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EXHIBIT 10.6
INVITROGEN CORPORATION 1997 STOCK OPTION PLAN
1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN.
1.1 ESTABLISHMENT. The Invitrogen Corporation 1997 Stock Option Plan (the
"PLAN") is hereby established effective as of May 28, 1997 (the "EFFECTIVE
DATE").
1.2 PURPOSE. The purpose of the Plan is to advance the interests of the
Participating Company Group and its stockholders by providing an incentive to
attract, retain and reward persons performing services for the Participating
Company Group and by motivating such persons to contribute to the growth and
profitability of the Participating Company Group.
1.3 TERM OF PLAN. The Plan shall continue in effect until the earlier of
its termination 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 Options
granted under the Plan have lapsed. However, all Options shall be granted, if at
all, within ten (10) years from the earlier of the date the Plan is adopted by
the Board or the date the Plan is duly approved by the stockholders of the
Company.
2. DEFINITIONS AND CONSTRUCTION.
2.1 DEFINITIONS. Whenever used herein, the following terms shall have their
respective meanings set forth below:
(a) "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).
(b) "CODE" means the Internal Revenue Code of 1986, as amended, and
any applicable regulations promulgated thereunder.
(c) "COMMITTEE" means the Compensation Committee or other committee 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.
(d) "COMPANY" means Invitrogen Corporation, a Delaware corporation, or
any successor corporation thereto.
(e) "CONSULTANT" means any person, including an advisor, engaged by a
Participating Company to render services other than as an Employee or a
Director.
(f) "DIRECTOR" means a member of the Board or of the board of
directors of any other Participating Company.
(g) "EMPLOYEE" means any person treated as an employee (including an
officer or a Director who is also treated as an employee) in the records of
a Participating Company, and, with respect to any Incentive Stock Option
granted to such person, who is an employee for purposes of Section 422 of
the Code; provided, however, that neither service as a Director nor payment
of a director's fee shall be sufficient to constitute employment for
purposes of the Plan.
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(h) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(i) "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 sole discretion,
or by the Company, in its sole discretion, if such determination is
expressly allocated to the Company herein, subject to the following:
(i) If, on such date, there is a public market for the Stock, the
Fair Market Value of a share of Stock shall be the closing sale price
of a share of Stock (or the mean of the closing bid and asked prices
of a share of Stock if the Stock is so quoted instead) as quoted on
the Nasdaq National Market, the Nasdaq Small-Cap Market or such other
national or regional securities exchange or market system constituting
the primary market for the Stock, as reported in the 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 sole
discretion.
(ii) If, on such date, there is no public market for the Stock,
the Fair Market Value of a share of Stock shall be as determined by
the Board without regard to any restriction other than a restriction
which, by its terms, will never lapse.
(j) "INCENTIVE STOCK OPTION" means an Option intended to be (as set
forth in the Option Agreement) and which qualifies as an incentive stock
option within the meaning of Section 422(b) of the Code.
(k) "INSIDER" means an officer or a Director of the Company or any
other person whose transactions in Stock are subject to Section 16 of the
Exchange Act.
(l) "NONEMPLOYEE DIRECTOR" means a Director of the Company who is not
an Employee.
(m) "NONEMPLOYEE DIRECTOR OPTION" means a right to purchase Stock
(subject to adjustment as provided in Section 4.2) pursuant to the terms
and conditions of Section 6.5 below. Nonemployee Director Options shall be
Nonstatutory Stock Options.
(n) "NONSTATUTORY STOCK OPTION" means an Option not intended to be (as
set forth in the Option Agreement) or which does not qualify as an
Incentive Stock Option.
(o) "OPTION" means a right to purchase Stock (subject to adjustment as
provided in Section 4.2) pursuant to the terms and conditions of the Plan.
An Option may be either an Incentive Stock Option or a Nonstatutory Stock
Option.
(p) "OPTION AGREEMENT" means a written agreement between the Company
and an Optionee setting forth the terms, conditions and restrictions of the
Option granted to the Optionee and any shares acquired upon the exercise
thereof.
