EXHIBIT 10.2
NANOSYS, INC.
2004 STOCK PLAN
1. Purposes of the Plan. The purposes of this Plan are:
- to attract and retain the best available personnel
for positions of substantial responsibility,
- to provide additional incentive to Employees,
Directors and Consultants, and
- to promote the success of the Company's business.
The Plan permits the grant of Incentive Stock Options,
Nonstatutory Stock Options, Restricted Stock, Stock Appreciation Rights,
Performance Units and Performance Shares.
2. Definitions. As used herein, the following definitions will
apply:
(a) "Administrator" means the Board or any of its
Committees as will be administering the Plan, in accordance with Section 4 of
the Plan.
(b) "Affiliated SAR" means an SAR that is granted in
connection with a related Option, and which automatically will be deemed to be
exercised at the same time that the related Option is exercised.
(c) "Applicable Laws" means the requirements relating to
the administration of equity-based awards under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Awards are, or will be, granted under
the Plan.
(d) "Award" means, individually or collectively, a grant
under the Plan of Options, SARs, Restricted Stock, Performance Units or
Performance Shares.
(e) "Award Agreement" means the written or electronic
agreement setting forth the terms and provisions applicable to each Award
granted under the Plan. The Award Agreement is subject to the terms and
conditions of the Plan.
(f) "Board" means the Board of Directors of the Company.
(g) "Change in Control" means the occurrence of any of
the following events:
(i) Any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) becomes the "beneficial owner" (as
defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of
securities of the Company representing fifty percent (50%) or more of the total
voting power represented by the Company's then outstanding voting securities; or
(ii) The consummation of the sale or disposition
by the Company of all or substantially all of the Company's assets;
(iii) A change in the composition of the Board
occurring within a two-year period, as a result of which fewer than a majority
of the directors are Incumbent Directors. "Incumbent Directors" means directors
who either (A) are Directors as of the effective date of the Plan, or (B) are
elected, or nominated for election, to the Board with the affirmative votes of
at least a majority of the Incumbent Directors at the time of such election or
nomination (but will not include an individual whose election or nomination is
in connection with an actual or threatened proxy contest relating to the
election of directors to the Company); or
(iv) The consummation of a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity or its parent) at least fifty percent (50%) of the total voting
power represented by the voting securities of the Company or such surviving
entity or its parent outstanding immediately after such merger or consolidation.
(h) "Code" means the Internal Revenue Code of 1986, as
amended. Any reference to a section of the Code herein will be a reference to
any successor or amended section of the Code.
(i) "Committee" means a committee of Directors appointed
by the Board in accordance with Section 4 of the Plan.
(j) "Common Stock" means the common stock of the Company.
(k) "Company" means Nanosys, Inc., a Delaware
corporation, or any successor thereto.
(l) "Consultant" means any person, including an advisor,
engaged by the Company or a Parent or Subsidiary to render services to such
entity.
(m) "Director" means a member of the Board.
(n) "Disability" means total and permanent disability as
defined in Section 22(e)(3) of the Code, provided that in the case of Awards
other than Incentive Stock Options, the Administrator in its discretion may
determine whether a permanent and total disability exists in accordance with
uniform and non-discriminatory standards adopted by the Administrator from time
to time.
(o) "Employee" means any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company.
Neither service as a Director nor payment of a director's fee by the Company
will be sufficient to constitute "employment" by the Company.
(p) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
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(q) "Exchange Program" means a program under which (i)
outstanding Awards are surrendered or cancelled in exchange for Awards of the
same type (which may have lower exercise prices and different terms), Awards of
a different type, and/or cash, and/or (ii) the exercise price of an outstanding
Award is reduced. The terms and conditions of any Exchange Program will be
determined by the Administrator in its sole discretion.
(r) "Fair Market Value" means, as of any date, the value
of Common Stock determined as follows:
(i) If the Common Stock is listed on any
established stock exchange or a national market system, including without
limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The
Nasdaq Stock Market, its Fair Market Value will be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or system on the day of determination, as reported in The Wall Street
Journal or such other source as the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock will be the mean between the high bid
and low asked prices for the Common Stock on the day of determination, as
reported in The Wall Street Journal or such other source as the Administrator
deems reliable;
(iii) For purposes of any Awards granted on the
Registration Date, the Fair Market Value will be the initial price to the public
as set forth in the final prospectus included 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; or
(iv) In the absence of an established market for
the Common Stock, the Fair Market Value will be determined in good faith by the
Administrator.
(s) "Fiscal Year" means the fiscal year of the Company.
(t) "Freestanding SAR" means a SAR that is granted
independently of any Option.
(u) "Incentive Stock Option" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code and the regulations promulgated thereunder.
