Exhibit 99.1
HALOZYME THERAPEUTICS, INC.
2008 OUTSIDE DIRECTORS’ STOCK PLAN
1.Establishment, Purpose and Term of Plan.
1.1Establishment.The Halozyme Therapeutics, Inc. 2008 Outside Directors’ Stock Plan (the “Plan”) is adopted by the Board of Directors as of March 13, 2008 (the “Effective Date”). Upon approval of the Plan by the stockholders of the Company and upon the issuance of automatic grants from the 2005 Outside Directors’ Stock Plan (the “Predecessor Plan”) following the 2008 Annual Meeting, the Predecessor Plan shall be terminated and no further Awards shall be granted thereunder.
1.2Purpose.The purpose of the Plan is to advance the interests of the Company and its stockholders by providing an incentive to attract, retain and reward persons performing services as Outside Directors of the Company and by motivating such persons to contribute to the growth and profitability of the Company. The Plan seeks to achieve this purpose by providing Awards in the form of Restricted Stock.
1.3Term of Plan.The Plan shall continue in effect until terminated by the Board or the date on which all of the shares of Stock available for issuance under the Plan have been issued and all restrictions on such shares under the terms of the Plan and the agreements evidencing Awards granted under the Plan have lapsed. However, all Awards shall be granted, if at all, within ten (10) years from the Effective Date.
2.Definitions and Construction.
2.1Definitions.Whenever used herein, the following terms shall have their respective meanings set forth below:
(a) “Annual Meeting” means an annual meeting of the Company’s stockholders at which directors are elected.
(b) “Award” means any Restricted Stock granted under the Plan.
(c) “Award Agreement”means a written agreement between the Company and a Participant setting forth the terms, conditions and restrictions of the Award granted to the Participant.
(d) “Board”means the Board of Directors of the Company. If one or more Committees have been appointed by the Board to administer the Plan,“Board”also means such Committee(s).
(e) “Change in Control”means, unless such term or an equivalent term is otherwise defined with respect to an Award by the Participant’s Award Agreement or written contract of employment or service, the occurrence of any of the following:
1
(i) an Ownership Change Event or series of related Ownership Change Events (collectively, a“Transaction”) in which the stockholders of the Company immediately before the Transaction do not retain immediately after the Transaction direct or indirect beneficial ownership of more than fifty percent (50%) of the total combined voting power of the outstanding securities entitled to vote generally in the election of Directors or, in the case of an Ownership Change Event described in Section 2.1(q)(iii), the entity to which the assets of the Company were transferred (the“Transferee”), as the case may be; or
(ii) a liquidation or dissolution of the Company;
provided, however, that a Change in Control shall be deemed not to include a transaction described in subsection (i) of this Section 2(e) in which a majority of the members of the board of directors of the continuing, surviving or successor entity, or parent thereof, immediately after such transaction is comprised of Incumbent Directors. Notwithstanding the foregoing, to the extent that any amount constituting deferred compensation subject to and not exempted from the requirements of Section 409A of the Code would become payable under this Plan by reason of a Change in Control, such amount shall become payable only if the event constituting a Change in Control would also constitute a change in ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company within the meaning of Section 409A.
For purposes of the preceding sentence, indirect beneficial ownership shall include, without limitation, an interest resulting from ownership of the voting securities of one or more corporations or other business entities which own the Company or the Transferee, as the case may be, either directly or through one or more subsidiary corporations or other business entities. The Committee shall determine whether multiple sales or exchanges of the voting securities of the Company or multiple Ownership Change Events are related, and its determination shall be final, binding and conclusive.
(f) “Code”means the Internal Revenue Code of 1986, as amended, and any applicable regulations promulgated thereunder.
(g) “Committee”means the compensation committee or other committee of one or members of the Board duly appointed to administer the Plan and having such powers as shall be specified by the Board. Unless the powers of the Committee have been specifically limited, the Committee shall have all of the powers of the Board granted herein, including, without limitation, the power to amend or terminate the Plan at any time, subject to the terms of the Plan and any applicable limitations imposed by law.