(q) "OPTIONEE" means a person who has been granted one or more
Options.
(r) "PARENT CORPORATION" means any present or future "parent
corporation" of the Company, as defined in Section 424(e) of the Code.
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(s) "PARTICIPATING COMPANY" means the Company or any Parent
Corporation or Subsidiary Corporation.
(t) "PARTICIPATING COMPANY GROUP" means, at any point in time, all
corporations collectively which are then Participating Companies.
(u) "RULE 16b-3" means Rule 16b-3 under the Exchange Act, as amended
from time to time, or any successor rule or regulation.
(v) "STOCK" means the common stock of the Company, as adjusted from
time to time in accordance with Section 4.2.
(w) "SUBSIDIARY CORPORATION" means any present or future "subsidiary
corporation" of the Company, as defined in Section 424(f) of the Code.
(x) "TEN PERCENT OWNER OPTIONEE" means an Optionee who, at the time an
Option is granted to the Optionee, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of
a Participating Company within the meaning of Section 422(b)(6) of the
Code.
2.2 CONSTRUCTION. Captions and titles contained herein are for convenience
only and shall not affect the meaning or interpretation of any provision of the
Plan. Except when otherwise indicated by the context, the singular shall include
the plural and the plural shall include the singular. Use of the term "or" is
not intended to be exclusive, unless the context clearly requires otherwise.
3. ADMINISTRATION.
3.1 ADMINISTRATION BY THE BOARD. The Plan shall be administered by the
Board. All questions of interpretation of the Plan or of any Option 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 Option. Any officer of a
Participating 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 apparent authority with respect to such matter, right,
obligation, determination or election.
3.2 ADMINISTRATION WITH RESPECT TO INSIDERS. With respect to participation
by Insiders in the Plan, at any time that any class of equity security of the
Company is registered pursuant to Section 12 of the Exchange Act, the Plan shall
be administered in compliance with the requirements, if any, of Rule 16b-3. In
addition, the Board may establish a Committee of "outside directors" within the
meaning of Section 162(m) of the Code to approve the grant of any Option which
might reasonably be anticipated to result in the payment of employee
remuneration that would otherwise exceed the limit on employee remuneration
deductible for income tax purposes pursuant to Section 162(m) of the Code.
3.3 POWERS 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 sole discretion:
(a) to determine the persons to whom, and the time or times at which,
Options shall be granted and the number of shares of Stock to be subject to
each Option;
(b) to designate Options as Incentive Stock Options or Nonstatutory
Stock Options;
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(c) to determine the Fair Market Value of shares of Stock or other
property;
(d) to determine the terms, conditions and restrictions applicable to
each Option (which need not be identical) and any shares acquired upon the
exercise thereof, including, without limitation, (i) the exercise price of
the Option, (ii) the method of payment for shares purchased upon the
exercise of the Option, (iii) the method for satisfaction of any tax
withholding obligation arising in connection with the Option or such
shares, including by the withholding or delivery of shares of stock, (iv)
the timing, terms and conditions of the exercisability of the Option or the
vesting of any shares acquired upon the exercise thereof, (v) the time of
the expiration of the Option, (vi) the effect of the Optionee's termination
of employment or service with the Participating Company Group on any of the
foregoing, and (vii) all other terms, conditions and restrictions
applicable to the Option or such shares not inconsistent with the terms of
the Plan;
(e) to approve one or more forms of Option Agreement;
(f) to amend, modify, extend, cancel, or renew, any Option or to waive
any restrictions or conditions applicable to any Option or any shares
acquired upon the exercise thereof; PROVIDED, HOWEVER, that without the
approval of the Company's stockholders, the Board shall not reprice,
replace, regrant through cancellation, or regrant by lowering the exercise
price of any Option and/or award previously granted under the Plan;
(g) to accelerate, continue, extend or defer the exercisability of any
Option or the vesting of any shares acquired upon the exercise thereof,
including with respect to the period following an Optionee's termination of
employment or service with the Participating Company Group;
(h) to prescribe, amend or rescind rules, guidelines and policies
relating to the Plan, or to adopt supplements to, or alternative versions
of, the Plan, including, without limitation, as the Board deems necessary
or desirable to comply with the laws of, or to accommodate the tax policy
or custom of, foreign jurisdictions whose citizens may be granted Options;
(i) to correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Option Agreement and to make all other
determinations and take such other actions with respect to the Plan or any
Option as the Board may deem advisable to the extent consistent with the
Plan and applicable law; and
(j) to delegate the power to grant Options to any Employee or
Consultant who is not a Director, Insider, or other officer of the Company
in an amount not to exceed Options to purchase 25,000 shares of Stock
(subject to adjustment to reflect changes in capital structure covered by
Section 4.2 below); PROVIDED that any such grant shall be made only in
accordance with a Stock Option Program or other program, plan, or procedure
approved by the Board.
