in
business management and development. Since 2004, Mr. Koy has been managing
Old
World Homes, LLC, an innovative construction firm he co-founded. From 2002
to
2004, Mr. Koy was the Director of Corporation Development, Business School,
University of Chicago and Director, External Affairs, Chemistry, of Northwestern
University. These positions were supported by his entrepreneur background
and
experience which includes positions as CEO of Northfield Consulting Group;
CEO
of Dauphin Technologies, Inc., the first hand-held computer company; CEO
of
VictorMaxx technologies, Inc., a virtual reality computing company, and Market
Logic Group Ltd. Mr. Koy holds a BA degree from Grinnell College in Grinnell,
Iowa.
DONALD
MORGAN, Director since September 2007
Mr.
Morgan joined our board in September 2007. Mr. Morgan has served as a senior
financial executive for over 30 years. He has worked with U.S. and international
companies ranging from small cap to Fortune 500. At present, Mr. Morgan is
a
financial consultant employed by OSIsoft, a private software and database
company. From 2005 until his retirement in 2006, Mr. Morgan was Chief Financial
Officer of RAE Systems Inc. Mr. Morgan worked as consultant for Armanino
McKenna, LLP, a public accounting firm from September 2004 until he joined
RAE
Systems in January 2005. Mr. Morgan was also Chief Financial Officer of Larscom
Incorporated (from 1999 to 2004) and Inrange Technologies Corporation (from
1991
to 1997). He began his financial career at Unisys Corporation. Mr. Morgan
holds
a B.S. degree in Business Administration from Northeastern University and
a M.S.
degree in Finance from the University of Illinois.
ROBERT
COACKLEY, Director since February 2008
Mr.
Coackley joined our board in February 2008. Mr. Coackley has been President
and
Chief Executive Officer at several public and private technology companies.
He
is currently Chief Executive Officer and a member of the board of directors
of
IP Video Networks, Inc., based in San Diego, California. Mr. Coackley is
also
President of CEO Excel. Mr. Coackley also currently serves as the Chairman
of
the board of directors at OFID Micro Devices, Inc. and as a director at
Swapstar, Inc., both private companies. Mr. Coackley teaches Business Finance
and Business Valuation at UC Berkeley Extension. Mr. Coackley holds a B.
Sc.
Honors Degree in Electrical Engineering from City University, London, England.
CORPORATE
GOVERNANCE
Director
Independence
The
Board
of Directors is presently comprised of Leo Shi Young, Shi Jian Yin, Donald
Morgan, Kevin Koy and Robert Coackley. Of such directors, Robert Coackley,
Kevin
Koy and Donald Morgan are each an “independent director” as such term is defined
in Marketplace Rule 4200(a)(15) of the listing standards of the NASDAQ Stock
Market. The Company was not a party to any transaction, relationship or other
arrangement with any of its “independent directors” that was considered by our
Board of Directors under Marketplace Rule 4200(a)(15) in the determination
of
such director’s independence.
Committees
and Meeting Attendance
In
February of 2008, the Board of Directors formed an Audit Committee, a
Compensation Committee and a Nominating and Corporate Governance Committee.
Each
of these committees operates under a written charter adopted by the Board.
Copies of these charters are available on our website at www.solarenertech.com.
The Board of Directors held one meeting during the fiscal year ended September
30, 2007. Because the Audit Committee, the Compensation Committee and the
Nominating and Corporate Governance Committee were recently formed, there
were
no meetings held for each of the Audit Committee, the Compensation Committee
and
the Nominating and Corporate Governance Committee during the fiscal year
ended
September 30, 2007. During the last fiscal year, each of our directors attended
the one meeting of the Board of Directors except Frank Xie.
Our
policy regarding director attendance at the annual meeting of stockholders
provides all directors are encouraged to make every effort to attend the
Company’s annual meeting of stockholders absent an unavoidable and
irreconcilable conflict. We did not have an annual meeting last
year.
The
following table sets forth the four standing committees of the Board, the
members of each committee.
Name
of Director
|
|
Audit
|
|
Compensation
|
|
Nominating
and
Corporate
Governance
|
Robert
Coackley
|
|
Member
|
|
Chair
|
|
Member
|
Kevin
Koy
|
|
Member
|
|
Member
|
|
Chair
|
Donald
Morgan
|
|
Chair
|
|
Member
|
|
Member
|
Audit
Committee
During
the last fiscal year, the Board of Directors performed the duties that would
normally be performed by an Audit Committee. In February of 2008, we formed
a
separate Audit Committee. The members of the Audit Committee are Robert
Coackley, Kevin Koy and Donald Morgan. The chair of the Audit Committee is
Donald Morgan. Each of the members of the Audit Committee is independent
for
purposes of the Nasdaq Marketplace Rules as they apply to Audit Committee
members. Mr. Morgan is an Audit Committee financial expert, as defined in
the
rules of the U.S. Securities and Exchange Commission (the “SEC”). The Audit
Committee operates under a charter that is available on our website at
www.solarenertech.com. The functions of the Audit Committee include (i)
retaining our independent auditors; (ii) reviewing their independence; (iii)
reviewing and approving the planned scope of our annual audit; (iv) reviewing
and approving any fee arrangements with our auditors; (v) overseeing their
audit
work; (vi) reviewing and pre-approving any non-audit services that may be
performed by them; (vii) reviewing the adequacy of accounting and financial
controls; (viii) reviewing our critical accounting policies; and (ix) reviewing
and approving any related party transactions.
Additional
information regarding the Audit Committee is set forth in the Report of the
Audit Committee immediately following Proposal No. 2.
Compensation
Committee
The
members of the Compensation Committee are Robert Coackley, Kevin Koy and
Donald
Morgan. The Chair of the Compensation Committee is Robert Coackley. Each
of the
members of the Compensation Committee is independent for purposes of the
Nasdaq
Marketplace Rules. The Compensation Committee operates under a charter that
is
available on our website at www.solarenertech.com. The Compensation Committee
has the responsibility and authority to supervise and review the affairs
of the
Company as they relate to the compensation and benefits of executive officers
of
the Company. In carrying out these responsibilities, the Committee shall
review
all components of executive compensation for consistency with the Company’s
compensation philosophy and with the interests of the Company’s
stockholders.
The
Compensation Committee will meet in person, telephonically or otherwise at
least
once during each fiscal year for, among other things, the consideration and
determination of executive and director compensation. The Compensation Committee
may also hold special meetings or act by unanimous written consent as required.
The Compensation Committee may request any officer or employee of the Company
or
the Company’s outside counsel to attend a meeting of the Compensation Committee
or to meet with any members of, or consultants to, the Compensation Committee;
provided, however, that the chief executive officer may not be present during
any discussions or deliberations of the Compensation Committee regarding
the
chief executive officer’s compensation.
The
Compensation Committee will review and approve on an annual basis the corporate
goals and objectives with respect to the compensation for the Company’s chief
executive officer and other executive officers. The Committee shall evaluate
at
least once a year the chief executive officer’s and other executive officers’
performance in light of these established goals and objectives and based
upon
these evaluations shall approve the chief executive officer’s and other
executive officers’ annual compensation, including salary, bonus, incentive and
equity compensation. In reviewing and approving the compensation of the chief
executive officer and other executive officers, the Committee may consider
the
compensation awarded to officers of similarly situated companies, the Company’s
performance, the individuals’ performance, compensation given to the Company’s
officers in past years or any other fact the Compensation Committee deems
appropriate. The chief executive officer shall not be permitted to participate
in any discussions or processes concerning his compensation, but may participate
in a non-voting capacity in discussions or processes concerning the compensation
of other executive officers.
The
Compensation Committee will develop and periodically assess the Compensation
Committee’s compensation policies applicable to the Company’s executive officers
and directors, including the relationship of corporate performance to executive
compensation. The Compensation Committee will review and recommend to the
Board
appropriate director compensation programs for service as directors, committee
chairs and committee members.
Nominating
and Corporate Governance Committee
The
members of the Nominating and Corporate Governance Committee are Robert
Coackley, Kevin Koy and Donald Morgan. The Chair of the Nominating and Corporate
Governance Committee is Kevin Koy. Each of the members of the Nominating
and
Corporate Governance Committee is independent for purposes of the Nasdaq
Marketplace Rules. The Nominating and Corporate Governance Committee operates
under a charter that is available on our website at www.solarenertech.com.
The
Nominating and Corporate Governance Committee functions are to (i) identify
individuals qualified to become Board members; (ii) select, or recommend
to the
Board, director nominees for each election of directors; (iii) develop and
recommend to the Board criteria for selecting qualified director candidates;
(iv) consider committee member qualifications, appointment and removal; (v)
recommend corporate governance principles applicable to the Company; and
(vi)
provide oversight in the evaluation of the Board and each committee.
Director
Nominations
In
February of 2008, the Board of Directors adopted a Policy Regarding Director
Nominations. According to the Policy Regarding Director Nominations, the
Nominating and Corporate Governance Committee will annually evaluate the
current
members of the Board of Directors whose terms are expiring and who are willing
to continue in service against the criteria set forth below in determining
whether to recommend these directors for election. The Nominating and Corporate
Governance Committee regularly assesses the optimum size of the Board of
Directors and its committees and the needs of the Board of Directors for
various
skills, background and business experience in determining if the Board of
Directors requires additional candidates for nomination.
In
fulfilling its responsibilities, the Nominating and Corporate Governance
Committee considers the following factors in reviewing possible candidates
for
nomination as director:
|
·
|
the
appropriate size of the Company’s Board of Directors and its Committees;
|
|
·
|
the
perceived needs of the Board of Directors for particular skills,
background and business experience;
|
|
·
|
the
skills, background, reputation, and business experience of nominees
compared to the skills, background, reputation, and business experience
already possessed by other members of the Board of Directors;
|
|
·
|
nominees’
independence from management;
|
|
·
|
applicable
regulatory and listing requirements, including independence requirements
and legal considerations, such as antitrust compliance;
|
|
·
|
the
benefits of a constructive working relationship among directors;
and
|
|
·
|
the
desire to balance the considerable benefit of continuity with the
periodic
injection of the fresh perspective provided by new members.
|
Candidates
for nomination as director come to the attention of the Nominating and Corporate
Governance Committee from time to time through incumbent directors, management,
stockholders or third parties. These candidates may be considered at meetings
of
the Nominating and Corporate Governance Committee at any point during the
year.
Such candidates are evaluated against the criteria set forth above. If the
Nominating and Corporate Governance Committee believes at any time that it
is
desirable that the Board of Directors consider additional candidates for
nomination, the Nominating and Corporate Governance Committee may poll directors
and management for suggestions or conduct research to identify possible
candidates and may engage, if the Nominating and Corporate Governance Committee
believes it is appropriate, a third party search firm to assist in identifying
qualified candidates.
The
Nominating and Corporate Governance Committee will evaluate any recommendation
for director nominee proposed by a stockholder. Because prior to February
of
2008 we did not have a Director Nominations Policy, the entire process by
which
stockholders may recommend nominees under the Director Nominations Policy
for
director is new. In order to be evaluated in connection with the Nominating
and
Corporate Governance Committee’s recently established procedures for evaluating
potential director nominees, any recommendation for director nominee submitted
by a stockholder must be sent in writing to the Corporate Secretary, Solar
Enertech Corp., 1600 Adams Drive, Menlo Park, CA 94025, 120 days prior to
the
anniversary of the date proxy statements were mailed to stockholders in
connection with the prior year’s annual meeting of stockholders and must contain
the following information:
|
·
|
the
candidate’s name, age, contact information and present principal
occupation or employment; and
|
|
·
|
a
description of the candidate’s qualifications, skills, background, and
business experience during, at a minimum, the last five years,
including
his/her principal occupation and employment and the name and principal
business of any corporation or other organization in which the
candidate
was employed or served as a
director.
|
All
directors and director nominees must, upon request of the Company, submit
a
completed form of directors’ and officers’ questionnaire as part of the
nominating process. The evaluation process may also include interviews and
additional background and reference checks for non-incumbent nominees, at
the
discretion of the Nominating and Corporate Governance Committee.
The
Nominating and Corporate Governance Committee will evaluate incumbent directors,
as well as candidates for director nominee submitted by directors, management
and stockholders consistently using the criteria stated in the Director
Nominations Policy and will select the nominees that in the Nominating and
Corporate Governance Committee’s judgment best suit the needs of the Board of
Directors at that time.
Communications
with Directors
Stockholders
may communicate with any and all members of our Board of Directors by
transmitting correspondence by mail or facsimile addressed to one or more
directors by name (or to the Chairman, for a communication addressed to the
entire Board of Directors) at the following address and fax number:
Name
of
the Director(s)
c/o
Corporate Secretary
Solar
Enertech Corp.
1600
Adams Drive
Menlo
Park, CA 94025
Fax:
(650) 989-1274
The
Corporate Secretary shall maintain a log of communications received from
stockholders and transmit as soon as practicable such communications to the
identified director addressee(s), unless there are safety or security concerns
that mitigate against further transmission of the communication or the
communication contains commercial matters not related to the stockholder’s stock
ownership, as determined by the Corporate Secretary in consultation with
legal
counsel. The Board of Directors or individual directors so addressed shall
be
advised of any communication withheld for safety or security reasons as soon
as
practicable.
Code
of Business Conduct and Ethics
We
have
adopted a Code of Business Conduct and Ethics that applies to all of our
employees, officers and directors. The Code of Business Conduct and Ethics
is
available on our website at www.solarenertech.com.
Corporate
Governance Guidelines
We
have
adopted Corporate Governance Guidelines that address the composition of the
Board and other Board governance matters. These guidelines are available
on our
website at www.solarenertech.com. A printed copy of the guidelines may also
be
obtained by any stockholder upon request.
PROPOSAL
NO. 2
RATIFICATION
OF APPOINTMENT OF INDEPENDENT AUDITORS
On
November 14, 2007, the Board of Directors dismissed Malone & Bailey, PC
(“M&B”) as the Company’s independent registered public accounting firm and
retained Ernst & Young Hua Ming (“E&Y China”) as the Company’s
independent registered public accounting firm. Prior to November 14, 2007,
M&B served as the Company’s independent registered public accounting
firm.
The
report of M&B on the Company’s financial statement for the fiscal year ended
September 30, 2006 did not contain an adverse opinion or disclaimer of opinion,
nor was it qualified or modified as to uncertainty, audit scope or accounting
principles.
During
the Company’s fiscal year ended September 30, 2007 and the subsequent interim
period through November 7, 2007, there were no disagreements with M&B on any
matter of accounting principles or practices, financial statement disclosure,
or
auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of M&B would have caused it to make reference thereto in any
reports on the Company’s financial statements for such fiscal periods.
On
November 7, 2007, the Company provided M&B with a copy of the disclosures
made herein and requested M&B to furnish a letter addressed to the SEC
stating whether M&B agreed with the above statements made by the Company
pursuant to the requirements of 17 C.F.R. 229.304(a)(3), and, if not, stating
the respects in which it does not agree. A copy of M&B’s letter can be found
as Exhibit 16.1 to our Form 8-K filed on November 13, 2007.
New
Independent Registered Public Accounting Firm
The
Company did not consult with E&Y China, at any time prior to its appointment
or during the Company’s two most recent fiscal years, regarding the application
of accounting principles to a specific completed or contemplated transaction,
or
the type of audit opinion that might be rendered on the Company’s financial
statements and neither written nor verbal advice was provided that was an
important factor considered by the Company in reaching a decision as to the
accounting, auditing or financial reporting issue.
The
Audit
Committee of the Board of Directors has selected E&Y China to continue in
its capacity for the fiscal year ending September 30, 2008. Accordingly,
the
Company is asking the stockholders to ratify the engagement of E&Y China as
its independent registered public accounting firm.
Although
the engagement of E&Y China is not required to be submitted to a vote of the
stockholders, the Board of Directors believes it appropriate as a matter
of
policy to request that the stockholders ratify the selection of its independent
registered public accounting firm for the fiscal year ending September 30,
2008.
If the stockholders fail to ratify the appointment, the Audit Committee of
the
Board of Directors will consider it as a direction to select other auditors
for
the subsequent year. Even if the selection is ratified, the Board of Directors
or the Audit Committee, in its discretion, may direct the appointment of
a
different independent registered public accounting firm at any time during
the
year if the Board of Directors or Audit Committee feels that such a change
would
be in the best interests of the Company and our stockholders.
A
representative of E&Y China is expected to be present at the annual meeting,
with the opportunity to make a statement if the representative desires to
do so,
and is expected to be available to respond to appropriate questions.
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
Audit
Fees
The
aggregate fees billed by our auditors for professional services rendered
for the
audit of our annual financial statements and the review of our quarterly
financial statements for the years ended September 30, 2007 and 2006, were
as
follows:
|
|
Fiscal Year 2007
|
|
Fiscal Year 2006
|
|
Ernst
& Young Hua Ming — current auditor
|
|
$
|
275,000
|
|
$
|
—
|
|
Malone
& Bailey PC — former auditor
|
|
|
146,000
|
|
|
59,000
|
|
Total
|
|
$
|
421,000
|
|
$
|
59,000
|
|
Audit
Related Fees
We
paid
no fees to auditors for audit related fees during the fiscal years ended
September 30, 2007 and 2006.
Tax
Fees
We
paid
no fees to auditors for tax compliance, tax advice or tax compliance services
during the fiscal years ended September 30, 2007 and 2006, respectively.
All
Other Fees
We
did
not pay any other fees billed by auditors for services rendered to our Company,
other than the services covered in “Audit Fees” for the fiscal years ended
September 30, 2007 and 2006.
Pre-Approval
Policies Regarding Audit and Permissible Non-Audit Services
Our
Board
of Directors’ policy is to pre-approve all audit and permissible non-audit
services provided by our independent auditors. These services may include
audit
services, audit-related services, tax services and other services. Pre-approval
is generally provided for up to one year and any pre-approval is detailed
as to
the particular service or category of services. The independent auditor and
management are required to periodically report to the Audit Committee regarding
the extent of services provided by the independent auditor in accordance
with
this pre-approval.
Vote
Required and Board of Directors Recommendation
Approval
of this Proposal requires the affirmative votes exceed negative votes at
the
annual meeting of stockholders, as well as the presence of a quorum representing
a majority of all outstanding shares of the Company’s Common Stock, either in
person or by proxy. Abstentions and broker non-votes will each be counted
as
present for purposes of determining the presence of a quorum but will not
have
any effect on the outcome of this Proposal.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPOINTMENT OF ERNST
& YOUNG HUA MING AS OUR INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING
SEPTEMBER 30, 2008.
BOARD
OF DIRECTORS AUDIT REPORT
The
Company’s Audit Committee was not formed until February 2008. Prior to February
2008, the Company’s Board of Directors took responsibility for oversight of the
quality and integrity of the accounting, auditing and financial reporting
practices of the Company.
In
discharging its oversight responsibility as to the audit process, the Board
of
Directors obtained from the independent registered public accounting firm
a
formal written statement describing all relationships between the independent
registered public accounting firm and the Company that might bear on the
independent registered public accounting firm’s independence consistent with
Independence Standards Board Standard No. 1 (Independence Discussions with
Audit
Committees) as adopted by the Public Company Accounting Oversight Board in
Rule
3600T, discussed with the independent registered public accounting firm any
relationships that may impact their objectivity and independence and satisfied
itself as to the independent registered public accounting firm’s independence.
The Board of Directors also discussed with management and the independent
registered public accounting firm the quality and adequacy of the Company’s
internal controls. The Board of Directors reviewed with the independent
registered public accounting firm their audit plan and audit scope.
The
Board
of Directors discussed and reviewed with the independent registered public
accounting firm all communications required by generally accepted auditing
standards, including those described in Statement on Auditing Standards No.
61,
as amended (Communication with Audit Committees), as adopted by the Public
Company Accounting Oversight Board in Rule 3200T and, with and without
management present, discussed and reviewed the independent registered public
accounting firm’s examination of the financial statements.
The
Board
of Directors reviewed the audited financial statements of the Company as
of and
for the year ended September 30, 2007, with management and the independent
registered public accounting firm. Management has the responsibility for
the
preparation of the Company’s financial statements and the independent registered
public accounting firm has the responsibility for the examination of those
statements.
Based
on
the above-mentioned review and discussions with the independent registered
public accounting firm, the Board of Directors recommended that the Company’s
audited financial statements be included in its Annual Report on Form 10-KSB
for
the year ended September 30, 2007, as filed with the Securities and Exchange
Commission, on December 28, 2007.
Respectfully
submitted,
|
|
Leo
Shi Young
|
Shi
Jian Yin
|
Donald
Morgan
|
Kevin
Koy
|
PROPOSAL
NO. 3
APPROVAL
OF THE SOLAR ENERTECH CORP.
AMENDED
AND RESTATED 2007
EQUITY
INCENTIVE
PLAN
At
the
Annual Meeting, the stockholders will be asked to approve the amendment and
restatement of the Solar Enertech Corp. 2007 Equity Incentive Plan. The Board
of
Directors initially adopted the 2007 Plan on September 24, 2007. On February
5,
2008, the Board of Directors adopted the Solar Enertech Corp. Amended and
Restated 2007 Equity Incentive Plan (the “Amended and Restated 2007 Plan”),
subject to the approval of the Company’s stockholders.
The
amendment and restatement will increase the maximum number of shares of Common
Stock that may be issued under the Amended and Restated 2007 Plan from
10,000,000 shares to 15,000,000 shares. In addition, the amendment and
restatement will permit the Amended and Restated 2007 Plan to issue “incentive
stock options” within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the “Code”). Further, the Board of Directors is seeking
stockholder approval of the Amended and Restated 2007 Plan and the per
participant stock option share limitation contained in the Amended and Restated
2007 Plan in order to qualify such stock options as “performance-based”
compensation under Section 162(m) of the Code.
Summary
of the Amended and Restated 2007 Plan
The
following provides a summary of the principal features of the Amended and
Restated 2007 Plan. The Amended and Restated 2007 Plan is set forth in its
entirety as
Annex
A
to this
Proxy Statement, and the following summary is qualified in its entirety by
the
specific language of the Amended and Restated 2007 Plan.
General.
The
purpose of the Amended and Restated 2007 Plan is to advance the interests
of the
Company and its stockholders by providing an incentive program that will
enable
the Company to attract and retain employees, consultants and directors upon
whose judgment, interest and efforts our success is dependent and to provide
them with an equity stake in our success. These incentives may be provided
through the grant of stock options, restricted stock, purchase rights and
restricted stock bonus awards.
The
Amended and Restated 2007 Plan is also designed to preserve our ability to
deduct in full, for federal income tax purposes, the compensation recognized
by
certain executive officers in connection with options granted under the Amended
and Restated 2007 Plan. Section 162(m) of the Code generally denies a corporate
tax deduction for annual compensation exceeding $1 million paid by a publicly
held company to its chief executive officer or to any of its four other most
highly compensated officers. However, compensation that is deemed to be
“performance-based” under Section 162(m) is generally excluded from this limit.
To enable compensation received in connection with options granted under
the
Amended and Restated 2007 Plan to qualify as performance-based, the Amended
and
Restated 2007 Plan limits the size of options that can be granted under the
plan. Under this limitation (the “Grant Limit”), no employee may be granted
options for more than 5,000,000 shares within the Company’s fiscal
year.
Authorized
Shares.
A
total
of 15,000,000 shares of the Company’s Common Stock will be authorized for
issuance under the Amended and Restated 2007 Plan if it is approved by the
stockholders. Shares issued under the Amended and Restated 2007 Plan may
consist
of authorized but unissued or reacquired shares of the Company’s Common Stock or
any combination.
Share
Counting and Adjustments for Capital Structure Changes.
If any
award granted under the Amended and Restated 2007 Plan expires or otherwise
terminates for any reason without having been exercised or settled in full,
or
if shares subject to forfeiture or repurchase are forfeited or repurchased
by
the Company for not more than the participant’s purchase price, any such shares
reacquired or subject to a terminated award will again become available for
issuance under the Amended and Restated 2007 Plan. Shares will not be treated
as
having been issued under the Amended and Restated 2007 Plan and will therefore
not reduce the number of shares available for issuance to the extent an award
is
settled in cash. Shares withheld or reacquired by the Company in satisfaction
of
a tax withholding obligation will not again become available under the Amended
and Restated 2007 Plan. If shares are tendered in payment of the exercise
price
of an option or the option is exercised by means of a net-exercise procedure,
the number of shares available under the Amended and Restated 2007 Plan will
be
reduced by the gross number of shares for which the option is
exercised.
Appropriate
adjustments will be made to the number of shares authorized under the Amended
and Restated 2007 Plan, to the numerical limits on awards under the Amended
and
Restated 2007 Plan, and to outstanding awards in the event of any change
in our
Common Stock through merger, consolidation, reorganization, reincorporation,
recapitalization, reclassification, stock dividend, stock split, reverse
stock
split, split-up, split-off, spin-off, combination of shares, exchange of
shares
or similar change in our capital structure, or if we make a distribution
to our
stockholders in a form other than Common Stock (excluding normal cash dividends)
that has a material effect on the fair market value of our Common Stock.
In such
circumstances, the Compensation Committee also has the discretion under the
Amended and Restated 2007 Plan to adjust the terms of outstanding awards
as it
deems appropriate. Without affecting the number of shares available for issuance
under the Amended and Restated 2007 Plan, the Compensation Committee may
authorize the issuance or assumption of benefits under the Amended and Restated
2007 Plan in connection with any merger, consolidation or similar transaction
on
such terms and conditions as it deems appropriate.
Certain
Award Limits.
In
addition to the limitation described above on the total number of shares
of our
Common Stock that will be authorized for issuance under the Amended and Restated
2007 Plan, and the Grant Limit, the Amended and Restated 2007 Plan also limits
the number of share that may be issued pursuant to options granted in the
form
of incentive stock options to 15,000,000 shares.
Administration.
The
Amended and Restated 2007 Plan generally will be administered by the
Compensation Committee or other committee or subcommittee of the Board of
Directors or, in the absence of such committee, by the Board of Directors.
For
purposes of this summary, the term “Committee” will refer to either such
committee or the Board of Directors. In the case of options intended to qualify
as “performance-based” under Section 162(m) of the Code, administration of the
Amended and Restated 2007 Plan will be by a committee comprised solely of
two or
more “outside directors” within the meaning of Section 162(m). Subject to the
provisions of the Amended and Restated 2007 Plan, the Committee will determine
when and to whom awards are granted, the types and sizes of awards, and all
other terms and conditions of awards. The Committee may, subject to certain
limitations on the exercise of its discretion required by the Amended and
Restated 2007 Plan, amend, cancel or renew any award, waive any restrictions
or
conditions applicable to any award, and accelerate, continue, extend or defer
the exercisability or vesting of any award. The Amended and Restated 2007
Plan
provides, subject to certain limitations, for indemnification by the Company
of
any director, officer or employee against all reasonable expenses, including
attorneys’ fees, incurred in connection with any legal action arising from such
person’s action or failure to act in administering the Amended and Restated 2007
Plan. All awards granted under the Amended and Restated 2007 Plan will be
evidenced by a written agreement between the Company and the participant
specifying the terms and conditions of the award, consistent with the
requirements of the Amended and Restated 2007 Plan. The Committee has the
authority to interpret the Amended and Restated 2007 Plan and awards granted
thereunder, and all determinations of the Committee are final and binding
on all
persons having an interest in the Amended and Restated 2007 Plan or any
award.
Eligibility.
Awards
may be granted under the Amended and Restated 2007 Plan only to employees
and
consultants of the Company or any present or future parent or subsidiary
corporation or other affiliated entity. Incentive stock options may be granted
only to employees who, as of the time of grant, are employees of the Company
or
any parent or subsidiary corporation of the Company as well as to members
of the
Board of Directors.
As
of
September 30, 2007, there were approximately two hundred sixty-four (264)
employees, including three (3) executive officers, and three (3) non-employee
directors who would be eligible under the Amended and Restated 2007
Plan.
Stock
Options.
The
Committee may grant nonstatutory stock options, incentive stock options
within
the meaning of Section 422 of the Code, or any combination of these. The
exercise price of each option may not be less than the fair market value
of a
share of our Common Stock on the date of grant. However, any incentive
stock
option granted to a person who at the time of grant owns stock possessing
more
than 10% of the total combined voting power of all classes of stock of
the
Company or any parent or subsidiary corporation of the Company (a “10%
Stockholder”) must have an exercise price equal to at least 110% of the fair
market value of a share of common stock on the date of grant. On March
27, 2008
the closing price of our Common Stock as quoted on the Over the Counter
Bulletin
Board was $0.62 per share.
The
Amended and Restated 2007 Plan provides that the option exercise price may
be
paid in cash or its equivalent; by means of a broker-assisted cashless exercise;
by tender to the Company of shares of common stock owned by the participant
having a fair market value not less than the exercise price (to the extent
legally permitted); by means of a net-exercise procedure; by such other lawful
consideration as approved by the Committee; or by any combination of these.
Nevertheless, the Committee may restrict the forms of payment permitted in
connection with any option grant. No option may be exercised unless the
participant has made adequate provision for federal, state, local and foreign
taxes, if any, relating to the exercise of the option, including, if permitted
or required by the Company, through the participant’s surrender of a portion of
the option shares to the Company.
Options
will become vested and exercisable at such times or upon such events and
subject
to such terms, conditions, performance criteria or restrictions as specified
by
the Committee. The maximum term of any option granted under the Amended and
Restated 2007 Plan is ten years, provided that an incentive stock option
granted
to a 10% Stockholder must have a term not exceeding five years. Unless otherwise
permitted by the Committee, an option generally will remain exercisable for
three months following the participant’s termination of service, provided that
if service terminates as a result of the participant’s death or disability, the
option generally will remain exercisable for 12 months, but not later than
its
expiration date in any event, and provided further that an option will terminate
immediately upon a participant’s termination for cause (as defined by the
Amended and Restated 2007 Plan).
Incentive
stock options are nontransferable by the participant other than by will or
by
the laws of descent and distribution, and are exercisable during the
participant’s lifetime only by the participant. However, a nonstatutory stock
option may be assigned or transferred to certain family members to the extent
permitted by the Committee, provided that options generally may not be
transferred for value.
Restricted
Stock Awards.
The
Committee may grant restricted stock awards under the Amended and Restated
2007
Plan either in the form of a restricted stock purchase right, giving a
participant an immediate right to purchase common stock, or in the form of
a
restricted stock bonus, in which stock is issued in consideration for services
to the Company rendered by the participant. The Committee determines the
purchase price payable under restricted stock purchase awards, which may
be less
than the then current fair market value of our Common Stock. Restricted stock
amounts may be subject to vesting conditions based on such service or
performance criteria as the Committee specifies, including the attainment
of one
or more performance goals. Shares acquired pursuant to a restricted stock
award
may not be transferred by the participant until vested. Unless otherwise
provided by the Committee, a participant will forfeit any shares of restricted
stock as to which the vesting restrictions have not lapsed prior to the
participant’s termination of service. Unless otherwise determined by the
Committee, participants holding restricted stock will have the right to vote
the
shares and to receive any dividends paid, except that dividends or other
distributions paid in shares will be subject to the same restrictions as
the
original award.
Restricted
Stock Units.
The
Committee may grant restricted stock units under the Amended and Restated
2007
Plan, which represents rights to receive shares of our Common Stock at a
future
date determined in accordance with the participant’s award agreement. No
monetary payment is required for receipt of restricted stock units or the
shares
issued in settlement of the award, the consideration for which is furnished
in
the form of the participant’s services to the Company. The Committee may grant
restricted stock unit awards subject to the attainment of one or more
performance goals, or may make the awards subject to vesting conditions similar
to those applicable to restricted stock awards. Unless otherwise provided
by the
Committee, a participant will forfeit any restricted stock units which have
not
vested prior to the participant’s termination of service. Participants have no
voting rights or rights to receive cash dividends with respect to restricted
stock unit awards until shares of common stock are issued in settlement of
such
awards. However, the Committee may grant restricted stock units that entitle
their holders to dividend equivalent rights, which are rights to receive
additional restricted stock units for a number of shares whose value is equal
to
any cash dividends we pay.
Awards
Subject to Section 409A of the Code.
Certain
awards granted under the Amended and Restated 2007 Plan may be deemed to
constitute “deferred compensation” within the meaning of Section 409A of the
Code, providing rules regarding the taxation of nonqualified deferred
compensation plans, and such regulations or other administrative guidance
that
may be issued pursuant to Section 409A of the Code. Any such awards will
be
required to comply with the requirements of Section 409A of the Code.
Notwithstanding any provision of the Amended and Restated 2007 Plan to the
contrary, the Committee is authorized, in its sole discretion and without
the
consent of any participant, to amend the Amended and Restated 2007 Plan or
any
award agreement as it deems necessary or advisable to comply with Section
409A
of the Code.
Termination
or Amendment.