(h) “Company”means Halozyme Therapeutics, Inc. a Delaware corporation, or any successor corporation thereto.
(i) “Consultant”means a person engaged to provide consulting or advisory services (other than as an Employee or a Director) to a Participating Company.
2
(j) “Director”means a member of the Board or of the board of directors of any other Parent Corporation or Subsidiary Corporation.
(k) “Disability”means the permanent and total disability of the Participant within the meaning of Section 22(e)(3) of the Code.
(l) “Employee”means any person treated as an employee (including an officer of the Company or a Director who is also treated as an employee) in the records of a Participating Company; provided, however, that neither service as a Director nor payment of a director’s fee shall be sufficient to constitute employment for purposes of the Plan.
(m) “Exchange Act”means the Securities Exchange Act of 1934, as amended.
(n) “Fair Market Value”means, as of any date, the value of a share of Stock or other property as determined by the Board, in its discretion, or by the Company, in its discretion, if such determination is expressly allocated to the Company herein, subject to the following:
(i) If, on such date, the Stock is listed on a national or regional securities exchange or market system, the Fair Market Value of a share of Stock shall be the closing price of a share of Stock (or the closing bid price of a share of Stock if the Stock is so quoted instead) as quoted on the NASDAQ Global Market or such other national or regional securities exchange or market system constituting the primary market for the Stock, as reported inThe Wall Street Journal or such other source as the Company deems reliable. If the relevant date does not fall on a day on which the Stock has traded on such securities exchange or market system, the date on which the Fair Market Value shall be established shall be the last day on which the Stock was so traded prior to the relevant date, or such other appropriate day as shall be determined by the Board, in its discretion.
(ii) Notwithstanding the foregoing, the Board may, in its discretion, determine the Fair Market Value on the basis of the opening, closing, high, low or average sale price of a share of Stock or the actual sale price of a share of Stock received by a Participant, on such date, the preceding trading day or the next succeeding trading day or an average determined over a period of trading days. The Board may vary its method of determination of the Fair Market Value as provided in this Section for different purposes under the Plan.
(iii) If, on such date, the Stock is not listed on a national or regional securities exchange or market system, the Fair Market Value of a share of Stock shall be as determined by the Board in good faith without regard to any restriction other than a restriction which, by its terms, will never lapse.
(o)“Incumbent Director”means a director who either (i) is a member of the Board as of the Effective Date or (ii) is elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such
3
election or nomination, but who was not elected or nominated in connection with an actual or threatened proxy contest relating to the election of directors of the Company.
(p) “Outside Director”means a Director of the Company who is not an Employee or Consultant and who has not been an Employee or Consultant during the preceding twelve months.
(q) “Ownership Change Event”means the occurrence of any of the following with respect to the Company: (i) the direct or indirect sale or exchange in a single or series of related transactions by the stockholders of the Company of more than fifty percent (50%) of the voting stock of the Company; (ii) a merger or consolidation in which the Company is a party; or (iii) the sale, exchange, or transfer of all or substantially all of the assets of the Company (other than a sale, exchange or transfer to one or more subsidiaries of the Company).
(r) “Parent Corporation”means any present or future “parent corporation” of the Company, as defined in Section 424(e) of the Code.
(s) “Participant”means a person who has been granted one or more Awards.
(t) “Participating Company” means the Company or any Parent Corporation or Subsidiary Corporation.
(u) “Participating Company Group”means, at any point in time, all corporations collectively which are then Participating Companies.
(v) “Restricted Stock” means Stock granted to a Participant pursuant to Section 6 of the Plan.
(w) “Rule 16b-3”means Rule 16b-3 under the Exchange Act, as amended from time to time, or any successor rule or regulation.
