Employee Stock Purchase Plan - CancerVax Corp.
CANCERVAX CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
CancerVax Corporation, a Delaware corporation (the "Company"),
hereby adopts the CancerVax Corporation Employee Stock Purchase Plan (the
"Plan"), effective as of the Effective Date (as defined herein).
1. Purpose. The purposes of the Plan are as follows:
(a) To assist employees of the Company and its Designated
Subsidiaries (as defined below) in acquiring a stock ownership interest in the
Company pursuant to a plan which is intended to qualify as an "employee stock
purchase plan" within the meaning of Section 423(b) of the Internal Revenue Code
of 1986, as amended.
(b) To help employees provide for their future security
and to encourage them to remain in the employment of the Company and its
Designated Subsidiaries.
2. Definitions.
(a) "Administrator" shall mean the administrator of the
Plan, as determined pursuant to Section 14 hereof.
(b) "Board" shall mean the Board of Directors of the
Company.
(c) "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(d) "Committee" shall mean the committee appointed to
administer the Plan pursuant to Section 14 hereof.
(e) "Common Stock" shall mean the common stock of the
Company.
(f) "Company" shall mean CancerVax Corporation, a
Delaware corporation, and any successor by merger, consolidation or otherwise.
(g) "Compensation" shall mean all base straight time
gross earnings and commissions, exclusive of payments for overtime, shift
premium, incentive compensation, incentive payments, bonuses, expense
reimbursements, fringe benefits and other compensation.
(h) "Designated Subsidiary" shall mean any Subsidiary
which has been designated by the Administrator from time to time in its sole
discretion as eligible to participate in the Plan. The Administrator may
designate, or terminate the designation of, a subsidiary as a Designated
Subsidiary without the approval of the stockholders of the Company.
(i) "Effective Date" shall mean the date on which the
Company's Registration Statement on Form S-8 filed with respect to the Plan
becomes effective.
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(j) "Eligible Employee" shall mean an Employee of the
Company or a Designated Subsidiary: (i) who does not, immediately after the
Option is granted, own stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Company, a Parent
or a Subsidiary (as determined under Section 423(b)(3) of the Code); (ii) whose
customary employment is for more than twenty (20) hours per week; and (iii)
whose customary employment is for more than five (5) months in any calendar
year. For purposes of clause (i), the rules of Section 424(d) of the Code with
regard to the attribution of stock ownership shall apply in determining the
stock ownership of an individual, and stock which an employee may purchase under
outstanding options shall be treated as stock owned by the employee. For
purposes of the Plan, the employment relationship shall be treated as continuing
intact while the individual is on sick leave or other leave of absence approved
by the Company or Designated Subsidiary and meeting the requirements of Treasury
Regulation Section 1.421-7(h)(2). Where the period of leave exceeds ninety (90)
days and the individual's right to reemployment is not guaranteed either by
statute or by contract, the employment relationship shall be deemed to have
terminated on the ninety-first (91st) day of such leave.
(k) "Employee" shall mean any person who renders services
to the Company or a Subsidiary in the status of an employee within the meaning
of Code Section 3401(c). "Employee" shall not include any director of the
Company or a Subsidiary who does not render services to the Company or a
Subsidiary in the status of an employee within the meaning of Code Section
3401(c).
(l) "Enrollment Date" shall mean the first Trading Day of
each Offering Period.
(m) "Exercise Date" shall mean the last Trading Day of
each Purchase Period.
(n) "Fair Market Value" shall mean, as of any date, the
value of Common Stock determined as follows:
(i) If the Common Stock is listed on any
established stock exchange or a national market system, including without
limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The
Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or system for the last market trading day prior to the date of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean of the closing bid and asked prices for the
Common Stock on the date prior to the date of determination as reported in The
Wall Street Journal or such other source as the Administrator deems reliable;
(iii) In the absence of an established market for
the Common Stock, the Fair Market Value thereof shall be determined in good
faith by the Administrator; or
(iv) For purposes of the first Offering Period
under the Plan, the Fair Market Value shall be the initial price to the public
as set forth in the final prospectus included
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within the registration statement in Form S-1 filed with the Securities and
Exchange Commission for the initial public offering of the Company's Common
Stock (the "Registration Statement").