(v) "Inside Director" means a Director who is an
Employee.
(w) "Nonstatutory Stock Option" means an Option that by
its terms does not qualify or is not intended to qualify as an Incentive Stock
Option.
(x) "Officer" means a person who is an officer of the
Company within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(y) "Option" means a stock option granted pursuant to the
Plan.
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(z) "Optioned Stock" means the Common Stock subject to an
Award.
(aa) "Outside Director" means a Director who is not an
Employee.
(bb) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(cc) "Participant" means the holder of an outstanding
Award.
(dd) "Performance Share" means an Award granted to a
Participant pursuant to Section 9.
(ee) "Performance Unit" means an Award granted to a
Participant pursuant to Section 9.
(ff) "Period of Restriction" means the period during which
the transfer of Shares of Restricted Stock are subject to restrictions and
therefore, the Shares are subject to a substantial risk of forfeiture. Such
restrictions may be based on the passage of time, the achievement of target
levels of performance, or the occurrence of other events as determined by the
Administrator.
(gg) "Plan" means this 2004 Stock Plan.
(hh) "Registration Date" means the effective date of the
first registration statement that is filed by the Company and declared effective
pursuant to Section 12(g) of the Exchange Act, with respect to any class of the
Company's securities.
(ii) "Restricted Stock" means shares of Common Stock
issued pursuant to a Restricted Stock award under Section 7 of the Plan or
issued pursuant to the early exercise of an Option.
(jj) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or
any successor to Rule 16b-3, as in effect when discretion is being exercised
with respect to the Plan.
(kk) "Section 16(b) " means Section 16(b) of the Exchange
Act.
(ll) "Service Provider" means an Employee, Director or
Consultant.
(mm) "Share" means a share of the Common Stock, as
adjusted in accordance with Section 13 of the Plan.
(nn) "Stock Appreciation Right" or "SAR" means an Award,
granted alone or in connection with an Option, that pursuant to Section 8 is
designated as a SAR.
(oo) "Subsidiary" means a "subsidiary corporation",
whether now or hereafter existing, as defined in Section 424(f) of the Code.
(pp) "Tandem SAR" means a SAR that is granted in
connection with a related Option, the exercise of which will require forfeiture
of the right to purchase an equal number of
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Shares under the related Option (and when a Share is purchased under the Option,
the SAR will be canceled to the same extent).
3. Stock Subject to the Plan.
(a) Stock Subject to the Plan. Subject to the provisions
of Section 13 of the Plan, the maximum aggregate number of Shares that may be
optioned and sold under the Plan is 3,000,000 Shares, plus (a) the number of
Shares which have been reserved but not issued under the Company's 2001 Amended
Stock Plan (the "2001 Plan") as of the Registration Date, (b) any Shares
returned to the Company's 2001 Plan as a result of termination of options or
repurchase of Shares issued under such plan, and (c) an annual increase to be
added on the first day of the Company's fiscal year beginning in 2005, equal to
the lesser of (i) 6,000,000 Shares, (ii) 5% of the outstanding Shares on such
date or (iii) an amount determined by the Board. The Shares may be authorized,
but unissued, or reacquired Common Stock. Shares shall not be deemed to have
been issued pursuant to the Plan with respect to any portion of an Award that is
settled in cash. Upon payment in Shares pursuant to the exercise of an SAR, the
number of Shares available for issuance under the Plan shall be reduced only by
the number of Shares actually issued in such payment. If the exercise price of
an Option is paid by tender to the Company, or attestation to the ownership, of
Shares owned by the Participant, the number of Shares available for issuance
under the Plan shall be reduced by the gross number of Shares for which the
Option is exercised.
(b) Lapsed Awards. If an Award expires or becomes
unexercisable without having been exercised in full, or is surrendered pursuant
to an Exchange Program, the unpurchased Shares which were subject thereto will
become available for future grant or sale under the Plan (unless the Plan has
terminated); provided, however, that Shares that have actually been issued under
the Plan, whether upon exercise of an Award, will not be returned to the Plan
and will not become available for future distribution under the Plan, except
that if unvested Shares are forfeited or repurchased by the Company, such Shares
will become available for future grant under the Plan.
4. Administration of the Plan.
(a) Procedure.
(i) Multiple Administrative Bodies. Different
Committees with respect to different groups of Service Providers may administer
the Plan.
(ii) Section 162(m). To the extent that the
Administrator determines it to be desirable to qualify Options granted hereunder
as "performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan will be administered by a Committee of two or more "outside
directors" within the meaning of Section 162(m) of the Code.
(iii) Rule 16b-3. To the extent desirable to
qualify transactions hereunder as exempt under Rule 16b-3, the transactions
contemplated hereunder will be structured to satisfy the requirements for
exemption under Rule 16b-3.