4. SHARES SUBJECT TO PLAN.
4.1 MAXIMUM 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 the sum of (a) five million three hundred fifty-nine
thousand six hundred eight-five (5,359,685) shares, and (b) the number of shares
of Stock, as of the Effective Date, subject to outstanding options or reserved
and available for grant pursuant to the Company's 1995 Stock Option Plan (the
"1995 PLAN OPTIONS") resulting in an aggregate total of eight million four
hundred eight-five thousand four hundred seventy-nine (8,485,479) shares (the
"SHARE RESERVE") and shall consist of authorized and unissued or reacquired
shares of Stock or any combination thereof. Notwithstanding the foregoing, the
Share Reserve, determined at any time, shall be
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reduced by (a) the number of shares remaining subject to outstanding 1995 Plan
Options, and (b) the number of shares issued upon the exercise of 1995 Plan
options. If an outstanding Option for any reason expires or is terminated or
canceled, or if the shares of Stock acquired, subject to repurchase, upon the
exercise of an Option are repurchased by the Company, the shares of Stock
allocable to the unexercised portion of such Option or such repurchased shares
of Stock shall again be available for issuance under the Plan.
4.2 ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event of any stock
dividend, stock split, reverse stock split, recapitalization, combination,
reclassification or similar change in the capital structure of the Company,
appropriate adjustments shall be made in the number and class of shares subject
to the Plan, the individual share limit set forth in Section 4.3 below, the size
of the automatic Nonemployee Director Option grants set forth in Section 6.5
below and to any outstanding Options and in the exercise price per share of any
outstanding Options. If a majority of the shares which are of the same class as
the shares that are subject to outstanding Options are exchanged for, converted
into, or otherwise become, (whether or not pursuant to an Ownership Change
Event, as defined in Section 8.1) shares of another corporation (the "NEW
SHARES"), the Board may unilaterally amend the outstanding Options to provide
that such Options are exercisable for New Shares. In the event of any such
amendment, the number of shares subject to, and the exercise price per share of,
the outstanding Options shall be adjusted in a fair and equitable manner as
determined by the Board, in its sole discretion. Notwithstanding the foregoing,
any fractional share resulting from an adjustment pursuant to this Section 4.2
shall be rounded up or down to the nearest whole number, as determined by the
Board, and in no event may the exercise price of any Option be decreased to an
amount less than the par value, if any, of the stock subject to the Option. The
adjustments determined by the Board pursuant to this Section 4.2 shall be final,
binding and conclusive.
4.3 INDIVIDUAL SHARE LIMIT. The maximum aggregate number of shares of Stock
with respect to which Options may be granted during any calendar year to any
Employee may not exceed 500,000 shares or, in the case of the calendar year
during which an Employee first commences employment with any Participating
Company, 1,000,000 shares (subject to adjustment to reflect changes in capital
structure covered by Section 4.2 above).