(o) "Offering Period" shall mean (i) the period
commencing on the Effective Date and ending on the last Trading Day on or before
the June 1 or December 1 following the Effective Date that is at least eighteen
(18) months but not more than twenty-four (24) months following the Effective
Date, and (ii) subject to Section 24, each twenty-four (24) month period
commencing on any December 1 or June 1 thereafter following the termination of
the preceding Offering Period and terminating on the last Trading Day in the
periods ending twenty-four (24) months later. The duration and timing of
Offering Periods may be changed pursuant to Section 4 of this Plan.
(p) "Parent" means any corporation, other than the
Company, in an unbroken chain of corporations ending with the Company if, at the
time of the determination, each of the corporations other than the Company owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.
(q) "Plan" shall mean this CancerVax Corporation Employee
Stock Purchase Plan.
(r) "Purchase Period" shall mean the approximately six
(6) month period commencing after one Exercise Date and ending with the next
Exercise Date, except that the first Purchase Period of any Offering Period
shall commence on the Enrollment Date and end with the next Exercise Date.
Notwithstanding the foregoing, the first Purchase Period with respect to the
initial Offering Period under the Plan shall end on the last Trading Day on or
before the next occurring June 1 or December 1 following the Effective Date and
such period may be more or less than six-months in duration.
(s) "Purchase Price" shall mean 85% of the Fair Market
Value of a share of Common Stock on the Enrollment Date or on the Exercise Date,
whichever is lower; provided, however, that the Purchase Price may be adjusted
by the Administrator pursuant to Section 20; provided, further, that the
Purchase Price shall not be less than the par value of a share of Common Stock.
(t) "Subsidiary" shall mean any corporation, other than
the Company, in an unbroken chain of corporations beginning with the Company if,
at the time of the determination, each of the corporations other than the last
corporation in an unbroken chain owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
(u) "Trading Day" shall mean a day on which national
stock exchanges and the Nasdaq System are open for trading.
3. Eligibility.
(a) Any Eligible Employee who shall be employed by the
Company or a Designated Subsidiary on a given Enrollment Date for an Offering
Period shall be eligible to
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participate in the Plan during such Offering Period, subject to the requirements
of Section 5 and the limitations imposed by Section 423(b) of the Code.
(b) Each person who, during the course of an Offering
Period, first becomes an Eligible Employee subsequent to the Enrollment Date
will be eligible to become a participant in the Plan on the first day of the
first Purchase Period following the day on which such person becomes an Eligible
Employee, subject to the requirements of Section 5 and the limitations imposed
by Section 423(b) of the Code.
(c) No Eligible Employee shall be granted an option under
the Plan which permits his rights to purchase stock under the Plan, and to
purchase stock under all other employee stock purchase plans of the Company, any
Parent or any Subsidiary subject to the Section 423, to accrue at a rate which
exceeds $25,000 of fair market value of such stock (determined at the time the
option is granted) for each calendar year in which the option is outstanding at
any time. For purpose of the limitation imposed by this subsection, the right to
purchase stock under an option accrues when the option (or any portion thereof)
first becomes exercisable during the calendar year, the right to purchase stock
under an option accrues at the rate provided in the option, but in no case may
such rate exceed $25,000 of fair market value of such stock (determined at the
time such option is granted) for any one calendar year, and a right to purchase
stock which has accrued under an option may not be carried over to any option.
This limitation shall be applied in accordance with Section 423(b)(8) of the
Code and the Treasury Regulations thereunder.
4. Offering Periods. Subject to Section 24, the Plan shall be
implemented by consecutive, overlapping Offering Periods which shall continue
until the Plan expires or is terminated in accordance with Section 20 hereof.
The Administrator shall have the power to change the duration of Offering
Periods (including the commencement dates thereof) with respect to future
offerings without stockholder approval if such change is announced at least five
(5) days prior to the scheduled beginning of the first Offering Period to be
affected thereafter.