(iv) Other Administration. Other than as provided
above, the Plan will be administered by (A) the Board or (B) a Committee, which
committee will be constituted to satisfy Applicable Laws.
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(b) Powers of the Administrator. Subject to the
provisions of the Plan, and in the case of a Committee, subject to the specific
duties delegated by the Board to such Committee, the Administrator will have the
authority, in its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom
Awards may be granted hereunder;
(iii) to determine the number of Shares to be
covered by each Award granted hereunder;
(iv) to approve forms of agreement for use under
the Plan;
(v) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any Award granted hereunder. Such
terms and conditions include, but are not limited to, the exercise price, the
time or times when Awards may be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions, and
any restriction or limitation regarding any Award or the Shares relating
thereto, based in each case on such factors as the Administrator will determine;
(vi) to institute an Exchange Program;
(vii) to construe and interpret the terms of the
Plan and Awards granted pursuant to the Plan;
(viii) to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules and regulations relating to
sub-plans established for the purpose of satisfying applicable foreign laws;
(ix) to modify or amend each Award (subject to
Section 17(c) of the Plan), including the discretionary authority to extend the
post-termination exercisability period of Awards longer than is otherwise
provided for in the Plan;
(x) to allow Participants to satisfy withholding
tax obligations by electing to have the Company withhold from the Shares to be
issued upon exercise of an Award that number of Shares having a Fair Market
Value equal to the minimum amount required to be withheld (the Fair Market Value
of the Shares to be withheld will be determined on the date that the amount of
tax to be withheld is to be determined and all elections by a Participant to
have Shares withheld for this purpose will be made in such form and under such
conditions as the Administrator may deem necessary or advisable);
(xi) to authorize any person to execute on behalf
of the Company any instrument required to effect the grant of an Award
previously granted by the Administrator;
(xii) to allow a Participant to defer the receipt
of the payment of cash or the delivery of Shares that would otherwise be due to
such Participant under an Award;
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(xiii) to make all other determinations deemed
necessary or advisable for administering the Plan.
(c) Effect of Administrator's Decision. The
Administrator's decisions, determinations and interpretations will be final and
binding on all Participants and any other holders of Awards.
5. Eligibility. Nonstatutory Stock Options, Restricted Stock,
Stock Appreciation Rights, Performance Units and Performance Shares may be
granted to Service Providers. Incentive Stock Options may be granted only to
Employees.
6. Stock Options.
(a) Limitations.
(i) Each Option will be designated in the Award
Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.
However, notwithstanding such designation, to the extent that the aggregate Fair
Market Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Participant during any calendar year
(under all plans of the Company and any Parent or Subsidiary) exceeds $100,000,
such Options will be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options will be taken into account in the order in
which they were granted. The Fair Market Value of the Shares will be determined
as of the time the Option with respect to such Shares is granted.
(ii) The following limitations will apply to
grants of Options and Stock Appreciation Rights:
(1) No Service Provider will be
granted, in any Fiscal Year, Options to purchase more than 2,250,000 Shares.
(2) In connection with his or her
initial service, a Service Provider may be granted Options to purchase up to an
additional 4,500,000 Shares, which will not count against the limit set forth in
Section 6(a)(2)(ii)(1) above.
(3) The foregoing limitations will be
adjusted proportionately in connection with any change in the Company's
capitalization as described in Section 13.
(4) If an Option is cancelled in the
same Fiscal Year in which it was granted (other than in connection with a
transaction described in Section 13), the cancelled Option will be counted
against the limits set forth in subsections (1) and (2) above. For this purpose,
if the exercise price of an Option is reduced, the transaction will be treated
as a cancellation of the Option and the grant of a new Option.
(b) Term of Option. The term of each Option will be
stated in the Award Agreement. In the case of an Incentive Stock Option, the
term will be ten (10) years from the date of grant or such shorter term as may
be provided in the Award Agreement. Moreover, in the case of an Incentive Stock
Option granted to a Participant who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent (10%) of the total
combined voting power of
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all classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option will be five (5) years from the date of grant or such
shorter term as may be provided in the Award Agreement.
(c) Option Exercise Price and Consideration.
(i) Exercise Price. The per share exercise price
for the Shares to be issued pursuant to exercise of an Option will be determined
by the Administrator, subject to the following:
(1) In the case of an Incentive Stock
Option
a) granted to an Employee
who, at the time the Incentive Stock Option is granted, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share exercise price will be no
less than 110% of the Fair Market Value per Share on the date of grant.
b) granted to any Employee
other than an Employee described in paragraph (A) immediately above, the per
Share exercise price will be no less than 100% of the Fair Market Value per
Share on the date of grant.
