2000 Stock Incentive Plan - CancerVax Corp.
CANCERVAX CORPORATION
THIRD AMENDED AND RESTATED 2000 STOCK INCENTIVE PLAN
SECTION 1. PURPOSE
The purpose of the CancerVax Corporation Third Amended and Restated
2000 Stock Incentive Plan (the "Plan") is to enhance the long-term stockholder
value of CancerVax Corporation, a Delaware corporation (the "Company"), by
offering opportunities to selected persons to participate in the Company's
growth and success, and to encourage them to remain in the service of the
Company and its Related Corporations (as defined in Section 2) and to acquire
and maintain stock ownership in the Company.
SECTION 2. DEFINITIONS
For purposes of the Plan, the following terms shall be defined as set
forth below:
"AWARD" means a grant of Options or Stock Awards, or any combination
thereof, pursuant to the Plan.
"BOARD" means the Board of Directors of the Company.
"CAUSE," unless otherwise defined in an employment or services
agreement between the Participant and the Company or a Related Corporation,
means dishonesty, fraud, misconduct, unauthorized use or disclosure of
confidential information or trade secrets, or conviction or confession of a
crime punishable by law (except minor violations), in each case as determined by
the Board, and its determination shall be conclusive and binding.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COMMON STOCK" means the common stock, par value $.00004 per share, of
the Company.
"CORPORATE TRANSACTION" means consummation of either
(a) a merger or consolidation of the Company with or into any
other corporation or other entity or person or
(b) a sale, lease, exchange or other transfer in one transaction
or a series of related transactions of all or substantially all the Company's
outstanding securities or all or substantially all the Company's assets;
provided, however, that a Corporate Transaction shall not include a Related
Party Transaction.
"DISABILITY" has the meaning set forth in Section 22(e)(3) of the Code,
which as of the date of the adoption of the Plan is as follows: "An individual
is permanently and totally disabled
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if he is unable to engage in any substantial gainful activity by reason of any
medially determinable physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a continuous
period of not less than 12 months.".
"EMPLOYMENT TERMINATION DATE" has the meaning set forth in Section 7.6.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FAIR MARKET VALUE" means, as of any date, the per share value of the
Common Stock as established in good faith by the Board or (a) if the Common
Stock is listed on the Nasdaq National Market, the closing sales price (or
closing bid, if no sales were reported) for the Common Stock as reported by that
market for the last market trading day prior to the time of determination or (b)
if the Common Stock is listed on the New York Stock Exchange or the American
Stock Exchange, the closing sales price (or closing bid, if no sales were
reported) for the Common Stock as such price is officially quoted in the
composite tape of transactions on such exchange for the last market trading day
prior to the time of determination.
"GOOD REASON" means the occurrence of any of the following events or
conditions and the failure of the Successor Corporation to cure such event or
condition within 30 days after receipt of written notice from the Participant:
(a) a change in the Participant's status, position or
responsibilities (including reporting responsibilities) that, in the
Participant's reasonable judgment, represents a substantial reduction in the
status, position or responsibilities as in effect immediately prior thereto; the
assignment to the Participant of any duties or responsibilities that, in the
Participant's reasonable judgment, are materially inconsistent with such status,
position or responsibilities; or any removal of the Participant from or failure
to reappoint or reelect the Participant to any of such positions, except in
connection with the termination of the Participant's employment for Cause, as a
result of his or her Disability or death, or by the Participant other than for
Good Reason;
(b) a material reduction in the Participant's annual base salary,
except in connection with a general reduction in the compensation of the
Successor Corporation's personnel with similar status and responsibilities;
(c) the Successor Corporation's requiring the Participant (without
the Participant's consent) to be based at any place outside a 50-mile radius of
his or her place of employment prior to a Corporate Transaction, except for
reasonably required travel on the Successor Corporation's business that is not
materially greater than such travel requirements prior to the Corporate
Transaction;
(d) the Successor Corporation's failure to provide the Participant
with compensation and benefits substantially equivalent (in terms of benefit
levels and/or reward opportunities) to those provided for under each material
employee benefit plan, program and practice as in effect immediately prior to
the Corporate Transaction;
(e) any material breach by the Successor Corporation of its
obligations to the Participant under the Plan or any substantially equivalent
plan of the Successor Corporation; or
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(f) any purported termination of the Participant's employment or
service relationship for Cause by the Successor Corporation that is not in
accordance with the definition of Cause under the Plan.
"GRANT DATE" means the date on which the Plan Administrator completes
the corporate action relating to the grant of an Award and all conditions
precedent to the grant have been satisfied, provided that conditions to the
exercisability or vesting of Awards shall not defer the Grant Date.
"INCENTIVE STOCK OPTION" means an Option to purchase Common Stock
granted under Section 7 with the intention that it qualify as an "incentive
stock option" as that term is defined in Section 422 of the Code.
"NONQUALIFIED STOCK OPTION" means an Option to purchase Common Stock
granted under Section 7 other than an Incentive Stock Option.
"OPTION" means the right to purchase Common Stock granted under Section
7.
"OPTION EXPIRATION DATE" has the meaning set forth in Section 7.6.
"OPTION TERM" has the meaning set forth in Section 7.3.
"PARENT" means any corporation, whether now or hereafter existing
(other than the Company), in an unbroken chain of corporations ending with the
Company if each of the corporations other than the last corporation in the
unbroken chain owns stock possessing more than fifty percent (50%) of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
"PARTICIPANT" means (a) the person to whom an Award is granted; (b) for
a Participant who has died, the personal representative of the Participant's
estate, the person(s) to whom the Participant's rights under the Award have
passed by will or by the applicable laws of descent and distribution, or the
beneficiary designated in accordance with Section 11; or (c) the person(s) to
whom an Award has been transferred in accordance with Section 11.
"PLAN ADMINISTRATOR" means the Board or any committee or committees
designated by the Board.