(x) “Securities Act”means the Securities Act of 1933, as amended.
(y) “Service”means a Participant’s employment or service with the Participating Company Group, whether in the capacity of an Employee, a Director, or a Consultant. A Participant’s Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant renders Service to the Participating Company Group or a change in the Participating Company for which the Participant renders such Service, provided that there is no interruption or termination of the Participant’s Service. Furthermore, a Participant’s Service shall not be deemed to have terminated if the Participant takes any military leave, sick leave, or other bona fide leave of absence approved by the Company. A Participant’s Service shall be deemed to have terminated either upon an actual termination of Service or upon the corporation for which the Participant performs Service ceasing to be a Participating Company. Subject to the foregoing, the Company, in its discretion, shall determine whether a Participant’s Service has terminated and the effective date of such termination.
4
(z) “Stock”means the common stock of the Company, as adjusted from time to time in accordance with Section 4.2.
(aa) “Subsidiary Corporation”means any present or future “subsidiary corporation” of the Company, as defined in Section 424(f) of the Code.
(bb) “Vesting Conditions”mean those conditions established in accordance with Section 6 of the Plan prior to the satisfaction of which shares of Restricted Stock remain subject to forfeiture to the Company upon the Participant’s termination of Service.
2.2Construction.Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of the Plan. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.
3.Administration.
3.1Administration by the Board.The Plan shall be administered by the Board. All questions of interpretation of the Plan or of any Award shall be determined by the Board, and such determinations shall be final and binding upon all persons having an interest in the Plan or such Award.
3.2Authority of Officers.Any officer of the Company shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, determination or election which is the responsibility of or which is allocated to the Company herein, provided the officer has been delegated such authority by the Board with respect to such matter, right, obligation, determination or election.
3.3Powers of the Board.In addition to any other powers set forth in the Plan and subject to the provisions of the Plan, the Board shall have the full and final power and authority, in its discretion:
(a) to determine the Fair Market Value of shares of Stock or other property;
(b) to determine the terms, conditions and restrictions applicable to each Award (which need not be identical) and any shares acquired pursuant thereto, including, without limitation, (i) the purchase price of shares purchased pursuant to any Award, (ii) the method of payment for shares purchased pursuant to any Award, (iii) the timing, terms and conditions of the vesting of any Award or any shares acquired pursuant thereto, (iv) the time of the expiration of any Award, (v) the effect of the Participant’s termination of Service on any of the foregoing, and (vi) all other terms, conditions and restrictions applicable to any Award or shares acquired pursuant thereto not inconsistent with the terms of the Plan;
(c) to approve one or more forms of Award Agreement;
5
(d) to amend, modify, extend, cancel or renew any Award or to waive any restrictions or conditions applicable to any Award or any shares acquired pursuant thereto;
(e) to accelerate, continue, extend or defer the vesting of any Award or any shares acquired pursuant thereto, including with respect to the period following a Participant’s termination of Service;
(f) to prescribe, amend or rescind rules, guidelines and policies relating to the plan, or to adopt sub-plans or supplements to, or alternative versions of, the Plan, including, without limitation, as the Board deems necessary or desirable to comply with the laws or regulations of or to accommodate the tax policy, accounting principles or custom of, foreign jurisdictions whose citizens may be granted Awards; and
(g) to correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award Agreement and to make all other determinations and take such other actions with respect to the Plan or any Award as the Board may deem advisable to the extent not inconsistent with the provisions of the Plan or applicable law.
3.4Indemnification.In addition to such other rights of indemnification as they may have as members of the Board or Officers or employees of the Company, members of the Board and any Officers or employees of the Company to whom authority to act for the Board or the Company is delegated shall be indemnified by the Company against all reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any right granted hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct in duties; provided, however, that within sixty (60) days after the institution of such action, suit or proceeding, such person shall offer to the Company, in writing, the opportunity at its own expense to handle and defend the same.