(2) In the case of a Nonstatutory Stock
Option, the per Share exercise price will be determined by the Administrator. In
the case of a Nonstatutory Stock Option intended to qualify as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, the per Share exercise price will be no less than 100% of the Fair Market
Value per Share on the date of grant.
(3) Notwithstanding the foregoing,
Incentive Stock Options may be granted with a per Share exercise price of less
than 100% of the Fair Market Value per Share on the date of grant pursuant to a
merger or other corporate transaction.
(ii) Waiting Period and Exercise Dates. At the
time an Option is granted, the Administrator will fix the period within which
the Option may be exercised and will determine any conditions that must be
satisfied before the Option may be exercised.
(iii) Form of Consideration. The Administrator
will determine the acceptable form of consideration for exercising an Option,
including the method of payment. In the case of an Incentive Stock Option, the
Administrator will determine the acceptable form of consideration at the time of
grant. Such consideration may consist entirely of: (1) cash; (2) check; (3)
promissory note; (4) other Shares, provided Shares acquired directly or
indirectly from the Company, (A) have been owned by the Participant and not
subject to substantial risk of forfeiture for more than six months on the date
of surrender, and (B) have a Fair Market Value on the date of surrender equal to
the aggregate exercise price of the Shares as to which said Option will be
exercised; (5) consideration received by the Company under a cashless exercise
program implemented by the Company in connection with the Plan; (6) a reduction
in the amount of any Company liability to the Participant, including any
liability attributable to the Participant's participation in any
Company-sponsored deferred compensation program or arrangement; (7) any
combination of the foregoing methods of payment; or (8) such other consideration
and method of payment for the issuance of Shares to the extent permitted by
Applicable Laws.
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(d) Exercise of Option.
(i) Procedure for Exercise; Rights as a
Stockholder. Any Option granted hereunder will be exercisable according to the
terms of the Plan and at such times and under such conditions as determined by
the Administrator and set forth in the Award Agreement. An Option may not be
exercised for a fraction of a Share.
An Option will be deemed exercised when the
Company receives: (x) written or electronic notice of exercise (in accordance
with the Award Agreement) from the person entitled to exercise the Option, and
(y) full payment for the Shares with respect to which the Option is exercised.
Full payment may consist of any consideration and method of payment authorized
by the Administrator and permitted by the Award Agreement and the Plan. Shares
issued upon exercise of an Option will be issued in the name of the Participant
or, if requested by the Participant, in the name of the Participant and his or
her spouse. Until the Shares are issued (as evidenced by the appropriate entry
on the books of the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive dividends or any other rights as a
stockholder will exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. The Company will issue (or cause to be issued) such
Shares promptly after the Option is exercised. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the
Shares are issued, except as provided in Section 13 of the Plan.
Exercising an Option in any manner will decrease the
number of Shares thereafter available, both for purposes of the Plan and for
sale under the Option, by the number of Shares as to which the Option is
exercised.
(ii) Termination of Relationship as a Service
Provider. If a Participant ceases to be a Service Provider, other than upon the
Participant's death or Disability, the Participant may exercise his or her
Option within such period of time as is specified in the Award Agreement to the
extent that the Option is vested on the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the Award
Agreement). In the absence of a specified time in the Award Agreement, the
Option will remain exercisable for three (3) months following the Participant's
termination. Unless otherwise provided by the Administrator, if on the date of
termination the Participant is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option will revert to the Plan. If
after termination the Participant does not exercise his or her Option within the
time specified by the Administrator, the Option will terminate, and the Shares
covered by such Option will revert to the Plan.
(iii) Disability of Participant. If a Participant
ceases to be a Service Provider as a result of the Participant's Disability, the
Participant may exercise his or her Option within such period of time as is
specified in the Award Agreement to the extent the Option is vested on the date
of termination (but in no event later than the expiration of the term of such
Option as set forth in the Award Agreement). In the absence of a specified time
in the Award Agreement, the Option will remain exercisable for twelve (12)
months following the Participant's termination. Unless otherwise provided by the
Administrator, if on the date of termination the Participant is not vested as to
his or her entire Option, the Shares covered by the unvested portion of the
Option will revert to the Plan. If after termination the Participant does not
exercise his or her Option within the
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time specified herein, the Option will terminate, and the Shares covered by such
Option will revert to the Plan.