"RELATED CORPORATION" means any Parent or Subsidiary of the Company.
"RELATED PARTY TRANSACTION" means (i) a merger or consolidation of the
Company in which the holders of the voting securities of the Company immediately
prior to the merger or consolidation hold at least a majority of the voting
securities in the Successor Corporation immediately after the merger or
consolidation; (ii) a sale, lease, exchange or other transaction in one
transaction or a series of related transactions of all or substantially all of
the Company's assets to a wholly owned subsidiary corporation; (iii) a mere
reincorporation of the Company; or (iv) a transaction undertaken for the sole
purpose of creating a holding company that will be owned in substantially the
same proportion by the persons who held the Company's securities immediately
before such transaction.
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"RETIREMENT" means retirement on or after the individual's normal
retirement date under the Company's 401(k) plan or other similar successor plan
applicable to salaried employees, unless otherwise defined by the Plan
Administrator from time to time for purposes of the Plan.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"STOCK AWARD" means an Award of shares of Common Stock or units
denominated in Common Stock granted under Section 9, the rights of ownership of
which may be subject to restrictions prescribed by the Plan Administrator.
"SUBSIDIARY" means any corporation, whether now existing or hereafter
existing (other than the Company), in an unbroken chain of corporations
beginning with the Company if each of the corporations other than the last
corporation in the unbroken chain owns stock possessing more than fifty percent
(50%) of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
"SUCCESSOR CORPORATION" has the meaning set forth in Section 12.3.1.
"VESTING COMMENCEMENT DATE" means the Grant Date or such other date
selected by the Plan Administrator as the date from which the Option begins to
vest for purposes of Section 7.4.
SECTION 3. ADMINISTRATION
3.1 PLAN ADMINISTRATOR
The Plan shall be administered by the Board and/or a committee or
committees (which term includes subcommittees) appointed by, and consisting of
two or more members of, the Board (a "Plan Administrator"). If and so long as
the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act,
the Board shall consider in selecting the members of any committee acting as
Plan Administrator, with respect to any persons subject or likely to become
subject to Section 16 of the Exchange Act, the provisions regarding (a) "outside
directors" as contemplated by Section 162(m) of the Code and (b) "nonemployee
directors" as contemplated by Rule 16b-3 under the Exchange Act. Notwithstanding
the foregoing, the Board may delegate the responsibility for administering the
Plan with respect to designated classes of eligible persons to different
committees consisting of one or more members of the Board, subject to such
limitations as the Board deems appropriate. Committee members shall serve for
such term as the Board may determine, subject to removal by the Board at any
time.
3.2 ADMINISTRATION AND INTERPRETATION BY PLAN ADMINISTRATOR
Except for the terms and conditions explicitly set forth in the Plan,
the Plan Administrator shall have exclusive authority, in its discretion, to
determine all matters relating to Awards under the Plan, including the selection
of individuals to be granted Awards, the type of Awards, the number of shares of
Common Stock subject to an Award, all terms, conditions, restrictions and
limitations, if any, of an Award and the terms of any instrument that evidences
the Award. The Plan Administrator shall also have exclusive authority to
interpret the Plan and the terms of any instrument evidencing the Award and may
from time to time adopt and change rules and
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regulations of general application for the Plan's administration. The Plan
Administrator's interpretation of the Plan and its rules and regulations, and
all actions taken and determinations made by the Plan Administrator pursuant to
the Plan, shall be conclusive and binding on all parties involved or affected.
The Plan Administrator may delegate administrative duties to such of the
Company's officers as it so determines.
SECTION 4. STOCK SUBJECT TO THE PLAN
4.1 AUTHORIZED NUMBER OF SHARES
Subject to adjustment from time to time as provided in Section 12.1, a
maximum of 10,874,082 shares of Common Stock shall be available for issuance
under the Plan. Shares issued under the Plan shall be drawn from authorized and
unissued shares or shares now held or subsequently acquired by the Company as
treasury shares.
4.2 REUSE OF SHARES
Any shares of Common Stock that have been made subject to an Award that
cease to be subject to the Award (other than by reason of exercise or settlement
of the Award to the extent it is exercised for or settled in vested and
nonforfeitable shares) shall again be available for issuance in connection with
future grants of Awards under the Plan. Notwithstanding the foregoing, to the
extent required by applicable law, shares repurchased by the Company pursuant to
Section 13 shall not again be available for issuance in connection with future
grants of Awards under the Plan; provided, however, the aggregate number of
shares that may be issued upon the exercise of Incentive Stock Options shall in
no event exceed the number set forth in Section 4.1, subject to adjustment from
time to time as provided in Section 12.1.
SECTION 5. ELIGIBILITY
Awards may be granted under the Plan to those officers, directors and
employees of the Company and its Related Corporations as the Plan Administrator
from time to time selects. Awards may also be granted to consultants, agents,
advisors and independent contractors who provide services to the Company and its
Related Corporations; provided, however, that such Participants (a) are natural
persons who have contracted directly with the Company or a Related Corporation
to render such services; (b) render bona fide services that are not in
connection with the offer and sale of the Company's securities in a
capital-raising transaction; and (c) render bona fide services that do not
directly or indirectly promote or maintain a market for the Company's
securities.
SECTION 6. AWARDS
6.1 FORM AND GRANT OF AWARDS
The Plan Administrator shall have the authority, in its sole
discretion, to determine the type or types of Awards to be granted under the
Plan. Awards may be granted singly or in combination.
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6.2 SETTLEMENT OF AWARDS
The Company may settle Awards through the delivery of shares of Common
Stock, the granting of replacement Awards or any combination thereof as the Plan
Administrator shall determine. Any Award settlement, including payment
deferrals, may be subject to such conditions, restrictions and contingencies as
the Plan Administrator shall determine. The Plan Administrator may permit or
require the deferral of any Award payment, subject to such rules and procedures
as it may establish, which may include provisions for the payment or crediting
of interest, or dividend equivalents, including converting such credits into
deferred stock equivalents.