5. ELIGIBILITY AND OPTION LIMITATIONS.
5.1 PERSONS ELIGIBLE FOR OPTIONS. Options may be granted only to Employees,
Consultants, and Directors. For purposes of the foregoing sentence, "Employees,"
"Consultants," and "Directors" shall include prospective Employees, prospective
Consultants and prospective Directors to whom Options are granted in connection
with written offers of employment or other service relationship with the
Participating Company Group. Eligible persons may be granted more than one (1)
Option.
5.2 OPTION GRANT RESTRICTIONS. Any person who is not an Employee on the
effective date of the grant of an Option to such person may be granted only a
Nonstatutory Stock Option. An Incentive Stock Option granted to a prospective
Employee upon the condition that such person become an Employee shall be deemed
granted effective on the date such person commences service as an Employee with
a Participating Company, with an exercise price determined as of such date in
accordance with Section 6.1.
5.3 FAIR MARKET VALUE LIMITATION. To the extent that options designated as
Incentive Stock Options (granted under all stock option plans of the
Participating Company Group, including the Plan) become exercisable by an
Optionee for the first time during any calendar year for stock having an
aggregate Fair Market Value greater than One Hundred Thousand Dollars
($100,000), the portion of such options which exceeds such amount shall be
treated as Nonstatutory Stock Options. For purposes of this Section 5.3, options
designated as Incentive Stock Options shall be taken into account in the order
in which they were granted, and the Fair Market Value of stock shall be
determined as of the time the option with respect to such stock is granted. If
the Code is amended to provide for a different limitation from that set forth in
this Section 5.3, such
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different limitation shall be deemed incorporated herein effective as of the
date and with respect to such Options as required or permitted by such amendment
to the Code. If an Option is treated as an Incentive Stock Option in part and as
a Nonstatutory Stock Option in part by reason of the limitation set forth in
this Section 5.3, the Optionee may designate which portion of such Option the
Optionee is exercising. In the absence of such designation, the Optionee shall
be deemed to have exercised the Incentive Stock Option portion of the Option
first. Separate certificates representing each such portion shall be issued upon
the exercise of the Option.
6. TERMS AND CONDITIONS OF OPTIONS. Options shall be evidenced by Option
Agreements specifying the number of shares of Stock covered thereby, in such
form as the Board shall from time to time establish. No Option or purported
Option shall be a valid and binding obligation of the Company unless evidenced
by a fully executed Option Agreement. Option Agreements may incorporate all or
any of the terms of the Plan by reference, and except as otherwise set forth in
Section 6.5 with respect to Nonemployee Director Options, shall comply with and
be subject to the following terms and conditions:
6.1 EXERCISE PRICE. The exercise price for each Option shall be established
in the sole discretion of the Board; provided, however, that (a) the exercise
price per share for an Incentive Stock Option shall be not less than the Fair
Market Value of a share of Stock on the effective date of grant of the Option,
(b) the exercise price per share for a Nonstatutory Stock Option shall be not
less than eighty-five percent (85%) of the Fair market Value of a share of Stock
on the effective date of grant of theOption, and (c) no Option granted to a Ten
Percent Owner Optionee shall have an exercise price per share less than one
hundred ten percent (110%) of the Fair Market Value of a share of Stock on the
effective date of grant of the Option. Notwithstanding the foregoing, an Option
(whether an Incentive Stock Option or a Nonstatutory Stock Option) may be
granted with an exercise price lower than the minimum exercise price set forth
above if such Option is granted pursuant to an assumption or substitution for
another option in a manner qualifying under the provisions of Section 424(a) of
the Code.
6.2 EXERCISE PERIOD. Options shall be exercisable at such time or times, or
upon such event or events, and subject to such terms, conditions, performance
criteria, and restrictions as shall be determined by the Board and set forth in
the Option Agreement evidencing such Option; provided, however, that (a) no
Option shall be exercisable after the expiration of ten (10) years after the
effective date of grant of such Option, (b) no Incentive Stock Option granted to
a Ten Percent Owner Optionee shall be exercisable after the expiration of five
(5) years after the effective date of grant of such Option, and (c) no Option
granted to a prospective Employee, prospective Consultant or prospective
Director may become exercisable prior to the date on which such person commences
service with a Participating Company.