(iv) Death of Participant. If a Participant dies
while a Service Provider, the Option may be exercised following the
Participant's death within such period of time as is specified in the Award
Agreement to the extent that the Option is vested on the date of death (but in
no event may the option be exercised later than the expiration of the term of
such Option as set forth in the Award Agreement), by the Participant's
designated beneficiary, provided such beneficiary has been designated prior to
Participant's death in a form acceptable to the Administrator. If no such
beneficiary has been designated by the Participant, then such Option may be
exercised by the personal representative of the Participant's estate or by the
person(s) to whom the Option is transferred pursuant to the Participant's will
or in accordance with the laws of descent and distribution. In the absence of a
specified time in the Award Agreement, the Option will remain exercisable for
twelve (12) months following Participant's death. Unless otherwise provided by
the Administrator, if at the time of death Participant is not vested as to his
or her entire Option, the Shares covered by the unvested portion of the Option
will immediately revert to the Plan. If the Option is not so exercised within
the time specified herein, the Option will terminate, and the Shares covered by
such Option will revert to the Plan.
7. Restricted Stock.
(a) Grant of Restricted Stock. Subject to the terms and
provisions of the Plan, the Administrator, at any time and from time to time,
may grant Shares of Restricted Stock to Service Providers in such amounts as the
Administrator, in its sole discretion, will determine.
(b) Restricted Stock Agreement. Each Award of Restricted
Stock will be evidenced by an Award Agreement that will specify the Period of
Restriction, the number of Shares granted, and such other terms and conditions
as the Administrator, in its sole discretion, will determine. Unless the
Administrator determines otherwise, Shares of Restricted Stock will be held by
the Company as escrow agent until the restrictions on such Shares have lapsed.
(c) Transferability. Except as provided in this Section
7, Shares of Restricted Stock may not be sold, transferred, pledged, assigned,
or otherwise alienated or hypothecated until the end of the applicable Period of
Restriction.
(d) Other Restrictions. The Administrator, in its sole
discretion, may impose such other restrictions on Shares of Restricted Stock as
it may deem advisable or appropriate.
(e) Removal of Restrictions. Except as otherwise provided
in this Section 7, Shares of Restricted Stock covered by each Restricted Stock
grant made under the Plan will be released from escrow as soon as practicable
after the last day of the Period of Restriction. The Administrator, in its
discretion, may accelerate the time at which any restrictions will lapse or be
removed.
(f) Voting Rights. During the Period of Restriction,
Service Providers holding Shares of Restricted Stock granted hereunder may
exercise full voting rights with respect to those Shares, unless the
Administrator determines otherwise.
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(g) Dividends and Other Distributions. During the Period
of Restriction, Service Providers holding Shares of Restricted Stock will be
entitled to receive all dividends and other distributions paid with respect to
such Shares unless otherwise provided in the Award Agreement. If any such
dividends or distributions are paid in Shares, the Shares will be subject to the
same restrictions on transferability and forfeitability as the Shares of
Restricted Stock with respect to which they were paid.
(h) Return of Restricted Stock to Company. On the date
set forth in the Award Agreement, the Restricted Stock for which restrictions
have not lapsed will revert to the Company and again will become available for
grant under the Plan.
8. Stock Appreciation Rights.
(a) Grant of SARs. Subject to the terms and conditions of
the Plan, a SAR may be granted to Service Providers at any time and from time to
time as will be determined by the Administrator, in its sole discretion. The
Administrator may grant Affiliated SARs, Freestanding SARs, Tandem SARs, or any
combination thereof.
(b) Number of Shares. The Administrator will have
complete discretion to determine the number of SARs granted to any Service
Provider; provided, however that no Service Provider shall be granted, in any
fiscal year of the Company, Options and/or Stock Appreciation Rights to purchase
more than an aggregate of 2,250,000 Shares. Notwithstanding the foregoing
limitation, in connection with a Participant's initial service as an Employee,
an Employee may be granted SARs covering up to an additional 4,500,000 Shares.
(c) Exercise Price and Other Terms. The Administrator,
subject to the provisions of the Plan, will have complete discretion to
determine the terms and conditions of SARs granted under the Plan. However, the
exercise price of Tandem or Affiliated SARs will equal the exercise price of the
related Option.
(d) Exercise of Tandem SARs. Tandem SARs may be exercised
for all or part of the Shares subject to the related Option upon the surrender
of the right to exercise the equivalent portion of the related Option. A Tandem
SAR may be exercised only with respect to the Shares for which its related
Option is then exercisable. With respect to a Tandem SAR granted in connection
with an Incentive Stock Option: (a) the Tandem SAR will expire no later than the
expiration of the underlying Incentive Stock Option; (b) the value of the payout
with respect to the Tandem SAR will be for no more than one hundred percent
(100%) of the difference between the exercise price of the underlying Incentive
Stock Option and the Fair Market Value of the Shares subject to the underlying
Incentive Stock Option at the time the Tandem SAR is exercised; and (c) the
Tandem SAR will be exercisable only when the Fair Market Value of the Shares
subject to the Incentive Stock Option exceeds the Exercise Price of the
Incentive Stock Option.