6.3 ACQUIRED COMPANY AWARDS
Notwithstanding anything in the Plan to the contrary, the Plan
Administrator may grant Awards under the Plan in substitution for awards issued
under other plans, or assume under the Plan awards issued under other plans, if
the other plans are or were plans of other acquired entities ("Acquired
Entities") (or the parent of the Acquired Entity) and the new Award is
substituted, or the old award is assumed, by reason of a merger, consolidation,
acquisition of property or stock, reorganization or liquidation (the
"Acquisition Transaction"). In the event that a written agreement pursuant to
which the Acquisition Transaction is completed is approved by the Board and said
agreement sets forth the terms and conditions of the substitution for or
assumption of outstanding awards of the Acquired Entity, said terms and
conditions shall be deemed to be the action of the Plan Administrator without
any further action by the Plan Administrator, except as may be required for
compliance with Rule 16b-3 under the Exchange Act, and the persons holding such
awards shall be deemed to be Participants.
SECTION 7. AWARDS OF OPTIONS
7.1 GRANT OF OPTIONS
The Plan Administrator is authorized under the Plan, in its sole
discretion, to issue Options as Incentive Stock Options or as Nonqualified Stock
Options, which shall be appropriately designated.
7.2 OPTION EXERCISE PRICE
The exercise price for shares purchased under an Option shall be as
determined by the Plan Administrator, but (a) for Incentive Stock Options, shall
not be less than 100% of the Fair Market Value of the Common Stock on the Grant
Date and (b) for Nonqualified Stock Options, to the extent required by
applicable law, shall not be less than 85% of the Fair Market Value of the
Common Stock on the Grant Date. The exercise price for an Option granted to an
individual who owns stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or any Related Corporation shall
not be less than 110% of the Fair Market Value of the Common Stock on the Grant
Date.
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7.3 TERM OF OPTIONS
The term of each Option (the "Option Term") shall be as established by
the Plan Administrator or, if not so established, shall be ten years from the
Grant Date. Notwithstanding the foregoing, to the extent required by applicable
law, the maximum Option Term shall not exceed ten years from the Grant Date. For
Incentive Stock Options, the Option Term shall be as specified in Sections 8.2
and 8.4.
7.4 EXERCISE OF OPTIONS
The Plan Administrator shall establish and set forth in each instrument
that evidences an Option the time at which, or the installments in which, the
Option shall vest and become exercisable, which provisions may be waived or
modified by the Plan Administrator at any time. If not so established in the
instrument evidencing the Option, the Option shall vest and become exercisable
according to the following schedule, which may be waived or modified by the Plan
Administrator at any time:
PERIOD OF PARTICIPANT'S CONTINUOUS
EMPLOYMENT OR SERVICE WITH THE COMPANY
OR ITS RELATED CORPORATIONS FROM THE PORTION OF TOTAL OPTION
VESTING COMMENCEMENT DATE THAT IS VESTED AND EXERCISABLE
After 1 year 1/4th
Each additional one-month period of An additional 1/36th of the
continuous service completed thereafter unvested shares calculated as of
the 1 year anniversary of the
Vesting Commencement Date.
After 4 years 100%
The Plan Administrator may adjust the vesting schedule of an Option
held by a Participant who works less than "full-time" as that term is defined by
the Plan Administrator or who takes a Company-approved leave of absence.
To the extent that an Option has vested and become exercisable, the
Option may be exercised from time to time by delivery to the Company of a
written stock option exercise agreement or notice, in a form and in accordance
with procedures established by the Plan Administrator, setting forth the number
of shares with respect to which the Option is being exercised, the restrictions
imposed on the shares purchased under such exercise agreement, if any, and such
representations and agreements as may be required by the Plan Administrator,
accompanied by payment in full as described in Section 7.5. An Option may be
exercised only for whole shares and may not be exercised for less than a
reasonable number of shares at any one time, as determined by the Plan
Administrator.
Notwithstanding the foregoing, to the extent required by applicable
law, Options granted to persons who are not officers, directors or consultants
of the Company or any of its Related Corporations shall become exercisable at
the rate of at least 20% per year over five years from the Grant Date, subject
to reasonable conditions such as continued employment. As indicated
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above, the Company's standard vesting schedule is over a four year period from
the Vesting Commencement Date.
7.5 PAYMENT OF EXERCISE PRICE
The exercise price for shares purchased under an Option shall be paid
in full to the Company by delivery of consideration equal to the product of the
Option exercise price and the number of shares purchased. Such consideration
must be paid in cash or by check (acceptable to the Plan Administrator) or,
unless the Plan Administrator in its sole discretion determines otherwise,
either at the time the Option is granted or at any time before it is exercised,
in any combination of
(a) cash;
(b) check (acceptable to the Plan Administrator);
(c) tendering (either actually or, if the Common Stock is
registered under Section 12(b) or 12(g) of the Exchange Act, by attestation)
shares of Common Stock already owned by the Participant for at least six months
(or any shorter period necessary to avoid a charge to the Company's earnings for
financial reporting purposes) that on the day prior to the exercise date have a
Fair Market Value equal to the aggregate exercise price of the shares being
purchased under the Option;
(d) if the Common Stock is registered under Section 12(b) or 12(g)
of the Exchange Act, delivery of a properly executed exercise notice, together
with irrevocable instructions to a brokerage firm designated by the Company to
deliver promptly to the Company the aggregate amount of sale or loan proceeds to
pay the Option exercise price and any withholding tax obligations that may arise
in connection with the exercise, all in accordance with the regulations of the
Federal Reserve Board; or
(e) such other consideration as the Plan Administrator may permit.