5. Participation.
(a) Each Eligible Employee who is employed by the Company
or a Designated Subsidiary on the calendar day immediately preceding the
Effective Date shall automatically become a participant in the Plan with respect
to the first Offering Period. Each such participant shall be granted an option
to purchase shares of Common Stock and shall be enrolled in such first Offering
Period to the extent of twenty percent (20%) of his or her Compensation for the
pay days during the first Offering Period (or, if less, the maximum amount of
contributions permitted to be made by such participant for such Offering Period
by payroll deduction under the terms of this Plan). Participants wishing to
purchase shares of Common Stock during the first Offering Period shall do so by
making a lump sum cash payment to the Company not later than ten (10) calendar
days before each Exercise Date of such Offering Period, and each such payment
may be made in an amount not exceeding twenty percent (20%) of such
participant's Compensation for the pay days occurring during such Offering
Period and occurring prior to such lump sum payment; provided, however, that
such participant shall not be required to make such lump sum cash payments, or
exercise all or any portion of such option to purchase shares of Common Stock by
making such lump sum payments. Following the Effective Date, each such
participant may, during the period designated from time to
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time by the Administrator for such purpose, elect to make such contributions (or
a lesser amount of contributions) for the first Offering Period by payroll
deductions in accordance with Section 6, in lieu of making contributions in such
lump sum cash payments under this subsection (a), or may elect to make no
contributions for such Offering Period; provided, however, that, to make
contributions by payroll deductions, such participant must complete the form of
subscription agreement provided by the Company for the first Offering Period
under this Plan. If (i) during such Offering Period, such a participant elects
to make contributions by payroll deduction, or elects to make no contributions
for such Offering Period, or (ii) on or prior to the tenth (10th) calendar day
before the last Exercise Date of such Offering Period, such a participant fails
to make any lump sum cash payment, such participant shall be deemed to have
elected not to make contributions by lump sum payment with respect to such first
Offering Period. Except as described in subsection (e) below, a participant may
not make contributions by lump sum payment for any Offering Period other than
the first Offering Period.
(b) Following the first Offering Period, an Eligible
Employee may become a participant in the Plan by completing a subscription
agreement authorizing payroll deductions in the form of Exhibit A to this Plan
and filing it with the Company's payroll office FIFTEEN (15) days (or such
shorter or longer period as may be determined by the Administrator, in its sole
discretion) prior to the applicable Enrollment Date.
(c) Each person who, during the course of an Offering
Period, first becomes an Eligible Employee subsequent to the Enrollment Date
will be eligible to become a participant in the Plan on the first day of the
first Purchase Period following the day on which such person becomes an Eligible
Employee. Such person may become a participant in the Plan by completing a
subscription agreement authorizing payroll deductions in the form of Exhibit A
to this Plan and filing it with the Company's payroll office FIFTEEN (15) days
(or such shorter or longer period as may be determined by the Administrator, in
its sole discretion) prior to the first day of any Purchase Period during the
Offering Period in which such person becomes an Eligible Employee. The rights
granted to such participant shall have the same characteristics as any rights
originally granted during that Offering Period except that the first day of the
Purchase Period in which such person initially participates in the Plan shall be
the "Enrollment Date" for all purposes for such person, including determination
of the Purchase Price.
(d) Except as provided in subsection (a), payroll
deductions for a participant shall commence on the first payroll following the
Enrollment Date and shall end on the last payroll in the Offering Period to
which such authorization is applicable, unless sooner terminated by the
participant as provided in Section 10 hereof.
(e) During a leave of absence approved by the Company or
a Subsidiary and meeting the requirements of Treasury Regulation Section
1.421-7(h)(2), a participant may continue to participate in the Plan by making
cash payments to the Company on each pay day equal to the amount of the
participant's payroll deductions under the Plan for the pay day immediately
preceding the first day of such participant's leave of absence. If a leave of
absence is unapproved or fails to meet the requirements of Treasury Regulation
Section 1.421-7(h)(2), the participant will cease automatically to participate
in the Plan. In such event, the company will automatically cease to deduct the
participant's payroll under the Plan. The Company will pay to the participant
his or her
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total payroll deductions for the quarterly purchase period, in cash in one lump
sum (without interest), as soon as practicable after the participant ceases to
participate in the Plan.