4.Shares Subject to Plan.
4.1Maximum Number of Shares Issuable.Subject to adjustment as provided in Section 4.2, the maximum aggregate number of shares of Stock that may be issued under the Plan shall be Six Hundred Thousand (600,000) shares. Shares issuable under this Plan shall consist of authorized but unissued or reacquired shares of Stock or any combination thereof. If shares of Stock acquired pursuant to an Award subject to forfeiture are forfeited, the shares of Stock allocable to such forfeiture shall again be available for issuance under the Plan.
4.2Adjustments for Changes in Capital Structure.Subject to any required action by the stockholders of the Company, in the event of any change in the Stock effected without receipt of consideration by the Company, whether through merger, consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend, stock split,
6
reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of shares, or similar change in the capital structure of the Company, or in the event of payment of a dividend or distribution to the stockholders of the Company in a form other than Stock (excepting normal cash dividends) that has a material effect on the Fair Market Value of shares of Stock, appropriate adjustments shall be made in the number and kind of shares subject to the Plan and to any outstanding Awards and in the number and kind of shares subject to the automatic grants provided under Section 6.1. For purposes of the foregoing, conversion of any convertible securities of the Company shall not be treated as “effected without receipt of consideration by the Company.” Any fractional share resulting from an adjustment pursuant to this Section 4.2 shall be rounded down to the nearest whole number, and in no event may the purchase price under any Award be decreased to an amount less than the par value, if any, of the stock subject to such Award. The adjustments determined by the Board pursuant to this Section 4.2 shall be final, binding and conclusive.
5.Eligibility.
Awards shall be granted only to those persons who, at the time of grant, are serving as Outside Directors.
6.Terms and Conditions of Restricted Stock Awards.
Restricted Stock Awards shall be evidenced by Award Agreements specifying the number of shares of Stock subject to the Award, in such form as the Board shall from time to time establish. No Restricted Stock Award or purported Restricted Stock Award shall be a valid and binding obligation of the Company unless evidenced by a fully executed Award Agreement. Award Agreements evidencing Restricted Stock may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:
6.1Automatic Grant.Subject to (i) the approval of the Plan by the stockholders of the Company at the 2008 Annual Meeting and (ii) the execution by an Outside Director of an appropriate Award Agreement, Restricted Stock Awards shall be granted automatically and without further action of the Board, as follows:
(a) Initial Restricted Stock Award. Each person who first becomes an Outside Director after the date of the 2008 Annual Meeting shall be granted on the date such person first becomes an Outside Director a Restricted Stock Award for Twenty Thousand (20,000) shares of Stock (an“Initial Stock Award”).
(b) Annual Restricted Stock Award.Immediately following the 2009 Annual Meeting, and each subsequent Annual Meeting for so long as a sufficient amount of shares are available to grant the automatic Awards described in this Plan to all Outside Directors, each Outside Director shall automatically be granted a Restricted Stock Award for Twenty Thousand (20,000) shares of Stock (an“Annual Stock Award”); provided, however, that an Outside Director who has not served on the Board for six (6) full months prior to the date of such Board meeting shall not be granted an Annual Stock Award.
7
(c) Right to Decline Restricted Stock Award.Notwithstanding the foregoing, any person may elect not to receive a Restricted Stock Award by delivering written notice of such election to the Board no later than the day prior to the date such Restricted Stock would otherwise be granted. A person so declining a Restricted Stock Award shall receive no payment or other consideration in lieu of such declined Restricted Stock. A person who has declined a Restricted Stock Award may revoke such election by delivering written notice of such revocation to the Board no later than the day prior to the date such Restricted Stock would be granted pursuant to Section 6.1(a) or (b), as the case may be.
6.2Purchase Price.No monetary payment shall be required as a condition of receiving shares of Restricted Stock, the consideration for which shall be services actually rendered to a Participating Company or for its benefit. Notwithstanding the foregoing, if required by applicable law, the Participant shall furnish consideration in the form of cash or past services rendered to a Participating Company or for its benefit having a value not less than the par value of the shares of Restricted Stock subject to such Award.