The
Amended and Restated 2007 Plan will continue in effect until its termination
by
the Committee, provided that no awards may be granted under the Amended and
Restated 2007 Plan following the tenth anniversary of the 2007 Plan’s original
effective date. The Committee may terminate or amend the Amended and Restated
2007 Plan at any time, provided that no amendment may be made without
stockholder approval that would increase the maximum aggregate number of
shares
of stock authorized for issuance under the Amended and Restated 2007 Plan,
change the class of persons eligible to receive incentive stock options or
require stockholder approval under any applicable law, regulation or rule.
No
termination or amendment may affect any outstanding award unless expressly
provided by the Committee, and, in any event, may not adversely affect an
outstanding award without the consent of the participant unless necessary
to
comply with any applicable law, regulation or rule, including, but not limited
to, Section 409A of the Code, or unless expressly provided in the terms and
conditions governing the award.
Summary
of U.S. Federal Income Tax Consequences
The
following summary is intended only as a general guide to the U.S. federal
income
tax consequences of participation in the Amended and Restated 2007 Plan and
does
not attempt to describe all possible federal or other tax consequences of
such
participation or tax consequences based on particular
circumstances.
Incentive
Stock Options.
A
participant recognizes no taxable income for regular income tax purposes
as a
result of the grant or exercise of an incentive stock option. Participants
who
do not dispose of their shares within two years following the date the option
was granted or within one year following the exercise of the option will
normally recognize a capital gain or loss upon the sale of the shares equal
to
the difference, if any, between the sale price and the purchase price of
the
shares. If a participant satisfies such holding periods upon a sale of the
shares, we will not be entitled to any deduction for federal income tax
purposes. If a participant disposes of shares within two years after the
date of
grant or within one year after the date of exercise (a “disqualifying
disposition”), the difference between the fair market value of the shares on the
option exercise date and the exercise price (not to exceed the gain realized
on
the sale if the disposition is a transaction with respect to which a loss,
if
sustained, would be recognized) will be taxed as ordinary income at the time
of
disposition. Any gain in excess of that amount will be a capital gain. If
a loss
is recognized, there will be no ordinary income, and such loss will be a
capital
loss. Any ordinary income recognized by the participant upon the disqualifying
disposition of the shares generally should be deductible by us for federal
income tax purposes, except to the extent such deduction is limited by
applicable provisions of the Code.
In
general, the difference between the option exercise price and the fair market
value of the shares on the date when an incentive stock option is exercised
is
treated as an adjustment in computing income that may be subject to the
alternative minimum tax, which is paid if such tax exceeds the regular tax
for
the year. Special rules may apply with respect to certain subsequent sales
of
the shares in a disqualifying disposition, certain basis adjustments for
purposes of computing the alternative minimum taxable income on a subsequent
sale of the shares and certain tax credits which may arise with respect to
participants subject to the alternative minimum tax.
Nonstatutory
Stock Options.
Options
not designated or qualifying as incentive stock options are nonstatutory
stock
options having no special tax status. A participant generally recognizes
no
taxable income upon receipt of such an option. Upon exercising a nonstatutory
stock option, the participant normally recognizes ordinary income equal to
the
difference between the exercise price paid and the fair market value of the
shares on the date when the option is exercised. If the participant is an
employee, such ordinary income generally is subject to withholding of income
and
employment taxes. Upon the sale of stock acquired by the exercise of a
nonstatutory stock option, any gain or loss, based on the difference between
the
sale price and the fair market value of the shares on the exercise date,
will be
taxed as capital gain or loss. We generally should be entitled to a tax
deduction equal to the amount of ordinary income recognized by the participant
as a result of the exercise of a nonstatutory stock option, except to the
extent
such deduction is limited by applicable provisions of the Code.
Restricted
Stock.
A
participant acquiring restricted stock generally will recognize ordinary
income
equal to the excess of the fair market value of the shares on the “determination
date” over the price paid, if any, for such shares. The “determination date” is
the date on which the participant acquires the shares unless the shares are
subject to a substantial risk of forfeiture and are not transferable, in
which
case the determination date is the earlier of (i) the date on which the shares
become transferable or (ii) the date on which the shares are no longer subject
to a substantial risk of forfeiture (e.g., when they become vested). If the
determination date follows the date on which the participant acquires the
shares, the participant may elect, pursuant to Section 83(b) of the Code,
to
designate the date of acquisition as the determination date by filing an
election with the Internal Revenue Service no later than 30 days after the
date
on which the shares are acquired. If the participant is an employee, such
ordinary income generally is subject to withholding of income and employment
taxes. Upon the sale of shares acquired pursuant to a restricted stock award,
any gain or loss, based on the difference between the sale price and the
fair
market value of the shares on the determination date, will be taxed as capital
gain or loss. We generally should be entitled to a deduction equal to the
amount
of ordinary income recognized by the participant on the determination date,
except to the extent such deduction is limited by applicable provisions of
the
Code.
Restricted
Stock Unit Awards.
A
participant generally will recognize no income upon the receipt of a restricted
stock unit, performance share, performance unit, cash-based or other stock-based
award. Upon the settlement of such awards, participants normally will recognize
ordinary income in the year of settlement in an amount equal to the cash
received and the fair market value of any substantially vested shares of
stock
received. If the participant is an employee, such ordinary income generally
is
subject to withholding of income and employment taxes. If the participant
receives shares of restricted stock, the participant generally will be taxed
in
the same manner as described above under “Restricted Stock.” Upon the sale of
any shares received, any gain or loss, based on the difference between the
sale
price and the fair market value of the shares on the determination date (as
defined above under “Restricted Stock”), will be taxed as capital gain or loss.
We generally should be entitled to a deduction equal to the amount of ordinary
income recognized by the participant on the determination date, except to
the
extent such deduction is limited by applicable provisions of the
Code.
Awards
Under the 2007 Plan
Awards
under the Amended and Restated 2007 Plan will be made at the discretion of
the
Compensation Committee. The Compensation Committee has not made any decisions
on
the amount and type of awards that are to be made to our employees in future
years. The following table sets forth information concerning stock-related
awards under the 2007 Plan to our named executive officers, executive officers
as a group, non-executive directors as a group, and non-executive officer
employees as a group. Please refer to “Compensation of the Named Executive
Officers and Directors—Grants of Plan-Based Awards” for further information on
these grants. This information may not be indicative of awards that will
be made
under the Amended and Restated 2007 Plan in future years.
New
Plan Benefits
Name
and Position
|
|
Number
of Units
|
Leo
Shi Young, President and Chief Executive Officer
|
|
0
|
Shi
Jian Yin, Chief Operating Officer
|
|
0
|
Anthea
Chung, Chief Financial Officer
|
|
3,000,000
|
Executive
Group
|
|
3,000,000
|
Non-Executive
Director Group
|
|
250,000
|
Non-Executive
Officer Employee Group
|
|
4,390,000
|
Required
Vote and Board of Directors Recommendation
Approval
of this Proposal requires the affirmative vote of a majority of the shares
present or represented by proxy and entitled to vote on this proposal.
Abstentions will have the same effect as votes against this Proposal. Broker
non-votes will have no effect on the outcome of this vote.
The
Board
believes that the adoption of the Amended and Restated 2007 Plan is in the
best
interests of the Company and its stockholders for the reasons stated
above.
THEREFORE,
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” PROPOSAL NO. 3 TO
APPROVE THE ADOPTION OF THE AMENDED AND RESTATED 2007
PLAN.
PROPOSAL
NO. 4
APPROVAL
OF AN AGREEMENT AND PLAN OF MERGER PURSUANT TO WHICH WE WILL
REINCORPORATE
FROM THE STATE OF NEVADA TO THE STATE OF DELAWARE
The
Board
of Directors has approved, subject to stockholder approval, an Agreement
and
Plan of Merger pursuant to which we will reincorporate from the State of
Nevada
to the State of Delaware (the “Reincorporation”). The Agreement and Plan of
Merger is attached hereto as
Annex
B
to the
Proxy Statement and should be read in its entirety. As part of the
Reincorporation, we will merge with and into a newly-formed, wholly-owned
subsidiary, Solar Enertech Corp., a Delaware corporation (“Solar Enertech
Delaware”), which will result in, among other things:
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your
right to receive one share of common stock, par value $0.001 per
share, of
Solar Enertech Delaware, for every one share of our common stock,
par
value $0.001 per share, owned by you as of the effective date of
the
Reincorporation;
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the
persons presently serving as our executive officers and directors
continuing to serve in such respective capacity with Solar Enertech
Delaware;
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the
adoption of Solar Enertech Delaware’s Certificate of Incorporation under
the laws of the State of Delaware in the forms attached hereto
as
Annex
C
to
the Proxy Statement; and
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the
adoption of Solar Enertech Delaware’s Bylaws under the laws of the State
of Delaware in the form attached hereto as
Annex
D
to
the Proxy Statement.
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Our
Common Stock is currently quoted on the OTC Bulletin Board. We believe that
the
Common Stock of Solar Enertech Delaware will also be quoted on the OTC Bulletin
Board.
The
Board
of Directors believes that the Reincorporation of our Company from the State
of
Nevada to the State of Delaware will benefit our Company and our stockholders.
The State of Delaware is recognized for adopting comprehensive modern and
flexible corporate laws which are periodically revised to respond to the
changing legal and business needs of corporations. For this reason, many
major
corporations have incorporated in Delaware or have changed their corporate
domiciles to Delaware in a manner similar to that proposed by our Company.
Consequently, the Delaware judiciary has become particularly familiar with
corporate law matters and a substantial body of court decisions has developed
construing Delaware Law. Delaware corporate law, accordingly, has been, and
is
likely to continue to be, interpreted in many significant judicial decisions,
a
fact which may provide greater clarity and predictability with respect to
our
corporate legal affairs.
For
these
reasons, the Board of Directors believes that it is in our best interest
for us
to incorporate in the State of Delaware from our present domicile of Nevada.
See
“Significant Differences between the Corporate Laws of Nevada and Delaware”
below.
Principal
Features of the Reincorporation
The
Reincorporation will be effected by the merger of our Company with and into
our
wholly-owned Delaware subsidiary corporation, Solar Enertech Delaware. Solar
Enertech Delaware was created for the sole purpose of effecting the
Reincorporation and, to date, has not conducted any business or operations.
Upon
the completion of the Reincorporation, Solar Enertech Delaware will continue
on
as the surviving corporation. The Reincorporation will become effective upon
the
filing of the requisite merger documents in Delaware and Nevada, which filings
are expected to occur as promptly as practicable after the requisite stockholder
approval for the Reincorporation is obtained. Upon the completion of the
Reincorporation, the Certificate of Incorporation and Bylaws of Solar Enertech
Delaware, attached hereto as
Annexes
C
and
D
,
respectively, will be the governing charter documents of the surviving
corporation.
On
the
effective date: (i) each outstanding share of our Common Stock shall be
converted into one share of Solar Enertech Delaware’s common stock; (ii) the
options to purchase common stock under our existing 2007 Plan will convert
into
an identical stock purchase right associated with each share of Solar Enertech
Delaware common stock, (iii) the convertible notes and warrants to purchase
common stock currently outstanding will convert into an identical stock purchase
right associated with each share of Solar Enertech Delaware common stock;
and
(iv) each outstanding share of Solar Enertech Delaware’s common stock held by us
shall be retired and canceled and shall resume the status of authorized and
un-issued common stock.
Upon
completion of the Reincorporation, our daily business operations will continue
as they are presently conducted. The individuals who will serve as our executive
officers following the Reincorporation are those who currently serve as
executive officers of our Company. The Reincorporation will not effect a
change
in our name. The name will remain “Solar Enertech Corp.” and we will continue to
conduct operations through the Delaware entity.
The
Board
of Directors has the authority, in the name and on behalf of our Company,
to
take any action to abandon the merger and the Reincorporation either before
or
after stockholder approval has been obtained.
Significant
Differences Between the Corporate Laws of Nevada and
Delaware
We
are
currently incorporated under the laws of the State of Nevada, but by virtue
of
the Reincorporation will become subject to the laws of the State of Delaware.
Upon consummation of the merger, our stockholders, whose rights currently
are
governed by Nevada laws and Articles of Incorporation and Bylaws created
pursuant to Nevada laws, will become stockholders of a Delaware company,
Solar
Enertech Delaware, and their rights as stockholders will then be governed
by
Delaware laws and a Certificate of Incorporation and Bylaws which have been
drafted and created under Delaware laws.
Although
the corporate statutes of Nevada and Delaware are similar in some respects,
many
differences exist between the two statutory schemes. The most significant
differences, in the judgment of our management and legal counsel, are summarized
below. This summary is not intended to be complete, and stockholders should
refer to the General Corporation Law of the State of Delaware (“Delaware Law”)
and Chapters 78 and 92A of the Nevada Revised Statutes (“Nevada Law”) to
understand the impact of changing our applicable statutory scheme by virtue
of
the Reincorporation.
Classified
Board of Directors
.
Currently, our Board of Directors is not classified under Nevada Law. While
Nevada Law permits a corporation to classify a board into as many as four
classes, Delaware Law only permits a corporation to classify the Board of
Directors into as many as three classes. In the future, should we wish to
classify our board, we will be able to do so under Delaware Law but only
up to
three classes.
Removal
of Directors
.
With
respect to removal of directors, under Nevada Law, any one or all of the
directors of a corporation may be removed by the holders of not less than
two-thirds of the voting power of a corporation’s issued and outstanding stock.
Nevada does not distinguish between removal of directors with and without
cause
and there are no special provisions relating to the removal of directors
when a
board is divided into classes. Under Delaware Law, the general rule is that
a
director may be removed with or without cause by a majority of the shares
then
entitled to vote at an election of directors, provided, however, that if
a board
is classified, a director can be removed only for cause by the holders of
a
majority of the shares then entitled to vote in an election of directors
unless
the certificate of incorporation provides otherwise. The Certificate of
Incorporation for Solar Enertech Delaware does not contain a provision regarding
removal of directors, so the removal of a director of Solar Enertech Delaware
may be accomplished by a vote of a majority of the stockholders entitled
to vote
at an election of directors.
Special
Meetings of Stockholders
.
Delaware Law permits special meetings of stockholders to be called by the
Board
of Directors or by any other person authorized in the certificate of
incorporation or bylaws to call a special stockholder meeting. Nevada Law
permits special meetings of stockholders to be called by the Board of Directors,
any two directors or the president of the company unless otherwise provided
in
the articles of incorporation or bylaws of the company. Our current Bylaws,
however, state that a special meeting of stockholders may only be called
by
either the Board of Directors, the chairman of the board, the President,
a
majority of the Board of Directors, or any stockholder or stockholders holding
in the aggregate one-forth (1/4) of the voting power of all stockholders.
The
Bylaws of Solar Enertech Delaware only allows for a special meeting of the
stockholders to be called by either the Board of Directors or the chairman
of
the board.
Indemnification
of Officers and Directors and Advancement of Expenses
.
Delaware and Nevada have substantially similar provisions that permit
indemnification by a corporation of its officers, directors, employees and
agents where they acted in good faith and in a manner which he or she reasonably
believed to be in or not opposed to the best interests of the corporation.
In
addition, Nevada Law provides that a director or officer will not be liable
to
the corporation or its stockholders for any act or failure to act unless
it is
proven that his or her act or failure to act constituted a breach of fiduciary
duties and the breach of such duties involved intentional misconduct, fraud,
or
a knowing violation of law, and the corporation is free to indemnify the
director or officer if the director or officer is not liable under this
provision.
Both
Nevada Law and Delaware Law permit the reimbursement of expenses in advance
of
the final disposition of an action, suit or proceedings upon receipt of an
undertaking by or on behalf of the director or officer to repay the amount
advanced if it is ultimately determined that he or she is not entitled to
be
indemnified by the corporation. Under Nevada Law, however, the articles of
incorporation or bylaws may provide that the corporation must pay advancements
of expenses in advance of the final disposition of the action, suit or
proceedings upon receipt of an undertaking by or on behalf of the director
or
officer to repay the amount if it is ultimately determined that he or she
is not
entitled to be indemnified by the corporation. The Board of Directors of
Solar
Enertech Delaware will retain the discretionary authority to authorize the
indemnification of employees and agents, subject to certain conditions under
Delaware Law.
Limitation
on Personal Liability of Directors
.
A
Delaware corporation is permitted to adopt provisions in its certificate
of
incorporation limiting or eliminating the liability of a director to a company
and its stockholders for monetary damages for breach of fiduciary duty as
a
director, provided that such liability does not arise from certain proscribed
conduct, including breach of the duty of loyalty, acts or omissions not in
good
faith or which involve intentional misconduct or a knowing violation of law
or
liability to the corporation based on unlawful dividends or distributions
or
improper personal benefit. The Certificate of Incorporation for Solar Enertech
Delaware limits the liability of its directors to the fullest extent permitted
by law. The similar limitation of liability provision under Nevada Law applies
automatically, unless limited in the articles of incorporation, to both
directors and officers and applies to damages as a result of any act or failure
to act in the director’s or officer’s capacity as a director or officer, except
in cases of a breach of fiduciary duty involving intentional misconduct,
fraud
or a knowing violation of law or under certain statutory provisions. Thus,
the
limitation on liability contained in the Certificate of Incorporation of
Solar
Enertech Delaware will not extend to officers and will be more limited under
Delaware Law than the limit on officers and directors liability that applied
under Nevada Law. Solar Enertech Delaware, however, may determine to indemnify
such persons in its discretion subject to the conditions of Delaware Law
and its
Certificate of Incorporation.
Dividends
.
Delaware Law is more restrictive than Nevada Law with respect to when dividends
may be paid. Under Delaware Law, unless further restricted in the certificate
of
incorporation, a corporation may declare and pay dividends, out of surplus,
or
if no surplus exists, out of net profits for the fiscal year in which the
dividend is declared and/or the preceding fiscal year (provided that the
amount
of capital of the corporation is not less than the aggregate amount of the
capital represented by the issued and outstanding stock of all classes having
a
preference upon the distribution of assets). In addition, Delaware Law provides
that a corporation may redeem or repurchase its shares only if the capital
of
the corporation is not impaired, such redemption or repurchase would not
impair
the capital of the corporation and the purchase price of the shares is not
more
than what they may then be redeemed for. Nevada Law provides that no
distribution (including dividends on, or redemption or repurchases of, shares
of
capital stock) may be made if, after giving effect to such distribution,
the
corporation would not be able to pay its debts as they become due in the
usual
course of business, or, except as specifically permitted by the articles
of
incorporation, the corporation’s total assets would be less than the sum of its
total liabilities plus the amount that would be needed at the time of a
dissolution to satisfy the preferential rights of preferred stockholders.
Amendment
to Articles of Incorporation/Certificate of Incorporation or
Bylaws
.
In
general, both Delaware Law and Nevada Law require the approval of the holders
of
a majority of all outstanding shares entitled to vote to approve proposed
amendments to a corporation’s certificate/articles of incorporation. Both
Delaware Law and Nevada Law also provide that in addition to the vote above,
the
vote of a majority of the outstanding shares of a class may be required to
amend
the certificate of incorporation or articles of incorporation. Neither state
requires stockholder approval for the Board of Directors of a corporation
to fix
the voting powers, designation, preferences, limitations, restrictions and
rights of a class of stock provided that the corporation’s organizational
documents grant such power to its Board of Directors. Under Delaware Law,
the
holders of the outstanding shares of a class are entitled to vote as a class
upon a proposed amendment, whether or not entitled to vote thereon by the
certificate of incorporation, if the amendment would increase or decrease
the
aggregate number of authorized shares of such class, increase or decrease
the
par value of the shares of such class, or adversely alter or change the powers,
preferences, or special rights of the shares of such class. Nevada Law allows
the Board of Directors, without stockholder approval, to increase or decrease
the number of authorized shares of capital stock if the number of outstanding
shares is proportionately increased or decreased. The Delaware Law does not
have
a similar provision. Consistent with Delaware Law, the Certificate of
Incorporation for Solar Enertech Delaware will authorize the board to amend,
make, modify or repeal our Bylaws.
Actions
by Written Consent of Stockholders
.
Nevada
Law and Delaware Law each provide that, unless the articles/certificate of
incorporation provides otherwise, any action required or permitted to be
taken
at a meeting of the stockholders may be taken without a meeting if the holders
of outstanding stock having at least the minimum number of votes that would
be
necessary to authorize or take such action at a meeting consents to the action
in writing. Our current Bylaws require that all the holders of outstanding
stock
entitled to vote with respect to the subject matter consent in order to take
action without a meeting. The Bylaws of Solar Enertech Delaware will continue
to
require that all holders of outstanding stock consent to an action taken
without
a meeting.
Stockholder
Vote for Mergers and Other Corporation Reorganizations
.
Generally under Delaware Law, stockholder consent and approval of the Board
of
Directors is required to authorize a merger. However, under Delaware Law,
no
vote of the stockholders is necessary to authorize a merger with or into
a
wholly-owned subsidiary (unless expressly required by the certificate of
incorporation), if (a) the parent corporation and the wholly-owned subsidiary
are the only parties to the merger; (b) each share of stock of the parent
corporation outstanding immediately before the effective date of the merger
is
an identical outstanding share after the merger; (c) the parent corporation
and
the wholly-owned subsidiary are corporations under Delaware Law; (d) the
certificate of incorporation and bylaws following the merger of the surviving
corporation contain provisions identical to the certificate of incorporation
and
by-laws of the parent corporation; (e) as a result of the merger the parent
corporation or its successor becomes or remains a direct or indirect
wholly-owned subsidiary of the surviving corporation; (f) directors of the
parent corporation become the directors of the surviving corporation after
the
merger; and (g) the organizational documents of the surviving corporation
immediately following the merger contain provisions identical to the certificate
of incorporation of the parent corporation. Further, Delaware Law does not
require a stockholder vote of the surviving corporation in a merger (unless
the
corporation provides otherwise in its certificate of incorporation) if: (a)
the
merger agreement does not amend the existing certificate of incorporation;
(b)
each share of stock of the surviving corporation outstanding immediately
before
the effective date of the merger is an identical outstanding share after
the
merger; and (c) either no shares of common stock of the surviving corporation
and no shares, securities or obligations convertible into such stock are
to be
issued or delivered under the plan of merger, or the authorized unissued
shares
or shares of common stock of the surviving corporation to be issued or delivered
under the plan of merger plus those initially issuable upon conversion of
any
other shares, securities or obligations to be issued or delivered under such
plan do not exceed 20% of the shares of common stock of such constituent
corporation outstanding immediately prior to the effective date of the merger.
Nevada Law does not require a stockholder vote of the surviving corporation
in a
merger under substantially similar circumstances.
Restrictions
on Business Combinations
.
Both
Delaware Law and Nevada Law contain provisions restricting the ability of
a
corporation to engage in certain transactions with an interested stockholder.
The restrictions prohibit a corporation, except in limited circumstances,
from
engaging in a merger, sale of assets or significant sale of stock with any
interested stockholder for a three-year period following the date such
stockholder became an interested stockholder. Under Delaware Law an interested
stockholder is a person who holds 15% or more of the outstanding voting stock,
or an affiliate or associate of the corporation and was the owner of 15%
or more
of the outstanding voting stock at any time within the 3-year period immediately
prior to the date on which it is sought to be determined whether such person
is
an interested stockholder. Under Nevada Law, the definition of interested
stockholder is similar except that a holder of 10% or more of the voting
stock
is an interested stockholder. Based upon this difference in percentage
thresholds, Solar Enertech Delaware will be able to engage in certain
transactions with stockholders that would otherwise be prohibited under Nevada
Law. Both Delaware and Nevada Law permit a corporation to opt out of application
of the statutory provisions limiting business combinations with interested
stockholders by making a statement to that effect in its certificate of
incorporation/articles of incorporation. We did not do so in our Nevada Articles
of Incorporation and the Certificate of Incorporation for Solar Enertech
Delaware also does not opt out of the application of the statutory
provisions.
Significant
Differences Between Our Current Charter Documents and the Charter Documents
of
Solar Enertech Delaware
The
following comparison of our current Articles of Incorporation and Bylaws
with
the Certificate of Incorporation and Bylaws of Solar Enertech Delaware
summarizes the important differences between the two sets of charter documents,
but is not intended to list all the differences.
Capitalization
.
Our
Articles of Incorporation currently authorizes the Company to issue up to
two
hundred million (200,000,000) shares of common stock, $0.001 par value per
share. Solar Enertech Delaware’s Certificate of Incorporation provides that
Solar Enertech Delaware will be authorized to issue up to four hundred million
(400,000,000) shares of common stock, $0.001 par value per share. If the
stockholders approve this Proposal but do not approve Proposal 5, the increasing
of the Company’s authorized common stock proposal, then Solar Enertech
Delaware’s Certificate of Incorporation in the form attached hereto as
Annex
C
will be
amended to lower the amount of authorized shares of common stock to two hundred
million (200,000,000) from four hundred million (400,000,000).
Vacancies
on the Board of Directors
.
Our
current Bylaws provide that in the event that a vacancy on the Board of
Directors occurs, whether caused by either resignation, death, retirement,
disqualification, removal, increase of directors, or otherwise, that the
vacancy
may be filled for the remainder of the term by the Board of Directors, by
the
stockholders, or, if the directors in office constitute less than a quorum
of
the Board of Directors, by an affirmative vote of a majority of the remaining
directors. The Bylaws of Solar Enertech Delaware provide that any newly created
directorships vacancies on the Board of Directors resulting from death,
resignation, retirement, disqualification or other cause (including removal
from
office by a vote of the stockholders) may be filled only by a majority vote
of
the directors then in office, though less than a quorum (and not by
stockholders), or by the sole remaining director and directors so chosen
shall
hold office until the expiration of the applicable term for that particular
director seat or until such director’s successor shall have been duly elected
and qualified.
Adjourned
Meetings; Notice
.
Under
our current Bylaws, in the event a stockholder meeting is adjourned, notice
need
not be given of the new place, date or time if the new place, date or time
is
announced at the meeting before adjournment, unless Nevada law requires that
a
new record date be set for an adjourned meeting. Under the Bylaws of Solar
Enertech Delaware, such notice must be given to stockholders upon the
adjournment of a meeting for more than thirty days.
Notice
of Special Board Meetings.
Under
our current Bylaws, notice of a special meeting of our Board of Directors
must
be delivered to the directors at least forty-eight (48) hours in advance
of the
special meeting, unless waived by the director. Under the Bylaws of Solar
Enertech Delaware, the advance notice period is twenty (24
)
hours,
in
most cases.
Insurance
.
Our
current Bylaws provide that we may purchase and maintain insurance on behalf
of
itself and any individual who is or was a director, officer, employee or
agent
of the company or another corporation, partnership, joint venture, trust
or
other enterprise against any liability asserted against or incurred by the
individual in that capacity or arising from his or her status as an officer,
director, agent, or employee, whether or not the we have the power to indemnify
such persons under the Nevada Revised Statutes. Under the Bylaws of Solar
Enertech, we will be required to main such insurance to the extent such
insurance is reasonably available.
Effect
of the Reincorporation
The
Reincorporation will not have any effect on the transferability of outstanding
stock certificates. The Reincorporation will be reflected by our transfer
agent,
currently Continental Stock Transfer & Trust Company, in book-entry. For
those stockholders that hold physical certificates, please do not destroy
or
send your stock certificates to Continental Stock Transfer & Trust Company,
as those stock certificates should be carefully preserved by you. You will
not
receive new share certificates until your current certificates are presented
for
transfer, at which time the certificates reflecting a Nevada corporation
will be
exchanged for certificates reflecting shares issued by Solar Enertech Delaware.
Material
United
States Federal Income Tax Consequences
The
following discussion of the material federal income tax consequences to our
stockholders resulting from the Reincorporation is based upon the Code,
regulations promulgated thereunder, Internal Revenue Service rulings and
pronouncements, and judicial decisions, all as in effect as of the date of
this
proxy statement, and all of which are subject to change, possibly with
retroactive effect. Any such change could alter the tax consequences described
herein. We have not sought and will not seek an opinion of counsel or a ruling
from the Internal Revenue Service regarding the federal income tax consequences
of the Reincorporation.
This
discussion is only for general information to
United
States
stockholders
who hold their shares as capital assets. This discussion does not address
every
aspect of federal income taxation that may be relevant to a particular Company
stockholder in light of the stockholder’s particular circumstances or to persons
who are otherwise subject to special tax treatment, including, without
limitation: (i) a partnership, subchapter S corporation or other pass-through
entity; (ii) dealers in securities; (iii) banks or other financial institutions;
(iv) insurance companies; (v) mutual funds; (vi) tax
-
exempt
organizations or pension funds; (vii) a foreign person, foreign entity or
U.S.
expatriate; (viii) persons who may be subject to the alternative minimum
tax
provisions of the Code; (ix) a stockholder whose functional currency is not
the
U.S. dollar; (x) persons who acquired their common stock in connection with
stock option or stock purchase plans or in other compensatory transactions;
or
(xi) persons who hold their common stock as part of a hedging, straddle,
conversion or other risk reduction transaction. This discussion does not
address
the tax consequences to any holders of our options, warrants or convertible
debt. The state
,
local
and
foreign
tax
consequences of the Reincorporation may vary significantly as to each
stockholder, depending upon the jurisdiction in which such stockholder resides.
You are urged to consult your own tax advisors to determine the particular
consequences to you.
We
believe that the merger of our Company with and into Solar Enertech Delaware,
which will effect the Reincorporation (the “Merger”), will qualify as a
reorganization, under section 368(a)(1)(F) of the Code. As a result, the
material federal income tax consequences of the Merger, and, therefore,
the
Reincorporation, would be as follows: (i) we and Solar Enertech Delaware
will
not recognize any gain or loss as a result of the Merger; (ii) no gain
or loss
will be recognized by holders of common stock on the conversion of common
stock
into Solar Enertech Delaware common stock; (iii) the aggregate adjusted
tax
basis of the Solar Enertech Delaware common stock received by a holder
of common
stock in the Merger will be the same as the aggregate adjusted tax basis
of the
common stock converted in the Merger; and (iv) the holding period, for
U.S.
federal income tax purposes, for the Solar Enertech Delaware common stock
received in the Merger by a holder of common stock will include the period
during which the holder held the converted common stock.
If
the
Merger fails to qualify for tax-free treatment, either under section
368(a)(1)(F) or any other provision of the Code, then a holder of common
stock
whose shares of common stock are converted to Solar Enertech Delaware common
stock
would
recognize gain or loss for U.S. federal income tax purposes equal to the
difference between the fair market value of the Solar Enertech Delaware shares
received by that stockholder and the stockholder’s adjusted tax basis in the
converted shares of common stock. Further, we would recognize taxable gain
as if
we sold all of our assets, subject to our liabilities, at fair market value.
Reporting
Requirements
Each
of
our stockholders who is a “significant holder” that receives Solar Enertech
Delaware common stock in the Merger will be required to file a statement
with
his, her or its federal income tax return setting forth his, her or its tax
basis in the common stock surrendered and the fair market value of the Solar
Enertech Delaware common stock, if any, received in the Merger, and to retain
permanent records of these facts relating to the Merger. A “significant holder”
is a Company stockholder who, immediately before the merger owned at least
five
percent (by vote or value) of our outstanding stock or owned our securities
with
an adjusted tax basis of $1,000,000 or more.
Our
stockholders are urged to consult their own tax advisors regarding the tax
consequences to them of the Reincorporation, including the applicable federal,
state, local and foreign tax consequences
and
related reporting requirements
.
Material
Accounting Implications
There
is
no material accounting impact of the Reincorporation of our Company in Delaware.
Regulatory
Approvals
We
are
required to obtain the approval of our stockholders under Nevada Law in order
to
effect the Reincorporation. In order to obtain this approval, we are required
to
prepare and circulate to our stockholders proxy materials meeting the
requirements of the rules and regulations of the SEC. This proxy statement
has
been prepared by us in accordance with such rules and regulations, and is
being
circulated in order to obtain the required stockholder approval. Once such
approval is obtained, we are required to file a Certificate of Merger with
the
State of Delaware and Articles of Merger with the State of Nevada in order
to
effect the Reincorporation. Other than the foregoing, no federal or state
regulatory requirements must be complied with or approval must be obtained
in
connection with the Merger and the Reincorporation.
Dissenters’
Rights of Appraisal
Assuming
the consummation of the Reincorporation, any stockholders who vote shares
against the Reincorporation may, under certain conditions, become entitled
to be
paid for his or her shares of the Company’s capital stock in lieu of receiving
shares of Solar Enertech Delaware under Nevada Law. Holders of options,
convertible notes, and warrants to purchase shares of the Company’s capital
stock will not be entitled to any such rights in connection with the
Reincorporation by virtue of holding such options, convertible notes, or
warrants.