(f) A participant's completion of a subscription
agreement will enroll such participant in the Plan for each successive Purchase
Period and each subsequent Offering Period on the terms contained therein until
the participant either submits a new subscription agreement, withdraws from
participation under the Plan as provided in Section 10 hereof or otherwise
becomes ineligible to participate in the Plan.
6. Payroll Deductions.
(a) At the time a participant files his or her
subscription agreement, he or she shall elect to have payroll deductions made on
each pay day during the Offering Period in an amount from one percent (1%) to
twenty percent (20%) of the Compensation which he or she receives on each pay
day during the Offering Period.
(b) All payroll deductions made for a participant shall
be credited to his or her account under the Plan and shall be withheld in whole
percentages only. Except as described in Section 5(a) hereof, a participant may
not make any additional payments into such account.
(c) A participant may discontinue his or her
participation in the Plan as provided in Section 10 hereof, or may increase or
decrease the rate of his or her payroll deductions during the Offering Period by
completing or filing with the Company a new subscription agreement authorizing a
change in payroll deduction rate. The Administrator may, in its discretion,
limit the number of participation rate changes during any Offering Period. The
change in rate shall be effective with the first full payroll period following
five (5) business days after the Company's receipt of the new subscription
agreement (or such shorter or longer period as may be determined by the
Administrator, in its sole discretion).
(d) Notwithstanding the foregoing, to the extent
necessary to comply with Section 423(b)(8) of the Code and Section 3(c) hereof,
a participant's payroll deductions may be decreased to zero percent (0%) at any
time during a Purchase Period.
(e) At the time the option is exercised, in whole or in
part, or at the time some or all of the Company's Common Stock issued under the
Plan is disposed of, the participant must make adequate provision for the
Company's federal, state, or other tax withholding obligations, if any, which
arise upon the exercise of the option or the disposition of the Common Stock. At
any time, the Company may, but shall not be obligated to, withhold from the
participant's compensation the amount necessary for the Company to meet
applicable withholding obligations, including any withholding required to make
available to the Company any tax deductions or benefits attributable to sale or
early disposition of Common Stock by the Employee.
7. Grant of Option. On the Enrollment Date of each Offering
Period, each Eligible Employee participating in such Offering Period shall be
granted an option to purchase on each Exercise Date during such Offering Period
(at the applicable Purchase Price) up to a number of shares of the Company's
Common Stock determined by dividing such participant's payroll
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deductions accumulated prior to such Exercise Date and retained in the
participant's account as of the Exercise Date by the applicable Purchase Price;
provided, however, that in no event shall a participant be permitted to purchase
during each Offering Period more than 30,000 shares of the Company's Common
Stock (subject to any adjustment pursuant to Section 19) and during each
Purchase Period more than 30,000 shares of the Company's Common Stock (subject
to any adjustment pursuant to Section 19); and provided, further, that such
purchase shall be subject to the limitations set forth in Sections 3(c) and 13
hereof. The Administrator may, for future Offering Periods, increase or
decrease, in its absolute discretion, the maximum number of shares of the
Company's Common Stock a participant may purchase during each Purchase Period
and Offering Period. Exercise of the option shall occur as provided in Section 8
hereof, unless the participant has withdrawn pursuant to Section 10 hereof or
otherwise becomes ineligible to participate in the Plan. The option shall expire
on the last day of the Offering Period.
8. Exercise of Option.
(a) Unless a participant withdraws from the Plan as
provided in Section 10 hereof or otherwise becomes ineligible to participate in
the Plan, his or her option for the purchase of shares shall be exercised
automatically on the Exercise Date, and the maximum number of full shares
subject to the option shall be purchased for such participant at the applicable
Purchase Price with the accumulated payroll deductions in his or her account. No
fractional shares shall be purchased; any payroll deductions accumulated in a
participant's account which are not sufficient to purchase a full share shall be
retained in the participant's account for the subsequent Purchase Period or
Offering Period. During a participant's lifetime, a participant's option to
purchase shares hereunder is exercisable only by him or her.