6.3 PAYMENT OF EXERCISE PRICE.
(a) FORMS OF CONSIDERATION AUTHORIZED. Except as otherwise provided
below, payment of the exercise price for the number of shares of Stock
being purchased pursuant to any Option shall be made (i) in cash, by check,
or cash equivalent, (ii) by tender to the Company of shares of Stock owned
by the Optionee having a Fair Market Value (as determined by the Company
without regard to any restrictions on transferability applicable to such
stock by reason of federal or state securities laws or agreements with an
underwriter for the Company) not less than the exercise price, (iii) by the
assignment of the proceeds of a sale or loan with respect to some or all of
the shares being acquired upon the exercise of the Option (including,
without limitation, through an exercise complying with the provisions of
Regulation T as promulgated from time to time by the Board of Governors of
the Federal Reserve System) (a "CASHLESS EXERCISE"), (iv) by the Optionee's
promissory note in a form approved by the Company, (v) by such other
consideration as may be approved by the Board from time to time to the
extent permitted by applicable law, or (vi) by any combination thereof. The
Board may at any time or from time to time, by adoption of or by amendment
to the standard forms of Option Agreement described in Section 7, or by
other means,grant options which do not permit all of the
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foregoing forms of consideration to be used in payment of the exercise
price or which otherwise restrict one or more forms of consideration.
(b) TENDER OF STOCK. Notwithstanding the foregoing, an Option may not
be exercised by tender to the Company of shares of Stock to the extent such
tender of Stock would constitute a violation of the provisions of any law,
regulation or agreement restricting the redemption of the Company's stock.
Unless otherwise provided by the Board, an Option may not be exercised by
tender to the Company of shares of Stock unless such shares either have
been owned by the Optionee for more than six (6) months or were not
acquired, directly or indirectly, from the Company.
(c) CASHLESS EXERCISE. The Company reserves, at any and all times, the
right, in the Company's sole and absolute discretion, to establish, decline
to approve or terminate any program or procedures for the exercise of
Options by means of a Cashless Exercise.
(d) PAYMENT BY PROMISSORY NOTE. No promissory note shall be permitted
if the exercise of an Option using a promissory note would be a violation
of any law. Any permitted promissory note shall be on such terms as the
Board shall determine at the time the Option is granted. The Board shall
have the authority to permit or require the Optionee to secure any
promissory note used to exercise an Option with the shares of Stock
acquired upon the exercise of the Option or with other collateral
acceptable to the Company. Unless otherwise provided by the Board, if the
Company at any time is subject to the regulations promulgated by the Board
of Governors of the Federal Reserve System or any other governmental entity
affecting the extension of credit in connection with the Company's
securities, any promissory note shall comply with such applicable
regulations, and the Optionee shall pay the unpaid principal and accrued
interest, if any, to the extent necessary to comply with such applicable
regulations.
6.4 TAX WITHHOLDING. The Company shall have the right, but not the
obligation, to deduct from the shares of Stock issuable upon the exercise of an
Option, or to accept from the Optionee the tender of, a number of whole shares
of Stock having a Fair Market Value, as determined by the Company, equal to all
or any part of the federal, state, local and foreign taxes, if any, required by
law to be withheld by the Participating Company Group with respect to such
Option or the shares acquired upon the exercise thereof. Alternatively or in
addition, in its sole discretion, the Company shall have the right to require
the Optionee, through payroll withholding, cash payment or otherwise, including
by means of a Cashless Exercise, to make adequate provision for any such tax
withholding obligations of the Participating Company Group arising in connection
with the Option or the shares acquired upon the exercise thereof. The Company
shall have no obligation to deliver shares of Stock or to release shares of
Stock from an escrow established pursuant to the Option Agreement until the
Participating Company Group's tax withholding obligations have been satisfied by
the Optionee.