In addition, to assist a Participant (including a Participant who is an
officer or a director of the Company) in acquiring shares of Common Stock
pursuant to an Award granted under the Plan, the Plan Administrator, in its sole
discretion, may authorize, either at the Grant Date or at any time before the
acquisition of Common Stock pursuant to the Award, (i) the payment by a
Participant of a full-recourse promissory note or (ii) the guarantee by the
Company of a full-recourse loan obtained by the Participant from a third party.
Any such promissory note shall bear interest at a market rate of interest
sufficient to preclude the imputation of interest (taking into account any
exceptions to the imputed interest rules) for federal income tax purposes.
Subject to the foregoing, the Plan Administrator shall in its sole discretion
specify the terms of any loans or loan guarantees, including the interest rate
and terms of and security for repayment.
7.6 POST-TERMINATION EXERCISES
The Plan Administrator shall establish and set forth in each instrument
that evidences an Option whether the Option shall continue to be exercisable,
and the terms and conditions of such exercise, if a Participant ceases to be
employed by, or to provide services to, the Company or its
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Related Corporations, which provisions may be waived or modified by the Plan
Administrator at any time. If not so established in the instrument evidencing
the Option, the Option shall be exercisable according to the following terms and
conditions, which may be waived or modified by the Plan Administrator at any
time:
(a) Any portion of an Option that is not vested and exercisable on
the date of termination of the Participant's employment or service relationship
(the "Employment Termination Date") shall expire on such date.
(b) Any portion of an Option that is vested and exercisable on the
Employment Termination Date shall expire upon the earliest to occur of
(i) if the Participant's Employment Termination Date
occurs for reasons other than Cause, Retirement, Disability or death, the
three-month anniversary of such Employment Termination Date;
(ii) if the Participant's Employment Termination Date
occurs by reason of Retirement, Disability or death, the one-year anniversary of
such Employment Termination Date; and
(iii) the last day of the Option Term (the "Option
Expiration Date").
Notwithstanding the foregoing, if the Participant dies after the
Employment Termination Date but while the Option is otherwise exercisable, the
portion of the Option that is vested and exercisable on such Employment
Termination Date shall expire upon the earlier to occur of (y) the Option
Expiration Date and (z) the first anniversary of the date of death, unless the
Plan Administrator determines otherwise.
Also notwithstanding the foregoing, in case of termination of the
Participant's employment or service relationship for Cause, the Option shall
automatically expire at the time the Company first notifies the Participant of
such termination, unless the Plan Administrator determines otherwise. If a
Participant's employment or service relationship with the Company is suspended
pending an investigation of whether the Participant shall be terminated for
Cause, all the Participant's rights under any Option likewise shall be suspended
during the period of investigation. If any facts that would constitute
termination for Cause are discovered after the Participant's relationship with
the Company or a Related Corporation has ended, any Option then held by the
Participant may be immediately terminated by the Plan Administrator, in its sole
discretion.
Also notwithstanding the foregoing, to the extent required by
applicable law, unless employment is terminated for Cause, the right to exercise
an Option in the event of termination of employment, to the extent that the
Participant is otherwise entitled to exercise an Option on the Employment
Termination Date, shall be at least six months from the Employment Termination
Date if termination was caused by death or Disability, and at least 30 days from
the Employment Termination Date if termination of employment was caused by other
than death or Disability, but in no event later than the Option Termination
Date.
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(c) A Participant's transfer of employment or service relationship
between or among the Company and a Related Corporation, or a change in status
from an employee to a consultant, agent, advisor or independent contractor or a
change in status from a consultant, agent, advisor or independent contractor to
an employee, shall not be considered a termination of employment or service
relationship for purposes of this Section 7. The effect of a Company-approved
leave of absence on the terms and conditions of an Option shall be determined by
the Plan Administrator, in its sole discretion.
7.7 EARLY EXERCISABILITY
The Plan Administrator may provide in the terms of a Participant's
Option agreement that the Participant may exercise the Option in whole or in
part prior to the full vesting of the Option; provided, however, that subject to
Section 13, shares of Common Stock acquired upon exercise of an Option which has
not fully vested may be subject to any forfeiture, transfer or other
restrictions as the Plan Administrator may determine in its sole discretion.
SECTION 8. INCENTIVE STOCK OPTION LIMITATIONS
To the extent required by Section 422 of the Code, Incentive Stock
Options shall be subject to the following additional terms and conditions:
8.1 DOLLAR LIMITATION
To the extent the aggregate Fair Market Value (determined as of the
Grant Date) of Common Stock with respect to which Incentive Stock Options are
exercisable by any Participant for the first time during any calendar year
(under the Plan and all other stock option plans of the Company and any Related
Corporation) exceeds $100,000, such portion in excess of $100,000 shall be
treated as a Nonqualified Stock Option. In the event the Participant holds two
or more such Options that become exercisable for the first time in the same
calendar year, such limitation shall be applied on the basis of the order in
which such Options are granted.
8.2 MORE THAN 10% STOCKHOLDERS
If an individual owns more than 10% of the total combined voting power
of all classes of the stock of the Company or of its Related Corporations, then
the exercise price per share of an Incentive Stock Option granted to such
individual shall not be less than 110% of the Fair Market Value of the Common
Stock on the Grant Date and the Option Term shall not exceed five years. The
determination of more than 10% ownership shall be made in accordance with
Section 422 of the Code.
8.3 ELIGIBLE EMPLOYEES
Individuals who are not employees of the Company or one of its Related
Corporations may not be granted Incentive Stock Options.
8.4 TERM
Subject to Section 8.2, the Option Term shall not exceed ten years.
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8.5 EXERCISABILITY
An Option designated as an Incentive Stock Option shall cease to
qualify for favorable tax treatment as an Incentive Stock Option to the extent
it is exercised (if permitted by the terms of the Option) (a) more than three
months after the Employment Termination Date if termination was for reasons
other than death or Disability, (b) more than one year after the Employment
Termination Date if termination was by reason of Disability, or (c) after the
Participant has been on leave of absence for more than 90 days, unless the
Participant's reemployment rights are guaranteed by statute or contract.