(b) If the Administrator determines that, on a given
Exercise Date, the number of shares with respect to which options are to be
exercised may exceed (i) the number of shares of Common Stock that were
available for sale under the Plan on the Enrollment Date of the applicable
Offering Period, or (ii) the number of shares available for sale under the Plan
on such Exercise Date, the Administrator may in its sole discretion (x) provide
that the Company shall make a pro rata allocation of the shares of Common Stock
available for purchase on such Enrollment Date or Exercise Date, as applicable,
in as uniform a manner as shall be practicable and as it shall determine in its
sole discretion to be equitable among all participants exercising options to
purchase Common Stock on such Exercise Date, and continue all Offering Periods
then in effect, or (y) provide that the Company shall make a pro rata allocation
of the shares available for purchase on such Enrollment Date or Exercise Date,
as applicable, in as uniform a manner as shall be practicable and as it shall
determine in its sole discretion to be equitable among all participants
exercising options to purchase Common Stock on such Exercise Date, and terminate
any or all Offering Periods then in effect pursuant to Section 20 hereof. The
Company may make pro rata allocation of the shares available on the Enrollment
Date of any applicable Offering Period pursuant to the preceding sentence,
notwithstanding any authorization of additional shares for issuance under the
Plan by the Company's stockholders subsequent to such Enrollment Date. The
balance of the amount credited to the account of each participant which has not
been applied to the purchase of shares of stock shall be paid to such
participant in one lump sum in cash as soon as reasonably practicable after the
Exercise Date, without any interest thereon.
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9. Deposit of Shares. As promptly as practicable after each
Exercise Date on which a purchase of shares occurs, the Company may arrange for
the deposit, into each participant's account with any broker designated by the
Company to administer this Plan, of the number of shares purchased upon exercise
of his or her option.
10. Withdrawal.
(a) A participant may withdraw all but not less than all
of the payroll deductions credited to his or her account and not yet used to
exercise his or her option under the Plan at any time by giving written notice
to the Company in the form of Exhibit A to this Plan. All of the participant's
payroll deductions credited to his or her account during the Offering Period
shall be paid to such participant as soon as reasonably practicable after
receipt of notice of withdrawal and such participant's option for the Offering
Period shall be automatically terminated, and no further payroll deductions for
the purchase of shares shall be made for such Offering Period. If a participant
withdraws from an Offering Period, payroll deductions shall not resume at the
beginning of the succeeding Offering Period unless the participant delivers to
the Company a new subscription agreement.
(b) A participant's withdrawal from an Offering Period
shall not have any effect upon his or her eligibility to participate in any
similar plan which may hereafter be adopted by the Company or in succeeding
Offering Periods which commence after the termination of the Offering Period
from which the participant withdraws.
11. Termination of Employment. Upon a participant's ceasing to be
an Eligible Employee, for any reason, he or she shall be deemed to have elected
to withdraw from the Plan and the payroll deductions credited to such
participant's account during the Offering Period shall be paid to such
participant or, in the case of his or her death, to the person or persons
entitled thereto under Section 15 hereof, as soon as reasonably practicable and
such participant's option for the Offering Period shall be automatically
terminated.
12. Interest. No interest shall accrue on the payroll deductions
or lump sum contributions of a participant in the Plan.
13. Shares Subject to Plan.
(a) Subject to adjustment upon changes in capitalization
of the Company as provided in Section 19 hereof, the maximum number of shares of
the Company's Common Stock which shall be made available for sale under the Plan
shall be 300,000 shares, plus an annual increase to be added on each December 31
during the term of the Plan equal to the least of (i) 30,000 shares, (ii) 1.0 %
of the Company's outstanding shares on such date or (iii) a lesser amount
determined by the Board. If any right granted under the Plan shall for any
reason terminate without having been exercised, the Common Stock not purchased
under such right shall again become available for issuance under the Plan. The
stock subject to the Plan may be unissued shares or reacquired shares, bought on
the market or otherwise.