(e) Exercise of Affiliated SARs. An Affiliated SAR will
be deemed to be exercised upon the exercise of the related Option. The deemed
exercise of an Affiliated SAR will not necessitate a reduction in the number of
Shares subject to the related Option.
(f) Exercise of Freestanding SARs. Freestanding SARs will
be exercisable on such terms and conditions as the Administrator, in its sole
discretion, will determine.
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(g) SAR Agreement. Each SAR grant will be evidenced by an
Award Agreement that will specify the exercise price, the term of the SAR, the
conditions of exercise, and such other terms and conditions as the
Administrator, in its sole discretion, will determine.
(h) Expiration of SARs. An SAR granted under the Plan
will expire upon the date determined by the Administrator, in its sole
discretion, and set forth in the Award Agreement. Notwithstanding the foregoing,
the rules of Section 6(d) also will apply to SARs.
(i) Payment of SAR Amount. Upon exercise of an SAR, a
Participant will be entitled to receive payment from the Company in an amount
determined by multiplying:
(i) The difference between the Fair Market Value
of a Share on the date of exercise over the exercise price; times
(ii) The number of Shares with respect to which
the SAR is exercised.
At the discretion of the Administrator, the payment upon SAR
exercise may be in cash, in Shares of equivalent value, or in some combination
thereof.
9. Performance Units and Performance Shares.
(a) Grant of Performance Units/Shares. Performance Units
and Performance Shares may be granted to Service Providers at any time and from
time to time, as will be determined by the Administrator, in its sole
discretion. The Administrator will have complete discretion in determining the
number of Performance Units and Performance Shares granted to each Participant.
(b) Value of Performance Units/Shares. Each Performance
Unit will have an initial value that is established by the Administrator on or
before the date of grant. Each Performance Share will have an initial value
equal to the Fair Market Value of a Share on the date of grant.
(c) Performance Objectives and Other Terms. The
Administrator will set performance objectives in its discretion which, depending
on the extent to which they are met, will determine the number or value of
Performance Units/Shares that will be paid out to the Service Providers. The
time period during which the performance objectives must be met will be called
the "Performance Period." Each Award of Performance Units/Shares will be
evidenced by an Award Agreement that will specify the Performance Period, and
such other terms and conditions as the Administrator, in its sole discretion,
will determine. The Administrator may set performance objectives based upon the
achievement of Company-wide, divisional, or individual goals, applicable federal
or state securities laws, or any other basis determined by the Administrator in
its discretion.
(d) Earning of Performance Units/Shares. After the
applicable Performance Period has ended, the holder of Performance Units/Shares
will be entitled to receive a payout of the number of Performance Units/Shares
earned by the Participant over the Performance Period, to be determined as a
function of the extent to which the corresponding performance objectives have
been achieved. After the grant of a Performance Unit/Share, the Administrator,
in its sole discretion, may reduce or waive any performance objectives for such
Performance Unit/Share.
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(e) Form and Timing of Payment of Performance
Units/Shares. Payment of earned Performance Units/Shares will be made as soon as
practicable after the expiration of the applicable Performance Period. The
Administrator, in its sole discretion, may pay earned Performance Units/Shares
in the form of cash, in Shares (which have an aggregate Fair Market Value equal
to the value of the earned Performance Units/Shares at the close of the
applicable Performance Period) or in a combination thereof.
(f) Cancellation of Performance Units/Shares. On the date
set forth in the Award Agreement, all unearned or unvested Performance
Units/Shares will be forfeited to the Company, and again will be available for
grant under the Plan.
10. Formula Option Grants to Outside Directors.
All grants of Options to Outside Directors pursuant to this Section
will be automatic and nondiscretionary and will be made in accordance with the
following provisions:
(a) Type of Option. All Options granted pursuant to this
Section will be Nonstatutory Stock Options and, except as otherwise provided
herein, will be subject to the other terms and conditions of the Plan.
(b) No Discretion. No person will have any discretion to
select which Outside Directors will be granted Options under this Section or to
determine the number of Shares to be covered by such Options (except as provided
in Sections 10(f) and 13).
(c) First Option. Each person who first becomes an
Outside Director following the Registration Date automatically will be granted
an Option to purchase 45,000 Shares (the "First Option") on or about the date on
which such person first becomes an Outside Director, whether through election by
the stockholders of the Company or appointment by the Board to fill a vacancy;
provided, however, that an Inside Director who ceases to be an Inside Director
but who remains a Director will not receive a First Option.
(d) Annual Option. Each Outside Director automatically
will be granted an Option to purchase 9,000 Shares (an "Annual Option") on (i)
the Registration Date, provided he or she is serving as an Outside Director on
such date, and (ii) each date of the annual meeting of the stockholders of the
Company beginning in 2005, if as of such date and only with respect to the
Option to be granted on the date of the Company's annual stockholder meeting, he
or she is serving and will have served on the Board for at least the preceding
six (6) months.