6.3Vesting Conditions and Restrictions on Transfer.Except as otherwise provided in the Plan or in the Award Agreement evidencing a Restricted Stock Award and provided that the Participant’s Service has not terminated prior to the relevant date, each Restricted Stock Award shall be subject to the Vesting Conditions as follows:
(a) Initial Stock Award. The Initial Stock Award shall vest and no longer be subject to forfeiture with respect to the total number of shares subject thereto on the later of: (a) the first day that Participant may trade Company stock in compliance with the Company’s Insider Trading Policy that occurs after the six-month anniversary of the date of grant or (b) the first day that Participant may trade Company stock in compliance with the Company’s Insider Trading Policy that occurs after the date of the first Annual Meeting following the grant of the Initial Stock Award.
(b) Annual Stock Award: The Annual Stock Award shall vest and no longer be subject to forfeiture with respect to the total number of shares subject thereto on the first day that Participant may trade Company stock in compliance with the Company’s Insider Trading Policy that occurs after the date immediately preceding the date of the Annual Meeting following the date of grant.
At any time the shares acquired pursuant to a Restricted Stock Award remain subject to Vesting Conditions, such shares may not be sold, exchanged, transferred, pledged, assigned or otherwise disposed of other than pursuant to an Ownership Change Event or as provided in Section 6.6 below. Upon request by the Company, each Participant shall execute any agreement evidencing such transfer restrictions prior to the receipt of shares of Restricted Stock hereunder and shall promptly present to the Company any and all certificates representing shares of Restricted Stock acquired hereunder for the placement on such certificates of appropriate legends evidencing any such transfer restrictions.
6.4Voting Rights; Dividends and Distributions.Except as provided in this Section, Section 6.3 and any Award Agreement, during the period in which shares subject to a
8
Restricted Stock Award are subject to Vesting Conditions, the Participant shall have all of the rights of a stockholder of the Company holding shares of Stock, including the right to vote such shares and to receive all dividends and other distributions paid with respect to such shares. However, in the event of a dividend or distribution paid in shares of Stock or any other adjustment made upon a change in the capital structure of the Company as described in Section 4.2, then any and all new, substituted or additional securities or other property (other than normal cash dividends) to which the Participant is entitled by reason of the Participant’s Restricted Stock Award shall be immediately subject to the same Vesting Conditions as the shares subject to the Restricted Stock Award with respect to which such dividends or distributions were paid or adjustments were made.
6.5Effect of Termination of Service.Unless otherwise provided by the Board in the grant of a Restricted Stock Award and set forth in the Award Agreement, if a Participant’s Service terminates for any reason, whether voluntary or involuntary (including the Participant’s death or Disability), then the Participant shall forfeit to the Company any shares acquired by the Participant pursuant to a Restricted Stock Award which remain subject to Vesting Conditions as of the date of the Participant’s termination of Service.
6.6Nontransferability of Restricted Stock Award Rights.Prior to the issuance of shares of Stock pursuant to a Restricted Stock Award, rights to acquire such shares shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or the laws of descent and distribution.
7.Standard Forms of Award Agreement.
7.1Award Agreement.Each Award shall comply with and be subject to the terms and conditions set forth in the appropriate form of Award Agreement approved by the Board and as amended from time to time. Any Award Agreement may consist of an appropriate form of Notice of Grant and a form of Agreement incorporated therein by reference, or such other form or forms as the Board may approve from time to time.
7.2Authority to Vary Terms.The Board shall have the authority from time to time to vary the terms of any standard form of Award Agreement either in connection with the grant or amendment of an individual Award or in connection with the authorization of a new standard form or forms; provided, however, that the terms and conditions of any such new, revised or amended standard form or forms of Award Agreement are not inconsistent with the terms of the Plan.