Under
Nevada Law Section 92A.380, you, the Company’s stockholder, have the right to
dissent from the Reincorporation and demand payment of the fair value of
your
shares of the Company’s capital stock. Under Nevada Law, “fair value” is defined
with respects to dissenter’s shares, as “the value of the shares immediately
before the effectuation of the corporate action to which he objects, excluding
any appreciation or depreciation in anticipation of the corporate action
unless
exclusion would be inequitable.” The following is a brief summary of the
relevant portions of Nevada Law Sections 92A.300 to 92A.500, attached hereto
in
its entirety as
Annex
E
to this
Proxy Statement, which sets forth the procedure for exercising dissenters’
rights with respect to the Reincorporation and demanding statutory appraisal
rights.
If
you
elect to assert dissenters’ rights in connection with the Reincorporation, you
must comply with the following procedures:
|
·
|
Deliver
Written Notice of Intent to Dissent
:
Prior to the Annual Meeting of the Stockholders, you must deliver
to the
Company written notice of intent to demand payment for your shares
if the
Reincorporation occurs.
|
and
|
·
|
Not
Vote in Favor of the Reincorporation
:
You will not have the right to dissent if you vote in favor of
the
Reincorporation. If any form of proxy with respect to the Reincorporation
is signed and returned by you, but no instruction is indicated
thereon
with respect to the approval and adoption of the Reincorporation,
and if
the proxy is unrevoked, the proxy will be voted in favor of the
Reincorporation and will be considered a vote
FOR
the Reincorporation resulting in you losing your rights to dissent.
|
|
·
|
Notification
by Solar Enertech Delaware
:
If the Reincorporation is authorized at the Annual Meeting of
Stockholders, the Company or Solar Enertech Delaware, as the surviving
corporation, as the case may be, will notify you within ten (10)
days
after the date of the consummation of the Reincorporation if you
have
timely filed an objection to such action and did not vote in favor
of such
action. This notice must state where demand for payment must be
sent and
where share certificates are deposited, among other information.
Within
the time period set forth in the notice, which may not be less
than thirty
(30) days nor more than sixty (60) days following the date the
notice is
delivered, you must make written demand on the Company or Solar
Enertech
Delaware for payment of the fair value of your shares and deposit
your
share certificates in accordance with the notice.
|
You
should address any written notice of intent to dissent and written demand
of
payment to:
|
·
|
Solar
Enertech Corp., 1600 Adams Drive, Menlo Park, CA 94025, re: Dissenters’
Rights
|
with
a
copy to:
|
·
|
DLA
Piper US LLP, 2000 University Avenue, East Palo Alto, CA 94303,
Attention:
Yem Mai, Esq.
|
IF
YOU FAIL TO COMPLY STRICTLY WITH THE PROCEDURES DESCRIBED ABOVE, YOU WILL
LOSE
YOUR DISSENTER’S RIGHTS. CONSEQUENTLY, IF YOU WISH TO EXERCISE YOUR DISSENTER’S
RIGHTS, WE STRONGLY URGE YOU TO CONSULT A LEGAL ADVISOR BEFORE ATTEMPTING
TO
EXERCISE YOUR DISSENTER’S RIGHTS.
Vote
Required and Recommendation of the Board of Directors
A
broker
who holds shares in street name will not be entitled to vote on this Proposal
without instructions from the beneficial owner. Since this Proposal requires
the
affirmative vote of at least a majority of the shares of common stock
outstanding as of the record date, abstentions and broker nonvotes will have
the
effect of a negative vote with respect to this Proposal. Stockholders are
urged
to mark the boxes on the proxy card to indicate how their shares will be
voted.
THE
BOARD OF DIRECTORS RECOMMENDS YOU VOTE “FOR” APPROVAL OF AN AGREEMENT AND PLAN
OF MERGER PURSUANT TO WHICH WE WILL REINCORPORATE FROM THE STATE OF NEVADA
TO
THE STATE OF DELAWARE.
PROPOSAL
NO. 5
APPROVAL
OF AN INCREASE IN THE AMOUNT OF THE COMPANY’S AUTHORIZED COMMON
STOCK
Background
Under
Nevada law, we may only issue shares of common stock to the extent such
shares
have been authorized for issuance under our Articles of Incorporation.
The
Articles of Incorporation currently authorizes the issuance of up to two
hundred
million (200,000,000) shares of common stock. However, as of March 7, 2008,
108,265,463 shares of Common Stock were issues and outstanding, 2,130,000
unissued shares were reserved for issuance under our equity compensation
plan
and 81,247,999 unissued shares were reserved for issuance for convertible
notes
and warrants issued by the Company, leaving 8,356,538 shares of Common
Stock unissued and unreserved. If stockholders approve Proposal 3 regarding
an increase in the maximum number of shares issuable under the 2007 Plan,
only 3,356,538 shares of Common Stock will remain unissued and unreserved.
In order to ensure sufficient shares of common stock will be available
for
future issuance by the Company, the Board of Directors has approved, subject
to
stockholder approval, an amendment to the Company’s Articles of Incorporation to
increase the number of shares of such common stock authorized for issuance
from
two hundred million (200,000,000) to four hundred million (400,000,000)
shares
of common stock.
Purpose
and Effect of the Increase in the Amount of Company
’
s
Authorized Common Stock
The
principal purpose of this Proposal is to authorize additional shares of common
stock which will be available in the event the Board of Directors determines
that it is necessary or appropriate to raise additional capital through the
sale
of equity securities, to acquire another company or its assets, to establish
strategic relationships with corporate partners, to provide equity incentives
to
employees and officers, to permit future stock dividends or for other corporate
purposes. The availability of additional shares of common stock is particularly
important in the event that the Board of Directors needs to undertake any
of the
foregoing actions on an expedited basis and thus to avoid the time and expense
of seeking stockholder approval in connection with the contemplated issuance
of
common stock. If the amendment is approved by the stockholders, the Board
does
not intend to solicit further stockholder approval prior to the issuance
of any
additional shares of common stock, except as may be required by applicable
law.
The
increase in authorized common stock will not have any immediate effect on
the
rights of existing stockholders. However, the Board or Directors will have
the
authority to issue authorized common stock without requiring future stockholder
approval of such issuances, except as may be required by applicable law.
To the
extent that additional authorized shares are issued in the future, they may
decrease the existing stockholders’ percentage equity ownership and, depending
on the price at which they are issued, could be dilutive to the existing
stockholders. The holders of common stock have no preemptive rights and the
Board of Directors has no plans to grant such rights with respect to any
such
shares.
The
increase in the authorized amount of shares of common stock and the subsequent
issuance of such shares could have the effect of delaying or preventing a
change
in control of the Company without further action by the stockholders. Shares
of
authorized and unissued common stock could, within the limits imposed by
applicable law, be issued in one or more transactions which would make a
change
in control of the Company more difficult, and therefore less likely. Any
such
issuance of additional stock could have the effect of diluting the earnings
per
share and book value per share of outstanding shares of common stock and
such
additional shares could be used to dilute the stock ownership or voting rights
of a person seeking to obtain control of the Company.
We
do not
have any arrangements, commitments or understandings to issue any shares
of our
capital stock except in connection with our existing stock option and purchase
plans and as stock dividends to holders of outstanding stock.
The
Board
of Directors is not currently aware of any attempt to take over or acquire
the
Company. While it may be deemed to have potential anti-takeover effects,
the
proposed amendment to increase the authorized common stock is not prompted
by
any specific effort or takeover threat currently perceived by
management.
If
the
stockholders approve this Proposal but do not approve Proposal
4,
the
Reincorporation proposal,
then
Article 3 of our Articles of Incorporation will be amended to read as
follows:
A.
Shares
(number of shares corporation authorized to issue):
Number
of
shares with par value: 400,000,000 par value $0.001.
The
additional shares of Common Stock to be authorized pursuant to this Proposal
will have a par value of $0.001 per share and be of the same class of common
stock as is currently authorized under the Articles.
If
the
stockholders approve Proposal 4 but do not approve this Proposal, then Solar
Enertech Delaware’s Certificate of Incorporation in the form attached hereto as
Annex
C
will be
amended to lower the amount of authorized shares of common stock from four
hundred million (400,000,000) to two hundred million (200,000,000).
If
the
stockholders approve both this Proposal and Proposal 4, then the Company
will
reincorporate in the State of Delaware and Solar Enertech Delaware’s Certificate
of Incorporation in the form attached hereto as
Annex
C
will
authorize the issuance of up to four hundred million (400,000,000) shares
of
common stock.
Vote
Required and Recommendation of the Board of Directors
A
broker
who holds shares in street name will not be entitled to vote on this Proposal
without instructions from the beneficial owner. Since this proposal requires
the
affirmative vote of at least a majority of the shares of common stock
outstanding as of the record date, abstentions and broker nonvotes will have
the
effect of a negative vote with respect to this Proposal. Stockholders are
urged
to mark the boxes on the proxy card to indicate how their shares will be
voted.
THE
BOARD OF DIRECTORS RECOMMENDS YOU VOTE “FOR” APPROVAL OF AN INCREASE IN THE
AMOUNT OF THE COMPANY’S AUTHORIZED COMMON STOCK.
PROPOSAL
NO. 6
APPROVAL
OF ADJOURNMENTS OF THE MEETING, IF NECESSARY, TO SOLICIT ADDITIONAL
PROXIES
Under
our
Bylaws, any meeting of stockholders, whether or not a quorum is present
or has
been established, may be adjourned by the affirmative vote of more shares
of
stock entitled to vote who are present, in person or by proxy, than are
voted
against the adjournment. No new notice need be given of the date, time
or place
of the adjourned meeting if such date, time or place is announced at the
meeting
before adjournment, unless the meeting is adjourned to a date more than
60 days
after the date fixed for the original meeting. If we determine that an
adjournment of the meeting is appropriate for the purpose of soliciting
additional proxies in favor of any proposal being submitted by Solar Enertech
Corp. at the meeting, such adjournment will be submitted for a stockholder
vote
under Item 6 of the attached Notice of Meeting. We will also use the
discretionary authority conferred on our proxy holders by duly executed
proxy
cards to vote for any other matter as we determine to be appropriate.
Vote
Required and Board of Directors Recommendation
Approval
of this proposal requires the affirmative votes exceed negative votes at
the
annual meeting of stockholders, as well as the presence of a quorum representing
a majority of all outstanding shares of the Company’s Common Stock, either in
person or by proxy. Abstentions and broker non-votes will each be counted
as
present for purposes of determining the presence of a quorum but will not
have
any effect on the outcome of the proposal.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” ADJOURNMENT OF THE
MEETING, IF NECESSARY IN THE JUDGMENT OF THE PROXY HOLDERS, TO SOLICIT
ADDITIONAL PROXIES IN FAVOR OF SOLAR ENERTECH CORP.’S PROPOSALS IN THIS PROXY
STATEMENT.
EXECUTIVE
COMPENSATION AND OTHER MATTERS
Summary
Compensation
Table
The
following table and discussion sets forth information with respect to all
compensation awarded to, earned by or paid to our Chief Executive Officer
and to
any executive officer whose annual salary and bonus exceeded $100,000 during
our
last completed fiscal year.
SUMMARY
COMPENSATION TABLE
|
|
|
|
Salary
|
|
Option
Awards
|
|
Other
Compensation
|
|
|
|
Name
and principal position
|
|
Year
|
|
($)
|
|
($)
(1)
|
|
($)
|
|
Total
($)
|
|
Leo
Shi Young,
President and Chief Executive Officer
|
|
|
2007
|
|
|
36,000
|
|
|
8,450,000
|
(2)
|
|
24,000
|
(3)
|
|
8,510,000
|
|
|
|
|
2006
|
|
|
21,000
|
|
|
13,379,000
|
(2)
|
|
4,429,000
|
(4)
|
|
17,829,000
|
|
Shi
Jian Yin,
Chief Operating Officer
|
|
|
2007
|
|
|
32,000
|
|
|
|
|
|
|
|
|
32,000
|
|
|
|
|
2006
|
|
|
|
|
|
|
|
|
6,510,000
|
(5)
|
|
6,510,000
|
|
Anthea
Chung,
Chief Financial Officer, Treasurer and
Secretary
|
|
|
2007
|
|
|
43,000
|
|
|
203,000
|
(6)
|
|
|
|
|
246,000
|
|
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Option
award values reflect the amortization expense recognized by the
Company in
accordance with FASB Statement No. 123R, “Share-Based Payment” (“FAS
123R”), during fiscal year 2007 for unvested and outstanding stock option
grants. The total value to be expensed over the amortization or
vesting
period for each award was determined using the Black-Scholes option
pricing model with assumptions as disclosed in our Form 10-KSB
in
Item 7 Financial Statements, Note 3. Summary of Significant
Accounting Policies under the heading “Stock Based Compensation” filed on
December 28, 2007.
|
(2)
|
|
Under
an agreement dated March 1, 2006, Mr. Young was granted an option
to
purchase a total of 36 million shares of common stock directly from
Jean Blanchard, our former President at a price of $0.0001 per
share until
February 10, 2010. The amount shown reflect the grant date fair value
computed in accordance with FAS 123R.
|
(3)
|
|
The
Company provided apartment and paid for utilities for Mr. Young while
he was working in the Shanghai office.
|
(4)
|
|
The
Company recorded compensation expenses related to the Company’s obligation
to withhold tax upon exercise of an option to purchase common stock
by Mr.
Young. The withholding tax accrued by the Company was accounted
for as
additional compensation expense to the employee.
|
(5)
|
|
Mr.
Yin acquired 3.5 million shares at no cost from Mr. Young in
July 2006.
|
(6)
|
|
On
September 24, 2007, the Board of Directors approved the issuance
of two
options to purchase common stock of the Company totaling 3 million
shares to Ms. Chung under the terms of the 2007 Plan. The exercise
price
of $1.20 was determined based on the closing price on the third
trading
day following the Company’s filing of its Form 10-QSB for the quarterly
period ending June 30, 2007. Other than a fully vested and exercisable
option to purchase 500,000 shares of common stock granted to Ms.
Chung,
the option to purchase the remaining 2.5 million shares of common
stock
shall vest and become exercisable over a 4 year period, with the
first
twenty-five percent of such shares vested and exercisable following
the
one year anniversary of Ms. Chung’s first date of employment; and the
remaining shares become vested and exercisable in equal monthly
installments over the following thirty-six
months.
|
Narrative
to Summary Compensation Table
As
our
business develops, we anticipate that our compensation program will expand
to
include bonuses for other employees and awards of equity compensation. We
believe that a combination of cash and common stock or options will allow
us to
attract and retain the services of the individuals who will help us achieve
our
business objectives, thereby increasing value for our stockholders.
In
setting the compensation for our officers, our Board of Directors looked
primarily at the stage of our business operations and our ability to pay
our
executives. As our operations develop, we expect that executive compensation
will be determined by reviewing the person’s responsibilities, salaries paid to
others in businesses comparable to ours, the person’s experience and our ability
to replace the individual.
We
entered into a contract dated March 1, 2006 with Mr. Young for management
services related to the development of our business. The term of the agreement
is two years. The agreement requires us to pay Mr. Young a salary of $3,000
per
month. This agreement can be terminated by Mr. Young or by us with 30 days’
notice.
We
also
have a verbal agreement with Mr. Yin for management services, which agreement
became effective on March 15, 2006. Pursuant to this agreement, Mr. Yin receives
20,000 RMB yuan per month for providing these services to us. When our revenues
are equal to our expenses, the monthly compensation will be increased to
40,000
RMB yuan. The agreement has no fixed term.
We
also
entered into a contract on April 26, 2007 with Anthea Chung for management
services whereby Ms. Chung shall serve as the Company’s Chief Financial Officer,
which became effective on June 1, 2007. Pursuant to the agreement, Ms. Chung
will receive (i) an annual salary ranging from $130,000 to $175,000 depending
on
the Company’s financial performance; (ii) stock options to be determined in
subsequent periods; and (iii) reimbursement of certain expenses including
but
not limited to relocation expenses, health insurance premium, car allowance
and
home trips. A copy of the agreement with Ms. Chung can be found as Exhibit
10.1
to our Form 8-K filed on June 7, 2007.
Outstanding
Equity Awards at Fiscal Year-End
OUTSTANDING
EQUITY AWARDS AT SEPTEMBER 30, 2007
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
Option
|
|
|
|
Options (#)
|
|
Options (#)
|
|
Exercise
|
|
Expiration
|
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Price
($)
|
|
Date
|
|
Leo
Shi Young
|
|
|
13,250,000
|
(1)
|
|
12,000,000
|
(1)
|
|
0.0001
|
|
|
2/28/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shi
Jian Yin
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anthea
Chung
|
|
|
500,000
|
(2)
|
|
0
|
|
|
1.20
|
|
|
9/25/2017
|
|
|
|
|
0
|
|
|
2,500,000
|
(3)
|
|
1.20
|
|
|
9/25/2017
|
|
(1)
|
|
On
March 1, 2006 Mr. Young obtained an option to purchase
36,000,000 shares of common stock from Ms. Jean Blanchard, our former
President. The option vests in equal increments of 12,000,000 shares.
The
right to purchase 12,000,000 shares vested on the date of grant,
the right
to purchase 12,000,000 shares vested on March 1, 2007 and the right
to purchase 12,000,000 shares on March 1, 2008. Mr. Young
exercised a portion of the option and acquired 10,750,000 shares
in
July 2006. Of this amount, Mr. Young retained 5,000,000 shares
and transferred 5,750,000 shares to various employees in
July 2006.
|
(2)
|
|
Represents
a fully vested option to purchase 500,000 shares under our 2007
Plan
granted effective September 25, 2007.
|
(3)
|
|
Represents
an option to purchase 2,500,000 shares under our 2007 Plan granted
effective September 25, 2007, vesting over a 4 year period, with
the first twenty-five percent of such shares vested and exercisable
following the one year anniversary of Ms. Chung’s first date of
employment; and the remaining shares become vested and exercisable
in
equal monthly installments over the following thirty-six
months.
|
Compensation
of Directors
DIRECTOR
COMPENSATION
|
|
Option
|
|
All Other
|
|
|
|
|
|
Awards
|
|
Compensation
|
|
Total
|
|
Name
|
|
($)
|
|
($)
|
|
($)
|
|
Leo
Shi Young (1)
|
|
|
0
|
|
|
0
|
|
|
0
|
|
Shi
Jian Yin (1)
|
|
|
0
|
|
|
0
|
|
|
0
|
|
Frank
Fang Xie
|
|
|
0
|
|
|
0
|
|
|
0
|
|
Donald
Morgan (2)
|
|
|
780
|
(3)
|
|
0
|
|
|
780
|
(3)
|
Kevin
Koy (2)
|
|
|
0
|
|
|
0
|
|
|
0
|
|
(1)
|
|
Please
see the Summary Compensation Table above with respect to compensation
earned by Messrs Young and Yin as executive officers of the
Company.
|
(2)
|
|
Messrs. Morgan
and Koy were appointed to our Board of Directors on September 24,
2007.
|
(3)
|
|
Mr.
Morgan was granted an option to purchase 100,000 shares of our
Common
Stock under the Plan effective September 25, 2007. The amount shown
reflect the grant date fair value computed in accordance with FAS123R.
|
We
do not
have a policy pursuant to which members of our Board of Directors are
compensated and members of the Board of Directors do not receive cash
compensation for their services as Board members, although we may adopt such
plans in the future. The Company did grant to Messrs. Coackley, Morgan and
Koy options to purchase common stock for services to be performed in fiscal
2008. Separately, the Company does provide reimbursement for reasonable
out-of-pocket expenses in attending meetings of the Board of Directors. From
time to time we may engage certain members of the Board of Directors to perform
services on our behalf. In such cases, we compensate the members for their
services at rates no more favorable than could be obtained from unaffiliated
parties.
EQUITY
COMPENSATION PLAN INFORMATION
2007
P
lan
On
September 24, 2007, our Board of Directors approved the adoption of the 2007
Plan. The 2007 Plan provides for the issuance of a maximum of 10 million
shares
of common stock in connection with awards under the 2007 Plan. Such awards
may
include stock options, restricted stock purchase rights, restricted stock
bonuses and restricted stock unit awards. The 2007 Plan may be administered
by
the Company’s Board of Directors or a committee duly appointed by the Board of
Directors and has a term of 10 years. Participation in the 2007 Plan is limited
to employees, directors and consultants of the Company and its subsidiaries
and
other affiliates. Options granted under the Plan must have an exercise price
per
share not less than the fair market value of the Company’s Common Stock on the
date of grant. Options granted under the 2007 Plan may not have a term exceeding
10 years. Awards will vest upon conditions established by the Board of Directors
or its duly appointed Committee. Subject to the requirements and limitations
of
section 409A of the Code in the event of a Change in Control (as defined
in the
2007 Plan), the Board of Directors may provide for the acceleration of the
exercisability or vesting and/settlement of any award, the Board of Directors
may provide for a cash-out of awards or the Acquiror (as defined in the 2007
Plan) may either assume or continue the Company’s rights and obligations under
any awards. The 2007 Plan and each of the two standard forms of notice of
grant
and stock option agreements are filed in conjunction with our Current Report
on
Form 8-K with the SEC on September 27, 2007. In this Proxy Statement, we
are
requesting the that the stockholders approve Proposal 3 to amend and restate
the
2007 Plan as more fully described in Proposal 3.
On
September 25, 2007, options to purchase 7.3 million shares of our Common
Stock
to our employees, directors and consultants became effective.
Options
to Purchase Our Common Stock Granted by Jean Blanchard
On
March
1, 2006 Mr. Young obtained an option to purchase 36,000,000 shares of common
stock from Ms. Jean Blanchard, our former President. The exercise price is
$0.0001 per share. The option vests in equal increments of 12,000,000 shares.
The right to purchase 12,000,000 shares vested on the date of grant, the
right
to purchase 12,000,000 shares vested on March 1, 2007 and the right to purchase
12,000,000 shares will vest on March 1, 2008. The option expires on February
28,
2010. Mr. Young exercised a portion of the option and acquired 10,750,000
shares
in July 2006. Of this amount, Mr. Young retained 5,000,000 shares and
transferred 5,750,000 shares to various employees in July 2006. On October
15,
2007, Mr. Young sold an additional 1,465,714 shares.
On
March
1, 2006 Mr. Xie obtained an option to purchase 1,500,000 shares of our Common
Stock at an exercise price of $0.0001 per share from Ms. Jean Blanchard,
our
former President. This option will expire on February 28, 2010.
Below
is
a summary of our Equity Compensation Plan Information as of the end of the
fiscal year ending September 30, 2007.
|
|
Number of
|
|
|
|
|
|
|
|
securities to
|
|
|
|
|
|
|
|
be issued upon
|
|
|
|
|
|
|
|
exercise
|
|
Weighted-average
|
|
|
|
|
|
of outstanding
|
|
exercise
|
|
Number of securities
|
|
|
|
options,
|
|
price of outstanding
|
|
remaining available for
|
|
|
|
warrants
and rights
|
|
options,
warrants and
|
|
future issuance under
equity compensation
|
|
Plan
Category
|
|
(1)
|
|
rights
(1)
|
|
plans
|
|
Equity
compensation plans approved by security holders
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Equity
compensation plans not approved by security holders
|
|
|
34,050,000
|
(2)
|
$
|
0.26
|
|
|
2,700,000
|
(3)
|
(1)
|
|
Includes
options granted under our 2007 Plan and options granted by Jean
Blanchard.
|
(2)
|
|
As
of September 30, 2007, options to purchase 7,300,000 shares of our
Common Stock to our employees, director and consultants have been
granted
under our 2007 Plan and 26,750,000 options are outstanding from
options
granted from Jean Blanchard to Messrs. Young and Xie.
|
(3)
|
|
The
2007 Plan has an authorized number of shares of 10,000,000 and
options to
purchase 7,300,000 shares of Common Stock have been granted as
of
September 30, 2007.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
On
February 9, 2006, we obtained a demand note payable of $450,000 from Infotech
Essential Inc, a company partially owned by Leo Shi Young, our President
and
Chief Executive Officer. The note is due on demand and is included in note
payable to a related party on the balance sheet. Subsequent to demand for
payment, any arrears in payment of the principal amount will bear interest
at
10% per annum. We calculated an imputed interest at 10% on the note, totaling
$45,000 and $31,000 for the years ended September 30, 2007 and 2006,
respectively. Subsequent to September 30, 2007, Infotech Essential Inc. assigned
the note payable due from us to Coach Capital LLC. In December 2007, the
Company
settled all the outstanding note payable due to Coach Capital LLC with the
Company’s Common Stock (see the Settlement and Release Agreement between the
Company and Coach Capital LLC dated December 10, 2007, filed as Exhibit 31.1
to
our Form 10-KSB filed on December 28, 2007).
In
the
fiscal year ended September 30, 2006, the Company accrued $4.4 million of
compensation expense related to the Company’s obligation to withhold tax upon
exercise of stock options by Mr. Young. The withholding tax absorbed by the
Company was accounted for as additional compensation expense to the employee.
During fiscal year 2007, Mr. Young paid $460,000 of tax related to exercise
of
the stock options. Accordingly, the Company reduced accrued liability and
general and administrative expense by $460,000 during the fiscal year 2007.
The
remaining reserve of $4 million in our accrued liability account at September
30, 2007 represents the Company’s estimate of the tax withholding
obligation.
Procedures
for Approval of Related Person Transactions
Since
the
creation of our Audit Committee, any request for us to enter into a transaction
with an executive officer, director or employee, or any of such persons’
immediate family members or affiliates, must first be presented to our Audit
Committee for review, consideration and approval. In approving or rejecting
the
proposed agreement, our audit committee will review each such transaction
for
potential conflicts of interest or improprieties. The above described related
party transactions were completed prior to the formation of our Audit Committee
and prior to the point in time where we had independent directors on our
Board
of Directors. As a result, the related party transactions above were not
reviewed according to the foregoing procedures.
PRINCIPAL
STOCKHOLDERS AND STOCK OWNERSHIP BY MANAGEMENT
The
following table sets forth information as of February 4, 2008, as to each
person
or group who is known to us to be the beneficial owner of more than 5% of
our
outstanding voting securities and as to the security and percentage ownership
of
each of our executive officers and directors and of all of our officers and
directors as a group. On February 4, 2008, we had 105,700,161 shares of Common
Stock outstanding.
Beneficial
ownership is determined under the rules of the SEC and generally includes
voting
or investment power over securities. Except in cases where community property
laws apply or as indicated in the footnotes to this table, we believe that
each
shareholder identified in the table possesses sole voting and investment
power
over all shares of common stock shown as beneficially owned by the shareholder.
Shares
of
common stock subject to options or warrants that are currently exercisable
or
exercisable within 60 days of February 4, 2008 are considered outstanding
and
beneficially owned by the person holding the options for the purpose of
computing the percentage ownership of that person but are not treated as
outstanding for the purpose of computing the percentage ownership of any
other
person.
|
|
Number
of Shares
|
|
|
|
Name
and Address (1)
|
|
Beneficially
Owned
|
|
Percentage
Owned
|
|
The
Quercus Trust (2)
|
|
|
22,907,728
|
(3)
|
|
19.99
|
%
|
LCG
Select, LLC (4) LCG Select Offshore, Ltd Luxor Capital Group,
LLC
|
|
|
18,181,818
|
(5)
|
|
15.84
|
%
|
Leo
Shi Young
|
|
|
28,784,286
|
(6)
|
|
27.23
|
%
|
Jean
Blanchard
|
|
|
26,750,000
|
(7)
|
|
25.34
|
%
|
Shi
Jian Yin
|
|
|
3,500,000
|
(8)
|
|
3.31
|
%
|
Frank
Fang Xie
|
|
|
1,500,000
|
(9)
|
|
1.42
|
%
|
Anthea
Chung
|
|
|
500,000
|
(10)
|
|
*
|
|
Donald
Morgan
|
|
|
50,000
|
(11)
|
|
*
|
|
Kevin
Koy
|
|
|
16,667
|
(12)
|
|
*
|
|
Robert
Coackley
|
|
|
8,333
|
(13)
|
|
*
|
|
All
directors and officers as a group
|
|
|
34,367,619
|
|
|
32.34
|
%
|
*
|
|
Beneficially
owns less than 1% of our outstanding common shares and
options.
|
|
|
|
(1)
|
|
Unless
otherwise noted, the address for the stockholder is 1600 Adams
Drive,
Menlo Park, California 94025.
|
(2)
|
|
The
address for The Quercus Trust is 1835 Newport Blvd., A109 - PMB
467, Costa
Mesa, California 92627. As reported on a Schedule 13D filed with
the SEC
on January 29, 2008, each of David Gelbaum and Monica Chavez Gelbaum,
acting alone, has the power to exercise voting and investment control
over
the shares of Common Stock owned by The Quercus Trust.
|
(3)
|
|
Of
the 22,907,728 shares reported above, 14,060,228 represents shares
of
Common Stock. In addition, the Quercus Trust also holds Series
C warrants
to purchase an additional 14,060,228 shares of Common Stock, subject
to
terms, conditions, and limitations as more fully described in the
Series C
Warrant to Purchase Common Stock dated 1/11/2008 ("Series C Warrant").
Pursuant to Series C Warrant, The Quercus Trust has the right to
exercise
its warrant, to the extent that after giving effect to such exercise,
The
Quercus Trust will beneficially own no more than 19.99% of shares
of
Common Stock outstanding immediately after giving effect to such
exercise.
Given this limitation and based on total number of shares of Common
Stock
outstanding as of February 4, 2008 and SEC rules surrounding the
calculation of beneficial ownership, The Quercus Trust, may exercise
warrants to purchase up to 8,847,500 additional shares of Common
Stock,
bringing their aggregate amount of shares beneficially owned to
22,907,728. More information concerning this shareholder is contained
in
the Schedule 13D filed with the SEC on January 29,
2008.
|
(4)
|
|
The
address for LCG Select, LLC and Luxor Capital Group, LLC is 767
Fifth
Avenue, 19th Floor, New York, New York 10153. The address for LCG
Select
Offshore, Ltd. is c/o M&C Corporate Services Limited, P.O. Box 309 GT,
Ugland House, South Church Street, George Town, Grand Cayman, Cayman
Islands. Luxor Capital Group, L.P. acts as the investment manager
of LCG
Select, LLC and LCG Select Offshore, Ltd., among other accounts.
Luxor
Management, LLC is the general partner of Luxor Capital Group,
L.P. Mr.
Christian Leone is the managing member of Luxor Management, LLC.
LCG
Holdings, LLC is the managing member of LCG Select, LLC. Mr. Leone is
the managing member of LCG Holdings, LLC. Luxor Capital Group,
L.P., Luxor
Management, LLC and Mr. Leone may each be deemed to have voting and
dispositive power with respect to the shares of Common Stock held
by the
LCG Select, LLC and the LCG Select Offshore, Ltd. LCG Holdings,
LLC may be
deemed to have voting and dispositive power with respect to the
shares of
Common Stock held by the LCG Select, LLC. More information concerning
these shareholders is contained in the Schedule 13G filed with
the SEC on
January 28, 2008.
|
(5)
|
|
As
reported on a Schedule 13G filed with the SEC on January 28, 2008,
represents 1,402,534 shares of Common Stock and warrants exercisable
for
1,402,534 shares of Common Stock held by LCG Select, LLC, 6,807,675
shares
of Common Stock and warrants exercisable for 6,807,675 shares of
Common
Stock held by LCG Select Offshore, Ltd and 880,700 shares of Common
Stock
and warrants exercisable for 880,700 shares of common stock held
in
accounts managed by Luxor Capital Group, L.P.
|
(6)
|
|
On
March 1, 2006 Mr. Young obtained an option to purchase
36,000,000 shares of common stock from Ms. Jean Blanchard, our former
President. The exercise price is $0.0001 per share. The option
vests in
equal increments of 12,000,000 shares. The right to purchase 12,000,000
shares vested on the date of grant, the right to purchase 12,000,000
shares vested on March 1, 2007 and the right to purchase 12,000,000
shares will vest on March 1, 2008. The option expires on
February 28, 2010. Mr. Young exercised a portion of the option
and acquired 10,750,000 shares in July 2006. Of this amount,
Mr. Young retained 5,000,000 shares and transferred 5,750,000 shares
to various employees in July 2006. On October 15, 2007, Mr.