8.6 TAXATION OF INCENTIVE STOCK OPTIONS
In order to obtain certain tax benefits afforded to Incentive Stock
Options under Section 422 of the Code, the Participant must hold the shares
issued upon the exercise of an Incentive Stock Option for two years after the
Grant Date and one year from the date of exercise. A Participant may be subject
to the alternative minimum tax at the time of exercise of an Incentive Stock
Option. The Participant shall give the Company prompt notice of any disposition
of shares acquired by the exercise of an Incentive Stock Option prior to the
expiration of such holding periods.
8.7 PROMISSORY NOTES
The amount of any promissory note delivered pursuant to Section 7.5 in
connection with an Incentive Stock Option shall bear interest at a rate
specified by the Plan Administrator, but in no case less than a market rate of
interest sufficient to avoid imputation of interest (taking into account any
exceptions to the imputed interest rules) for federal income tax purposes.
8.8 STOCKHOLDER APPROVAL
If the stockholders of the Company do not approve the Plan within 12
months after the Board's adoption of the Plan, any outstanding Incentive Stock
Options shall become Nonqualified Stock Options.
SECTION 9. STOCK AWARDS
9.1 GRANT OF STOCK AWARDS
(a) The Plan Administrator is authorized to make Awards of Common
Stock or Awards denominated in units of Common Stock on such terms and
conditions and subject to such restrictions, if any (which may be based on
continuous service with the Company or the achievement of performance goals), as
the Plan Administrator shall determine, in its sole discretion, which terms,
conditions and restrictions shall be set forth in the instrument evidencing the
Award. Subject to Section 13.3, the terms, conditions and restrictions that the
Plan Administrator shall have the power to determine shall include, without
limitation, the manner in which shares subject to Stock Awards are held during
the periods they are subject to restrictions
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and the circumstances under which repurchase or forfeiture of the Stock Award
shall occur by reason of termination of the Participant's employment or service
relationship.
(b) Notwithstanding the foregoing, to the extent required by
applicable law, the purchase price for any Stock Awards that may be purchased
under the Plan ("Stock Purchase Rights") shall be at least 85% of the Fair
Market Value of the Common Stock at the time the Participant is granted the
Stock Purchase Right or at the time the purchase is consummated. Also
notwithstanding the foregoing, the purchase price shall be at least 100% of the
Fair Market Value of the Common Stock at the time the Participant is granted the
Stock Purchase Right or at the time the purchase is consummated in the case of
any person who owns stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or any Related Corporation.
9.2 ISSUANCE OF SHARES
Upon the satisfaction of any terms, conditions and restrictions
prescribed in respect to a Stock Award, or upon the Participant's release from
any terms, conditions and restrictions of a Stock Award, as determined by the
Plan Administrator, the Company shall release, as soon as practicable, to the
Participant or, in the case of the Participant's death, to the personal
representative of the Participant's estate or as the appropriate court directs,
the appropriate number of shares of Common Stock.
9.3 WAIVER OF RESTRICTIONS
Notwithstanding any other provision of the Plan, the Plan Administrator
may, in its sole discretion, waive the repurchase or forfeiture period and any
other terms, conditions or restrictions on any Stock Award under such
circumstances and subject to such terms and conditions as the Plan Administrator
shall deem appropriate.
SECTION 10. WITHHOLDING
10.1 GENERAL
To the extent required by applicable federal, state, local or foreign
law, a Participant shall make arrangements satisfactory to the Company for the
satisfaction of any withholding tax obligations that arise in connection with an
Award. The Company shall not be required to issue any shares of Common Stock or
make any cash distributions under the Plan until such obligations are satisfied.
10.2 SHARE WITHHOLDING
The Plan Administrator may permit or require a Participant to satisfy
all or part of any withholding tax obligations by having the Company withhold a
portion of any shares of Common Stock that would otherwise be issued to the
Participant pursuant to an Award (up to the employer's minimum required tax
withholding rate) or by surrendering any shares that the Participant previously
acquired (up to the employer's minimum required tax withholding rate to the
extent the Participant has held the surrendered shares for less than six
months). Such shares
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of Common Stock shall be valued at their Fair Market Value on the date when
taxes otherwise would be withheld in cash.
SECTION 11. ASSIGNABILITY
Awards granted under the Plan and any interest therein may not be
assigned, pledged or transferred by the Participant and may not be made subject
to attachment or similar proceedings otherwise than by will or by the applicable
laws of descent and distribution, and, during the Participant's lifetime, such
Awards may be exercised only by the Participant. Notwithstanding the foregoing,
the Plan Administrator, in its discretion, may permit the transfer by a
Participant of an Award other than an Incentive Stock Option as permitted by
Rule 701 of the Securities Act; provided, however, that any Award so assigned or
transferred shall be subject to all the same terms and conditions contained in
the instrument evidencing the Award.
SECTION 12. ADJUSTMENTS
12.1 ADJUSTMENT OF SHARES
In the event that, at any time or from time to time, a stock dividend,
stock split, spin-off, combination or exchange of shares, recapitalization,
merger, consolidation, distribution to stockholders other than a normal cash
dividend, or other change in the Company's corporate or capital structure,
including without limitation, a Related Party Transaction, results in (a) the
outstanding shares of Common Stock, or any securities exchanged therefor or
received in their place, being exchanged for a different number or kind of
securities of the Company or of any other corporation or (b) new, different or
additional securities of the Company or of any other corporation being received
by the holders of shares of Common Stock of the Company, then the Plan
Administrator shall make proportional adjustments in (i) the maximum number and
kind of securities subject to the Plan and issuable as Incentive Stock Options
as set forth in Section 4 and (ii) the number and kind of securities that are
subject to any outstanding Awards and the per share price of such securities,
without any change in the aggregate price to be paid therefor. The determination
by the Plan Administrator as to the terms of any of the foregoing adjustments
shall be conclusive and binding. Notwithstanding the foregoing, a dissolution or
liquidation of the Company or a Corporate Transaction shall not be governed by
this Section 12.1 but shall be governed by Sections 12.2 and 12.3, respectively.