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(b) With respect to shares of stock subject to an option
granted under the Plan, a participant shall not be deemed to be a stockholder of
the Company, and the participant shall not have any of the rights or privileges
of a stockholder, until such shares have been issued to the participant or his
or her nominee following exercise of the participant's option. No adjustments
shall be made for dividends (ordinary or extraordinary, whether in cash
securities, or other property) or distribution or other rights for which the
record date occurs prior to the date of such issuance, except as otherwise
expressly provided herein.
14. Administration.
(a) The Plan shall be administered by the Board unless
and until the Board delegates administration to a Committee as set forth below.
The Board may delegate administration of the Plan to a Committee comprised of
two or more members of the Board, each of whom is a "non-employee director"
within the meaning of Rule 16b-3 which has been adopted by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended, and
which is otherwise constituted to comply with applicable law, and the term
"Committee" shall apply to any persons to whom such authority has been
delegated. If administration is delegated to a Committee, the Committee shall
have, in connection with the administration of the Plan, the powers theretofore
possessed by the Board, including the power to delegate to a subcommittee any of
the administrative powers the Committee is authorized to exercise, subject,
however, to such resolutions, not inconsistent with the provisions of the Plan,
as may be adopted from time to time by the Board. Each member of the Committee
shall serve for a term commencing on a date specified by the Board and
continuing until the member dies or resigns or is removed from office by the
Board. References in this Plan to the "Administrator" shall mean the Board
unless administration is delegated to a Committee or subcommittee, in which case
references in this Plan to the Administrator shall thereafter be to the
Committee or subcommittee.
(b) It shall be the duty of the Administrator to conduct
the general administration of the Plan in accordance with the provisions of the
Plan. The Administrator shall have the power to interpret the Plan and the terms
of the options and to adopt such rules for the administration, interpretation,
and application of the Plan as are consistent therewith and to interpret, amend
or revoke any such rules. The Administrator at its option may utilize the
services of an agent to assist in the administration of the Plan including
establishing and maintaining an individual securities account under the Plan for
each participant. In its absolute discretion, the Board may at any time and from
time to time exercise any and all rights and duties of the Administrator under
the Plan.
(c) All expenses and liabilities incurred by the
Administrator in connection with the administration of the Plan shall be borne
by the Company. The Administrator may, with the approval of the Board, employ
attorneys, consultants, accountants, appraisers, brokers or other persons. The
Administrator, the Company and its officers and directors shall be entitled to
rely upon the advice, opinions or valuations of any such persons. All actions
taken and all interpretations and determinations made by the Administrator in
good faith shall be final and binding upon all participants, the Company and all
other interested persons. No member of the Board shall be personally liable for
any action, determination or interpretation made in good faith with respect to
the Plan or the options, and all members of the Board shall be fully protected
by the Company in respect to any such action, determination, or interpretation.
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15. Designation of Beneficiary.
(a) A participant may file a written designation of a
beneficiary who is to receive any shares and cash, if any, from the
participant's account under the Plan in the event of such participant's death
subsequent to an Exercise Date on which the option is exercised but prior to
delivery to such participant of such shares and cash. In addition, a participant
may file a written designation of a beneficiary who is to receive any cash from
the participant's account under the Plan in the event of such participant's
death prior to exercise of the option. If a participant is married and the
designated beneficiary is not the spouse, spousal consent shall be required for
such designation to be effective.
(b) Such designation of beneficiary may be changed by the
participant at any time by written notice to the Company. In the event of the
death of a participant and in the absence of a beneficiary validly designated
under the Plan who is living at the time of such participant's death, the
Company shall deliver such shares and/or cash to the executor or administrator
of the estate of the participant, or if no such executor or administrator has
been appointed (to the knowledge of the Company), the Company, in its
discretion, may deliver such shares and/or cash to the spouse or to any one or
more dependents or relatives of the participant, or if no spouse, dependent or
relative is known to the Company, then to such other person as the Company may
designate.
16. Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 15 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10 hereof.
17. Use of Funds. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such payroll deductions.
18. Reports. Individual accounts shall be maintained for each
participant in the Plan. Statements of account shall be given to participating
Employees at least annually, which statements shall set forth the amounts of
payroll deductions, the Purchase Price, the number of shares purchased and the
remaining cash balance, if any.
19. Adjustments Upon Changes in Capitalization, Dissolution,
Liquidation, Merger or Asset Sale.
(a) Changes in Capitalization. Subject to any required
action by the stockholders of the Company, the number of shares of Common Stock
which have been authorized for issuance under the Plan but not yet placed under
option, the maximum number of shares each participant may purchase each Purchase
Period (pursuant to Section 7), as well as the price per share and the number of
shares of Common Stock covered by each option under the Plan which has not yet
been exercised shall be proportionately adjusted for any increase or decrease in
the number of issued shares of
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Common Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the
Administrator, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an option.
(b) Dissolution or Liquidation. In the event of the
proposed dissolution or liquidation of the Company, the Offering Period then in
progress shall be shortened by setting a new Exercise Date (the "New Exercise
Date"), and shall terminate immediately prior to the consummation of such
proposed dissolution or liquidation, unless provided otherwise by the
Administrator. The New Exercise Date shall be before the date of the Company's
proposed dissolution or liquidation. The Administrator shall notify each
participant in writing, at least ten (10) business days prior to the New
Exercise Date, that the Exercise Date for the participant's option has been
changed to the New Exercise Date and that the participant's option shall be
exercised automatically on the New Exercise Date, unless prior to such date the
participant has withdrawn from the Offering Period as provided in Section 10
hereof.
(c) Merger or Asset Sale. In the event of a proposed sale
of all or substantially all of the assets of the Company, or the merger of the
Company with or into another corporation, each outstanding option shall be
assumed or an equivalent option substituted by the successor corporation or a
Parent or Subsidiary of the successor corporation. In the event that the
successor corporation refuses to assume or substitute for the option, any
Purchase Periods then in progress shall be shortened by setting a New Exercise
Date and any Offering Periods then in progress shall end on the New Exercise
Date. The New Exercise Date shall be before the date of the Company's proposed
sale or merger. The Administrator shall notify each participant in writing, at
least ten (10) business days prior to the New Exercise Date, that the Exercise
Date for the participant's option has been changed to the New Exercise Date and
that the participant's option shall be exercised automatically on the New
Exercise Date, unless prior to such date the participant has withdrawn from the
Offering Period as provided in Section 10 hereof.
20. Amendment or Termination.
(a) The Board may at any time and for any reason
terminate or amend the Plan. Except as provided in Section 19 hereof, no such
termination can affect options previously granted, provided that an Offering
Period may be terminated by the Board if the Board determines that the
termination of the Offering Period or the Plan is in the best interests of the
Company and its stockholders. Except as provided in Section 19 and this Section
20 hereof, no amendment may make any change in any option theretofore granted
which adversely affects the rights of any participant without the consent of
such participant. To the extent necessary to comply with Section 423 of the Code
(or any successor rule or provision or any other applicable law, regulation or
stock exchange rule), the Company shall obtain stockholder approval in such a
manner and to such a degree as required.
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(b) Without stockholder consent and without regard to
whether any participant rights may be considered to have been "adversely
affected," the Administrator shall be entitled to change the Offering Periods,
limit the frequency and/or number of changes in the amount withheld during an
Offering Period, establish the exchange ratio applicable to amounts withheld in
a currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation, and establish such other limitations or procedures
as the Administrator determines in its sole discretion advisable which are
consistent with the Plan.