Young sold an additional 1,465,714 shares.
|
(7)
|
|
The
shares of common stock held by Ms. Blanchard are subject to the
option rights held by Mr. Leo Shi Young and Mr. Frank Fang Xie
as described in footnote 6 and 9, respectively.
|
(8)
|
|
Mr. Shi
Jian Yin has acquired 3,500,000 shares of our Common Stock at no
cost from
Mr. Leo Young.
|
(9)
|
|
On
March 1, 2006 Mr. Xie obtained an option to purchase 1,500,000
shares of our Common Stock at an exercise price of $0.0001 per
share from
Ms. Jean Blanchard, our former President. This option will expire on
February 28, 2010 and was fully vested on the date of
grant.
|
(10)
|
|
Represents
one of two options granted to Ms. Chung effective September 25,
2007 under the terms of the Company’s 2007 Plan. See additional discussion
under Summary Compensation Table above.
|
(11)
|
|
Represents
the vested and exercisable of an option granted to Mr. Morgan
effective September 25, 2007 under the terms of the Company’s 2007
Plan.
|
(12)
|
|
Represents
the vested and exercisable of an option granted to Mr. Koy effective
January 4, 2008 under the terms of the Company’s 2007
Plan.
|
(13)
|
|
Represents
the vested and exercisable of an option granted to Mr. Coackley
effective
February 12, 2008 under the terms of the Company’s 2007
Plan.
|
SECTION 16(
a)
BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Securities and Exchange Act of 1934 requires any person who
is our
director or executive officer or who beneficially holds more than 10% of
any
class of our securities which have been registered with the SEC, to file
reports
of initial ownership and changes in ownership with the SEC. These persons
are
also required under the regulations of the SEC to furnish us with copies
of all
Section 16(a) reports they file.
Based
solely on a review of copies of such reports furnished to us and written
representations that no other reports were required during the fiscal year
ended
September 30, 2007, we believe that all persons subject to the reporting
requirements of Section 16(a) filed the required reports on a timely basis
with
the SEC, except as follows:
|
|
|
|
Date
of
|
|
|
|
Insider
|
|
Filing
|
|
Transaction
|
|
Filing
Date
|
|
Kevin
Koy
|
|
|
Form
3
|
|
|
Sept.
24, 2007
|
|
|
Mar.
3, 2008
|
|
Donald
Morgan
|
|
|
Form
4
|
|
|
Sept.
25, 2007
|
|
|
Sept.
28, 2007
|
|
Leo
Shi Young
|
|
|
Form
4
|
|
|
Oct.
15, 2007
|
|
|
Oct.
19, 2007
|
|
STOCKHOLDER
PROPOSALS TO BE PRESENTED
AT
NEXT ANNUAL MEETING
Stockholder
proposals may be included in our proxy materials for an annual meeting so
long
as they are provided to us on a timely basis and satisfy the other conditions
set forth in applicable SEC rules. For a stockholder proposal to be included
our
proxy materials for the 2009
annual
meeting, the proposal must be received at our principal executive offices,
addressed to the Secretary, not later than Friday, November 28, 2008. Should
a
stockholder proposal be brought before the 2009 annual meeting, regardless
of
whether it is included in our proxy materials, our management proxy holders
will
be authorized by our proxy form to vote for or against the proposal, in their
discretion, if we do not receive notice of the proposal, addressed to the
Secretary at our principal executive offices, prior to the close of business
on
Wednesday, February 11,
2009.
TRANSACTION
OF OTHER BUSINESS
At
the
date of this Proxy Statement, the Board of Directors knows of no other business
that will be conducted at the 2008 annual meeting other than as described
in
this Proxy Statement. If any other matter or matters are properly brought
before
the meeting or any adjournment or postponement of the meeting, it is the
intention of the persons named in the accompanying form of proxy to vote
the
proxy on such matters in accordance with their best judgment.
By
order of the Board of Directors
|
|
|
Anthea
Chung
|
Secretary
|
March
31,
2008
ANNEX
A
AMENDED
AND RESTATED 2007 PLAN
SOLAR
ENERTECH CORP.
AMENDED
AND RESTATED
2007
EQUITY INCENTIVE PLAN
1.
Establishment,
Purpose and Term of Plan
.
1.1
Establishment.
The
Solar
Enertech Corp. 2007 Equity Incentive Plan (the “
Plan
”)
was
originally established effective as of September 24, 2007 (the “
Effective
Date
”).
Effective as of the Plan’s approval by the stockholders of the Company, the Plan
is amended and restated as set forth below.
1.2
Purpose
.
The
purpose of the Plan is to advance the interests of the Participating Company
Group and its stockholders by providing an incentive to attract, retain
and
reward persons performing services for the Participating Company Group
and by
motivating such persons to contribute to the growth and profitability of
the
Participating Company Group. The Company intends that Awards granted pursuant
to
the Plan be exempt from or comply with Section 409A of the Code (including
any
amendments or replacements of such section), and the Plan shall be so construed.
1.3
Term
of Plan
.
The
Plan shall continue in effect until its termination by the Committee; provided,
however, that, to the extent required by applicable law, all Awards shall
be
granted, if at all, within ten (10) years from the Plan’s Effective Date.
2.
Definitions
and Construction
.
2.1
Definitions
.
Whenever used herein, the following terms shall have their respective meanings
set forth below:
(a)
“
Affiliate
”
means
(i) an entity, other than a Parent Corporation, that directly, or indirectly
through one or more intermediary entities, controls the Company or (ii)
an
entity, other than a Subsidiary Corporation, that is controlled by the
Company
directly or indirectly through one or more intermediary entities. For this
purpose, the term “
control
”
(including the term “
controlled
by
”)
means
the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of the relevant entity, whether
through
the ownership of voting securities, by contract or otherwise; or shall
have such
other meaning assigned such term for the purposes of registration on Form
S-8
under the Securities Act.
(b)
“
Award
”
means
any Option, Restricted Stock Purchase Right, Restricted Stock Bonus or
Restricted Stock Unit Award granted under the Plan.
(c)
“
Award
Agreement
”
means
a
written or electronic agreement between the Company and a Participant setting
forth the terms, conditions and restrictions of the Award granted to the
Participant.
(d) “
Board
”
means
the Board of Directors of the Company.
(e)
“
Cause
”
means,
unless such term or an equivalent term is otherwise defined with respect
to an
Award by the Participant’s Award Agreement or by a written contract of
employment or service, any of the following: (i) the Participant’s theft,
dishonesty, willful misconduct, breach of fiduciary duty for personal profit,
or
falsification of any Participating Company documents or records; (ii) the
Participant’s material failure to abide by a Participating Company’s code of
conduct or other policies (including, without limitation, policies relating
to
confidentiality and reasonable workplace conduct); (iii) the Participant’s
unauthorized use, misappropriation, destruction or diversion of any tangible
or
intangible asset or corporate opportunity of a Participating Company (including,
without limitation, the Participant’s improper use or disclosure of a
Participating Company’s confidential or proprietary information); (iv) any
intentional act by the Participant which has a material detrimental effect
on a
Participating Company’s reputation or business; (v) the Participant’s repeated
failure or inability to perform any reasonable assigned duties after written
notice from a Participating Company of, and a reasonable opportunity to
cure,
such failure or inability; (vi) any material breach by the Participant
of any
employment, service, non-disclosure, non-competition, non-solicitation
or other
similar agreement between the Participant and a Participating Company,
which
breach is not cured pursuant to the terms of such agreement; or (vii) the
Participant’s conviction (including any plea of guilty or
nolo
contendere
)
of any
criminal act involving fraud, dishonesty, misappropriation or moral turpitude,
or which impairs the Participant’s ability to perform his or her duties with a
Participating Company.
(f)
“
Change
in Control
”
means,
unless such term or an equivalent term is otherwise defined with respect
to an
Award by the Participant’s Award Agreement or written contract of employment or
service, the occurrence of any of the following:
(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 promulgated under the
Exchange Act), directly or indirectly, of securities of the Company representing
more than fifty percent (50%) of the total combined voting power of the
Company’s then-outstanding securities entitled to vote generally in the election
of Directors; provided, however, that the following acquisitions shall
not
constitute a Change in Control: (1) an acquisition by any such person who
on the
Effective Date is the beneficial owner of more than fifty percent (50%)
of such
voting power, (2) any acquisition directly from the Company, including,
without
limitation, a public offering of securities, (3) any acquisition by the
Company,
(4) any acquisition by a trustee or other fiduciary under an employee benefit
plan of a Participating Company or (5) any acquisition by an entity owned
directly or indirectly by the stockholders of the Company in substantially
the
same proportions as their ownership of the voting securities of the Company;
or
(ii)
an
Ownership Change Event or series of related Ownership Change Events
(collectively, a “
Transaction
”)
in
which the stockholders of the Company immediately before the Transaction
do not
retain immediately after the Transaction direct or indirect beneficial
ownership
of more than fifty percent (50%) of the total combined voting power of
the
outstanding securities entitled to vote generally in the election of Directors
or, in the case of an Ownership Change Event described in Section 2.1(z)(iii),
the entity to which the assets of the Company were transferred (the
“
Transferee
”),
as
the case may be; or
(iii)
the
liquidation or dissolution of the Company.
provided,
however, that a Change in Control shall be deemed not to include a transaction
described in subsections (i) or (ii) of this Section 2.1(f) in which a
majority
of the members of the board of directors of the continuing, surviving or
successor entity, or parent thereof, immediately after such transaction
is
comprised of Incumbent Directors. Notwithstanding the foregoing, to the
extent
that any amount constituting Section 409A Deferred Compensation would become
payable under this Plan by reason of a Change in Control, such amount shall
become payable only if the event constituting a Change in Control would
also
constitute a change in ownership or effective control of the Company or
a change
in the ownership of a substantial portion of the assets of the Company
within
the meaning of Section 409A.
For
purposes of the preceding sentence, indirect beneficial ownership shall
include,
without limitation, an interest resulting from ownership of the voting
securities of one or more corporations or other business entities which
own the
Company or the Transferee, as the case may be, either directly or through
one or
more subsidiary corporations or other business entities. The Committee
shall
have the right to determine whether multiple sales or exchanges of the
voting
securities of the Company or multiple Ownership Change Events are related,
and
its determination shall be final, binding and conclusive.
(g)
“
Code
”
means
the Internal Revenue Code of 1986, as amended, and any applicable regulations
promulgated thereunder.
(h)
“
Committee
”
means
the Compensation Committee and such other committee or subcommittee of
the
Board, if any, duly appointed to administer the Plan and having such powers
in
each instance as shall be specified by the Board. If, at any time, there
is no
committee of the Board then authorized or properly constituted to administer
the
Plan, the Board shall exercise all of the powers of the Committee granted
herein, and, in any event, the Board may in its discretion exercise any
or all
of such powers. Notwithstanding the foregoing, if the Company is a “publicly
held corporation” within the meaning of Section 162(m), with respect to the
grant of Options to a Covered Employee, the Committee shall consist solely
of
“outside directors” as required pursuant to Section 162(m).
(i)
“
Company
”
means
Solar Enertech Corp., a Nevada corporation, or any successor corporation
thereto.
(j)
“
Consultant
”
means
a
person engaged to provide consulting or advisory services (other than as
an
Employee or a Director) to a Participating Company.
(k)
“
Covered
Employee
”
means,
at any time the Plan is subject to Section 162(m), any Employee who is,
or may
become, a “covered employee” as defined in Section 162(m).
(l)
“
Director
”
means
a
member of the Board.
(m)
“
Disability
”
means
the inability of the Participant, in the opinion of a qualified physician
acceptable to the Company, to perform the major duties of the Participant’s
position with the Participating Company Group because of the sickness or
injury
of the Participant.
(n)
“
Dividend
Equivalent Right
”
means
the right of a Participant, granted at the discretion of the Committee
or as
otherwise provided by the Plan, to receive a credit for the account of
such
Participant in an amount equal to the cash dividends paid on one share
of Stock
for each share of Stock represented by an Award held by such Participant.
(o)
“
Employee
”
means
any person treated as an employee (including an Officer or a Director who
is
also treated as an employee) in the records of a Participating Company,
and,
with respect to any Incentive Stock Option granted to such person, who
is an
employee for purposes of Section 422 of the Code; provided, however, that
neither service as a member of the Board nor payment of a director’s fee shall
be sufficient to constitute employment for purposes of the Plan. The Company
shall determine in good faith and in the exercise of its discretion whether
an
individual has become or has ceased to be an Employee and the effective
date of
such individual’s employment or termination of employment, as the case may be.
For purposes of an individual’s rights, if any, under the terms of the Plan as
of the time of the Company’s determination of whether or not the individual is
an Employee, all such determinations by the Company shall be final, binding
and
conclusive as to such rights, if any, notwithstanding that the Company
or any
court of law or governmental agency subsequently makes a contrary determination
as to such individual’s status as an Employee.
(p)
“
Exchange
Act
”
means
the Securities Exchange Act of 1934, as amended.
(q)
“
Fair
Market Value
”
means,
as of any date, the value of a share of Stock or other property as determined
by
the Committee, in its discretion, or by the Company, in its discretion,
if such
determination is expressly allocated to the Company herein, subject to
the
following:
(i)
If,
on such date, the Stock is listed on a national or regional securities
exchange
or market system, or is quoted on the Over the Counter Bulletin Board (OTCBB),
the Fair Market Value of a share of Stock shall be the closing price of
a share
of Stock (or the mean of the closing bid and asked prices of a share of
Stock if
the Stock is so quoted instead) as quoted on such national, regional securities
exchange, market system or OTCBB constituting the primary market for the
Stock,
as reported in
The
Wall Street Journal,
the
OTCBB
or such other source as the Company deems reliable. If the relevant date
does
not fall on a day on which the Stock has traded over the counter or on
such
securities exchange or market system, the date on which the Fair Market
Value
shall be established shall be the last day on which the Stock was so traded
prior to the relevant date, or such other appropriate day as shall be determined
by the Committee, in its discretion.
(ii)
If,
on such date, the Stock is not listed on a national or regional securities
exchange, market system or OTCBB, the Fair Market Value of a share of Stock
shall be as determined by the Committee in good faith without regard to
any
restriction other than a restriction which, by its terms, will never lapse,
and
subject to the applicable requirements, if any, of Section 409A of the
Code.
(r)
“
Incentive
Stock Option
”
means
an Option intended to be (as set forth in the Award Agreement) and which
qualifies as an incentive stock option within the meaning of Section 422(b)
of
the Code.
(s)
“
Incumbent
Director
”
means
a
director who either (i) is a member of the Board as of the Effective Date
or
(ii) is 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 who was not elected or nominated in connection
with
an actual or threatened proxy contest relating to the election of directors
of
the Company.
(t)
“
Insider
”
means
an Officer, a Director of the Company or other person whose transactions
in
Stock are subject to Section 16 of the Exchange Act.
(u)
“
Insider
Trading Policy
”
means
the written policy of the Company pertaining to the purchase, sale, transfer
or
other disposition of the Company’s equity securities by Directors, Officers,
Employees or other service providers who may possess material, nonpublic
information regarding the Company or its securities.
(v)
“
Net-Exercise
”
means
a
procedure by which the Participant will be issued a number of whole shares
of
Stock upon the exercise of an Option determined in accordance with the
following
formula:
N
=
X(A-B)/A, where
|
|
|
“N”
= the number of shares of Stock to be issued to the Participant
upon
exercise of the Option;
|
|
|
|
“X”
= the total number of shares with respect to which the Participant
has
elected to exercise the Option;
|
|
|
|
“A”
= the Fair Market Value of one (1) share of Stock determined
on the
exercise date; and
|
|
|
|
“B”
= the exercise price per share (as defined in the Participant’s Award
Agreement)
|
(w)
“
Nonstatutory
Stock Option
”
means
an Option not intended to be (as set forth in the Award Agreement) or which
does
not qualify as an incentive stock option within the meaning of Section
422(b) of
the Code.
(x)
“
Officer
”
means
any person designated by the Board as an officer of the Company.
(y)
“
Option
”
means
a
right granted under Section 6 to purchase Stock pursuant to the terms and
conditions of the Plan. All Options shall be Nonstatutory Stock Options.
(z)
“
Ownership
Change Event
”
means
the occurrence of any of the following with respect to the Company: (i)
the
direct or indirect sale or exchange in a single or series of related
transactions by the stockholders of the Company of more than fifty percent
(50%)
of the voting stock of the Company; (ii) a merger or consolidation in which
the
Company is a party; or (iii) the sale, exchange, or transfer of all or
substantially all of the assets of the Company (other than a sale, exchange
or
transfer to one or more subsidiaries of the Company).
(aa)
“
Parent
Corporation
”
means
any present or future “parent corporation” of the Company, as defined in Section
424(e) of the Code.
(bb)
“
Participant
”
means
any eligible person who has been granted one or more Awards.
(cc)
“
Participating
Company
”
means
the Company or any Parent Corporation, Subsidiary Corporation or Affiliate.
(dd)
“
Participating
Company Group
”
means,
at any point in time, all entities collectively which are then Participating
Companies.
(ee)
“
Restricted
Stock Award
”
means
an Award of a Restricted Stock Bonus or a Restricted Stock Purchase Right.
(ff)
“
Restricted
Stock Bonus
”
means
Stock granted to a Participant pursuant to Section 7.
(gg)
“
Restricted
Stock Purchase Right
”
means
a
right to purchase Stock granted to a Participant pursuant to Section 7.
(hh)
“
Restricted
Stock Unit
”
means
a
right granted to a Participant pursuant to Section 8 to receive a share
of Stock
on a date determined in accordance with the provisions of such Section
and the
Participant’s Award Agreement.
(ii)
“
Rule
16b-3
”
means
Rule 16b-3 under the Exchange Act, as amended from time to time, or any
successor rule or regulation.
(jj)
“
Section
162(m)
”
means
Section 162(m) of the Code.
(kk)
“
Section
409A
”
means
Section 409A of the Code.
(ll)
“
Section
409A Deferred Compensation
”
means
compensation provided pursuant to the Plan that constitutes deferred
compensation subject to and not exempted from the requirements of Section
409A.
(mm)
“
Securities
Act
”
means
the Securities Act of 1933, as amended.
(nn)
“
Service
”
means
a
Participant’s employment or service with the Participating Company Group,
whether in the capacity of an Employee, a Director or a Consultant. A
Participant’s Service shall not be deemed to have terminated merely because of a
change in the capacity in which the Participant renders Service to the
Participating Company Group or a change in the Participating Company for
which
the Participant renders such Service, provided that there is no interruption
or
termination of the Participant’s Service. Furthermore, a Participant’s Service
shall not be deemed to have terminated if the Participant takes any military
leave, sick leave, or other bona fide leave of absence approved by the
Company.
However, if any such leave taken by a Participant exceeds ninety (90) days,
then
on the ninety-first (91st) day following the commencement of such leave
the
Participant’s Service shall be deemed to have terminated, unless the
Participant’s right to return to Service is guaranteed by statute or contract.
Notwithstanding the foregoing, unless otherwise designated by the Company
or
required by law, a leave of absence shall not be treated as Service for
purposes
of determining vesting under the Participant’s Award Agreement. A Participant’s
Service shall be deemed to have terminated either upon an actual termination
of
Service or upon the corporation for which the Participant performs Service
ceasing to be a Participating Company. Subject to the foregoing, the Company,
in
its discretion, shall determine whether the Participant’s Service has terminated
and the effective date of and reason for such termination.
(oo)
“
Stock
”
means
the common stock of the Company, as adjusted from time to time in accordance
with Section 4.3.
(pp)
“
Subsidiary
Corporation
”
means
any present or future “subsidiary corporation” of the Company, as defined in
Section 424(f) of the Code.
(qq)
“
Ten
Percent Owner
”
means
a
Participant who, at the time an Option is granted to the Participant, owns
stock
possessing more than ten percent (10%) of the total combined voting power
of all
classes of stock of a Participating Company (other than an Affiliate) within
the
meaning of Section 422(b)(6) of the Code.
(rr)
“
Vesting
Conditions
”
mean
those conditions established in accordance with the Plan prior to the
satisfaction of which shares subject to an Award remain subject to forfeiture
or
a repurchase option in favor of the Company exercisable for the Participant’s
monetary purchase price, if any, for such shares upon the Participant’s
termination of Service.
2.2
Construction
.
Captions and titles contained herein are for convenience only and shall
not
affect the meaning or interpretation of any provision of the Plan. Except
when
otherwise indicated by the context, the singular shall include the plural
and
the plural shall include the singular. Use of the term “or” is not intended to
be exclusive, unless the context clearly requires otherwise.
3.
Administration
.
3.1
Administration
by the Committee.
The Plan
shall be administered by the Committee. All questions of interpretation
of the
Plan, of any Award Agreement or of any other form of agreement or other
document
employed by the Company in the administration of the Plan or of any Award
shall
be determined by the Committee, and such determinations shall be final,
binding
and conclusive upon all persons having an interest in the Plan or such
Award,
unless fraudulent or made in bad faith. Any and all actions, decisions
and
determinations taken or made by the Committee in the exercise of its discretion
pursuant to the Plan or Award Agreement or other agreement thereunder (other
than determining questions of interpretation pursuant to the preceding
sentence)
shall be final, binding and conclusive upon all persons having an interest
therein.
3.2
Authority of Officers
.
Any
Officer shall have the authority to act on behalf of the Company with respect
to
any matter, right, obligation, determination or election which is the
responsibility of or which is allocated to the Company herein, provided
the
Officer has apparent authority with respect to such matter, right, obligation,
determination or election.
3.3
Administration
with Respect to Insiders.
With
respect to participation by Insiders in the Plan, at any time that any
class of
equity security of the Company is registered pursuant to Section 12 of
the
Exchange Act, the Plan shall be administered in compliance with the
requirements, if any, of Rule 16b-3.
3.4
Powers
of the Committee
.
In
addition to any other powers set forth in the Plan and subject to the provisions
of the Plan, the Committee shall have the full and final power and authority,
in
its discretion:
(a)
to
determine the persons to whom, and the time or times at which, Awards shall
be
granted and the number of shares of Stock to be subject to each Award;
(b)
to determine the type of Award
granted;
(c)
to
determine the Fair Market Value of shares of Stock or other property;
(d)
to
determine the terms, conditions and restrictions applicable to each Award
(which
need not be identical) and any shares acquired pursuant thereto, including,
without limitation, (i) the exercise or purchase price of shares pursuant
to any
Award, (ii) the method of payment for shares purchased pursuant to any
Award,
(iii) the method for satisfaction of any tax withholding obligation arising
in
connection with Award, including by the withholding or delivery of shares
of
Stock, (iv) the timing, terms and conditions of the exercisability or vesting
of
any Award or any shares acquired pursuant thereto, (v) the time of the
expiration of any Award, (vi) the effect of the Participant’s termination of
Service on any of the foregoing, and (vii) all other terms, conditions
and
restrictions applicable to any Award or shares acquired pursuant thereto
not
inconsistent with the terms of the Plan;
(e)
to
determine whether an Award will be settled in shares of Stock, cash, or
in any
combination thereof;
(f)
to approve one or more forms of Award
Agreement;
(g)
to
amend, modify, extend, cancel or renew any Award or to waive any restrictions
or
conditions applicable to any Award or any shares acquired upon the exercise
thereof;
(h)
to
accelerate, continue, extend or defer the exercisability of any Award or
the
vesting of any shares acquired upon the exercise thereof, including with
respect
to the period following a Participant’s termination of Service;
(i)
to
prescribe, amend or rescind rules, guidelines and policies relating to
the Plan,
or to adopt sub-plans or supplements to, or alternative versions of, the
Plan,
including, without limitation, as the Committee deems necessary or desirable
to
comply with the laws or regulations of or to accommodate the tax policy,
accounting principles or custom of, foreign jurisdictions whose citizens
may be
granted Awards; and
(j)
to
correct any defect, supply any omission or reconcile any inconsistency
in the
Plan or any Award Agreement and to make all other determinations and take
such
other actions with respect to the Plan or any Award as the Committee may
deem
advisable to the extent not inconsistent with the provisions of the Plan
or
applicable law.
3.5
Indemnification.
In
addition to such other rights of indemnification as they may have as members
of
the Board or the Committee or as officers or employees of the Participating
Company Group, members of the Board or the Committee and any officers or
employees of the Participating Company Group to whom authority to act for
the
Board, the Committee or the Company is delegated shall be indemnified by
the
Company against all reasonable expenses, including attorneys’ fees, actually and
necessarily incurred in connection with the defense of any action, suit
or
proceeding, or in connection with any appeal therein, to which they or
any of
them may be a party by reason of any action taken or failure to act under
or in
connection with the Plan, or any right granted hereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is
approved
by independent legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except
in
relation to matters as to which it shall be adjudged in such action, suit
or
proceeding that such person is liable for gross negligence, bad faith or
intentional misconduct in duties; provided, however, that within sixty
(60) days
after the institution of such action, suit or proceeding, such person shall
offer to the Company, in writing, the opportunity at its own expense to
handle
and defend the same.
4.
Shares
Subject
to
Plan
.
4.1
Maximum
Number of Shares Issuable
.
Subject
to adjustment as provided in Sections 4.2 and 4.3, the maximum aggregate
number
of shares of Stock that may be issued under the Plan shall be 15,000,000
which
shall consist of authorized but unissued or reacquired shares of Stock
or any
combination thereof.
4.2
Share Counting.
If an
outstanding Award for any reason expires or is terminated or canceled without
having been exercised or settled in full, or if shares of Stock acquired
pursuant to an Award subject to forfeiture or repurchase are forfeited
or
repurchased by the Company for an amount not greater than the Participant’s
purchase price, the shares of Stock allocable to the terminated portion
of such
Award or such forfeited or repurchased shares of Stock shall again be available
for issuance under the Plan. Shares of Stock shall not be deemed to have
been
issued pursuant to the Plan with respect to any portion of an Award that
is
settled in cash. If the exercise price of an Option is paid by tender to
the
Company, or attestation to the ownership, of shares of Stock owned by the
Participant, or by means of a Net-Exercise, the number of shares available
for
issuance under the Plan shall be reduced by the gross number of shares
for which
the Option is exercised. Shares withheld or reacquired by the Company in
satisfaction of tax withholding obligations pursuant to Section 11.2 shall
not
again be available for issuance under the Plan.
4.3
Adjustments
for Changes in Capital Structure
.
Subject
to any required action by the stockholders of the Company, in the event
of any
change in the Stock effected without receipt of consideration by the Company,
whether through merger, consolidation, reorganization, reincorporation,
recapitalization, reclassification, stock dividend, stock split, reverse
stock
split, split-up, split-off, spin-off, combination of shares, exchange of
shares,
or similar change in the capital structure of the Company, or in the event
of
payment of a dividend or distribution to the stockholders of the Company
in a
form other than Stock (excepting normal cash dividends) that has a material
effect on the Fair Market Value of shares of Stock, appropriate and
proportionate adjustments shall be made in the number and class of shares
subject to the Plan and to any outstanding Awards, and in the exercise
or
purchase price per share of any outstanding Awards in order to prevent
dilution
or enlargement of Participants’ rights under the Plan. For purposes of the
foregoing, conversion of any convertible securities of the Company shall
not be
treated as “effected without receipt of consideration by the Company.” If a
majority of the shares which are of the same class as the shares that are
subject to outstanding Awards are exchanged for, converted into, or otherwise
become (whether or not pursuant to an Ownership Change Event) shares of
another
corporation (the “
New
Shares
”),
the
Committee may unilaterally amend the outstanding Awards to provide that
such
Awards are for New Shares. In the event of any such amendment, the number
of
shares subject to, and the exercise or purchase price per share of, the
outstanding Awards shall be adjusted in a fair and equitable manner as
determined by the Committee, in its discretion. Any fractional share resulting
from an adjustment pursuant to this Section shall be rounded down to the
nearest
whole number, and the exercise price per share shall be rounded up to the
nearest whole cent. In no event may the exercise price of any Award be
decreased
to an amount less than the par value, if any, of the stock subject to the
Award.
The Committee in its sole discretion, may also make such adjustments in
the
terms of any Award to reflect, or related to, such changes in the capital
structure of the Company or distributions as it deems appropriate. The
adjustments determined by the Committee pursuant to this Section shall
be final,
binding and conclusive.
5.
Eligibility
and Option Limitations
.
5.1
Persons
Eligible for Awards
.
Awards
may be granted only to Employees, Consultants and Directors.
5.2
Participation
in Plan
.
Awards
are granted solely at the discretion of the Committee. Eligible persons
may be
granted more than one Award. However, eligibility in accordance with this
Section shall not entitle any person to be granted an Award, or, having
been
granted an Award, to be granted an additional Award.
5.3
Incentive
Stock Option Limitations
.
(a)
Maximum
Number of Shares Issuable Pursuant to Incentive Stock
Options.
Subject
to adjustment as provided in Section 4.3, the maximum aggregate number
of shares
of Stock that may be issued under the Plan pursuant to the exercise of
Incentive
Stock Options shall not exceed fifteen million (15,000,000) shares. The
maximum
aggregate number of shares of Stock that may be issued under the Plan pursuant
to all Awards other than Incentive Stock Options shall be the number of
shares
determined in accordance with Section 4.1, subject to adjustment as provided
in
Sections 4.2, and 4.3.
(b)
Persons
Eligible.
An
Incentive Stock Option may be granted only to a person who, on the effective
date of grant, is an Employee. Any person who is not an Employee on the
effective date of the grant of an Option to such person may be granted
only a
Nonstatutory Stock Option. An Incentive Stock Option granted to a prospective
Employee upon the condition that such person become an Employee shall be
deemed
granted effective on the date such person commences Service as an Employee,
with
an exercise price determined as of such date in accordance with Section
6.1.
(c)
Fair
Market Value Limitation.
To the
extent that options designated as Incentive Stock Options (granted under
all
stock option plans of the Participating Company Group, including the Plan)
become exercisable by a Participant for the first time during any calendar
year
for stock having a Fair Market Value greater than One Hundred Thousand
Dollars
($100,000), the portion of such options which exceeds such amount shall
be
treated as Nonstatutory Stock Options. For purposes of this Section, options
designated as Incentive Stock Options shall be taken into account in the
order
in which they were granted, and the Fair Market Value of stock shall be
determined as of the time the option with respect to such stock is granted.
If
the Code is amended to provide for a limitation different from that set
forth in
this Section, such different limitation shall be deemed incorporated herein
effective as of the date and with respect to such Options as required or
permitted by such amendment to the Code. If an Option is treated as an
Incentive
Stock Option in part and as a Nonstatutory Stock Option in part by reason
of the
limitation set forth in this Section, the Participant may designate which
portion of such Option the Participant is exercising. In the absence of
such
designation, the Participant shall be deemed to have exercised the Incentive
Stock Option portion of the Option first. Upon exercise, shares issued
pursuant
to each such portion shall be separately identified.
5.4
Section 162(m) Option Limitation
.
Subject
to adjustment as provided in Section 4.3, no Employee shall be granted
within
any fiscal year of the Company one or more Options which in the aggregate
are
for more than five million (5,000,000) shares.
6.
Stock
Options
.
Options
shall be evidenced by Award Agreements specifying the number of shares
of Stock
covered thereby, in such form as the Committee shall from time to time
establish. Award Agreements evidencing Options may incorporate all or any
of the
terms of the Plan by reference and shall comply with and be subject to
the
following terms and conditions:
6.1
Exercise Price
.
The
exercise price for each Option shall be established in the discretion of
the
Committee; provided, however, that (a) the exercise price per share for
an
Option shall be not less than one hundred percent (100%) of the Fair Market
Value of a share of Stock on the effective date of grant of the Option,
and (b)
no Incentive Stock Option granted to a Ten Percent Owner shall have an
exercise
price per share less than one hundred ten percent (110%) of the Fair Market
Value of a share of Stock on the date of grant of the Option. Notwithstanding
the foregoing, an Option may be granted with an exercise price lower than
the
minimum exercise price set forth above if such Option is granted pursuant
to an
assumption or substitution for another option in a manner that would qualify
under the applicable provisions of Sections 424(a) and 409A of the Code.
6.2
Exercisability
and Term of Options
.
Options
shall be exercisable at such time or times, or upon such event or events,
and
subject to such terms, conditions, performance criteria and restrictions
as
shall be determined by the Committee and set forth in the Award Agreement
evidencing such Option; provided, however, that (a) no Option shall be
exercisable after the expiration of ten (10) years after the effective
date of
grant of such Option, and (b) no Incentive Stock Option granted to a Ten
Percent
Shareholder shall be exercisable after the expiration of five (5) years
after
the effective date of grant of such Option. Subject to the foregoing, unless
otherwise specified by the Committee in the grant of an Option, any Option
granted hereunder shall terminate ten (10) years after the effective date
of
grant of the Option, unless earlier terminated in accordance with its
provisions.
6.3
Payment
of Exercise Price
.
(a)
Forms
of Consideration Authorized
.
Except
as otherwise provided below, payment of the exercise price for the number
of
shares of Stock being purchased pursuant to any Option shall be made (i)
in cash
or by check or cash equivalent, (ii) subject to Section 6.3(b)(i), by tender
to
the Company, or attestation to the ownership, of shares of Stock owned
by the
Participant having a Fair Market Value not less than the exercise price,
(iii)
subject to Section 6.3(b)(ii), by delivery of a properly executed notice
of
exercise together with irrevocable instructions to a broker providing for
the
assignment to the Company of the proceeds of a sale or loan with respect
to some
or all of the shares being acquired upon the exercise of the Option (including,
without limitation, through an exercise complying with the provisions of
Regulation T as promulgated from time to time by the Board of Governors
of the
Federal Reserve System) (a “
Cashless
Exercise
”),
(iv)
by delivery of a properly executed notice electing a Net-Exercise, (v)
by such
other consideration as may be approved by the Committee from time to time
to the
extent permitted by applicable law, or (vi) by any combination thereof.