12.2 DISSOLUTION OR LIQUIDATION
To the extent not previously exercised or settled, and unless otherwise
determined by the Board in its sole discretion, Options and Stock Awards
denominated in units shall terminate immediately prior to the dissolution or
liquidation of the Company. To the extent a forfeiture provision or repurchase
right applicable to an Award has not been waived by the Board, the Award shall
be forfeited immediately prior to the consummation of the dissolution or
liquidation.
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12.3 CORPORATE TRANSACTION
12.3.1 OPTIONS
(a) In the event of a Corporate Transaction, except as otherwise
provided in the instrument evidencing an Option and except as provided in
Subsection (b) below, each outstanding Option shall be assumed or an equivalent
option or right substituted by the surviving corporation, the successor
corporation or its parent corporation, as applicable (the "Successor
Corporation").
(b) If in the event of a Corporate Transaction the Successor
Corporation refuses to assume or substitute for an Option, then each such
outstanding Option shall become fully vested and exercisable with respect to
100% of the unvested portion of the Option. In such case, the Plan Administrator
shall notify the Participant in writing or electronically that the unvested
portion of the Option specified above shall be fully vested and exercisable for
a specified time period. At the expiration of the time period, the Option shall
terminate, provided that the Corporate Transaction is consummated.
(c) For the purposes of this Section 12.3, the Option shall be
considered assumed, continued or substituted for if following the Corporate
Transaction the option or right confers the right to purchase or receive, for
each share of Common Stock subject to the Option immediately prior to the
Corporate Transaction, the consideration (whether stock, cash, or other
securities or property) received in the Corporate Transaction by holders of
Common Stock for each share held on the effective date of the transaction (and
if holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding shares); provided,
however, that if such consideration received in the Corporate Transaction is not
solely common stock of the Successor Corporation, the Plan Administrator may,
with the consent of the Successor Corporation, provide for the consideration to
be received upon the exercise of the Option, for each share of Common Stock
subject thereto, to be solely common stock of the Successor Corporation
substantially equal in fair market value to the per share consideration received
by holders of Common Stock in the Corporate Transaction. The determination of
such substantial equality of value of consideration shall be made by the Plan
Administrator and its determination shall be conclusive and binding.
(d) All Options shall terminate and cease to remain outstanding
immediately following the Corporate Transaction, except to the extent assumed by
the Successor Corporation.
12.3.2 STOCK AWARDS
In the event of a Corporate Transaction, except as otherwise provided
in the instrument evidencing the Award, the vesting of shares subject to Stock
Awards shall accelerate, and the repurchase or forfeiture provisions to which
such shares are subject shall lapse, if and to the same extent that the vesting
of outstanding Options accelerates in connection with the Corporate Transaction.
If unvested Options are to be assumed, continued or substituted by a Successor
Corporation without acceleration upon the occurrence of a Corporate Transaction,
the repurchase or forfeiture provisions to which such Stock Awards are subject
shall continue with respect to shares of the Successor Corporation that may be
issued in exchange for such shares.
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12.3.3 ACCELERATION
Except as otherwise provided in the Agreement evidencing the Award, any
such Awards that are assumed or replaced in a Corporate Transaction and do not
otherwise accelerate at that time shall automatically become fully vested and
exercisable with respect to 100% of the unvested portion of the Award (the
forfeiture or repurchase provisions to which such Awards may be subject shall
lapse to the same extent) in the event that the Participant's employment or
service relationship with the Successor Corporation should terminate (i) in
connection with the Corporate Transaction or (ii) subsequently within two years
following such Corporate Transaction, unless such employment or service
relationship is terminated by the Successor Corporation for Cause or by the
Participant voluntarily without Good Reason; provided, that any such
acceleration shall not occur (a) if, in the opinion of the Company's outside
accountants, such acceleration would render unavailable "pooling of interests"
accounting treatment for any Corporate Transaction for which pooling of
interests accounting treatment is sought by the Company, or (b) in connection
with a general reduction in workforce.
12.4 FURTHER ADJUSTMENT OF AWARDS
Subject to Sections 12.2 and 12.3, the Plan Administrator shall have
the discretion, exercisable at any time before a sale, merger, consolidation,
reorganization, liquidation or change in control of the Company, as defined by
the Plan Administrator, to take such further action as it determines to be
necessary or advisable, and fair and equitable to the Participants, with respect
to Awards. Such authorized action may include (but shall not be limited to)
establishing, amending or waiving the type, terms, conditions or duration of, or
restrictions on, Awards so as to provide for earlier, later, extended or
additional time for exercise, lifting restrictions and other modifications, and
the Plan Administrator may take such actions with respect to all Participants,
to certain categories of Participants or only to individual Participants. The
Plan Administrator may take such action before or after granting Awards to which
the action relates and before or after any public announcement with respect to
such sale, merger, consolidation, reorganization, liquidation or change in
control that is the reason for such action.
12.5 LIMITATIONS
The grant of Awards shall in no way affect the Company's right to
adjust, reclassify, reorganize or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.
12.6 FRACTIONAL SHARES
In the event of any adjustment in the number of shares covered by any
Award, each such Award shall cover only the number of full shares resulting from
such adjustment.