8.Change in Control.
Notwithstanding any other provision of the Plan to the contrary, in the event of a Change in Control, the lapsing of any Vesting Conditions applicable to the shares subject to the Restricted Stock Award held by a Participant whose Service has not terminated prior to such date shall be accelerated effective immediately prior to the consummation of the Change in Control. Any acceleration of the lapsing of any Vesting Conditions that was permissible solely by reason
9
of this Section 8.2 and the provisions of such Award Agreement shall be conditioned upon the consummation of the Change in Control.
9.Compliance with Securities Law.
The grant of Awards and the issuance of shares of Stock pursuant to any Award shall be subject to compliance with all applicable requirements of federal, state and foreign law with respect to such securities and the requirements of any stock exchange or market system upon which the Stock may then be listed. In addition, no shares may be issued pursuant to an Award unless (i) a registration statement under the Securities Act shall at the time of such issuance be in effect with respect to the shares issuable pursuant to the Award or (ii) in the opinion of legal counsel to the Company, the shares issuable pursuant to the Award may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any shares hereunder shall relieve the Company of any liability in respect of the failure to issue or sell such shares as to which such requisite authority shall not have been obtained. As a condition to issuance of any Stock, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company.
10.Termination or Amendment of Plan.
The Board may amend, suspend or terminate the Plan at any time. However, without the approval of the Company’s stockholders, there shall be (a) no increase in the maximum aggregate number of shares of Stock that may be issued under the Plan (except by operation of the provisions of Section 4.2), and (b) no other amendment of the Plan that would require approval of the Company’s stockholders under any applicable law, regulation or rule. No amendment, suspension or termination of the Plan shall affect any then outstanding Award unless expressly provided by the Board. In any event, no amendment, suspension or termination of the Plan may adversely affect any then outstanding Award without the consent of the Participant unless necessary to comply with any applicable law, regulation or rule.
11.Miscellaneous Provisions.
11.1Rights as Outside Director.Nothing in the Plan or any Award granted under the Plan, nor any action taken pursuant to the Plan, shall (a) confer on any Participant a right to remain an Outside Director or to continue in the Service of the Company in any capacity for any period of time or at a particular retainer or other rate of compensation, or interfere with or limit in any way any right of a Participating Company to terminate the Participant’s Service at any time, and (b) limit, interfere with, or otherwise affect the provisions of the Company’s charter, bylaws or the Delaware General Corporation Law relating to the removal of Directors.
11.2Fractional Shares.The Company shall not be required to issue fractional shares upon the settlement of any Award.
10
11.3Beneficiary Designation.Subject to local laws and procedures, each Participant may file with the Company a written designation of a beneficiary who is to receive any benefit under the Plan to which the Participant is entitled in the event of such Participant’s death before he or she receives any or all of such benefit. Each designation will revoke all prior designations by the same Participant, shall be in a form prescribed by the Company, and will be effective only when filed by the Participant in writing with the Company during the Participant’s lifetime. If a married Participant designates a beneficiary other than the Participant’s spouse, the effectiveness of such designation may be subject to the consent of the Participant’s spouse, if required by applicable law or the Company. If a Participant dies without an effective designation of a beneficiary who is living at the time of the Participant’s death, the Company will pay any remaining unpaid benefits to the Participant’s legal representative.
11.4Rights as a Stockholder.A Participant shall have no rights as a stockholder with respect to any shares covered by an Award until the date of the issuance of such shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date such shares are issued, except as provided in Section 4.2 or another provision of the Plan.
11
PLAN HISTORY
| | | |
| March 13, 2008 | | Board adopts 2008 Outside Directors’ Stock Plan (“Plan”) effective as of the Effective Date, with an initial reserve of 600,000 shares. |
| | | |
| May [___], 2008 | | Stockholders approve Plan at Annual Meeting. |