The
Committee may at any time or from time to time grant Options which do not
permit
all of the foregoing forms of consideration to be used in payment of the
exercise price or which otherwise restrict one or more forms of consideration.
(b)
Limitations
on Forms of Consideration
.
(i)
Tender
of Stock.
Notwithstanding the foregoing, an Option may not be exercised by tender
to the
Company, or attestation to the ownership, of shares of Stock to the extent
such
tender or attestation would constitute a violation of the provisions of
any law,
regulation or agreement restricting the redemption of the Company’s stock.
Unless otherwise provided by the Committee, an Option may not be exercised
by
tender to the Company, or attestation to the ownership, of shares of Stock
unless such shares either have been owned by the Participant for more than
six
(6) months (or such other period, if any, as the Committee may permit)
and not
used for another Option exercise by attestation during such period, or
were not
acquired, directly or indirectly, from the Company.
(ii)
Cashless
Exercise.
The
Cashless Exercise program is available only if, at the time of exercise,
the
offer and sale of shares of Stock pursuant to the Plan is registered on
a then
effective registration statement on Form S-8 under the Securities Act.
The
Company reserves, at any and all times, the right, in the Company’s sole and
absolute discretion, to establish, decline to approve or terminate any
program
or procedures for the exercise of Options by means of a Cashless Exercise,
including with respect to one or more Participants specified by the Company
notwithstanding that such program or procedures may be available to other
Participants.
6.4
Effect
of Termination of Service
.
(a)
Option
Exercisability
.
Subject
to earlier termination of the Option as otherwise provided herein and unless
otherwise provided by the Committee, an Option shall terminate immediately
upon
the Participant’s termination of Service to the extent that it is then unvested
and shall be exercisable after the Participant’s termination of Service to the
extent it is then vested only during the applicable time period determined
in
accordance with this Section and thereafter shall terminate:
(i)
Disability.
If the
Participant’s Service terminates because of the Disability of the Participant,
the Option, to the extent unexercised and exercisable for vested shares
on the
date on which the Participant’s Service terminated, may be exercised by the
Participant (or the Participant’s guardian or legal representative) at any time
prior to the expiration of twelve (12) months after the date on which the
Participant’s Service terminated, but in any event no later than the date of
expiration of the Option’s term as set forth in the Award Agreement evidencing
such Option (the “
Option
Expiration Date
”).
(ii)
Death.
If the
Participant’s Service terminates because of the death of the Participant, then
the Option, to the extent unexercised and exercisable for vested shares
on the
date on which the Participant’s Service terminated, may be exercised by the
Participant’s legal representative or other person who acquired the right to
exercise the Option by reason of the Participant’s death at any time prior to
the expiration of twelve (12) months after the date on which the Participant’s
Service terminated, but in any event no later than the Option Expiration
Date.
The Participant’s Service shall be deemed to have terminated on account of death
if the Participant dies within three (3) months after the Participant’s
termination of Service.
(iii)
Termination
for Cause.
Notwithstanding any other provision of the Plan to the contrary, if the
Participant’s Service is terminated for Cause or if, following the Participant’s
termination of Service and during any period in which the Option otherwise
would
remain exercisable, the Participant engages in any act that would constitute
Cause, the Option shall terminate in its entirety and cease to be exercisable
immediately upon such termination of Service or act.
(iv)
Other
Termination of Service.
If the
Participant’s Service terminates for any reason, except Disability, death or
Cause, the Option, to the extent unexercised and exercisable for vested
shares
on the date on which the Participant’s Service terminated, may be exercised by
the Participant at any time prior to the expiration of three (3) months
after
the date on which the Participant’s Service terminated, but in any event no
later than the Option Expiration Date.
(b)
Extension
if Exercise Prevented by Law
.
Notwithstanding the foregoing, if the exercise of an Option within the
applicable time periods set forth in Section 6.4(a) is prevented by the
provisions of Section 12 below, the Option shall remain exercisable until
thirty
(30) days after the date such exercise first would no longer be prevented
by
such provisions, but in any event no later than the Option Expiration Date.
6.5
Transferability of Options.
During
the lifetime of the Participant, an Option shall be exercisable only by
the
Participant or the Participant’s guardian or legal representative. An Option
shall not be subject in any manner to anticipation, alienation, sale, exchange,
transfer, assignment, pledge, encumbrance, or garnishment by creditors
of the
Participant or the Participant’s beneficiary, except transfer by will or by the
laws of descent and distribution. Notwithstanding the foregoing, to the
extent
permitted by the Committee, in its discretion, and set forth in the Award
Agreement evidencing such Option, a Nonstatutory Stock Option may be assignable
or transferable subject to the applicable limitations, if any, described
in the
General Instructions to Form S-8 under the Securities Act.
7.
Restricted
Stock
Awards
.
Restricted
Stock Awards shall be evidenced by Award Agreements specifying whether
the Award
is a Restricted Stock Bonus or a Restricted Stock Purchase Right and the
number
of shares of Stock subject to the Award, in such form as the Committee
shall
from time to time establish. Award Agreements evidencing Restricted Stock
Awards
may incorporate all or any of the terms of the Plan by reference and shall
comply with and be subject to the following terms and conditions:
7.1
Types
of Restricted Stock Awards Authorized.
Restricted Stock Awards may be granted in the form of either a Restricted
Stock
Bonus or a Restricted Stock Purchase Right. Restricted Stock Awards may
be
granted upon such conditions as the Committee shall determine, including,
without limitation, upon the attainment of one or more performance goals.
7.2
Purchase Price.
The
purchase price for shares of Stock issuable under each Restricted Stock
Purchase
Right shall be established by the Committee in its discretion. No monetary
payment (other than applicable tax withholding) shall be required as a
condition
of receiving shares of Stock pursuant to a Restricted Stock Bonus, the
consideration for which shall be services actually rendered to a Participating
Company or for its benefit. Notwithstanding the foregoing, if required
by
applicable state corporate law, the Participant shall furnish consideration
in
the form of cash or past services rendered to a Participating Company or
for its
benefit having a value not less than the par value of the shares of Stock
subject to a Restricted Stock Award.
7.3
Purchase Period.
A
Restricted Stock Purchase Right shall be exercisable within a period established
by the Committee, which shall in no event exceed thirty (30) days from
the
effective date of the grant of the Restricted Stock Purchase Right.
7.4
Payment
of Purchase Price.
Except
as
otherwise provided below, payment of the purchase price for the number
of shares
of Stock being purchased pursuant to any Restricted Stock Purchase Right
shall
be made (a) in cash or by check or cash equivalent, (b) by such other
consideration as may be approved by the Committee from time to time to
the
extent permitted by applicable law, or (c) by any combination thereof.
7.5
Vesting
and Restrictions on Transfer.
Shares
issued pursuant to any Restricted Stock Award may (but need not) be made
subject
to Vesting Conditions based upon the satisfaction of such Service requirements,
conditions, restrictions or performance criteria as shall be established
by the
Committee and set forth in the Award Agreement evidencing such Award. During
any
period in which shares acquired pursuant to a Restricted Stock Award remain
subject to Vesting Conditions, such shares may not be sold, exchanged,
transferred, pledged, assigned or otherwise disposed of other than pursuant
to
an Ownership Change Event or as provided in Section 7.8. The Committee,
in its
discretion, may provide in any Award Agreement evidencing a Restricted
Stock
Award that, if the satisfaction of Vesting Conditions with respect to any
shares
subject to such Restricted Stock Award would otherwise occur on a day on
which
the sale of such shares would violate the provisions of the Insider Trading
Policy, then satisfaction of the Vesting Conditions automatically shall
be
determined on the next trading day on which the sale of such shares would
not
violate the Insider Trading Policy. Upon request by the Company, each
Participant shall execute any agreement evidencing such transfer restrictions
prior to the receipt of shares of Stock hereunder and shall promptly present
to
the Company any and all certificates representing shares of Stock acquired
hereunder for the placement on such certificates of appropriate legends
evidencing any such transfer restrictions.
7.6
Voting
Rights; Dividends and Distributions.
Except
as provided in this Section, Section 7.5 and any Award Agreement, during
any
period in which shares acquired pursuant to a Restricted Stock Award remain
subject to Vesting Conditions, the Participant shall have all of the rights
of a
stockholder of the Company holding shares of Stock, including the right
to vote
such shares and to receive all dividends and other distributions paid with
respect to such shares. However, in the event of a dividend or distribution
paid
in shares of Stock or other property or any other adjustment made upon
a change
in the capital structure of the Company as described in Section 4.3, any
and all
new, substituted or additional securities or other property (other than
normal
cash dividends) to which the Participant is entitled by reason of the
Participant’s Restricted Stock Award shall be immediately subject to the same
Vesting Conditions as the shares subject to the Restricted Stock Award
with
respect to which such dividends or distributions were paid or adjustments were
made.
7.7
Effect
of Termination of Service.
Unless
otherwise provided by the Committee in the Award Agreement evidencing a
Restricted Stock Award, if a Participant’s Service terminates for any reason,
whether voluntary or involuntary (including the Participant’s death or
disability), then (a) the Company shall have the option to repurchase for
the
purchase price paid by the Participant any shares acquired by the Participant
pursuant to a Restricted Stock Purchase Right which remain subject to Vesting
Conditions as of the date of the Participant’s termination of Service and (b)
the Participant shall forfeit to the Company any shares acquired by the
Participant pursuant to a Restricted Stock Bonus which remain subject to
Vesting
Conditions as of the date of the Participant’s termination of Service. The
Company shall have the right to assign at any time any repurchase right
it may
have, whether or not such right is then exercisable, to one or more persons
as
may be selected by the Company.
7.8
Nontransferability
of Restricted Stock Award Rights.
Rights
to acquire shares of Stock pursuant to a Restricted Stock Award shall not
be
subject in any manner to anticipation, alienation, sale, exchange, transfer,
assignment, pledge, encumbrance or garnishment by creditors of the Participant
or the Participant’s beneficiary, except transfer by will or the laws of descent
and distribution. All rights with respect to a Restricted Stock Award granted
to
a Participant hereunder shall be exercisable during his or her lifetime
only by
such Participant or the Participant’s guardian or legal representative.
8.
Restricted
Stock
Unit
Awards
.
Restricted
Stock Unit Awards shall be evidenced by Award Agreements specifying the
number
of Restricted Stock Units subject to the Award, in such form as the Committee
shall from time to time establish. Award Agreements evidencing Restricted
Stock
Units may incorporate all or any of the terms of the Plan by reference
and shall
comply with and be subject to the following terms and conditions:
8.1
Grant
of Restricted Stock Unit Awards.
Restricted Stock Unit Awards may be granted upon such conditions as the
Committee shall determine, including, without limitation, upon the attainment
of
one or more performance goals.
8.2
Purchase Price.
No
monetary payment (other than applicable tax withholding, if any) shall
be
required as a condition of receiving a Restricted Stock Unit Award, the
consideration for which shall be services actually rendered to a Participating
Company or for its benefit. Notwithstanding the foregoing, if required
by
applicable state corporate law, the Participant shall furnish consideration
in
the form of cash or past services rendered to a Participating Company or
for its
benefit having a value not less than the par value of the shares of Stock
issued
upon settlement of the Restricted Stock Unit Award.
8.3
Vesting.
Restricted Stock Unit Awards may (but need not) be made subject to Vesting
Conditions based upon the satisfaction of such Service requirements, conditions,
restrictions or performance criteria as shall be established by the Committee
and set forth in the Award Agreement evidencing such Award. The Committee,
in
its discretion, may provide in any Award Agreement evidencing a Restricted
Stock
Unit Award that, if the satisfaction of Vesting Conditions with respect
to any
shares subject to the Award would otherwise occur on a day on which the
sale of
such shares would violate the provisions of the Insider Trading Policy,
then
satisfaction of the Vesting Conditions automatically shall be determined
on the
first to occur of (a) the next trading day on which the sale of such shares
would not violate the Insider Trading Policy or (b) the later of (i) the
last
day of the calendar year in which the original vesting date occurred or
(ii) the
last day of the Company’s taxable year in which the original vesting date
occurred.
8.4
Voting
Rights, Dividend Equivalent Rights and Distributions.
Participants
shall have no voting rights with respect to shares of Stock represented
by
Restricted Stock Units until the date of the issuance of such shares (as
evidenced by the appropriate entry on the books of the Company or of a
duly
authorized transfer agent of the Company). However, the Committee, in its
discretion, may provide in the Award Agreement evidencing any Restricted
Stock
Unit Award that the Participant shall be entitled to Dividend Equivalent
Rights
with respect to the payment of cash dividends on Stock during the period
beginning on the date such Award is granted and ending, with respect to
each
share subject to the Award, on the earlier of the date the Award is settled
or
the date on which it is terminated. Such Dividend Equivalent Rights, if
any,
shall be paid by crediting the Participant with additional whole Restricted
Stock Units as of the date of payment of such cash dividends on Stock.
The
number of additional Restricted Stock Units (rounded to the nearest whole
number) to be so credited shall be determined by dividing (a) the amount
of cash
dividends paid on such date with respect to the number of shares of Stock
represented by the Restricted Stock Units previously credited to the Participant
by (b) the Fair Market Value per share of Stock on such date. Such additional
Restricted Stock Units shall be subject to the same terms and conditions
and
shall be settled in the same manner and at the same time as the Restricted
Stock
Units originally subject to the Restricted Stock Unit Award. In the event
of a
dividend or distribution paid in shares of Stock or other property or any
other
adjustment made upon a change in the capital structure of the Company as
described in Section 4.3, appropriate adjustments shall be made in the
Participant’s Restricted Stock Unit Award so that it represents the right to
receive upon settlement any and all new, substituted or additional securities
or
other property (other than normal cash dividends) to which the Participant
would
be entitled by reason of the shares of Stock issuable upon settlement of
the
Award, and all such new, substituted or additional securities or other
property
shall be immediately subject to the same Vesting Conditions as are applicable
to
the Award.
8.5
Effect
of Termination of Service.
Unless
otherwise provided by the Committee and set forth in the Award Agreement
evidencing a Restricted Stock Unit Award, if a Participant’s Service terminates
for any reason, whether voluntary or involuntary (including the Participant’s
death or disability), then the Participant shall forfeit to the Company
any
Restricted Stock Units pursuant to the Award which remain subject to Vesting
Conditions as of the date of the Participant’s termination of Service.
8.6
Settlement of Restricted Stock Unit Awards.
The
Company shall issue to a Participant on the date on which Restricted Stock
Units
subject to the Participant’s Restricted Stock Unit Award vest or on such other
date determined by the Committee, in its discretion, and set forth in the
Award
Agreement one (1) share of Stock (and/or any other new, substituted or
additional securities or other property pursuant to an adjustment described
in
Section 8.4) for each Restricted Stock Unit then becoming vested or otherwise
to
be settled on such date, subject to the withholding of applicable taxes,
if any.
If permitted by the Committee, the Participant may elect, consistent with
the
requirements of Section 409A, to defer receipt of all or any portion of
the
shares of Stock or other property otherwise issuable to the Participant
pursuant
to this Section, and such deferred issuance date(s) and amount(s) elected
by the
Participant shall be set forth in the Award Agreement. Notwithstanding
the
foregoing, the Committee, in its discretion, may provide in any Award Agreement
for settlement of any Restricted Stock Unit Award by payment to the Participant
in cash of an amount equal to the Fair Market Value on the payment date
of the
shares of Stock or other property otherwise issuable to the Participant
pursuant
to this Section.
8.7
Nontransferability of Restricted Stock Unit Awards.
The
right to receive shares pursuant to a Restricted Stock Unit Award shall
not be
subject in any manner to anticipation, alienation, sale, exchange, transfer,
assignment, pledge, encumbrance, or garnishment by creditors of the Participant
or the Participant’s beneficiary, except transfer by will or by the laws of
descent and distribution. All rights with respect to a Restricted Stock
Unit
Award granted to a Participant hereunder shall be exercisable during his
or her
lifetime only by such Participant or the Participant’s guardian or legal
representative.
9.
Standard
Forms of Award Agreements
.
9.1
Award Agreements
.
Each
Award shall comply with and be subject to the terms and conditions set
forth in
the appropriate form of Award Agreement approved by the Committee and as
amended
from time to time. No Award or purported Award shall be a valid and binding
obligation of the Company unless evidenced by a fully executed Award Agreement.
Any Award Agreement may consist of an appropriate form of Notice of Grant
and a
form of Agreement incorporated therein by reference, or such other form
or
forms, including electronic media, as the Committee may approve from time
to
time.
9.2
Authority
to Vary Terms
.
The
Committee shall have the authority from time to time to vary the terms
of any
standard form of Award Agreement either in connection with the grant or
amendment of an individual Award or in connection with the authorization
of a
new standard form or forms; provided, however, that the terms and conditions
of
any such new, revised or amended standard form or forms of Award Agreement
are
not inconsistent with the terms of the Plan.
10.
Change
in
Control
.
10.1
Effect
of Change in Control on Awards
.
Subject
to the requirements and limitations of Section 409A if applicable, the
Committee
may provide for any one or more of the following:
(a)
Accelerated
Vesting
.
The
Committee may, in its discretion, provide in any Award Agreement or, in
the
event of a Change in Control, may take such actions as it deems appropriate
to
provide for the acceleration of the exercisability, vesting and/or settlement
in
connection with such Change in Control of each or any outstanding Award
or
portion thereof and shares acquired pursuant thereto upon such conditions,
including termination of the Participant’s Service prior to, upon, or following
such Change in Control, to such extent as the Committee shall determine.
(b)
Assumption,
Continuation or Substitution
.
In the
event of a Change in Control, the surviving, continuing, successor, or
purchasing corporation or other business entity or parent thereof, as the
case
may be (the “
Acquiror
”),
may,
without the consent of any Participant, either assume or continue the Company’s
rights and obligations under each or any Award or portion thereof outstanding
immediately prior to the Change in Control or substitute for each or any
such
outstanding Award or portion thereof a substantially equivalent award with
respect to the Acquiror’s stock, as applicable. For purposes of this Section, if
so determined by the Committee, in its discretion, an Award denominated
in
shares of Stock shall be deemed assumed if, following the Change in Control,
the
Award confers the right to receive, subject to the terms and conditions
of the
Plan and the applicable Award Agreement, for each share of Stock subject
to the
Award immediately prior to the Change in Control, the consideration (whether
stock, cash, other securities or property or a combination thereof) to
which a
holder of a share of Stock on the effective date of the Change in Control
was
entitled; provided, however, that if such consideration is not solely common
stock of the Acquiror, the Committee may, with the consent of the Acquiror,
provide for the consideration to be received upon the exercise or settlement
of
the Award, for each share of Stock subject to the Award, to consist solely
of
common stock of the Acquiror equal in Fair Market Value to the per share
consideration received by holders of Stock pursuant to the Change in Control.
If
any portion of such consideration may be received by holders of Stock pursuant
to the Change in Control on a contingent or delayed basis, the Committee
may, in
its sole discretion, determine such Fair Market Value per share as of the
time
of the Change in Control on the basis of the Committee’s good faith estimate of
the present value of the probable future payment of such consideration.
Any
Award or portion thereof which is neither assumed or continued by the Acquiror
in connection with the Change in Control nor exercised or settled as of
the time
of consummation of the Change in Control shall terminate and cease to be
outstanding effective as of the time of consummation of the Change in Control.
(c)
Cash-Out
of Awards
.
The
Committee may, in its discretion and without the consent of any Participant,
determine that, upon the occurrence of a Change in Control, each or any
Award or
a portion thereof outstanding immediately prior to the Change in Control
and not
previously exercised or settled shall be canceled in exchange for a payment
with
respect to each vested share (and each unvested share, if so determined
by the
Committee) of Stock subject to such canceled Award in (i) cash, (ii) stock
of
the Company or of a corporation or other business entity a party to the
Change
in Control, or (iii) other property which, in any such case, shall be in
an
amount having a Fair Market Value equal to the Fair Market Value of the
consideration to be paid per share of Stock in the Change in Control, reduced
by
the exercise or purchase price per share, if any, under such Award. If
any
portion of such consideration may be received by holders of Stock pursuant
to
the Change in Control on a contingent or delayed basis, the Committee may,
in
its sole discretion, determine such Fair Market Value per share as of the
time
of the Change in Control on the basis of the Committee’s good faith estimate of
the present value of the probable future payment of such consideration.
In the
event such determination is made by the Committee, the amount of such payment
(reduced by applicable withholding taxes, if any) shall be paid to Participants
in respect of the vested portions of their canceled Awards as soon as
practicable following the date of the Change in Control and in respect
of the
unvested portions of their canceled Awards in accordance with the vesting
schedules applicable to such Awards.
10.2
Federal
Excise Tax Under Section 4999 of the Code
.
(a)
Excess
Parachute Payment
.
In the
event that any acceleration of vesting pursuant to an Award and any other
payment or benefit received or to be received by a Participant would subject
the
Participant to any excise tax pursuant to Section 4999 of the Code due
to the
characterization of such acceleration of vesting, payment or benefit as
an
“excess parachute payment” under Section 280G of the Code, the Participant may
elect, in his or her sole discretion, to reduce the amount of any acceleration
of vesting called for under the Award in order to avoid such characterization.
(b)
Determination
by Independent Accountants
.
To aid
the Participant in making any election called for under Section 10.2(a),
no
later than the date of the occurrence of any event that might reasonably
be
anticipated to result in an “excess parachute payment” to the Participant as
described in Section 10.2(a), the Company shall request a determination
in
writing by independent public accountants selected by the Company (the
“
Accountants
”).
As
soon as practicable thereafter, the Accountants shall determine and report
to
the Company and the Participant the amount of such acceleration of vesting,
payments and benefits which would produce the greatest after-tax benefit
to the
Participant. For the purposes of such determination, the Accountants may
rely on
reasonable, good faith interpretations concerning the application of Sections
280G and 4999 of the Code. The Company and the Participant shall furnish
to the
Accountants such information and documents as the Accountants may reasonably
request in order to make their required determination. The Company shall
bear
all fees and expenses the Accountants may reasonably charge in connection
with
their services contemplated by this Section 10.2(b).
11.
Tax
Withholding
.
11.1
Tax
Withholding in General
.
The
Company shall have the right to deduct from any and all payments made under
the
Plan, or to require the Participant, through payroll withholding, cash
payment
or otherwise, to make adequate provision for, the federal, state, local
and
foreign taxes, if any, required by law to be withheld by the Participating
Company Group with respect to an Award or the shares acquired pursuant
thereto.
The Company shall have no obligation to deliver shares of Stock, to release
shares of Stock from an escrow established pursuant to an Award Agreement,
or to
make any payment in cash under the Plan until the Participating Company
Group’s
tax withholding obligations have been satisfied by the Participant.
11.2
Withholding
in Shares
.
The
Company shall have the right, but not the obligation, to deduct from the
shares
of Stock issuable to a Participant upon the exercise or settlement of an
Award,
or to accept from the Participant the tender of, a number of whole shares
of
Stock having a Fair Market Value, as determined by the Company, equal to
all or
any part of the tax withholding obligations of the Participating Company
Group.
The Fair Market Value of any shares of Stock withheld or tendered to satisfy
any
such tax withholding obligations shall not exceed the amount determined
by the
applicable minimum statutory withholding rates.
12.
Compliance
with
Securities
Law
.
The
grant
of Awards and the issuance of shares of Stock pursuant to any Award shall
be
subject to compliance with all applicable requirements of federal, state
and
foreign law with respect to such securities and the requirements of any
stock
exchange or market system upon which the Stock may then be listed. In addition,
no Award may be exercised or shares issued pursuant to an Award unless
(a) a
registration statement under the Securities Act shall at the time of such
exercise or issuance be in effect with respect to the shares issuable pursuant
to the Award or (b) in the opinion of legal counsel to the Company, the
shares
issuable pursuant to the Award may be issued in accordance with the terms
of an
applicable exemption from the registration requirements of the Securities
Act.
The inability of the Company to obtain from any regulatory body having
jurisdiction the authority, if any, deemed by the Company’s legal counsel to be
necessary to the lawful issuance and sale of any shares hereunder shall
relieve
the Company of any liability in respect of the failure to issue or sell
such
shares as to which such requisite authority shall not have been obtained.
As a
condition to issuance of any Stock, the Company may require the Participant
to
satisfy any qualifications that may be necessary or appropriate, to evidence
compliance with any applicable law or regulation and to make any representation
or warranty with respect thereto as may be requested by the Company.
13.
Compliance
with
Section
409A
.
13.1
Awards
Subject to Section 409A
.
The
provisions of this Section 13 shall apply to any Award or portion thereof
that
is or becomes subject to Section 409A, notwithstanding any provision to
the
contrary contained in the Plan or the Award Agreement applicable to such
Award.
Awards subject to Section 409A include, without limitation:
(a)
Any
Nonstatutory Stock Option having an exercise price per share less than
the Fair
Market Value determined as of the date of grant of such Option or that
permits
the deferral of compensation other than the deferral of recognition of
income
until the exercise or transfer of the Option or the time the shares acquired
pursuant to the exercise of the option first become substantially vested.
(b)
Any
Restricted Stock Award that either provides by its terms, or under which
the
Participant makes an election, for settlement of all or any portion of
the Award
either (i) on one or more dates following the end of the Short-Term Deferral
Period (as defined below) or (ii) upon or after the occurrence of any event
that
will or may occur later than the end of the Short-Term Deferral Period.
Subject
to U.S. Treasury Regulations promulgated pursuant to Section 409A (“
Section
409A Regulations
”)
or
other applicable guidance, the term “
Short-Term
Deferral Period
”
means
the period ending on the later of (i) the 15th day of the third month following
the end of the Company’s fiscal year in which the applicable portion of the
Award is no longer subject to a substantial risk of forfeiture or (ii)
the 15th
day of the third month following the end of the Participant’s taxable year in
which the applicable portion of the Award is no longer subject to a substantial
risk of forfeiture. For this purpose, the term “substantial risk of forfeiture”
shall have the meaning set forth in Section 409A Regulations or other applicable
guidance.
13.2
Deferral
and/or Distribution Elections
.
Except
as otherwise permitted or required by Section 409A or Section 409A Regulations
or other applicable guidance, the following rules shall apply to any deferral
and/or distribution elections (each, an “
Election
”)
that
may be permitted or required by the Committee pursuant to an Award subject
to
Section 409A:
(a)
All
Elections must be in writing and specify the amount (or an objective,
nondiscretionary formula determining the amount) of the distribution in
settlement of an Award being deferred, as well as the time and form of
distribution as permitted by this Plan.
(b)
All
Elections shall be made by the end of the Participant’s taxable year prior to
the year in which services commence for which an Award may be granted to
such
Participant; provided, however, that if the Award qualifies as
“performance-based compensation” for purposes of Section 409A (and is based on a
performance period of at least 12 consecutive months), then the Election
may be
made no later than six (6) months prior to the end of the performance period,
provided that the Participant’s service is continuous from the later of the
beginning of the performance period or the date on which the performance
goals
are established through the date such election is made and provided further
that
no election may be made after the compensation has become readily ascertainable
(as provided by Section 409A Regulations).
(c)
Elections shall continue in effect until a written election to revoke or
change
such Election is received by the Company, except that a written election
to
revoke or change such Election must be made prior to the last day for making
an
Election determined in accordance with paragraph (b) above or as permitted
by
Section 13.3.
13.3
Subsequent
Elections
.
Except
as otherwise permitted or required by Section 409A Regulations or other
applicable guidance, any Award subject to Section 409A which permits a
subsequent Election to delay the distribution or change the form of distribution
in settlement of such Award shall comply with the following requirements:
(a)
No
subsequent Election may take effect until at least twelve (12) months after
the
date on which the subsequent Election is made;
(b)
Each
subsequent Election related to a distribution in settlement of an Award
not
described in Section 13.4(b), 13.4(c) or 13.4(f) must result in a delay
of the
distribution for a period of not less than five (5) years from the date
such
distribution would otherwise have been made; and
(c)
No
subsequent Election related to a distribution pursuant to Section 13.4(d)
shall
be made less than twelve (12) months prior to the date of the first scheduled
payment under such distribution.
13.4
Distributions
Pursuant to Deferral Elections
.
Except
as otherwise permitted or required by Section 409A Regulations or other
applicable guidance, no distribution in settlement of an Award subject
to
Section 409A may commence earlier than:
(a)
The
Participant’s separation from service (as defined by Section 409A
Regulations);
(b)
The
date
the Participant becomes Disabled (as defined below);
(c)
The
Participant’s death;
(d)
A
specified time (or pursuant to a fixed schedule) that is either
(i)
specified by the Committee upon the grant of an Award and set forth in
the Award
Agreement evidencing such Award or (ii) specified by the Participant in
an
Election complying with the requirements of Section 13.2 and/or 13.3, as
applicable;
(e)
A
change in the ownership or effective control of the Company or in the ownership
of a substantial portion of the assets of the Company (as defined by Section
409A Regulations); or
(f)
The
occurrence of an Unforeseeable Emergency (as defined by Section 409A
Regulations).
Notwithstanding
anything else herein to the contrary, to the extent that a Participant
is a
“Specified Employee” (as defined by Section 409A Regulations) of the Company, no
distribution pursuant to Section 13.4(a) in settlement of an Award subject
to
Section 409A may be made before the date (the “
Delayed
Payment Date
”)
which
is six (6) months after such Participant’s date of separation from service, or,
if earlier, the date of the Participant’s death. All such amounts that would,
but for this paragraph, become payable prior to the Delayed Payment Date
shall
be accumulated and paid on the Delayed Payment Date.
13.5
Unforeseeable
Emergency
.
The
Committee shall have the authority to provide in any Award subject to Section
409A for distribution in settlement of all or a portion of such Award in
the
event that a Participant establishes, to the satisfaction of the Committee,
the
occurrence of an Unforeseeable Emergency. In such event, the amount(s)
distributed with respect to such Unforeseeable Emergency cannot exceed
the
amounts reasonably necessary to satisfy such Unforeseeable Emergency plus
amounts necessary to pay taxes or penalties reasonably anticipated as a
result
of such distribution(s), after taking into account the extent to which
such
hardship is or may be relieved through reimbursement or compensation by
insurance or otherwise, by liquidation of the Participant’s assets (to the
extent the liquidation of such assets would not itself cause severe financial
hardship), or by cessation of deferrals under the Plan. All distributions
with
respect to an Unforeseeable Emergency shall be made in a lump sum within
90 days
of the occurrence of Unforeseeable Emergency and following the Committee’s
determination that an Unforeseeable Emergency has occurred.
The
occurrence of an Unforeseeable Emergency shall be judged and determined
by the
Committee. The Committee’s decision with respect to whether an Unforeseeable
Emergency has occurred and the manner in which, if at all, the distribution
in
settlement of an Award shall be altered or modified, shall be final, conclusive,
and not subject to approval or appeal.
13.6
Disabled
.
The
Committee shall have the authority to provide in any Award subject to Section
409A for distribution in settlement of such Award in the event that the
Participant becomes Disabled. A Participant shall be considered “
Disabled
”
if
either:
(a)
the
Participant is unable to engage in any substantial gainful activity by
reason of
any medically determinable physical or mental impairment which can be expected
to result in death or can be expected to last for a continuous period of
not
less than twelve (12) months, or
(b)
the
Participant is, by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected
to last
for a continuous period of not less than twelve (12) months, receiving
income
replacement benefits for a period of not less than three (3) months under
an
accident and health plan covering employees of the Participant’s employer.
All
distributions payable by reason of a Participant becoming Disabled shall
be paid
in a lump sum or in periodic installments as established by the Participant’s
Election, commencing within 90 days following the date the Participant
becomes
Disabled. If the Participant has made no Election with respect to distributions
upon becoming Disabled, all such distributions shall be paid in a lump
sum
within 90 days following the date the Participant becomes Disabled.
13.7
Death
.
If a
Participant dies before complete distribution of amounts payable upon settlement
of an Award subject to Section 409A, such undistributed amounts shall be
distributed to his or her beneficiary under the distribution method for
death
established by the Participant’s Election, or, if the Participant has made no
Election with respect to distributions upon death, in a lump sum, within
90 days
following the Participant’s death and following receipt by the Committee of
satisfactory notice and confirmation of the Participant’s death.
13.8
No
Acceleration of Distributions
.
Notwithstanding anything to the contrary herein, this Plan does not permit
the
acceleration of the time or schedule of any distribution under this Plan
pursuant to any Award subject to Section 409A, except as provided by Section
409A and Section 409A Regulations.
14.
Amendment
or
Termination
of
Plan
.