SECTION 13. FIRST REFUSAL AND REPURCHASE RIGHTS
13.1 FIRST REFUSAL RIGHTS
Until the date on which the initial registration of the Common Stock
under Section 12(b) or 12(g) of the Exchange Act first becomes effective, the
Company shall have the right of first
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refusal with respect to any proposed sale or other disposition by the
Participant of any shares of Common Stock issued pursuant to an Award granted
under the Plan. Such right of first refusal shall be exercisable in accordance
with the terms and conditions established by the Plan Administrator and set
forth in the agreement evidencing such right.
13.2 REPURCHASE RIGHTS FOR UNVESTED SHARES
Subject to Section 13.3, the Plan Administrator shall have the
discretion to provide that the Company may repurchase unvested shares of Common
Stock acquired upon exercise of an Option or Stock Award upon the occurrence of
certain specified events, including, without limitation, a Participant's
cessation of employment or services, divorce, bankruptcy or insolvency. The
terms and conditions upon which such repurchase right shall be exercisable
(including the period and procedure for exercise) shall be established by the
Plan Administrator and set forth in the agreement evidencing such right.
Except as otherwise provided in the instrument evidencing the Award, in
the event of a Corporate Transaction, the Company's repurchase rights shall
automatically be assigned to the Successor Corporation; provided, however, that
such repurchase rights shall automatically lapse if and to the same extent that
the vesting of outstanding Options accelerates in connection with the Corporate
Transaction.
The Plan Administrator shall have the discretionary authority,
exercisable either before or after the Participant's cessation of employment or
service, to cancel the Company's outstanding repurchase rights with respect to
one or more shares purchased or purchasable by the Participant under an Option
and thereby accelerate the vesting of such shares in whole or in part at any
time.
13.3 RESTRICTIONS ON RIGHTS
(a) To the extent required by applicable law, any right of
repurchase on behalf of the Company in the event of a Participant's termination
of employment shall be at a purchase price that is (i) not less than the Fair
Market Value of the securities upon termination of employment, and the right to
repurchase shall be exercised for cash or cancellation of purchase money
indebtedness for the shares within 90 days of termination of employment (or in
the case of securities issued upon exercise of Options after the date of
termination, within 90 days after the date of the exercise), and the right shall
terminate when the Company's securities become publicly traded; or (ii) at the
original purchase price, provided that the right to repurchase at the original
purchase price shall lapse in accordance with the vesting schedule established
by the Plan Administrator for such Option or Stock Purchase Right, but in any
case at the rate of at least 20% of the shares per year over five years from the
date the Option or Stock Purchase Right is granted (without respect to the date
the Option or Stock Purchase Right was exercised or became exercisable) and the
right to repurchase shall be exercised for cash or cancellation of purchase
money indebtedness for the shares within 90 days of termination of employment
(or in the case of securities issued upon exercise of Options after the date of
termination, within 90 days after the date of the exercise). In addition to the
restrictions set forth in clauses (i) and (ii), the securities held by an
officer, director or consultant of the Company or an affiliate of the Company
may be subject to additional or greater restrictions.
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(b) Notwithstanding the foregoing, repurchase or first refusal
rights under this Section 13 may not be exercised earlier than six months and
one day following the date the shares were purchased by the Participant or such
other time period necessary to avoid charges to the Company's earnings for
financial reporting purposes. All the Company's first refusal and repurchase
rights under this Section 13 are assignable by the Company at any time.
SECTION 14. MARKET STANDOFF
In connection with any underwritten public offering by the Company of
its equity securities pursuant to an effective registration statement filed
under the Securities Act, including the Company's initial public offering, a
person shall not sell, make any short sale of, loan, hypothecate, pledge, grant
any option for the purchase of, or otherwise dispose of or transfer for value or
otherwise agree to engage in any of the foregoing transactions with respect to
any shares issued pursuant to an Award granted under the Plan without the prior
written consent of the Company or its underwriters. Such limitations shall be in
effect for such period of time beginning on the date such person is notified in
writing by the Company that the Company proposes to file a registration
statement under the Securities Act and ending on the date specified by the
Company or its underwriters; provided, however, that in no event shall such
period exceed 180 days following the effective date of such registration. The
limitations of this Section 14 shall in all events terminate four years after
the effective date of the Company's initial public offering.
In the event of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
Company's outstanding Common Stock effected as a class without the Company's
receipt of consideration, any new, substituted or additional securities
distributed with respect to the purchased shares shall be immediately subject to
the provisions of this Section 14, to the same extent the purchased shares are
at such time covered by such provisions.
In order to enforce the limitations of this Section 14, the Company may
impose stop-transfer instructions with respect to the purchased shares until the
end of the applicable standoff period.
SECTION 15. AMENDMENT AND TERMINATION
15.1 AMENDMENT OR TERMINATION OF PLAN
The Board may suspend, amend or terminate the Plan or any portion of
the Plan at any time and in such respects as it shall deem advisable; provided,
however, that to the extent required for compliance with Section 422 of the Code
or any applicable law or regulation, stockholder approval shall be required for
any amendment that would (a) increase the total number of shares available for
issuance under the Plan, (b) modify the class of employees eligible to receive
Options, or (c) otherwise require stockholder approval under any applicable law
or regulation. Any amendment made to the Plan that would constitute a
"modification" to Incentive Stock Options outstanding on the date of such
amendment shall not, without the consent of the Participant, be applicable to
such outstanding Incentive Stock Options but shall have prospective effect only.
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15.2 TERM OF PLAN
Unless sooner terminated as provided therein, the Plan shall terminate
ten years after the earlier of (a) the Plan's adoption by the Board and (b) its
approval by the stockholders.
15.3 CONSENT OF PARTICIPANT
The suspension, amendment or termination of the Plan or the amendment
of an outstanding Award (including, without limitation, any action taken under
Section 12.4) shall not, without the Participant's consent, impair or diminish
any rights or obligations under any Award theretofore granted to the Participant
under the Plan. Any amendment made to the Plan or to an outstanding Incentive
Stock Option (including, without limitation, any amendment under Section 12.4)
that would constitute a "modification" to Incentive Stock Options outstanding on
the date of such amendment shall not, without the consent of the Participant, be
applicable to such outstanding Incentive Stock Options but shall have
prospective effect only.