(e) Audit Committee Member Option. Each Outside Director
that is a member of the Audit Committee automatically will be granted an Option
(an " AC Option") to purchase 3,000 Shares (4,500 Shares for the Chairman of the
Audit Committee) on (i) the Registration Date, provided he or she is serving as
a member of the Audit Committee on such date, and (ii) each date of the annual
meeting of the stockholders of the Company beginning in 2005, if as of such date
and only with respect to the Option to be granted on the date of the Company's
annual stockholder meeting, he or she is serving and will have served on the
Audit Committee for at least the preceding six (6) months.
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(f) Compensation Committee Member Option. Each Outside
Director that is a member of the Compensation Committee automatically will be
granted an Option (a "CC Option") to purchase 3,000 Shares (4,500 Shares for the
Chairman of the Compensation Committee) on (i) the Registration Date, provided
he or she is serving as a member of the Compensation Committee on such date, and
(ii) each date of the annual meeting of the stockholders of the Company
beginning in 2005, if as of such date and only with respect to the Option to be
granted on the date of the Company's annual stockholder meeting, he or she is
serving and will have served on the Compensation Committee for at least the
preceding six (6) months.
(g) Terms. The terms of each Option granted pursuant to
this Section will be as follows:
(i) The term of the Option will be ten (10)
years.
(ii) The exercise price per Share will be 100% of
the Fair Market Value per Share on the date of grant of the Option.
(iii) Subject to Section 13, the First Option will
vest and become exercisable as to one-third (1/3rd) of the Shares subject to the
First Option on each anniversary of its date of grant, provided that the
Participant continues to serve as a Director through each such date;
(iv) Subject to Section 13, the Annual Option,
the AC Option and the CC Option will vest and become exercisable as to 100% of
the Shares subject to the Annual Option, the AC Option or the CC Option, as
applicable, on the one-year anniversary of its respective date of grant,
provided that the Participant continues to serve as a Director, in the case of
the Annual Option, or as a member of the Audit Committee or Compensation
Committee, as applicable, for each of the AC Option and CC Option, through such
date.
(h) Amendment. The Administrator in its discretion may
change the number of Shares subject to the First Options, Annual Options, AC
Options and CC Options.
11. Leaves of Absence. Unless the Administrator provides
otherwise, vesting of Awards granted hereunder will be suspended during any
unpaid leave of absence. A Service Provider will not cease to be an Employee in
the case of (i) any leave of absence approved by the Company or (ii) transfers
between locations of the Company or between the Company, its Parent, or any
Subsidiary. For purposes of Incentive Stock Options, no such leave may exceed
ninety (90) days, unless reemployment upon expiration of such leave is
guaranteed by statute or contract. If reemployment upon expiration of a leave of
absence approved by the Company is not so guaranteed, then three months
following the 91st day of such leave any Incentive Stock Option held by the
Participant will cease to be treated as an Incentive Stock Option and will be
treated for tax purposes as a Nonstatutory Stock Option.
12. Transferability of Awards. Unless determined otherwise by the
Administrator, an Award may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Participant, only by the Participant. If the Administrator makes an Award
transferable, such Award will contain such additional terms and conditions as
the Administrator deems appropriate.
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13. Adjustments; Dissolution or Liquidation; Merger or Change in
Control.
(a) Adjustments. In the event that any dividend or other
distribution (whether in the form of cash, Shares, other securities, or other
property), recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase, or exchange
of Shares or other securities of the Company, or other change in the corporate
structure of the Company affecting the Shares occurs, the Administrator, in
order to prevent diminution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, may (in its sole discretion)
adjust the number and class of Shares that may be delivered under the Plan
and/or the number, class, and price of Shares covered by each outstanding Award,
the numerical Share limits in Sections 3 and 6 of the Plan and the number of
Shares issuable pursuant to Section 10.
(b) Dissolution or Liquidation. In the event of the
proposed dissolution or liquidation of the Company, the Administrator will
notify each Participant as soon as practicable prior to the effective date of
such proposed transaction. To the extent it has not been previously exercised,
an Award will terminate immediately prior to the consummation of such proposed
action.