The
Committee may amend, suspend or terminate the Plan at any time. However,
without
the approval of the Company’s stockholders, there shall be no amendment of the
Plan (including, but not limited to, an increase in the share limitations
imposed by Sections 4.1, 5.3 and 5.4 (other than adjustments made to such
Sections pursuant to Sections 4.2 and 4.3)) that would require approval
of the
Company’s stockholders under any applicable law, regulation or rule, including
the rules of any stock exchange or market system upon which the Stock may
then
be listed. No amendment, suspension or termination of the Plan shall affect
any
then outstanding Award unless expressly provided by the Committee. Except
as
provided by the next sentence, no amendment, suspension or termination
of the
Plan may adversely affect any then outstanding Award without the consent
of the
Participant. Notwithstanding any other provision of the Plan or any Award
Agreement to the contrary, the Committee may, in its sole and absolute
discretion and without the consent of any Participant, amend the Plan or
any
Award Agreement, to take effect retroactively or otherwise, as it deems
necessary or advisable for the purpose of conforming the Plan or such Award
Agreement to any present or future law, regulation or rule applicable to
the
Plan, including, but not limited to, Section 409A of the Code and all applicable
guidance promulgated thereunder.
15.
Miscellaneous
Provisions
.
15.1
Repurchase
Rights
.
Shares
issued under the Plan may be subject to one or more repurchase options,
or other
conditions and restrictions as determined by the Committee in its discretion
at
the time the Award is granted. The Company shall have the right to assign
at any
time any repurchase right it may have, whether or not such right is then
exercisable, to one or more persons as may be selected by the Company.
Upon
request by the Company, each Participant shall execute any agreement evidencing
such transfer restrictions prior to the receipt of shares of Stock hereunder
and
shall promptly present to the Company any and all certificates representing
shares of Stock acquired hereunder for the placement on such certificates
of
appropriate legends evidencing any such transfer restrictions.
15.2
Forfeiture
Events.
(a)
The
Committee may specify in an Award Agreement that the Participant’s rights,
payments, and benefits with respect to an Award shall be subject to reduction,
cancellation, forfeiture, or recoupment upon the occurrence of specified
events,
in addition to any otherwise applicable vesting or performance conditions
of an
Award. Such events may include, but shall not be limited to, termination
of
Service for Cause or any act by a Participant, whether before or after
termination of Service, that would constitute Cause for termination of
Service.
(b)
If
the Company is required to prepare an accounting restatement due to the
material
noncompliance of the Company, as a result of misconduct, with any financial
reporting requirement under the securities laws, any Participant who knowingly
or through gross negligence engaged in the misconduct, or who knowingly
or
through gross negligence failed to prevent the misconduct, and any Participant
who is one of the individuals subject to automatic forfeiture under Section
304
of the Sarbanes-Oxley Act of 2002, shall reimburse the Company the amount
of any
payment in settlement of an Award earned or accrued during the twelve-
(12-)
month period following the first public issuance or filing with the United
States Securities and Exchange Commission (whichever first occurred) of
the
financial document embodying such financial reporting requirement.
15.3
Provision
of Information.
Each
Participant shall be given access to information concerning the Company
equivalent to that information generally made available to the Company’s common
stockholders. In addition, the Company shall deliver such other disclosures
to
Participants as may be required pursuant to applicable law.
15.4
Rights
as Employee, Consultant or Director
.
No
person, even though eligible pursuant to Section 5, shall have a right
to be
selected as a Participant, or, having been so selected, to be selected
again as
a Participant. Nothing in the Plan or any Award granted under the Plan
shall
confer on any Participant a right to remain an Employee, Consultant or
Director
or interfere with or limit in any way any right of a Participating Company
to
terminate the Participant’s Service at any time. To the extent that an Employee
of a Participating Company other than the Company receives an Award under
the
Plan, that Award shall in no event be understood or interpreted to mean
that the
Company is the Employee’s employer or that the Employee has an employment
relationship with the Company.
15.5
Rights
as a Stockholder
.
A
Participant shall have no rights as a stockholder with respect to any shares
covered by an Award until the date of the issuance of such shares (as evidenced
by the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company). No adjustment shall be made for dividends,
distributions or other rights for which the record date is prior to the
date
such shares are issued, except as provided in Section 4.3 or another provision
of the Plan.
15.6
Delivery
of Title to Shares.
Subject
to any governing rules or regulations, the Company shall issue or cause
to be
issued the shares of Stock acquired pursuant to an Award and shall deliver
such
shares to or for the benefit of the Participant by means of one or more
of the
following: (a) by delivering to the Participant evidence of book entry
shares of
Stock credited to the account of the Participant, (b) by depositing such
shares
of Stock for the benefit of the Participant with any broker with which
the
Participant has an account relationship, or (c) by delivering such shares
of
Stock to the Participant in certificate form.
15.7
Fractional
Shares
.
The
Company shall not be required to issue fractional shares upon the exercise
or
settlement of any Award.
15.8
Retirement
and Welfare Plans
.
Neither
Awards made under this Plan nor shares of Stock or cash paid pursuant to
such
Awards shall be included as “compensation” for purposes of computing the
benefits payable to any Participant under any Participating Company’s retirement
plans (both qualified and non-qualified) or welfare benefit plans unless
such
other plan expressly provides that such compensation shall be taken into
account
in computing such benefits.
15.9
Severability
.
If any
one or more of the provisions (or any part thereof) of this Plan shall
be held
invalid, illegal or unenforceable in any respect, such provision shall
be
modified so as to make it valid, legal and enforceable, and the validity,
legality and enforceability of the remaining provisions (or any part thereof)
of
the Plan shall not in any way be affected or impaired thereby.
15.10
No
Constraint on Corporate Action
.
Nothing
in this Plan shall be construed to: (a) limit, impair, or otherwise affect
the
Company’s or another Participating Company’s right or power to make adjustments,
reclassifications, reorganizations, or changes of its capital or business
structure, or to merge or consolidate, or dissolve, liquidate, sell, or
transfer
all or any part of its business or assets; or (b) limit the right or power
of
the Company or another Participating Company to take any action which such
entity deems to be necessary or appropriate.
15.11
Unfunded
Obligation.
Participants shall have the status of general unsecured creditors of the
Company. Any amounts payable to Participants pursuant to the Plan shall
be
unfunded and unsecured obligations for all purposes, including, without
limitation, Title I of the Employee Retirement Income Security Act of 1974.
No
Participating Company shall be required to segregate any monies from its
general
funds, or to create any trusts, or establish any special accounts with
respect
to such obligations. The Company shall retain at all times beneficial ownership
of any investments, including trust investments, which the Company may
make to
fulfill its payment obligations hereunder. Any investments or the creation
or
maintenance of any trust or any Participant account shall not create or
constitute a trust or fiduciary relationship between the Committee or any
Participating Company and a Participant, or otherwise create any vested
or
beneficial interest in any Participant or the Participant’s creditors in any
assets of any Participating Company. The Participants shall have no claim
against any Participating Company for any changes in the value of any assets
which may be invested or reinvested by the Company with respect to the
Plan.
15.12
Choice
of Law
.
Except
to the extent governed by applicable federal law, the validity, interpretation,
construction and performance of the Plan and each Award Agreement shall
be
governed by the laws of the State of California, without regard to its
conflict
of law rules.
15.13
Stockholder
Approval.
The
Plan, as amended and restated, shall become effective upon its approval
by the
stockholders of the Company. Such approval shall be obtained within twelve
(12)
months of the date this Plan is amended and restated by the Committee.
ANNEX
B
AGREEMENT
AND PLAN OF MERGER FOR REINCORPORATION
AGREEMENT
AND PLAN OF MERGER
OF
SOLAR
ENERTECH CORP.
(A
NEVADA CORPORATION)
WITH
AND
INTO
SOLAR
ENERTECH CORP.
(A
DELAWARE CORPORATION)
This
AGREEMENT AND PLAN OF MERGER (this “
Agreement
”)
dated
as of _______ __, 2008 by and between Solar Enertech Corp., a Nevada corporation
(“
Solar
Enertech Nevada
”),
and
Solar Enertech Corp., a Delaware corporation and wholly-owned subsidiary
of
Solar Enertech Nevada (“
Solar
Enertech Nevada
”),
is
made with respect to the following facts.
RECITALS
WHEREAS,
Solar Enertech Nevada is a corporation duly organized and existing under
the
laws of the State of Nevada;
WHEREAS,
Solar Enertech Delaware is a corporation duly organized and existing under
the
laws of the State of Delaware;
WHEREAS,
the respective Boards of Directors for Solar Enertech Nevada and Solar
Enertech
Delaware have determined that, for purposes of effecting the reincorporation
of
Solar Enertech Nevada in the State of Delaware, it is advisable and to
the
advantage of said two corporations and their stockholders that Solar Enertech
Nevada merge with and into Solar Enertech Delaware so that Solar Enertech
Delaware is the surviving corporation on the terms provided herein (the
“
Merger
”);
and
WHEREAS,
the respective Board of Directors Solar Enertech Nevada and Solar Enertech
Delaware, the stockholders of Solar Enertech Nevada, and the sole stockholder
of
Solar Enertech Delaware have adopted and approved this Agreement.
NOW
THEREFORE, based upon the foregoing, and in consideration of the mutual
promises
and covenants contained herein and other good and valuable consideration,
the
receipt of which is hereby acknowledged, the parties to this Agreement
agree as
follows.
ARTICLE
I
THE
MERGER
1.1
The
Merger; Surviving Corporation
.
Subject
to the terms and conditions set forth in this Agreement, at the Effective
Time
(as defined in Section 1.5 below), Solar Enertech Nevada shall be merged
with
and into Solar Enertech Delaware, subject to and upon the terms and conditions
provided in this Agreement and the applicable provisions of the General
Corporation Law of the State of Delaware (the “
DGCL
”)
and
the applicable provisions of the Nevada Revised Statutes (the “
NRS
”),
and
the separate existence of Solar Enertech Nevada shall cease. Solar Enertech
Delaware shall be the surviving entity (the “
Surviving
Corporation
”)
and
shall continue to be governed by the DGCL.
1.2
Constituent
Corporations
.
The
name, address, jurisdiction of organization and governing law of each of
the
constituent corporations is as follows:
(a)
Solar
Enertech Nevada: Solar Enertech Corp., a corporation organized under and
governed by the laws of the State of Nevada with an address of 1600 Adams
Drive,
Menlo Park, CA 94025; and
(b)
Solar
Enertech Delaware: Solar Enertech Corp., a corporation organized under
and
governed by the laws of the State of Delaware with an address of 1600 Adams
Drive, Menlo Park, CA 94025.
1.3
Surviving
Corporation
.
Solar
Enertech Corp., a corporation organized under the laws of the State of
Delaware,
shall be the surviving corporation.
1.4
Address
of Principal Office of the Surviving Corporation
.
The
address of Solar Enertech Delaware, as the Surviving Corporation, shall
be 1600
Adams Drive, Menlo Park, CA 94025.
1.5
Effective
Time
.
The
Merger shall become effective (the “
Effective
Time
”),
on
the date upon which the last to occur of the following shall have been
completed:
(a)
This
Agreement and the Merger shall have been adopted and recommended to the
stockholders of Solar Enertech Nevada by the Board of Directors of Solar
Enertech Nevada and approved by a majority of the voting power of the
outstanding stock of Solar Enertech Nevada entitled to vote thereon, in
accordance with the requirements of the NRS;
(b)
This
Agreement and the Merger shall have been adopted by the Board of Directors
of
Solar Enertech Delaware and approved by a majority of the outstanding stock
of
Solar Enertech Delaware in accordance with the requirements of the DGCL;
(c)
The
effective date of the Merger as stated in the executed Articles of Merger
(the
“
Articles
of Merger
”)
filed
with the Secretary of State for the State of Nevada; and
(d)
An
executed Certificate of Merger (the “
Certificate
of Merger
”)
or an
executed counterpart to this Agreement meeting the requirements of the
DGCL
shall have been filed with the Secretary of State of the State of Delaware.
1.6
Effect
of the Merger
.
The
effect of the Merger shall be as provided in this Agreement, the Articles
of
Merger, the Certificate of Merger and the applicable provisions of the
DGCL and
the NRS. Without limiting the foregoing, from and after the Effective Time,
all
the property, rights, privileges, powers and franchises of Solar Enertech
Nevada
shall vest in Solar Enertech Delaware, as the Surviving Corporation, and
all
debts, liabilities and duties of Solar Enertech Nevada shall become the
debts,
liabilities and duties of Solar Enertech Delaware, as the Surviving Corporation.
1.7
Certificate
of Incorporation; Bylaws
.
(a)
From
and after the Effective Time, the Certificate of Incorporation of Solar
Enertech
Delaware shall be the Certificate of Incorporation of the Surviving Corporation;
and
(b)
From
and after the Effective Time, the Bylaws of Solar Enertech Delaware as
in effect
immediately prior to the Effective Time shall be the Bylaws of the Surviving
Corporation.
1.8
Officers
and Directors
.
The
officers of Solar Enertech Nevada immediately prior to the Effective Time
shall
continue as officers of the Surviving Corporation and remain officers until
their successors are duly appointed or their prior resignation, removal
or
death. The directors of Solar Enertech Nevada immediately prior to the
Effective
Time shall continue as directors of the Surviving Corporation and shall
remain
as directors for the term until their successors are duly elected and qualified
or their prior resignation, removal or death.
ARTICLE
II
CONVERSION
OF SHARES
2.1
Conversion
of Common Stock of Solar Enertech Nevada
.
At the
Effective Time by virtue of the Merger, and without any action on part of
the
holders of any outstanding shares of Solar Enertech Nevada:
(a)
each
share of common stock of Solar Enertech Nevada, par value of $0.001 per share,
issued and outstanding immediately prior to the Effective Time shall be
converted (without the surrender of stock certificates or any other action)
into
one (1) fully paid and non-assessable share of common stock, par value $0.001,
of Solar Enertech Delaware’s common stock, $0.001 par value per share (the
“
Common
Stock
”);
and
(b)
the
one thousand shares of Solar Enertech Delaware common stock owned by Solar
Enertech Nevada shall be canceled at the Effective Time.
2.2
Solar
Enertech Nevada Options, Stock Purchase Rights, Convertible
Securities
.
(a)
From
and after the Effective Time, the Surviving Corporation shall assume the
obligations of Solar Enertech Nevada under, and continue, the option plans
and
all other employee benefit plans of Solar Enertech Nevada. Each outstanding
and
unexercised option, other right to purchase, or security convertible into
or
exercisable for Solar Enertech Nevada common stock (a “
Right
”)
shall
become, an option, right to purchase or a security convertible into the
Surviving Corporation’s Common Stock, on the basis of one share of the Surviving
Corporation’s Common Stock for each one share of Solar Enertech Nevada common
stock issuable pursuant to any such Right, on the same terms and conditions
and
at an exercise price equal to the exercise price applicable to any such Solar
Enertech Nevada Right from and after the Effective Time. This paragraph 2.2(a)
shall not apply to currently issued and outstanding Solar Enertech Nevada
common
stock. Such common stock is subject to paragraph 2.1 hereof.
(b)
A
number of shares of the Surviving Corporation’s Common Stock shall be reserved
for issuance upon the exercise of options and convertible securities equal
to
the number of shares of Solar Enertech Nevada common stock so reserved
immediately prior to the Effective Time.
2.3
Certificates
.
At and
after the Effective Time, all of the outstanding certificates that immediately
prior thereto represented shares of common stock, options, warrants or other
securities of Solar Enertech Nevada shall be deemed for all purposes to evidence
ownership of and to represent the shares of the respective common stock,
options, warrants or other securities of Solar Enertech Delaware, as the
case
may be, into which the shares of common stock, options, warrants or other
securities of Solar Enertech Nevada represented by such certificates have
been
converted as herein provided and shall be so registered on the books and
records
of the Surviving Corporation or its transfer agent. The registered owner
of any
such outstanding certificate shall, until such certificate shall have been
surrendered for transfer or otherwise accounted for to the Surviving Corporation
or its transfer agent, have and be entitled to exercise any voting and other
rights with respect to, and to receive any dividends and other distributions
upon, the shares of common stock, options, warrants or other securities of
Solar
Enertech Delaware, as the case may be, evidenced by such outstanding
certificate, as above provided.
ARTICLE
III
TRANSFER
AND CONVEYANCE OF ASSETS AND ASSUMPTION OF LIABILITIES
3.1
Transfer,
Conveyance and Assumption
.
At the
Effective Time, Solar Enertech Delaware shall continue in existence as the
Surviving Corporation, and without further action on the part of Solar Enertech
Nevada or Solar Enertech Delaware, succeed to and possess all the rights,
privileges and powers of Solar Enertech Nevada, and all the assets and property
of whatever kind and character of Solar Enertech Nevada shall vest in Solar
Enertech Delaware without further act or deed. Thereafter, Solar Enertech
Delaware, as the Surviving Corporation, shall be liable for all of the
liabilities and obligations of Solar Enertech Nevada, and any claim or judgment
against Solar Enertech Nevada may be enforced against Solar Enertech Delaware
as
the Surviving Corporation, in accordance with Section 259 of the DGCL.
3.2
Further
Assurances
.
If at
any time Solar Enertech Delaware shall consider or be advised that any further
assignment, conveyance or assurance is necessary or advisable to vest, perfect
or confirm of record in it the title to any property or right of Solar Enertech
Nevada, or otherwise to carry out the provisions hereof, officers of Solar
Enertech Nevada as of the Effective Time shall execute and deliver any and
all
proper deeds, assignments and assurances, and do all things necessary and
proper
to vest, perfect or convey title to such property or right in Solar Enertech
Delaware and otherwise to carry out the provisions hereof.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF SOLAR ENERTECH NEVADA
Solar
Enertech Nevada represents and warrants to Solar Enertech Delaware as follows:
4.1
Validity
of Actions
.
Solar
Enertech Nevada (a) is a corporation duly formed, validly existing and in
good
standing under the laws of the State of Nevada, and (b) has full power and
authority to enter into this Agreement and to carry out all acts contemplated
by
it. This Agreement has been duly executed and delivered on behalf of Solar
Enertech Nevada. Solar Enertech Nevada has received all necessary authorization
to enter into this Agreement, and this Agreement is a legal, valid and binding
obligation of Solar Enertech Nevada, enforceable against Solar Enertech Nevada
in accordance with its terms. The execution and delivery of this Agreement
and
consummation of the transactions contemplated by it will not violate any
provision of Solar Enertech Nevada’s Articles of Incorporation or Bylaws, nor
violate, conflict with or result in any breach of any of the terms, provisions
or conditions of, or constitute a default or cause acceleration of, any
indebtedness under any agreement or instrument to which Solar Enertech Nevada
is
a party or by which it or its assets may be bound, or cause a breach of any
applicable Federal or state law or governmental regulation, or any applicable
order, judgment, writ, award, injunction or decree of any court or governmental
instrumentality.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES OF SOLAR ENERTECH DELAWARE
Solar
Enertech Delaware represents and warrants to Solar Enertech Nevada as follows:
5.1
Validity
of Actions
.
Solar
Enertech Delaware (a) is duly organized, validly existing and in good standing
under the laws of the State of Delaware, and (b) has full power and authority
to
enter into this Agreement and to carry out all acts contemplated by it. This
Agreement has been duly executed and delivered on behalf of Solar Enertech
Delaware. Solar Enertech Delaware has received all necessary authorization
to
enter into this Agreement, and this Agreement is a legal, valid and binding
obligation of Solar Enertech Delaware, enforceable against Solar Enertech
Delaware in accordance with its terms. The execution and delivery of this
Agreement and consummation of the transactions contemplated by it will not
violate any provision of the Certificate of Incorporation or Bylaws of Solar
Enertech Delaware nor violate, conflict with or result in any breach of any
of
the terms, provisions or conditions of, or constitute a default or cause
acceleration of, any indebtedness under any agreement or instrument to which
Solar Enertech Delaware is a party or by which it or its assets may be bound,
or
cause a breach of any applicable federal or state law or regulation, or any
applicable order, judgment, writ, award, injunction or decree of any court
or
governmental instrumentality.
ARTICLE
VI
FURTHER
ACTIONS
6.1
Additional
Documents
.
At the
request of any party, each party will execute and deliver any additional
documents and perform in good faith such acts as reasonably may be required
in
order to consummate the transactions contemplated by this Agreement.
ARTICLE
VII
CONDITIONS
TO THE MERGER
The
obligation of Solar Enertech Delaware and of Solar Enertech Nevada to consummate
the Merger shall be subject to the satisfaction or waiver of the following
conditions:
7.1
Bring
Down
.
The
representations and warranties set forth in this Agreement shall be true
and
correct in all material respects at, and as of, the Effective Time as if
then
made as of the Effective Time.
7.2
No
Statute, Rule or Regulation Affecting
.
At the
Effective Time, there shall be no statute, or regulation enacted or issued
by
the United States or any State, or by a court, which prohibits or challenges
the
consummation of the Merger.
7.3
Satisfaction
of Conditions
.
All
other conditions to the Merger set forth herein shall have been satisfied.
ARTICLE
VIII
TERMINATION;
AMENDMENT; WAIVER
8.1
Termination
.
This
Agreement and the transactions contemplated hereby may be terminated at any
time
prior to the filing of the Certificate of Merger with the Secretary of State
of
the State of Delaware, by mutual consent of the Board of Directors of Solar
Enertech Delaware and the Board of Directors of Solar Enertech Nevada.
8.2
Amendment
.
The
parties hereto may, by written agreement, amend this Agreement at any time
prior
to the filing of the Certificate of Merger with the Secretary of State of
the
State of Delaware, provided that any such amendment must first be approved
by
the Board of Directors of Solar Enertech Nevada.
8.3
Waiver
.
At any
time prior to the Effective Time, any party to this Agreement may extend
the
time for the performance of any of the obligations or other acts of any other
party hereto, or waive compliance with any of the agreements of any other
party
or with any condition to the obligations hereunder, in each case only to
the
extent that such obligations, agreements and conditions are intended for
its
benefit.
ARTICLE
IX
MISCELLANEOUS
9.1
Expenses
.
If the
Merger becomes effective, all of the expenses incurred in connection with
the
Merger shall be paid by Solar Enertech Delaware.
9.2
Notice
.
Except
as otherwise specifically provided, any notices to be given hereunder shall
be
in writing and shall be deemed given upon personal delivery or upon mailing
thereof, if mailed by certified mail, return receipt requested, to the following
addresses (or to such other address or addresses shall be specified in any
notice given):
In
the
case of Solar Enertech Delaware:
SOLAR
ENERTECH CORP.
1600
Adams Drive
Menlo
Park, CA 94025
In
the
case of Solar Enertech Nevada:
SOLAR
ENERTECH CORP.
1600
Adams Drive
Menlo
Park, CA 94025
9.3
Non-Assignability
.
This
Agreement shall not be assignable by any of the parties hereto.
9.4
Entire
Agreement
.
This
Agreement contains the parties’ entire understanding and agreement with respect
to its subject matter, and any and all conflicting or inconsistent discussions,
agreements, promises, representations and statements, if any, between the
parties or their representatives that are not incorporated in this Agreement
shall be null and void and are merged into this Agreement.
9.5
Governing
Law
.
This
Agreement shall be governed by and construed in accordance with the laws
of the
State of Delaware, without giving effect to conflicts of law principles.
9.6
Headings
.
The
various section headings are inserted for purposes of reference only and
shall
not affect the meaning or interpretation of this Agreement or any provision
hereof.
9.7
Gender;
Number
.
All
references to gender or number in this Agreement shall be deemed interchangeably
to have a masculine, feminine, neuter, singular or plural meaning, as the
sense
of the context requires.
9.8
Severability
.
The
provisions of this Agreement shall be severable, and any invalidity,
unenforceability or illegality of any provision or provisions of this Agreement
shall not affect any other provision or provisions of this Agreement, and
each
term and provision of this Agreement shall be construed to be valid and
enforceable to the full extent permitted by law.
IN
WITNESS WHEREOF, the undersigned have caused this Agreement to be executed
by an
officer duly authorized to do so, all as of the day and year first above
written.
SOLAR
ENERTECH CORP.,
|
|
SOLAR
ENERTECH CORP.,
|
a
Delaware
Corporation
|
|
a
Nevada
Corporation
|
|
|
|
|
|
By:
|
|
|
By:
|
|
|
Anthea
Chung
|
|
|
Leo
Shi Young
|
|
President
|
|
|
President
and Chief Executive Officer
|
ANNEX
C
SOLAR
ENERTECH CORP. (DELAWARE)
CERTIFICATE
OF INCORPORATION
CERTIFICATE
OF INCORPORATION
OF
SOLAR
ENERTECH CORP.
FIRST
:
The
name of the corporation is:
Solar
Enertech Corp.
SECOND
:
The
address of its registered office in the State of Delaware is 3500 South DuPont
Highway in the City of Dover, County of Kent. The name of its registered
agent
at such address is Incorporating Services, Ltd.
THIRD
:
The
nature of the business or purposes to be conducted or promoted is to engage
in
any lawful act or activity for which corporations may be organized under
the
General Corporation Law of Delaware.
FOURTH
:
The
corporation is authorized to issue one class of stock, to be designated “Common
Stock,” with a par value of $0.001 per share. The total number of shares of
Common Stock that the corporation shall have authority to issue is 400,000,000.
FIFTH
:
The
business and affairs of the corporation shall be managed by or under the
direction of the Board of Directors. In addition to the powers and authority
expressly conferred upon them by statute or by this Certificate of Incorporation
or the Bylaws of the corporation, the directors are hereby empowered to exercise
all such powers and do all such acts and things as may be exercised or done
by
the corporation. Election of directors need not be by written ballot, unless
the
Bylaws so provide.
SIXTH
:
The
Board of Directors is authorized to make, adopt, amend, alter or repeal the
Bylaws of the corporation. The stockholders shall also have power to make,
adopt, amend, alter or repeal the Bylaws of the corporation.
SEVENTH
:
The
name and mailing address of the incorporator is:
Yem
Mai
DLA
Piper
US LLP
2000
University Avenue
East
Palo
Alto, CA 94303
EIGHTH
:
A
director of the Corporation shall not be personally liable to the Corporation
or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director’s duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not
in good faith or which involved intentional misconduct or a knowing violation
of
law, (iii) under Section 174 of the Delaware General Corporation Law, or
(iv)
for any transaction from which the director derived an improper personal
benefit.
If
the
Delaware General Corporation Law is hereafter amended to authorize the further
elimination or limitation of the liability of a director, then the liability
of
a director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation Law, as so amended.
Any
repeal or modification of the foregoing provisions of this Article EIGHTH
by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such
repeal
or modification.
NINTH
:
The
Corporation reserves the right to amend or repeal any provision contained
in
this Certificate of Incorporation in the manner prescribed by the laws of
the
State of Delaware and all rights conferred upon stockholders are granted
subject
to this reservation.
*
* * * *
ANNEX
D
SOLAR
ENERTECH CORP. (DELAWARE)
BYLAWS
BYLAWS
OF
SOLAR
ENERTECH CORP.
ARTICLE
I
STOCKHOLDERS
1.1
Place
of Meetings
.
All
meetings of stockholders shall be held at such place (if any) within or without
the State of Delaware as may be designated from time to time by the Board
of
Directors (the “Board”).
1.2
Annual
Meeting
.
The
annual meeting of stockholders for the election of directors and for the
transaction of such other business as may properly be brought before the
meeting
shall be held on a date to be fixed by the Board of Directors at the time
and
place to be fixed by the Board of Directors and stated in the notice of the
meeting. In lieu of holding an annual meeting of stockholders at a designated
place, the Board of Directors may, in its sole discretion, determine that
any
annual meeting of stockholders may be held solely by means of remote
communication.
1.3
Special
Meetings
.
Special
meetings of stockholders may be called at any time by the Board of Directors
or
the Chairman of the Board, for any purpose or purposes prescribed in the
notice
of the meeting and shall be held at such place (if any), on such date and
at
such time as the Board may fix. In lieu of holding a special meeting of
stockholders at a designated place, the Board of Directors may, in its sole
discretion, determine that any special meeting of stockholders may be held
solely by means of remote communication. Business transacted at any special
meeting of stockholders shall be confined to the purpose or purposes stated
in
the notice of meeting.
1.4
Notice
of Meetings
.
(a)
Written notice of each meeting of stockholders, whether annual or special,
shall
be given not less than 10 nor more than 60 calendar days before the date
on
which the meeting is to be held, to each stockholder entitled to vote at
such
meeting, except as otherwise provided herein or as required by law (meaning
here
and hereafter, as required from time to time by the Delaware General Corporation
Law or the Certificate of Incorporation). The notice of any meeting shall
state
the place, if any, date and hour of the meeting, and the means of remote
communication, if any, by which stockholders and proxy holders may be deemed
to
be present in person and vote at such meeting. The notice of a special meeting
shall state, in addition, the purpose or purposes for which the meeting is
called. If mailed, notice is given when deposited in the United States mail,
postage prepaid, directed to the stockholder at his or her address as it
appears
on the records of the corporation.
(b)
Notice to stockholders may be given by personal delivery, mail, or, with
the
consent of the stockholder entitled to receive notice, by facsimile or other
means of electronic transmission. If mailed, such notice shall be delivered
by
postage prepaid envelope directed to each stockholder at such stockholder’s
address as it appears in the records of the corporation and shall be deemed
given when deposited in the United States mail. Notice given by electronic
transmission pursuant to this subsection shall be deemed given: (1) if by
facsimile telecommunication, when directed to a facsimile telecommunication
number at which the stockholder has consented to receive notice; (2) if by
electronic mail, when directed to an electronic mail address at which the
stockholder has consented to receive notice; (3) if by posting on an electronic
network together with separate notice to the stockholder of such specific
posting, upon the later of (A) such posting and (B) the giving of such separate
notice; and (4) if by any other form of electronic transmission, when directed
to the stockholder. An affidavit of the secretary or an assistant secretary
or
of the transfer agent or other agent of the corporation that the notice has
been
given by personal delivery, by mail, or by a form of electronic transmission
shall, in the absence of fraud, be prima facie evidence of the facts stated
therein.
(c)
Notice of any meeting of stockholders need not be given to any stockholder
if
waived by such stockholder either in a writing signed by such stockholder
or by
electronic transmission, whether such waiver is given before or after such
meeting is held. If such a waiver is given by electronic transmission,
the
electronic transmission must either set forth or be submitted with information
from which it can be determined that the electronic transmission was authorized
by the stockholder.
1.5
Voting
List
.
The
officer who has charge of the stock ledger of the corporation shall prepare,
at
least 10 calendar days before each meeting of stockholders, a complete list
of
the stockholders entitled to vote at the meeting, arranged in alphabetical
order
for each class of stock and showing the address of each stockholder and the
number of shares registered in the name of each stockholder. Such list shall
be
open to the examination of any such stockholder, for any purpose germane
to the
meeting, during ordinary business hours, for a period of at least 10 calendar
days prior to the meeting, in the manner provided by law. The list shall
also be
produced and kept at the time and place of the meeting during the whole time
of
the meeting, and may be inspected by any stockholder who is present. This
list
shall determine the identity of the stockholders entitled to vote at the
meeting
and the number of shares held by each of them.
1.6
Quorum
.
Except
as otherwise provided by law or these Bylaws, the holders of a majority of
the
shares of the capital stock of the corporation entitled to vote at the meeting,
present in person or represented by proxy, shall constitute a quorum for
the
transaction of business. Where a separate class vote by a class or classes
or
series is required, a majority of the shares of such class or classes or
series
present in person or represented by proxy shall constitute a quorum entitled
to
take action with respect to that vote on that matter. If a quorum shall fail
to
attend any meeting, any meeting of stockholders may be adjourned to any other
time and to any other place at which a meeting of stockholders may be held
under
these Bylaws by the chairman of the meeting or, in the absence of such person,
by any officer entitled to preside at or to act as secretary of such meeting,
or
by the holders of a majority of the shares of stock present or represented
at
the meeting and entitled to vote, although less than a quorum.
1.7
Adjournments
.
Any
meeting of stockholders may be adjourned to any other time and to any other
place at which a meeting of stockholders may be held under these Bylaws by
the
chairman of the meeting or, in the absence of such person, by any officer
entitled to preside at or to act as secretary of such meeting, or by the
holders
of a majority of the shares of stock present or represented at the meeting
and
entitled to vote, although less than a quorum. When a meeting is adjourned
to
another place, date or time, written notice need not be given of the adjourned
meeting if the date, time, and place, if any, thereof, and the means of remote
communication, if any, by which stockholders and proxy holders may be deemed
to
be present in person and vote at such adjourned meeting, are announced at
the
meeting at which the adjournment is taken; provided, however, that if the
date
of any adjourned meeting is more than 30 calendar days after the date for
which
the meeting was originally noticed, or if a new record date is fixed for
the
adjourned meeting, written notice of the place, if any, date, and time of
the
adjourned meeting and the means of remote communications, if any, by which
stockholders and proxy holders may be deemed to be present in person and
vote at
such adjourned meeting, shall be given in conformity herewith. At the adjourned
meeting, the corporation may transact any business which might have been
transacted at the original meeting. If a notice of any adjourned special
meeting
of stockholders is sent to all stockholders entitled to vote thereat, stating
that it will be held with those present constituting a quorum, then except
as
otherwise required by law, those present at such adjourned meeting shall
constitute a quorum, and all matters shall be determined by a majority of
the
votes cast at such meeting.