SECTION 16. GENERAL
16.1 EVIDENCE OF AWARDS
Awards granted under the Plan shall be evidenced by a written
instrument that shall contain such terms, conditions, limitations and
restrictions as the Plan Administrator shall deem advisable and that are not
inconsistent with the Plan.
16.2 NO INDIVIDUAL RIGHTS
Nothing in the Plan or any Award granted under the Plan shall be deemed
to constitute an employment contract or confer or be deemed to confer on any
Participant any right to continue in the employ of, or to continue any other
relationship with, the Company or any Related Corporation or limit in any way
the right of the Company or any Related Corporation to terminate a Participant's
employment or other relationship at any time, with or without Cause.
16.3 ISSUANCE OF SHARES
Notwithstanding any other provision of the Plan, the Company shall have
no obligation to issue or deliver any shares of Common Stock under the Plan or
make any other distribution of benefits under the Plan unless such issuance,
delivery or distribution would comply with all applicable laws (including,
without limitation, the requirements of the Securities Act), and the applicable
requirements of any securities exchange or similar entity.
The Company shall be under no obligation to any Participant to register
for offering or resale or to qualify for exemption under the Securities Act, or
to register or qualify under state securities laws, any shares of Common Stock,
security or interest in a security paid or issued under, or created by, the
Plan, or to continue in effect any such registrations or qualifications if made.
To the extent that the Plan or any instrument evidencing an Award
provides for the issuance of stock certificates to reflect the issuance of
shares of Common Stock, the issuance
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may be effected on a noncertificated basis, to the extent not prohibited by
applicable law or the applicable rules of any stock exchange. As a condition to
the exercise of an Option or any other receipt of Common Stock pursuant to an
Award under the Plan, the Company may require (a) the Participant to represent
and warrant at the time of any such exercise or receipt that such shares are
being purchased or received only for the Participant's own account and without
any present intention to sell or distribute such shares and (b) such other
action or agreement by the Participant as may from time to time be necessary to
comply with federal and state securities laws. At the option of the Company, a
stop-transfer order against any such shares may be placed on the official stock
books and records of the Company, and a legend indicating that such shares may
not be pledged, sold or otherwise transferred, unless an opinion of counsel is
provided (concurred in by counsel for the Company) stating that such transfer is
not in violation of any applicable law or regulation, may be stamped on stock
certificates to ensure exemption from registration. The Plan Administrator may
also require the Participant to execute and deliver to the Company a purchase
agreement or such other agreement as may be in use by the Company at such time
that describes certain terms and conditions applicable to the shares.
16.4 NO RIGHTS AS A STOCKHOLDER
No Option or Stock Award denominated in units shall entitle the
Participant to any cash dividend, voting or other right of a stockholder unless
and until the date of issuance under the Plan of the shares that are the subject
of such Award.
16.5 COMPLIANCE WITH LAWS AND REGULATIONS
Notwithstanding anything in the Plan to the contrary, the Plan
Administrator, in its sole discretion, may bifurcate the Plan so as to restrict,
limit or condition the use of any provision of the Plan to Participants who are
officers or directors subject to Section 16 of the Exchange Act without so
restricting, limiting or conditioning the Plan with respect to other
Participants. Additionally, in interpreting and applying the provisions of the
Plan, any Option granted as an Incentive Stock Option pursuant to the Plan
shall, to the extent permitted by law, be construed as an "incentive stock
option" within the meaning of Section 422 of the Code.
16.6 PARTICIPANTS IN FOREIGN COUNTRIES
The Plan Administrator shall have the authority to adopt such
modifications, procedures and subplans as may be necessary or desirable to
comply with provisions of the laws of foreign countries in which the Company or
its Related Corporations may operate to assure the viability of the benefits
from Awards granted to Participants employed in such countries and to meet the
objectives of the Plan.
16.7 NO TRUST OR FUND
The Plan is intended to constitute an "unfunded" plan. Nothing
contained herein shall require the Company to segregate any monies or other
property, or shares of Common Stock, or to create any trusts, or to make any
special deposits for any immediate or deferred amounts payable to any
Participant, and no Participant shall have any rights that are greater than
those of a general unsecured creditor of the Company.
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16.8 SEVERABILITY
If any provision of the Plan or any Award is determined to be invalid,
illegal or unenforceable in any jurisdiction, or as to any person, or would
disqualify the Plan or any Award under any law deemed applicable by the Plan
Administrator, such provision shall be construed or deemed amended to conform to
applicable laws, or, if it cannot be so construed or deemed amended without, in
the Plan Administrator's determination, materially altering the intent of the
Plan or the Award, such provision shall be stricken as to such jurisdiction,
person or Award, and the remainder of the Plan and any such Award shall remain
in full force and effect.
16.9 CHOICE OF LAW
The Plan and all determinations made and actions taken pursuant hereto,
to the extent not otherwise governed by the laws of the United States, shall be
governed by the laws of the State of California without giving effect to
principles of conflicts of laws.
16.10 FINANCIAL REPORTS
To the extent required by applicable law, including Section 260.140.46
of Title 10 of the California Code of Regulations, the Company shall provide
annual financial statements of the Company to each Participant. Such financial
statements need not be audited and need not be issued to key employees whose
duties with the Company assure them access to equivalent information.
SECTION 17. EFFECTIVE DATE
The effective date of the Plan is the date on which it is adopted by
the Board, so long as it is approved by the Company's stockholders at any time
within 12 months of such adoption. Any Award exercised or settled in shares of
Common Stock before stockholder approval is obtained shall be rescinded if
stockholder approval is not obtained within 12 months before or after the Board
adopts the Plan. Such shares shall not be counted in determining whether such
approval is obtained.
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