(c) In the event the Board determines that the ongoing
operation of the Plan may result in unfavorable financial accounting
consequences, the Board may, in its discretion and, to the extent necessary or
desirable, modify or amend the Plan to reduce or eliminate such accounting
consequence including, but not limited to:
(i) altering the Purchase Price for any Offering
Period including an Offering Period underway at the time of the change in
Purchase Price;
(ii) shortening any Offering Period so that the
Offering Period ends on a new Exercise Date, including an Offering Period
underway at the time of the Administrator action; and
(iii) allocating shares.
Such modifications or amendments shall not require stockholder approval
or the consent of any Plan participants.
21. Notices. All notices or other communications by a participant
to the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location,
or by the person, designated by the Company for the receipt thereof.
22. Conditions To Issuance of Shares. The Company shall not be
required to issue or deliver any certificate or certificates for shares of Stock
purchased upon the exercise of options prior to fulfillment of all the following
conditions:
(a) The admission of such shares to listing on all stock
exchanges, if any, on which is then listed; and
(b) The completion of any registration or other
qualification of such shares under any state or federal law or under the rulings
or regulations of the Securities and Exchange Commission or any other
governmental regulatory body, which the Administrator shall, in its absolute
discretion, deem necessary or advisable; and
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(c) The obtaining of any approval or other clearance from
any state or federal governmental agency which the Administrator shall, in its
absolute discretion, determine to be necessary or advisable; and
(d) The payment to the Company of all amounts which it is
required to withhold under federal, state or local law upon exercise of the
option; and
(e) The lapse of such reasonable period of time following
the exercise of the Option as the Administrator may from time to time establish
for reasons of administrative convenience.
23. Term of Plan. The Plan shall become effective on the Effective
Date. Subject to approval by the stockholders of the Company in accordance with
this Section, the Plan shall be in effect until the tenth (10th) anniversary of
the date of the initial adoption of the Plan by the Board, unless sooner
terminated under Section 20 hereof. The Plan shall be submitted for the approval
of the Company's stockholders within twelve (12) months after the date of the
initial adoption of the Plan by the Board.
24. Automatic Transfer to Low Price Offering Period. To the extent
permitted by any applicable laws, regulations, or stock exchange rules, if the
Fair Market Value of the Common Stock on any Exercise Date in an Offering Period
is lower than the Fair Market Value of the Common Stock on the Enrollment Date
of such Offering Period, then (i) a new twenty-four (24) month Offering Period
will automatically begin on the first trading day following that Exercise Date,
and (ii) all participants in such Offering Period shall be automatically
withdrawn from such Offering Period immediately after the exercise of their
option on such Exercise Date and automatically re-enrolled in the immediately
following Offering Period as of the first day thereof.
25. Equal Rights and Privileges. All Eligible Employees of the
Company (or of any Designated Subsidiary) will have equal rights and privileges
under this Plan so that this Plan qualifies as an "employee stock purchase plan"
within the meaning of Section 423 of the Code or applicable Treasury regulations
thereunder. Any provision of this Plan that is inconsistent with Section 423 or
applicable Treasury regulations will, without further act or amendment by the
Company, the Board or the Administrator, be reformed to comply with the equal
rights and privileges requirement of Section 423 or applicable Treasury
regulations.
26. No Employment Rights. Nothing in the Plan shall be construed
to give any person (including any Eligible Employee or participant) the right to
remain in the employ of the Company, a Parent or a Subsidiary or to affect the
right of the Company, any Parent or any Subsidiary to terminate the employment
of any person (including any Eligible Employee or participant) at any time, with
or without cause.
27. Notice of Disposition of Shares. Each participant shall give
prompt notice to the Company of any disposition or other transfer of any shares
of stock purchased upon exercise of an option if such disposition or transfer is
made: (a) within two (2) years from the Enrollment Date of the Offering Period
in which the shares were purchased or (b) within one (1) year after the Exercise
Date on which such shares were purchased. Such notice shall specify the date of
such disposition or
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other transfer and the amount realized, in cash, other property, assumption of
indebtedness or other consideration, by the participant in such disposition or
other transfer.
28. Governing Law. The validity and enforceability of this Plan
shall be governed by and construed in accordance with the laws of the State of
Delaware without regard to otherwise governing principles of conflicts of law.
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