1.8
Voting
and Proxies
.
Each
stockholder shall have one vote for each share of stock entitled to vote
held of
record by such stockholder and a proportionate vote for each fractional share
so
held, unless otherwise provided by law or in the Certificate of Incorporation.
Each stockholder of record entitled to vote at a meeting of stockholders
may
vote in person or may authorize any other person or persons to vote or act
for
him or her by written proxy executed by the stockholder or his or her authorized
agent or by a transmission permitted by law and delivered to the Secretary
of
the corporation. Any copy, facsimile transmission or other reliable reproduction
of the writing or transmission created pursuant to this Section may be
substituted or used in lieu of the original writing or transmission for any
and
all purposes for which the original writing or transmission could be used,
provided that such copy, facsimile transmission or other reproduction shall
be a
complete reproduction of the entire original writing or transmission.
1.9
Action
at Meeting
.
When a
quorum is present at any meeting, any election of directors shall be determined
by a plurality of the votes cast by the stockholders entitled to vote at
the
election, and any other matter shall be determined by a majority in voting
power
of the shares present in person or represented by proxy and entitled to vote
on
the matter (or if there are two or more classes of stock entitled to vote
as
separate classes, then in the case of each such class, a majority of the
shares
of each such class present in person or represented by proxy and entitled
to
vote on the matter) shall decide such matter, except when a different vote
is
required by express provision of law, the Certificate of Incorporation or
these
Bylaws.
All
voting, including on the election of directors, but excepting where otherwise
required by law, may be by a voice vote provided, however, that upon demand
therefor by a stockholder entitled to vote or his or her proxy, a vote by
ballot
shall be taken. Each ballot shall state the name of the stockholder or proxy
voting and such other information as may be required under the procedure
established for the meeting. The corporation may, and to the extent required
by
law, shall, in advance of any meeting of stockholders, appoint one or more
inspectors to act at the meeting and make a written report thereof. The
corporation may designate one or more persons as an alternate inspector to
replace any inspector who fails to act. If no inspector or alternate is able
to
act at a meeting of stockholders, the person presiding at the meeting may,
and
to the extent required by law, shall, appoint one or more inspectors to act
at
the meeting. Each inspector, before entering upon the discharge of his or
her
duties, shall take and sign an oath to faithfully execute the duties of
inspector with strict impartiality and according to the best of his or her
ability.
1.10
Notice
of Stockholder Business
.
(a)
At an
annual or special meeting of the stockholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be properly
brought before an annual meeting, business must be (i) specified in the notice
of meeting (or any supplement thereto) given by or at the direction of the
Board
of Directors, (ii) properly brought before the meeting by or at the direction
of
the Board of Directors, or (iii) properly brought before the meeting by a
stockholder of record. For business to be properly brought before an annual
meeting by a stockholder, it must be a proper matter for stockholder action
under the Delaware General Corporation Law and the stockholder must have
given
timely notice thereof in writing to the Secretary of the corporation. To
be
timely, a stockholder proposal to be presented at an annual meeting shall
be
received at the corporation’s principal executive offices not less than 120
calendar days prior to the first anniversary of the date that the corporation’s
(or its predecessor’s) proxy statement was released to stockholders in
connection with the previous year’s annual meeting of stockholders, except that
if no annual meeting was held in the previous year or the date of the annual
meeting is more than 30 calendar days earlier than the date contemplated
at the
time of the previous year’s proxy statement, notice by the stockholders to be
timely must be received not later than the close of business on the 10th
day
following the day on which the date of the annual meeting is publicly announced.
“Public announcement” for purposes hereof shall have the meaning set forth in
Article II, Section 2.15(c) of these Bylaws. In no event shall the public
announcement of an adjournment or postponement of an annual meeting commence
a
new time period (or extend any time period) for the giving of a stockholder’s
notice as described above. To be properly brought before a special meeting,
business must be brought before the meeting by or at the direction of the
Board
of Directors.
(b)
A
stockholder’s notice to the Secretary of the corporation shall set forth as to
each matter the stockholder proposes to bring before the annual meeting
(i) a
brief description of the business desired to be brought before the meeting,
(ii)
the name and address, as they appear on the Company’s books, of the stockholder
proposing such business and the name and address of the beneficial owner,
if
any, on whose behalf the business is being brought, (iii) the class and
number
of shares of the corporation which are owned beneficially and of record
by the
stockholder and such other beneficial owner
,
(iv) any
material interest of the stockholder and such other beneficial owner in
such
business and (v) whether either such stockholder or beneficial owner intends
to
deliver a proxy statement and form of proxy to holders of at least the
percentage of the corporation's voting shares required under applicable
law to
carry the proposal.
(c)
Notwithstanding the foregoing provisions of this Bylaw, a stockholder shall
also
comply with all applicable requirements of the Securities Exchange Act
of 1934
(the “Exchange Act”) and the rules and regulations thereunder with respect to
the matters set forth in this Bylaw. Nothing in this Bylaw shall be deemed
to
affect any rights of stockholders to request inclusion of proposals in
the
corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.
1.11
Conduct
of Business
.
At
every meeting of the stockholders, the Chairman of the Board, or, in his
or her
absence, the President, or, in his or her absence, such other person as may
be
appointed by the Board of Directors, shall act as chairman. The Secretary
of the
corporation or a person designated by the chairman of the meeting shall act
as
secretary of the meeting. Unless otherwise approved by the chairman of the
meeting, attendance at the stockholders’ meeting is restricted to stockholders
of record, persons authorized in accordance with Section 1.8 of these Bylaws
to
act by proxy, and officers of the corporation.
The
chairman of the meeting shall call the meeting to order, establish the agenda,
and conduct the business of the meeting in accordance therewith or, at the
chairman’s discretion, it may be conducted otherwise in accordance with the
wishes of the stockholders in attendance. The date and time of the opening
and
closing of the polls for each matter upon which the stockholders will vote
at
the meeting shall be announced at the meeting.
The
chairman shall also conduct the meeting in an orderly manner, rule on the
precedence of, and procedure on, motions and other procedural matters, and
exercise discretion with respect to such procedural matters with fairness
and
good faith toward all those entitled to take part. Without limiting the
foregoing, the chairman may (a) restrict attendance at any time to bona fide
stockholders of record and their proxies and other persons in attendance
at the
invitation of the presiding officer or Board of Directors, (b) restrict use
of
audio or video recording devices at the meeting, and (c) impose reasonable
limits on the amount of time taken up at the meeting on discussion in general
or
on remarks by any one stockholder. Should any person in attendance become
unruly
or obstruct the meeting proceedings, the chairman shall have the power to
have
such person removed from the meeting. Notwithstanding anything in the Bylaws
to
the contrary, no business shall be conducted at a meeting except in accordance
with the procedures set forth in this Section 1.11 and Section 1.10 above.
The
chairman of a meeting may determine and declare to the meeting that any proposed
item of business was not brought before the meeting in accordance with the
provisions of this Section 1.11 and Section 1.10, and if he or she should
so
determine, he or she shall so declare to the meeting and any such business
not
properly brought before the meeting shall not be transacted.
1.12
Stockholder
Action Without Meeting
.
The
stockholders may take any action without a meeting that they could properly
take
at a meeting, if one or more written consents setting forth the action so
taken
are signed by all of the stockholders entitled to vote with respect to the
subject matter and are delivered to the Corporation for inclusion in the
minutes
or filing with the corporate records. Actions taken under this section are
effective when all consents are in the possession of the Corporation, unless
otherwise specified in the consent. A stockholder may withdraw consent only
be
delivering a written notice of withdrawal to the Corporation prior to the
time
that all consents are in the possession of the Corporation.
1.13
Meetings
by Remote Communication
.
If
authorized by the Board of Directors, and subject to such guidelines and
procedures as the Board may adopt, stockholders and proxy holders not physically
present at a meeting of stockholders may, by means of remote communication,
participate in the meeting and be deemed present in person and vote at the
meeting, whether such meeting is to be held at a designated place or solely
by
means of remote communication, provided that (i) the corporation shall implement
reasonable measures to verify that each person deemed present and permitted
to
vote at the meeting by means of remote communication is a stockholder or
proxy
holder, (ii) the corporation shall implement reasonable measures to provide
such
stockholders and proxy holders a reasonable opportunity to participate in
the
meeting and to vote on matters submitted to the stockholders, including an
opportunity to read or hear the proceedings of the meeting substantially
concurrently with such proceedings, and (iii) if any stockholder or proxy
holder
votes or takes other action at the meeting by means of remote communication,
a
record of such vote or other action shall be maintained by the corporation.
ARTICLE
II
BOARD
OF DIRECTORS
2.1
General
Powers
.
The
business and affairs of the corporation shall be managed by or under the
direction of a Board of Directors, who may exercise all of the powers of
the
corporation except as otherwise provided by law or the Certificate of
Incorporation. In the event of a vacancy in the Board of Directors, the
remaining directors, except as otherwise provided by law, may exercise the
powers of the full Board until the vacancy is filled.
2.2
Number
and Term of Office
.
The
number of directors shall initially be one (1) and, thereafter, shall be
fixed
from time to time exclusively by the Board of Directors pursuant to a resolution
adopted by a majority of the total number of authorized directors (whether
or
not there exist any vacancies in previously authorized directorships at the
time
any such resolution is presented to the Board for adoption). Directors shall
be
elected at each annual meeting of the stockholders to hold office until the
expiration of their respective term, but if any such annual meeting is not
held
or the directors are not elected at any annual meeting, the directors may
be
elected at any special meeting of stockholders held for that purpose, or
at the
next annual meeting of stockholders held thereafter. Each director, including
a
director elected to fill a vacancy, shall hold office until the expiration
of
the term for which elected and until a successor has been elected and qualified
or until his or her earlier resignation or removal or his or her office has
been
declared vacant in the manner provided in these bylaws. Directors need not
be
stockholders.
2.3
Vacancies
and Newly Created Directorships
.
Newly
created directorships resulting from any increase in the authorized number
of
directors or any vacancies in the Board of Directors resulting from death,
resignation, retirement, disqualification or other cause (including removal
from
office by a vote of the stockholders) may be filled only by a majority vote
of
the directors then in office, though less than a quorum (and not by
stockholders), or by the sole remaining director and directors so chosen
shall
hold office until the expiration of the applicable term for that particular
director seat or until such director’s successor shall have been duly elected
and qualified. No decrease in the number of authorized directors shall shorten
the term of any incumbent director.
2.4
Resignation
.
Any
director may resign by delivering notice in writing or by electronic
transmission to the President, Chairman of the Board or Secretary. Such
resignation shall be effective upon receipt unless it is specified to be
effective at some other time or upon the happening of some other event.
2.5
Removal
.
Subject
to the rights of the holders of any series of Preferred Stock then outstanding,
any directors, or the entire Board of Directors, may be removed from office
at
any time, with or without cause, by the affirmative vote of the holders of
a
majority of the voting power of all of the outstanding shares of capital
stock
entitled to vote generally in the election of directors, voting together
as a
single class. Vacancies in the Board of Directors resulting from such removal
may be filled by a majority of the directors then in office, though less
than a
quorum, or by the sole remaining director. Directors so chosen shall hold
office
until the term of office of the class to which they have been elected expires.
2.6
Regular
Meetings
.
Regular
meetings of the Board of Directors may be held without notice at such time
and
place, either within or without the State of Delaware, as shall be determined
from time to time by the Board of Directors; provided that any director who
is
absent when such a determination is made shall be given notice of the
determination. A regular meeting of the Board of Directors may be held without
notice immediately after and at the same place as the annual meeting of
stockholders.
2.7
Special
Meetings
.
Special
meetings of the Board of Directors may be called by the Chairman of the Board,
the President or two or more directors and may be held at any time and place,
within or without the State of Delaware.
2.8
Notice
of Special Meetings
.
Notice
of any special meeting of directors shall be given to each director by whom
it
is not waived by the Secretary or by the officer or one of the directors
calling
the meeting. Notice shall be duly given to each director by (i) giving notice
to
such director in person or by telephone, electronic transmission or voice
message system at least 24 hours in advance of the meeting, (ii) sending
a
facsimile to his or her last known facsimile number, or delivering written
notice by hand to his or her last known business or home address, at least
24
hours in advance of the meeting, or (iii) mailing written notice to his or
her
last known business or home address at least three calendar days in advance
of
the meeting. A notice or waiver of notice of a meeting of the Board of Directors
need not specify the purposes of the meeting. Unless otherwise indicated
in the
notice thereof, any and all business may be transacted at a special meeting.
2.9
Participation
in Meetings by Telephone Conference Calls or Other Methods of
Communication
.
Directors or any members of any committee designated by the directors may
participate in a meeting of the Board of Directors or such committee by means
of
conference telephone or other communications equipment by means of which
all
persons participating in the meeting can hear each other, and participation
by
such means shall constitute presence in person at such meeting.
2.10
Quorum
.
A
majority of the total number of authorized directors shall constitute a quorum
at any meeting of the Board of Directors. In the absence of a quorum at any
such
meeting, a majority of the directors present may adjourn the meeting from
time
to time without further notice other than announcement at the meeting, until
a
quorum shall be present. Interested directors may be counted in determining
the
presence of a quorum at a meeting of the Board of Directors or at a meeting
of a
committee which authorizes a particular contract or transaction.
2.11
Action
at Meeting
.
At any
meeting of the Board of Directors at which a quorum is present, the vote
of a
majority of those present shall be sufficient to take any action, unless
a
different vote is specified by law, the Certificate of Incorporation or these
Bylaws.
2.12
Action
by Written Consent
.
Any
action required or permitted to be taken at any meeting of the Board of
Directors or of any committee of the Board of Directors may be taken without
a
meeting if all members of the Board or committee, as the case may be, consent
to
the action in writing or by electronic transmission, and the writings or
electronic transmissions are filed with the minutes of proceedings of the
Board
or committee. Such filing shall be in paper form if the minutes are maintained
in paper form and shall be in electronic form if the minutes are maintained
in
electronic form.
2.13
Committees
.
The
Board of Directors may designate one or more committees, each committee to
consist of one or more of the directors of the corporation, with such lawfully
delegated powers and duties as it therefor confers, to serve at the pleasure
of
the Board. The Board may designate one or more directors as alternate members
of
any committee, who may replace any absent or disqualified member at any meeting
of the committee. In the absence or disqualification of a member of a committee,
the member or members of the committee present at any meeting and not
disqualified from voting, whether or not he or she or they constitute a quorum,
may unanimously appoint another member of the Board of Directors to act at
the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of Directors
and subject to the provisions of the Delaware General Corporation Law, shall
have and may exercise all the powers and authority of the Board of Directors
in
the management of the business and affairs of the corporation and may authorize
the seal of the corporation to be affixed to all papers which may require
it.
Each such committee shall keep minutes and make such reports as the Board
of
Directors may from time to time request. Except as the Board of Directors
may
otherwise determine, any committee may make rules for the conduct of its
business, but unless otherwise provided by such rules, its business shall
be
conducted as nearly as possible in the same manner as is provided in these
Bylaws for the Board of Directors.
2.14
Compensation
of Directors
.
Directors may be paid such compensation for their services and such
reimbursement for expenses of attendance at meetings as the Board of Directors
may from time to time determine. No such payment shall preclude any director
from serving the corporation or any of its parent or subsidiary corporations
in
any other capacity and receiving compensation for such service.
2.15
Nomination
of Director Candidates
.
(a)
Subject to the rights of holders of any class or series of Preferred Stock
then
outstanding, nominations for the election of Directors at an annual meeting
may
be made by (i) the Board of Directors or a duly authorized committee thereof
or
(ii) any stockholder entitled to vote in the election of Directors generally
who
complies with the procedures set forth in this Bylaw and who is a stockholder
of
record at the time notice is delivered to the Secretary of the corporation.
Any
stockholder entitled to vote in the election of Directors generally may nominate
one or more persons for election as Directors at an annual meeting only if
timely notice of such stockholder’s intent to make such nomination or
nominations has been given in writing to the Secretary of the corporation.
To be
timely, a stockholder nomination for a director to be elected at an annual
meeting shall be received at the corporation’s principal executive offices not
less than 120 calendar days in advance of the first anniversary of the date
that
the corporation’s (or the corporation’s predecessor’s) proxy statement was
released to stockholders in connection with the previous year’s annual meeting
of stockholders, except that if no annual meeting was held in the previous
year
or the date of the annual meeting has been advanced by more than 30 calendar
days from the date contemplated at the time of the previous year’s proxy
statement, notice by the stockholders to be timely must be received not later
than the close of business on the tenth day following the day on which public
announcement of the date of such meeting is first made. Each such notice
shall
set forth: (i) the name and address of the stockholder who intends to make
the
nomination, of the beneficial owner, if any, on whose behalf the nomination
is
being made and of the person or persons to be nominated; (ii) a representation
that the stockholder is a holder of record of stock of the corporation entitled
to vote for the election of Directors on the date of such notice and intends
to
appear in person or by proxy at the meeting to nominate the person or persons
specified in the notice; (iii) a description of all arrangements or
understandings between the stockholder or such beneficial owner and each
nominee
and any other person or persons (naming such person or persons) pursuant
to
which the nomination or nominations are to be made by the stockholder; (iv)
such
other information regarding each nominee proposed by such stockholder as
would
be required to be included in a proxy statement filed pursuant to the proxy
rules of the Securities and Exchange Commission, had the nominee been nominated,
or intended to be nominated, by the Board of Directors; (v) the consent of
each
nominee to serve as a director of the corporation if so elected; (vi) the
class
and number of shares of the corporation that are owned beneficially and of
record by such stockholder and such beneficial owner; and (vii) whether either
such stockholder or beneficial owner intends to deliver a proxy statement
and
form of proxy to holders of at least the percentage of the corporation's
voting
shares required under applicable law to carry the proposal. In no event shall
the public announcement of an adjournment or postponement of an annual meeting
commence a new time period (or extend any time period) for the giving of
a
stockholder’s notice as described above. Notwithstanding the third sentence of
this Section 2.15(a), in the event that the number of Directors to be elected
at
an annual meeting is increased and there is no public announcement by the
corporation naming the nominees for the additional directorships at least
130
calendar days prior to the first anniversary of the date that the corporation’s
(or its predecessor’s) proxy statement was released to stockholders in
connection with the previous year’s annual meeting, a stockholder’s notice
required by this Section 2.15(a) shall also be considered timely, but only
with
respect to nominees for the additional directorships, if it shall be delivered
to the Secretary at the principal executive offices of the corporation not
later
than the close of business on the 10th day following the day on which such
public announcement is first made by the corporation.
(b)
Nominations of persons for election to the Board of Directors may be made
at a
special meeting of stockholders at which directors are to be elected pursuant
to
the corporation’s notice of meeting by (i) or at the direction of the Board of
Directors or a committee thereof or (ii) any stockholder of the corporation
who
is entitled to vote at the meeting, who complies with the notice procedures
set
forth in this Bylaw and who is a stockholder of record at the time such notice
is delivered to the Secretary of the corporation. In the event the corporation
calls a special meeting of stockholders for the purpose of electing one or
more
directors to the Board of Directors, any such stockholder may nominate a
person
or persons (as the case may be), for election to such position(s) as are
specified in the corporation’s notice of meeting, if the stockholder’s notice as
required by paragraph (a) of this Bylaw shall be delivered to the Secretary
at
the principal executive offices of the corporation not earlier than the 90th
day
prior to such special meeting and not later than the close of business on
the
later of the 70th day prior to such special meeting or the 10th day following
the day on which public announcement is first made of the date of the special
meeting and of the nominees proposed by the Board of Directors to be elected
at
such meeting. In no event shall the public announcement of an adjournment
or
postponement of a special meeting commence a new time period (or extend any
time
period) for the giving of a stockholder’s notice as described above.
(c)
For
purposes of these Bylaws, “public announcement” shall mean disclosure in a press
release reported by the Dow Jones News Service, Associated Press or comparable
national news service or in a document publicly filed by the corporation
with
the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d)
of
the Exchange Act.
(d)
Notwithstanding the foregoing provisions of this Bylaw, a stockholder shall
also
comply with all applicable requirements of the Exchange Act and the rules
and
regulations thereunder with respect to the matters set forth in this Bylaw.
Nothing in this Bylaw shall be deemed to affect any rights of stockholders
to
request inclusion of proposals in the corporation’s proxy statement pursuant to
Rule 14a-8 under the Exchange Act.
(e)
Only
persons nominated in accordance with the procedures set forth in this Section
2.15 shall be eligible to serve as directors. Except as otherwise provided
by
law, the chairman of the meeting shall have the power and duty (a) to determine
whether a nomination was made in accordance with the procedures set forth
in
this Section 2.15 and (b) if any proposed nomination was not made in compliance
with this Section 2.15, to declare that such nomination shall be
disregarded.
(f)
If
the chairman of the meeting for the election of Directors determines that
a
nomination of any candidate for election as a Director at such meeting was
not
made in accordance with the applicable provisions of this Section 2.15, such
nomination shall be void; provided, however, that nothing in this Section
2.15
shall be deemed to limit any voting rights upon the occurrence of dividend
arrearages provided to holders of Preferred Stock pursuant to the Preferred
Stock designation for any series of Preferred Stock.
ARTICLE
III
OFFICERS
3.1
Enumeration
.
The
officers of the corporation shall consist of a Chief Executive Officer, a
President, a Secretary, a Treasurer, a Chief Financial Officer and such other
officers with such other titles as the Board of Directors shall determine,
including, at the discretion of the Board of Directors, a Chairman of the
Board
of Directors and one or more Vice Presidents and Assistant Secretaries. The
Board of Directors may appoint such other officers as it may deem appropriate.
3.2
Election/Appointment
.
Officers shall be elected annually by the Board of Directors at its first
meeting following the annual meeting of stockholders. Officers may be appointed
by the Board of Directors at any other meeting. The Board of Directors may
appoint, or empower the president to appoint, such other officers and agents
as
the business of the corporation may require, each of whom shall hold office
for
such period, have such authority, and perform such duties as are provided
in
these Bylaws or as the Board of Directors may from time to time determine.
3.3
Qualification
.
No
officer need be a stockholder. Any two or more offices may be held by the
same
person.
3.4
Tenure
.
Except
as otherwise provided by law, by the Certificate of Incorporation or by these
Bylaws, each officer shall hold office until his or her successor is elected
and
qualified, unless a different term is specified in the vote appointing him
or
her, or until his or her earlier death, resignation or removal.
3.5
Resignation
and Removal
.
Any
officer may resign by delivering his or her written resignation to the
corporation at its principal office or to the President or Secretary. Such
resignation shall be effective upon receipt unless it is specified to be
effective at some other time or upon the happening of some other event. Any
officer elected by the Board of Directors may be removed at any time, with
or
without cause, by the Board of Directors or, except in the case of an officer
chosen by the Board of Directors, by any officer upon whom such power of
removal
may be conferred by the Board of Directors.
3.6
Chairman
of the Board
.
The
Board of Directors may appoint a Chairman of the Board. If the Board of
Directors appoints a Chairman of the Board, he or she shall perform such
duties
and possess such powers as are assigned to him or her by the Board of Directors.
Unless otherwise provided by the Board of Directors, he or she shall preside
at
all meetings of the Board of Directors.
3.7
Chief
Executive Officer
.
The
Chief Executive Officer of the corporation shall, subject to the direction
of
the Board of Directors, have general supervision, direction and control of
the
business and the officers of the corporation. He or she shall preside at
all
meetings of the stockholders and, in the absence or nonexistence of a Chairman
of the Board, at all meetings of the Board of Directors. He or she shall
have
the general powers and duties of management usually vested in the chief
executive officer of a corporation, including general supervision, direction
and
control of the business and supervision of other officers of the corporation,
and shall have such other powers and duties as may be prescribed by the Board
of
Directors or these Bylaws.
3.8
President
.
Subject
to the direction of the Board of Directors and such supervisory powers as
may be
given by these Bylaws or the Board of Directors to the Chairman of the Board or
the Chief Executive Officer, if such titles be held by other officers, the
President shall have general supervision, direction and control of the business
and supervision of other officers of the corporation. Unless otherwise
designated by the Board of Directors, the President shall be the Chief Executive
Officer of the corporation. The President shall have such other powers and
duties as may be prescribed by the Board of Directors or these Bylaws. He
or she
shall have power to sign stock certificates, contracts and other instruments
of
the corporation which are authorized and shall have general supervision and
direction of all of the other officers, employees and agents of the corporation,
other than the Chairman of the Board and the Chief Executive Officer.
3.9
Vice
Presidents
.
Any
Vice President shall perform such duties and possess such powers as the Board
of
Directors or the President may from time to time prescribe. In the event
of the
absence, inability or refusal to act of the President, the Vice President
(or if
there shall be more than one, the Vice Presidents in the order determined
by the
Board of Directors) shall perform the duties of the President and when so
performing shall have at the powers of and be subject to all the restrictions
upon the President. The Board of Directors may assign to any Vice President
the
title of Executive Vice President, Senior Vice President or any other title
selected by the Board of Directors.
3.10
Secretary
and Assistant Secretaries
.
The
Secretary shall perform such duties and shall have such powers as the Board
of
Directors or the President may from time to time prescribe. In addition,
the
Secretary shall perform such duties and have such powers as are incident
to the
office of the Secretary, including, without limitation, the duty and power
to
give notices of all meetings of stockholders and special meetings of the
Board
of Directors, to keep a record of the proceedings of all meetings of
stockholders and the Board of Directors, to maintain a stock ledger and prepare
lists of stockholders and their addresses as required, to be custodian of
corporate records and the corporate seal and to affix and attest to the same
on
documents.
Any
Assistant Secretary shall perform such duties and possess such powers as
the
Board of Directors, the Chief Executive Officer, the President or the Secretary
may from time to time prescribe. In the event of the absence, inability or
refusal to act of the Secretary, the Assistant Secretary (or if there shall
be
more than one, the Assistant Secretaries in the order determined by the Board
of
Directors) shall perform the duties and exercise the powers of the Secretary.
In
the
absence of the Secretary or any Assistant Secretary at any meeting of
stockholders or directors, the person presiding at the meeting shall designate
a
temporary secretary to keep a record of the meeting.
3.11
Treasurer
.
The
Treasurer shall perform such duties and have such powers as are incident
to the
office of treasurer, including without limitation, the duty and power to
keep
and be responsible for all funds and securities of the corporation, to maintain
the financial records of the corporation, to deposit funds of the corporation
in
depositories as authorized, to disburse such funds as authorized, to make
proper
accounts of such funds, and to render as required by the Board of Directors
accounts of all such transactions and of the financial condition of the
corporation.
3.12
Chief
Financial Officer
.
The
Chief Financial Officer shall perform such duties and shall have such powers
as
may from time to time be assigned to him or her by the Board of Directors,
the
Chief Executive Officer or the President. Unless otherwise designated by
the
Board of Directors, the Chief Financial Officer shall be the Treasurer of
the
corporation.
3.13
Salaries
.
Officers of the corporation shall be entitled to such salaries, compensation
or
reimbursement as shall be fixed or allowed from time to time by the Board
of
Directors.
3.14
Delegation
of Authority
.
The
Board of Directors may from time to time delegate the powers or duties of
any
officer to any other officers or agents, notwithstanding any provision hereof.
ARTICLE
IV
CAPITAL
STOCK
4.1
Issuance
of Stock
.
Subject
to the provisions of the Certificate of Incorporation, the whole or any part
of
any unissued balance of the authorized capital stock of the corporation or
the
whole or any part of any unissued balance of the authorized capital stock
of the
corporation held in its treasury may be issued, sold, transferred or otherwise
disposed of by vote of the Board of Directors in such manner, for such
consideration and on such terms as the Board of Directors may determine.
4.2
Certificates
of Stock
.
The
shares of the corporation shall be represented by certificates, provided
that
the Board of Directors may provide by resolution or resolutions that some
or all
of any class or series of its stock shall be uncertificated shares; provided,
however, that no such resolution shall apply to shares represented by a
certificate until such certificate is surrendered to the corporation. Every
holder of stock of the corporation represented by certificates, and, upon
written request to the corporation’s transfer agent or registrar, any holder of
uncertificated shares, shall be entitled to have a certificate, in such form
as
may be prescribed by law and by the Board of Directors, certifying the number
and class of shares owned by him or her in the corporation. Each such
certificate shall be signed by, or in the name of the corporation by, the
Chairman or Vice Chairman, if any, of the Board of Directors, or the President
or a Vice President, and the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary of the corporation. Any or all of the
signatures on the certificate may be a facsimile.
Each
certificate for shares of stock which are subject to any restriction on transfer
pursuant to the Certificate of Incorporation, the Bylaws, applicable securities
laws or any agreement among any number of stockholders or among such holders
and
the corporation shall have conspicuously noted on the face or back of the
certificate either the full text of the restriction or a statement of the
existence of such restriction.
4.3
Transfers
.
Except
as otherwise established by rules and regulations adopted by the Board of
Directors, and subject to applicable law, shares of stock may be transferred
on
the books of the corporation: (i) in the case of shares represented by a
certificate, by the surrender to the corporation or its transfer agent of
the
certificate representing such shares properly endorsed or accompanied by
a
written assignment or power of attorney properly executed, and with such
proof
of authority or authenticity of signature as the corporation or its transfer
agent may reasonably require; and (ii) in the case of uncertificated shares,
upon the receipt of proper transfer instructions from the registered owner
thereof. Except as may be otherwise required by law, the Certificate of
Incorporation or the Bylaws, the corporation shall be entitled to treat the
record holder of stock as shown on its books as the owner of such stock for
all
purposes, including the payment of dividends and the right to vote with respect
to such stock, regardless of any transfer, pledge or other disposition of
such
stock until the shares have been transferred on the books of the corporation
in
accordance with the requirements of these Bylaws.
4.4
Lost,
Stolen or Destroyed Certificates
.
The
corporation may issue a new certificate of stock in place of any previously
issued certificate alleged to have been lost, stolen, or destroyed, or it
may
issue uncertificated shares if the shares represented by such certificate
have
been designated as uncertificated shares in accordance with Section 4.2,
upon
such terms and conditions as the Board of Directors may prescribe, including
the
presentation of reasonable evidence of such loss, theft or destruction and
the
giving of such indemnity as the Board of Directors may require for the
protection of the corporation or any transfer agent or registrar (including
the
delivery of a bond in an amount determined by the corporation).
4.5
Record
Date
.
The
Board of Directors may fix in advance a record date for the determination
of the
stockholders entitled to notice of or to vote at any meeting of stockholders,
or
entitled to receive payment of any dividend or other distribution or allotment
of any rights in respect of any change, concession or exchange of stock,
or for
the purpose of any other lawful action. Such record date shall not precede
the
date on which the resolution fixing the record date is adopted and shall
not be
more than 60 nor less than 10 calendar days before the date of such meeting,
nor
more than 60 calendar days prior to any other action to which such record
date
relates.
If
no
record date is fixed by the Board of Directors, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders
shall
be at the close of business on the day before the day on which notice is
given,
or, if notice is waived, at the close of business on the day before the day
on
which the meeting is held. If no record date is fixed by the Board of Directors,
the record date for determining stockholders entitled to express consent
to
corporate action in writing without a meeting when no prior action by the
Board
of Directors is necessary shall be the day on which the first written consent
is
expressed. The record date for determining stockholders for any other purpose
shall be at the close of business on the day on which the Board of Directors
adopts the resolution relating to such purpose.
A
determination of stockholders of record entitled to notice of or to vote
at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
ARTICLE
V
GENERAL
PROVISIONS
5.1
Fiscal
Year
.
The
fiscal year of the corporation shall be as fixed by the Board of Directors.
5.2
Corporate
Seal
.
The
corporate seal shall be in such form as shall be approved by the Board of
Directors.
5.3
Waiver
of Notice
.
Whenever any notice whatsoever is required to be given by law, by the
Certificate of Incorporation or by these Bylaws, a waiver of such notice
either
in writing signed by the person entitled to such notice or such person’s duly
authorized attorney, or by electronic transmission or any other method permitted
under the Delaware General Corporation Law, whether before, at or after the
time
stated in such waiver, or the appearance of such person or persons at such
meeting in person or by proxy, shall be deemed equivalent to such notice.
Neither the business nor the purpose of any meeting need be specified in
such a
waiver. Attendance at any meeting shall constitute waiver of notice except
attendance for the sole purpose of objecting to the timeliness of notice.
5.4
Actions
with Respect to Securities of Other Corporations
.