(c) Change in Control. In the event of a Change in
Control, each outstanding Award will be assumed or an equivalent option or right
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 Award, the Participant will fully vest in and have
the right to exercise all of his or her outstanding Options and Stock
Appreciation Rights, including Shares as to which such Awards would not
otherwise be vested or exercisable, all restrictions on Restricted Stock shall
lapse, and, with respect to Performance Shares and Performance Units, all
performance goals will be deemed achieved at target levels and all other terms
and conditions met. In addition, if an Option or Stock Appreciation Right
becomes fully vested and exercisable in lieu of assumption or substitution in
the event of a Change in Control, the Administrator will notify the Participant
in writing or electronically that the Option or Stock Appreciation Right will be
fully vested and exercisable for a period of time determined by the
Administrator in its sole discretion, and the Option or Stock Appreciation Right
will terminate upon the expiration of such period.
With respect to Awards granted to an Outside Director that are
assumed or substituted for, if on the date of or following such assumption or
substitution the Participant's status as a Director or a director of the
successor corporation, as applicable, is terminated other than upon a voluntary
resignation by the Participant, then the Participant will fully vest in and have
the right to exercise Options and/or Stock Appreciation Rights as to all of the
Optioned Stock, including Shares as to which such Awards would not otherwise be
vested or exercisable, all restrictions on Restricted Stock shall lapse, and,
with respect to Performance Shares and Performance Units, all performance goals
will be deemed achieved at target levels and all other terms and conditions
met.
For the purposes of this subsection (c), an Award will be
considered assumed if, following the Change in Control, the Award confers the
right to purchase or receive, for each Share subject to the Award immediately
prior to the Change in Control, the consideration (whether stock, cash, or other
securities or property) or, in the case of a Stock Appreciation Right upon the
exercise of which the Administrator determines to pay cash or a Performance
Share or Performance Unit which the Administrator can determine to pay in cash,
the fair market value of the consideration
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received in the merger or Change in Control by holders of Common Stock for each
Share held on the effective date of the transaction (and if holders were offered
a choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares); provided, however, that if such
consideration received in the Change in Control is not solely common stock of
the successor corporation or its Parent, the Administrator may, with the consent
of the successor corporation, provide for the consideration to be received upon
the exercise of an Option or Stock Appreciation Right or upon the payout of a
Performance Share or Performance Unit, for each Share subject to such Award (or
in the case of Performance Units, the number of implied shares determined by
dividing the value of the Performance Units by the per share consideration
received by holders of Common Stock in the Change in Control), to be solely
common stock of the successor corporation or its Parent equal in fair market
value to the per share consideration received by holders of Common Stock in the
Change in Control.
Notwithstanding anything in this Section 13(c) to the
contrary, an Award that vests, is earned or paid-out upon the satisfaction of
one or more performance goals will not be considered assumed if the Company or
its successor modifies any of such performance goals without the Participant's
consent; provided, however, a modification to such performance goals only to
reflect the successor corporation's post-Change in Control corporate structure
will not be deemed to invalidate an otherwise valid Award assumption.
14. No Effect on Employment or Service. Neither the Plan nor any
Award will confer upon a Participant any right with respect to continuing the
Participant's relationship as a Service Provider with the Company, nor will they
interfere in any way with the Participant's right or the Company's right to
terminate such relationship at any time, with or without cause, to the extent
permitted by Applicable Laws.
15. Date of Grant. The date of grant of an Award will be, for all
purposes, the date on which the Administrator makes the determination granting
such Award, or such other later date as is determined by the Administrator.
Notice of the determination will be provided to each Participant within a
reasonable time after the date of such grant.
16. Term of Plan. Subject to Section 20 of the Plan, the Plan will
become effective upon its adoption by the Board. It will continue in effect for
a term of ten (10) years unless terminated earlier under Section 17 of the Plan.
17. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time
amend, alter, suspend or terminate the Plan.
(b) Stockholder Approval. The Company will obtain
stockholder approval of any Plan amendment to the extent necessary and desirable
to comply with Applicable Laws.
(c) Effect of Amendment or Termination. No amendment,
alteration, suspension or termination of the Plan will impair the rights of any
Participant, unless mutually agreed otherwise between the Participant and the
Administrator, which agreement must be in writing and signed by the Participant
and the Company. Termination of the Plan will not affect the Administrator's
ability
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to exercise the powers granted to it hereunder with respect to Awards granted
under the Plan prior to the date of such termination.
18. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares will not be issued pursuant
to the exercise of an Award unless the exercise of such Award and the issuance
and delivery of such Shares will comply with Applicable Laws and will be further
subject to the approval of counsel for the Company with respect to such
compliance.
(b) Investment Representations. As a condition to the
exercise of an Award, the Company may require the person exercising such Award
to represent and warrant at the time of any such exercise that the Shares are
being purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required.
19. Inability to Obtain Authority. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, will relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority will not have been obtained.
20. Stockholder Approval. The Plan will be subject to approval by
the stockholders of the Company within twelve (12) months after the date the
Plan is adopted. Such stockholder approval will be obtained in the manner and to
the degree required under Applicable Laws.
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