Except
as the Board of Directors may otherwise designate, the Chief Executive Officer
or President or any officer of the corporation authorized by the Chief Executive
Officer or President shall have the power to vote and otherwise act on behalf
of
the corporation, in person or proxy, and may waive notice of, and act as,
or
appoint any person or persons to act as, proxy or attorney-in-fact to this
corporation (with or without power of substitution) at any meeting of
stockholders or stockholders (or with respect to any action of stockholders)
of
any other corporation or organization, the securities of which may be held
by
this corporation and otherwise to exercise any and all rights and powers
which
this corporation may possess by reason of this corporation’s ownership of
securities in such other corporation or other organization.
5.5
Evidence
of Authority
.
A
certificate by the Secretary, or an Assistant Secretary, or a temporary
Secretary, as to any action taken by the stockholders, directors, a committee
or
any officer or representative of the corporation shall as to all persons
who
rely on the certificate in good faith be conclusive evidence of such action.
5.6
Certificate
of Incorporation
.
All
references in these Bylaws to the Certificate of Incorporation shall be deemed
to refer to the Certificate of Incorporation of the corporation, as amended
and
in effect from time to time.
5.7
Severability
.
Any
determination that any provision of these Bylaws is for any reason inapplicable,
illegal or ineffective shall not affect or invalidate any other provision
of
these Bylaws.
5.8
Pronouns
.
All
pronouns used in these Bylaws shall be deemed to refer to the masculine,
feminine or neuter, singular or plural, as the identity of the person or
persons
may require.
5.9
Notices
.
Except
as otherwise specifically provided herein or required by law, all notices
required to be given to any stockholder, director, officer, employee or agent
shall be in writing and may in every instance be effectively given by hand
delivery to the recipient thereof, by depositing such notice in the mails,
postage paid, or by sending such notice by commercial courier service, or
by
facsimile or other electronic transmission, provided that notice to stockholders
by electronic transmission shall be given in the manner provided in Section
232
of the Delaware General Corporation Law. Any such notice shall be addressed
to
such stockholder, director, officer, employee or agent at his or her last
known
address as the same appears on the books of the corporation. The time when
such
notice shall be deemed to be given shall be the time such notice is received
by
such stockholder, director, officer, employee or agent, or by any person
accepting such notice on behalf of such person, if delivered by hand, facsimile,
other electronic transmission or commercial courier service, or the time
such
notice is dispatched, if delivered through the mails. Without limiting the
manner by which notice otherwise may be given effectively, notice to any
stockholder shall be deemed given: (1) if by facsimile, when directed to
a
number at which the stockholder has consented to receive notice; (2) if by
electronic mail, when directed to an electronic mail address at which the
stockholder has consented to receive notice; (3) if by a posting on an
electronic network together with separate notice to the stockholder of such
specific posting, upon the later of (A) such posting and (B) the giving of
such
separate notice; (4) if by any other form of electronic transmission, when
directed to the stockholder; and (5) if by mail, when deposited in the mail,
postage prepaid, directed to the stockholder at such stockholder’s address as it
appears on the records of the corporation.
5.10
Reliance
Upon Books, Reports and Records
.
Each
director, each member of any committee designated by the Board of Directors,
and
each officer of the corporation shall, in the performance of his or her duties,
be fully protected in relying in good faith upon the books of account or
other
records of the corporation as provided by law, including reports made to
the
corporation by any of its officers, by an independent certified public
accountant, or by an appraiser selected with reasonable care.
5.11
Time
Periods
.
In
applying any provision of these Bylaws which require that an act be done
or not
done a specified number of calendar days prior to an event or that an act
be
done during a period of a specified number of calendar days prior to an event,
calendar days shall be used, the day of the doing of the act shall be excluded,
and the day of the event shall be included.
5.12
Facsimile
Signatures
.
In
addition to the provisions for use of facsimile signatures elsewhere
specifically authorized in these Bylaws, facsimile signatures of any officer
or
officers of the corporation may be used whenever and as authorized by the
Board
of Directors or a committee thereof.
ARTICLE
VI
AMENDMENTS
6.1
By
the
Board of Directors
.
Except
as otherwise set forth in these Bylaws, these Bylaws may be altered, amended
or
repealed or new Bylaws may be adopted by the affirmative vote of a majority
of
the directors present at any regular or special meeting of the Board of
Directors at which a quorum is present.
6.2
By
the
Stockholders
.
Except
as otherwise set forth in these Bylaws, these Bylaws may be altered, amended
or
repealed or new Bylaws may be adopted by the affirmative vote of the holders
of
at least a majority of the voting power of all of the shares of capital stock
of
the corporation issued and outstanding and entitled to vote generally in
any
election of directors, voting together as a single class. Such vote may be
held
at any annual meeting of stockholders, or at any special meeting of stockholders
provided that notice of such alteration, amendment, repeal or adoption of
new
Bylaws shall have been stated in the notice of such special meeting.
ARTICLE
VII
INDEMNIFICATION
OF DIRECTORS AND OFFICERS
7.1
Right
to Indemnification
.
Each
person who was or is made a party or is threatened to be made a party to
or is
involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (“proceeding”), by reason of the fact that he or
she or a person of whom he or she is the legal representative, is or was
a
director or officer of the corporation or is or was serving at the request
of
the corporation as a director or officer of another corporation, or as a
controlling person of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis
of
such proceeding is alleged action in an official capacity as a director or
officer, or in any other capacity while serving as a director or officer,
shall
be indemnified and held harmless by the corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or
may
hereafter be amended (but, in the case of any such amendment, only to the
extent
that such amendment permits the corporation to provide broader indemnification
rights than said Law permitted the corporation to provide prior to such
amendment) against all expenses, liability and loss reasonably incurred or
suffered by such person in connection therewith and such indemnification
shall
continue as to a person who has ceased to be a director or officer and shall
inure to the benefit of his or her heirs, executors and administrators;
provided
,
however
,
that
except as provided in Section 7.2 of this Article VII, the corporation shall
indemnify any such person seeking indemnity in connection with a proceeding
(or
part thereof) initiated by such person only if (a) such indemnification is
expressly required to be made by law, (b) the proceeding (or part thereof)
was
authorized by the Board of Directors of the corporation, (c) such
indemnification is provided by the corporation, in its sole discretion, pursuant
to the powers vested in the corporation under the Delaware General Corporation
Law, or (d) the proceeding (or part thereof) is brought to establish or enforce
a right to indemnification or advancement under an indemnity agreement or
any
other statute or law or otherwise as required under Section 145 of the Delaware
General Corporation Law. The rights hereunder shall be contract rights and
shall
include the right to be paid expenses incurred in defending any such proceeding
in advance of its final disposition;
provided
,
however
,
that
the payment of such expenses incurred by a director or officer of the
corporation in his or her capacity as a director or officer (and not in any
other capacity in which service was or is tendered by such person while a
director or officer, including, without limitation, service to an employee
benefit plan) in advance of the final disposition of such proceeding, shall
be
made only upon delivery to the corporation of an undertaking, by or on behalf
of
such director or officer, to repay all amounts so advanced if it should be
determined ultimately by final judicial decision from which there is no further
right to appeal that such director or officer is not entitled to be indemnified
under this Section or otherwise.
7.2
Right
of Claimant to Bring Suit
.
If a
claim under Section 7.1 is not paid in full by the corporation within 60
calendar days after a written claim has been received by the corporation,
or 20
calendar days in the case of a claim for advancement of expenses, the claimant
may at any time thereafter bring suit against the corporation to recover
the
unpaid amount of the claim and, if such suit is not frivolous or brought
in bad
faith, the claimant shall be entitled to be paid also the expense of prosecuting
such claim. It shall be a defense to any such action (other than an action
brought to enforce a claim for expenses incurred in defending any proceeding
in
advance of its final disposition where the required undertaking, if any,
has
been tendered to this corporation) that the claimant has not met the standards
of conduct which make it permissible under the Delaware General Corporation
Law
for the corporation to indemnify the claimant for the amount claimed. Neither
the failure of the corporation (including its Board of Directors, independent
legal counsel, or its stockholders) to have made a determination prior to
the
commencement of such action that indemnification of the claimant is proper
in
the circumstances because he or she has met the applicable standard of conduct
set forth in the Delaware General Corporation Law, nor an actual determination
by the corporation (including its Board of Directors, independent legal counsel
or its stockholders) that the claimant has not met such applicable standard
of
conduct, shall be a defense to the action or create a presumption that claimant
has not met the applicable standard of conduct. In any suit brought by the
corporation to recover an advancement of expenses pursuant to the terms of
an
undertaking, the corporation shall be entitled to recover such expenses upon
a
final judicial decision from which there is no further right to appeal that
the
indemnitee has not met any applicable standard for indemnification set forth
in
the Delaware General Corporation Law. In any suit brought by the indemnitee
to
enforce a right to indemnification or to an advancement of expenses hereunder,
or brought by the corporation to recover an advancement of expenses pursuant
to
the terms of an undertaking, the burden of proving that the indemnitee is
not
entitled to be indemnified, or to such advancement of expenses, shall be
on the
corporation.
7.3
Indemnification
of Employees and Agents
.
The
corporation may, to the extent authorized from time to time by the Board
of
Directors, grant rights to indemnification, and to the advancement of related
expenses, to any employee or agent of the corporation to the fullest extent
of
the provisions of this Article with respect to the indemnification of and
advancement of expenses to directors and officers of the corporation.
7.4
Non-Exclusivity
of Rights
.
The
rights conferred on any person in this Article VII shall not be exclusive
of any
other right which such persons may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
7.5
Indemnification
Contracts
.
The
Board of Directors is authorized to enter into a contract with any director,
officer, employee or agent of the corporation, or any person serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, including
employee benefit plans, providing for indemnification rights equivalent to
or,
if the Board of Directors so determines, greater than, those provided for
in
this Article VII.
7.6
Insurance
.
The
corporation shall maintain insurance to the extent reasonably available,
at its
expense, to protect itself and any such director, officer, employee or agent
of
the corporation or another corporation, partnership, joint venture, trust
or
other enterprise against any such expense, liability or loss, whether or
not the
corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
7.7
Effect
of Amendment
.
Any
amendment, repeal or modification of any provision of this Article VII shall
not
adversely affect any right or protection of an indemnitee or his or her
successor existing at the time of such amendment, repeal or modification.
ANNEX
E
NEVADA
REVISED STATUTES SECTIONS 92A.300 TO 92A.500
RIGHTS
OF DISSENTING OWNERS
NEVADA
REVISED STATUTES SECTIONS 92A.300 TO 92A.500
RIGHTS
OF DISSENTING OWNERS
NRS
92A.300 Definitions.
As
used
in
NRS
92A.300
to
92A.500
,
inclusive, unless the context otherwise requires, the words and terms defined
in
NRS
92A.305
to
92A.335
,
inclusive, have the meanings ascribed to them in those sections.
(Added
to
NRS by 1995, 2086)
NRS
92A.305 “Beneficial stockholder” defined.
“Beneficial
stockholder” means a person who is a beneficial owner of shares held in a voting
trust or by a nominee as the stockholder of record.
(Added
to
NRS by 1995, 2087)
NRS
92A.310 “Corporate action” defined.
“Corporate
action” means the action of a domestic corporation.
(Added
to
NRS by 1995, 2087)
NRS
92A.315 “Dissenter” defined.
“Dissenter”
means a stockholder who is entitled to dissent from a domestic corporation’s
action under
NRS
92A.380
and who
exercises that right when and in the manner required by
NRS
92A.400
to
92A.480
,
inclusive.
(Added
to
NRS by 1995, 2087; A
1999,
1631
)
NRS
92A.320 “Fair value” defined.
“Fair
value,” with respect to a dissenter’s shares, means the value of the shares
immediately before the effectuation of the corporate action to which he objects,
excluding any appreciation or depreciation in anticipation of the corporate
action unless exclusion would be inequitable.
(Added
to
NRS by 1995, 2087)
NRS
92A.325 “Stockholder” defined.
“Stockholder”
means a stockholder of record or a beneficial stockholder of a domestic
corporation.
(Added
to
NRS by 1995, 2087)
NRS
92A.330 “Stockholder of record” defined.
“Stockholder
of record” means the person in whose name shares are registered in the records
of a domestic corporation or the beneficial owner of shares to the extent
of the
rights granted by a nominee’s certificate on file with the domestic corporation.
(Added
to
NRS by 1995, 2087)
NRS
92A.335 “Subject corporation” defined.
“Subject
corporation” means the domestic corporation which is the issuer of the shares
held by a dissenter before the corporate action creating the dissenter’s rights
becomes effective or the surviving or acquiring entity of that issuer after
the
corporate action becomes effective.
(Added
to
NRS by 1995, 2087)
NRS
92A.340 Computation of interest.
Interest
payable pursuant to
NRS
92A.300
to
92A.500
,
inclusive, must be computed from the effective date of the action until the
date
of payment, at the average rate currently paid by the entity on its principal
bank loans or, if it has no bank loans, at a rate that is fair and equitable
under all of the circumstances.
(Added
to
NRS by 1995, 2087)
NRS
92A.350 Rights of dissenting partner of domestic limited partnership.
A
partnership agreement of a domestic limited partnership or, unless otherwise
provided in the partnership agreement, an agreement of merger or exchange,
may
provide that contractual rights with respect to the partnership interest
of a
dissenting general or limited partner of a domestic limited partnership are
available for any class or group of partnership interests in connection with
any
merger or exchange in which the domestic limited partnership is a constituent
entity.
(Added
to
NRS by 1995, 2088)
NRS
92A.360 Rights of dissenting member of domestic limited-liability company.
The
articles of organization or operating agreement of a domestic limited-liability
company or, unless otherwise provided in the articles of organization or
operating agreement, an agreement of merger or exchange, may provide that
contractual rights with respect to the interest of a dissenting member are
available in connection with any merger or exchange in which the domestic
limited-liability company is a constituent entity.
(Added
to
NRS by 1995, 2088)
NRS
92A.370 Rights of dissenting member of domestic nonprofit corporation.
1.
Except
as otherwise provided in subsection 2, and unless otherwise provided in the
articles or bylaws, any member of any constituent domestic nonprofit corporation
who voted against the merger may, without prior notice, but within 30 days
after
the effective date of the merger, resign from membership and is thereby excused
from all contractual obligations to the constituent or surviving corporations
which did not occur before his resignation and is thereby entitled to those
rights, if any, which would have existed if there had been no merger and
the
membership had been terminated or the member had been expelled.
2.
Unless
otherwise provided in its articles of incorporation or bylaws, no member
of a
domestic nonprofit corporation, including, but not limited to, a cooperative
corporation, which supplies services described in
chapter
704
of NRS
to its members only, and no person who is a member of a domestic nonprofit
corporation as a condition of or by reason of the ownership of an interest
in
real property, may resign and dissent pursuant to subsection 1.
(Added
to
NRS by 1995, 2088)
NRS
92A.380 Right of stockholder to dissent from certain corporate actions and
to
obtain payment for shares.
1.
Except
as otherwise provided in
NRS
92A.370
and
92A.390
,
any
stockholder is entitled to dissent from, and obtain payment of the fair value
of
his shares in the event of any of the following corporate actions:
(a)
Consummation of a conversion or plan of merger to which the domestic corporation
is a constituent entity:
(1)
If
approval by the stockholders is required for the conversion or merger by
NRS
92A.120
to
92A.160
,
inclusive, or the articles of incorporation, regardless of whether the
stockholder is entitled to vote on the conversion or plan of merger;
or
(2)
If
the domestic corporation is a subsidiary and is merged with its parent pursuant
to
NRS
92A.180
.
(b)
Consummation of a plan of exchange to which the domestic corporation is a
constituent entity as the corporation whose subject owner’s interests will be
acquired, if his shares are to be acquired in the plan of exchange.
(c)
Any
corporate action taken pursuant to a vote of the stockholders to the extent
that
the articles of incorporation, bylaws or a resolution of the board of directors
provides that voting or nonvoting stockholders are entitled to dissent and
obtain payment for their shares.
(d)
Any
corporate action not described in paragraph (a), (b) or (c) that will result
in
the stockholder receiving money or scrip instead of fractional shares except
where the stockholder would not be entitled to receive such payment pursuant
to
NRS
78.205
,
78.2055
or
78.207
.
2.
A
stockholder who is entitled to dissent and obtain payment pursuant to
NRS
92A.300
to
92A.500
, inclusive, may not challenge the corporate action
creating his entitlement unless the action is unlawful or fraudulent with
respect to him or the domestic corporation.
3. From
and after the effective date of any corporate action described in subsection
1,
no stockholder who has exercised his right to dissent pursuant to
NRS
92A.300
to
92A.500
, inclusive, is entitled to vote his shares for any
purpose or to receive payment of dividends or any other distributions on
shares.
This subsection does not apply to dividends or other distributions payable
to
stockholders on a date before the effective date of any corporate action
from
which the stockholder has dissented.
(Added
to
NRS by 1995, 2087; A
2001,
1414
,
3199
;
2003,
3189
;
2005,
2204
;
2007,
2438
)
NRS
92A.390 Limitations on right of dissent: Stockholders of certain classes
or
series; action of stockholders not required for plan of merger.
1.
There
is no right of dissent with respect to a plan of merger or exchange in favor
of
stockholders of any class or series which, at the record date fixed to determine
the stockholders entitled to receive notice of and to vote at the meeting
at
which the plan of merger or exchange is to be acted on, were either listed
on a
national securities exchange, included in the national market system by the
National Association of Securities Dealers, Inc., or held by at least 2,000
stockholders of record, unless:
(a)
The
articles of incorporation of the corporation issuing the shares provide
otherwise; or
(b)
The
holders of the class or series are required under the plan of merger or exchange
to accept for the shares anything except:
(1)
Cash,
owner’s interests or owner’s interests and cash in lieu of fractional owner’s
interests of:
(I)
The
surviving or acquiring entity; or
(II)
Any
other entity which, at the effective date of the plan of merger or exchange,
were either listed on a national securities exchange, included in the national
market system by the National Association of Securities Dealers, Inc., or
held
of record by a least 2,000 holders of owner’s interests of record;
or
(2)
A
combination of cash and owner’s interests of the kind described in
sub-subparagraphs (I) and (II) of subparagraph (1) of paragraph (b).
2.
There
is no right of dissent for any holders of stock of the surviving domestic
corporation if the plan of merger does not require action of the
stockholders
of the surviving domestic corporation under
NRS
92A.130
.
(Added
to
NRS by 1995, 2088)
NRS
92A.400 Limitations on right of dissent: Assertion as to portions only to
shares
registered to stockholder; assertion by beneficial stockholder.
1.
A
stockholder of record may assert dissenter’s rights as to fewer than all of the
shares registered in his name only if he dissents with respect to all shares
beneficially owned by any one person and notifies the subject corporation
in
writing of the name and address of each person on whose behalf he asserts
dissenter’s rights. The rights of a partial dissenter under this subsection are
determined as if the shares as to which he dissents and his other shares
were
registered in the names of different stockholders.
2.
A
beneficial stockholder may assert dissenter’s rights as to shares held on his
behalf only if:
(a)
He
submits to the subject corporation the written consent of the stockholder
of
record to the dissent not later than the time the beneficial stockholder
asserts
dissenter’s rights; and
(b)
He
does so with respect to all shares of which he is the beneficial stockholder
or
over which he has power to direct the vote.
(Added
to
NRS by 1995, 2089)
NRS
92A.410 Notification of stockholders regarding right of
dissent.
1
If
a
proposed corporate action creating dissenters’ rights is submitted to a vote at
a stockholders’ meeting, the notice of the meeting must state that stockholders
are or may be entitled to assert dissenters’ rights under
NRS
92A.300
to
92A.500
,
inclusive, and be accompanied by a copy of those sections.
2
If the
corporate action creating dissenters’ rights is taken by written consent of the
stockholders or without a vote of the stockholders, the domestic corporation
shall notify in writing all stockholders entitled to assert dissenters’ rights
that the action was taken and send them the dissenter’s notice described in
NRS
92A.430
.
(Added
to
NRS by 1995, 2089; A 1997, 730)
NRS
92A.420 Prerequisites to demand for payment for shares.
1.
If a
proposed corporate action creating dissenters’ rights is submitted to a vote at
a stockholders’ meeting, a stockholder who wishes to assert dissenter’s
rights:
(a)
Must
deliver to the subject corporation, before the vote is taken, written notice
of
his intent to demand payment for his shares if the proposed action is
effectuated; and
(b)
Must
not vote his shares in favor of the proposed action.
2.
If a
proposed corporate action creating dissenters’ rights is taken by written
consent of the stockholders, a stockholder who wishes to assert dissenters’
rights must not consent to or approve the proposed corporate
action.
3.
A
stockholder who does not satisfy the requirements of subsection 1 or 2 and
NRS
92A.400
is not
entitled to payment for his shares under this
chapter.
(Added
to
NRS by 1995, 2089; A
1999,
1631
;
2005,
2204
)
NRS
92A.430 Dissenter’s notice: Delivery to stockholders entitled to assert rights;
contents.
1.
The
subject corporation shall deliver a written dissenter’s notice to all
stockholders entitled to assert dissenters’ rights.
2.
The
dissenter’s notice must be sent no later than 10 days after the effectuation of
the corporate action, and must:
(a)
State
where the demand for payment must be sent and where and when certificates,
if
any, for shares must be deposited;
(b)
Inform the holders of shares not represented by certificates to what extent
the
transfer of the shares will be restricted after the demand for payment is
received;
(c)
Supply a form for demanding payment that includes the date of the first
announcement to the news media or to the stockholders of the terms of the
proposed action and requires that the person asserting dissenter’s rights
certify whether or not he acquired beneficial ownership of the shares before
that date;
(d)
Set a
date by which the subject corporation must receive the demand for payment,
which
may not be less than 30 nor more than 60 days after the date the notice is
delivered; and
(e)
Be
accompanied by a copy of
NRS
92A.300
to
92A.500
,
inclusive.
(Added
to
NRS by 1995, 2089; A
2005,
2205
)
NRS
92A.440 Demand for payment and deposit of certificates; retention of rights
of
stockholder.
1.
A
stockholder to whom a dissenter’s notice is sent must:
(a)
Demand payment;
(b)
Certify whether he or the beneficial owner on whose behalf he is dissenting,
as
the case may be, acquired beneficial ownership of the shares before the date
required to be set forth in the dissenter’s notice for this certification; and
(c)
Deposit his certificates, if any, in accordance with the terms of the notice.
2.
The
stockholder who demands payment and deposits his certificates, if any, before
the proposed corporate action is taken retains all other rights of a stockholder
until those rights are cancelled or modified by the taking of the proposed
corporate action.
3.
The
stockholder who does not demand payment or deposit his certificates where
required, each by the date set forth in the dissenter’s notice, is
not
entitled to payment for his shares under this chapter.
(Added
to
NRS by 1995, 2090; A 1997, 730;
2003,
3189
)
NRS
92A.450 Uncertificated shares: Authority to restrict transfer after demand
for
payment; retention of rights of stockholder.
1.
The
subject corporation may restrict the transfer of shares not represented by
a
certificate from the date the demand for their payment is received.
2.
The
person for whom dissenter’s rights are asserted as to shares not represented by
a certificate retains all other rights of a stockholder until
those
rights are cancelled or modified by the taking of the proposed corporate
action.
(Added
to
NRS by 1995, 2090)
NRS
92A.460 Payment for shares: General requirements. [Effective through June
30,
2008.]
1.
Except
as otherwise provided in
NRS
92A.470
,
within
30 days after receipt of a demand for payment, the subject corporation shall
pay
each dissenter who complied with
NRS
92A.440
the
amount the subject corporation estimates to be the fair value of his shares,
plus accrued interest. The obligation of the subject corporation under this
subsection may be enforced by the district court:
(a)
Of
the county where the corporation’s registered office is located; or
(b)
At
the election of any dissenter residing or having its registered office in
this
State, of the county where the dissenter resides or has its registered office.
The court shall dispose of the complaint promptly.
2.
The
payment must be accompanied by:
(a)
The
subject corporation’s balance sheet as of the end of a fiscal year ending not
more than 16 months before the date of payment, a statement of income for
that
year, a statement of changes in the stockholders’ equity for that year and the
latest available interim financial statements, if any;
(b)
A
statement of the subject corporation’s estimate of the fair value of the
shares;
(c)
An
explanation of how the interest was calculated;
(d)
A
statement of the dissenter’s rights to demand payment under
NRS
92A.480
;
and
(e)
A
copy of
NRS
92A.300
to
92A.500
,
inclusive.
(Added
to
NRS by 1995, 2090)
NRS
92A.460 Payment for shares: General requirements. [Effective July 1, 2008.]
1.
Except
as otherwise provided in
NRS
92A.470
,
within
30 days after receipt of a demand for payment, the subject corporation shall
pay
each dissenter who complied with
NRS
92A.440
the
amount the subject corporation estimates to be the fair value of his shares,
plus accrued interest. The obligation of the subject corporation under this
subsection may be enforced by the district court:
(a)
Of
the county where the corporation’s principal office is located;
(b)
If
the corporation’s principal office is not located in this State, in Carson City;
or
(c)
At
the election of any dissenter residing or having its principal office in
this
State, of the county where the dissenter resides or has its principal
office.
The
court
shall dispose of the complaint promptly.
2.
The
payment must be accompanied by:
(a)
The
subject corporation’s balance sheet as of the end of a fiscal year ending not
more than 16 months before the date of payment, a statement of income for
that
year, a statement of changes in the stockholders’ equity for that year and the
latest available interim financial statements, if any;
(b)
A
statement of the subject corporation’s estimate of the fair value of the
shares;
(c)
An
explanation of how the interest was calculated;
(d)
A
statement of the dissenter’s rights to demand payment under
NRS
92A.480
;
and
(e)
A
copy of
NRS
92A.300
to
92A.500
,
inclusive.
(Added
to
NRS by 1995, 2090; A
2007,
2704
,
effective July 1, 2008)
NRS
92A.470 Payment for shares: Shares acquired on or after date of dissenter’s
notice.
1.
A
subject corporation may elect to withhold payment from a dissenter unless
he was
the beneficial owner of the shares before the date set forth in the dissenter’s
notice as the date of the first announcement to the news media or to the
stockholders of the terms of the proposed action.
2.
To
the
extent the subject corporation elects to withhold payment, after taking the
proposed action, it shall estimate the fair value of the shares, plus accrued
interest, and shall offer to pay this amount to each dissenter who agrees
to
accept it in full satisfaction of his demand. The subject corporation shall
send
with its offer a statement of its estimate of the fair value of the shares,
an
explanation of how the interest was calculated, and a statement of the
dissenters’ right to demand payment pursuant to
NRS
92A.480
.
(Added
to
NRS by 1995, 2091)
NRS
92A.480 Dissenter’s estimate of fair value: Notification of subject corporation;
demand for payment of estimate.
1.
A
dissenter may notify the subject corporation in writing of his own estimate
of
the fair value of his shares and the amount of interest due, and demand payment
of his estimate, less any payment pursuant to
NRS
92A.460
,
or
reject the offer pursuant to
NRS
92A.470
and
demand payment of the fair value of his shares and interest due, if he believes
that the amount paid pursuant to
NRS
92A.460
or
offered pursuant to
NRS
92A.470
is less
than the fair value of his shares or that the interest due is incorrectly
calculated.
2.
A
dissenter waives his right to demand payment pursuant to this section unless
he
notifies the subject corporation of his demand in writing
within
30
days after the subject corporation made or offered payment for his
shares.
(Added
to
NRS by 1995, 2091)
NRS
92A.490 Legal proceeding to determine fair value: Duties of subject corporation;
powers of court; rights of dissenter. [Effective through June 30,
2008.]
1.
If
a
demand for payment remains unsettled, the subject corporation shall commence
a
proceeding within 60 days after receiving the demand and petition the court
to
determine the fair value of the shares and accrued interest. If the subject
corporation does not commence the proceeding within the 60-day period, it
shall
pay each dissenter whose demand remains unsettled the amount demanded.
2.
A
subject corporation shall commence the proceeding in the district court of
the
county where its registered office is located. If the subject corporation
is a
foreign entity without a resident agent in the State, it shall commence the
proceeding in the county where the registered office of the domestic corporation
merged with or whose shares were acquired by the foreign entity was located.
3.
The
subject corporation shall make all dissenters, whether or not residents of
Nevada, whose demands remain unsettled, parties to the proceeding as in an
action against their shares. All parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
4.
The
jurisdiction of the court in which the proceeding is commenced under subsection
2 is plenary and exclusive. The court may appoint one or more persons as
appraisers to receive evidence and recommend a decision on the question of
fair
value. The appraisers have the powers described in the order appointing them,
or
any amendment thereto. The dissenters are entitled to the same discovery
rights
as parties in other civil proceedings.
5.
Each
dissenter who is made a party to the proceeding is entitled to a
judgment:
(a)
For
the amount, if any, by which the court finds the fair value of his shares,
plus
interest, exceeds the amount paid by the subject corporation; or
(b)
For
the fair value, plus accrued interest, of his after-acquired shares for which
the subject corporation elected to withhold payment pursuant to
NRS
92A.470
.
(Added
to
NRS by 1995, 2091)
NRS
92A.490 Legal proceeding to determine fair value: Duties of subject corporation;
powers of court; rights of dissenter. [Effective July 1,
2008.]
1.
If
a
demand for payment remains unsettled, the subject corporation shall commence
a
proceeding within 60 days after receiving the demand and petition the court
to
determine the fair value of the shares and accrued interest. If the subject
corporation does not commence the proceeding within the 60-day period, it
shall
pay each dissenter whose demand remains unsettled the amount demanded.
2.
A
subject corporation shall commence the proceeding in the district court of
the
county where its principal office is located. If the principal office of
the
subject corporation is not located in the State, it shall commence the
proceeding in the county where the principal office of the domestic corporation
merged with or whose shares were acquired by the foreign entity was located.
If
the principal office of the subject corporation and the domestic corporation
merged with or whose shares were acquired is not located in this State, the
subject corporation shall commence the proceeding in the district court in
Carson City.
3.
The
subject corporation shall make all dissenters, whether or not residents of
Nevada, whose demands remain unsettled, parties to the proceeding as in an
action against their shares. All parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
4
The
jurisdiction of the court in which the proceeding is commenced under subsection
2 is plenary and exclusive. The court may appoint one or more persons as
appraisers to receive evidence and recommend a decision on the question of
fair
value. The appraisers have the powers described in the order appointing them,
or
any amendment thereto. The dissenters are entitled to the same discovery
rights
as parties in other civil proceedings.
5.
Each
dissenter who is made a party to the proceeding is entitled to a
judgment:
(a)
For
the amount, if any, by which the court finds the fair value of his shares,
plus
interest, exceeds the amount paid by the subject corporation; or
(b)
For
the fair value, plus accrued interest, of his after-acquired shares for which
the subject corporation elected to withhold payment pursuant to
NRS
92A.470
.
(Added
to
NRS by 1995, 2091; A
2007,
2705
,
effective July 1, 2008)
NRS
92A.500 Legal proceeding to determine fair value: Assessment of costs and
fees.
1.
The
court in a proceeding to determine fair value shall determine all of the
costs
of the proceeding, including the reasonable compensation and expenses of
any
appraisers appointed by the court. The court shall assess the costs against
the
subject corporation, except that the court may assess costs against all or
some
of the dissenters, in amounts the court finds equitable, to the extent the
court
finds the dissenters acted arbitrarily, vexatiously or not in good faith
in
demanding payment.
2.
The
court may also assess the fees and expenses of the counsel and experts for
the
respective parties, in amounts the court finds equitable:
(a)
Against the subject corporation and in favor of all dissenters if the court
finds the subject corporation did not substantially comply with the requirements
of
NRS
92A.300
to
92A.500
,
inclusive; or
(b)
Against either the subject corporation or a dissenter in favor of any other
party, if the court finds that the party against whom the fees and expenses
are
assessed acted arbitrarily, vexatiously or not in good faith with respect
to the
rights provided by
NRS
92A.300
to
92A.500
,
inclusive.
3.
If
the
court finds that the services of counsel for any dissenter were of substantial
benefit to other dissenters similarly situated, and that the fees for those
services should not be assessed against the subject corporation, the court
may
award to those counsel reasonable fees to be paid out of the amounts awarded
to
the dissenters who were benefited.
4.
In
a
proceeding commenced pursuant to
NRS
92A.460
,
the
court may assess the costs against the subject corporation, except that the
court may assess costs against all or some of the dissenters who are parties
to
the proceeding, in amounts the court finds equitable, to the extent the court
finds that such parties did not act in good faith in instituting the proceeding.
5.
This
section does not preclude any party in a proceeding commenced pursuant to
NRS
92A.460
or
92A.490
from
applying the provisions of
N
.R.C.P.
68
or
NRS
17.115
.
(Added
to
NRS by 1995, 2092)