6.5 NONEMPLOYEE DIRECTOR OPTIONS.
(a) AUTOMATIC GRANT. Subject to the execution by a Nonemployee
Director of an appropriate Option Agreement, Nonemployee Director Options
shall be granted automatically and without further action of the Board, as
follows:
(i) INITIAL OPTION. Each person who first becomes a Nonemployee
Director on or after the November 20, 1998 shall be granted on the
date such person first becomes a Nonemployee Director a Nonemployee
Director Option to purchase ten thousand (10,000) shares of Stock (an
"INITIAL OPTION"); provided, however, that an Initial Option shall not
be granted to a Director who previously did not qualify as a
Nonemployee Director but subsequently becomes a Nonemployee Director
as a result of the termination of his or her status as an Employee.
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(ii) ANNUAL OPTION. Each Nonemployee Director (including any
Director who previously did not qualify as a Nonemployee Director but
who subsequently becomes a Nonemployee Director) shall be granted on
the date immediately following each annual meeting of the stockholders
of the Company which occurs on or after November 20, 1998 (an "ANNUAL
MEETING") a Nonemployee Director Option to purchase ten thousand
(10,000) shares of Stock (an "ANNUAL OPTION"); provided, however, that
a Nonemployee Director granted an Initial Option less than six months
prior to date of an Annual Meeting shall not be granted an Annual
Option pursuant to this Section on the date immediately following the
same Annual Meeting.
(iii) RIGHT TO DECLINE NONEMPLOYEE DIRECTOR OPTION.
Notwithstanding the foregoing, any person may elect not to receive a
Nonemployee Director Option by delivering written notice of such
election to the Board no later than the day prior to the date such
Nonemployee Director Option would otherwise be granted. A person so
declining a Nonemployee Director Option shall receive no payment or
other consideration in lieu of such declined Nonemployee Director
Option. A person who has declined a Nonemployee Director Option may
revoke such election by delivering written notice of such revocation
to the Board no later than the day prior to the date such Nonemployee
Director Option would be granted pursuant to Section 6.5(a)(i) or
6.5(a)(ii), as the case may be.
(b) EXERCISE PRICE. The exercise price per share of Stock subject to a
Nonemployee Director Option shall be the Fair Market Value of a share of
Stock on the date the Nonemployee Director Option is granted.
(c) EXERCISE PERIOD. Each Nonemployee Director Option shall terminate
and cease to be exercisable on the date ten (10) years after the date of
grant of the Nonemployee Director Option unless earlier terminated pursuant
to the terms of the Plan or the Option Agreement.
(d) RIGHT TO EXERCISE NONEMPLOYEE DIRECTOR OPTIONS.
(i) INITIAL OPTIONS. Except as otherwise provided in the Option
Agreement, each initial Option shall become vested and exercisable
cumulatively for 1/3 of the shares of Stock initially subject to the
Option on each of the first three (3) anniversaries of the date on
which the initial Option was granted, provided that the Optionee's
Service has not terminated prior to the relevant date.
(ii) ANNUAL OPTIONS. Except as otherwise provided in the Option
Agreement, each Annual Option shall become fully vested and
exercisable on the first anniversary of the date of grant, provided
the Optionee's Service has not terminated prior to such date.
(e) EFFECT OF TERMINATION OF SERVICE ON NONEMPLOYEE DIRECTOR OPTIONS.
(i) OPTION EXERCISABILITY. Subject to earlier termination of the
Nonemployee Director Option as otherwise provided herein, a
Nonemployee Director Option shall be exercisable after an Optionee's
termination of Service as follows:
(A) DISABILITY. If the Optionee's Service with the
Participating Company Group is terminated because of the
Disability of the Optionee, the Nonemployee Director Option, to
the extent unexercised and exercisable on the date on which the
Optionee's Service terminated, may be exercised by the Optionee
(or the
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Optionee's guardian or legal representative) at any time prior to
the expiration of twelve (12) months after the date on which the
Optionee's Service terminated, but in any event no later than the
date of expiration of the Option Expiration Date.
(B) DEATH. If the Optionee's Service with the Participating
Company Group is terminated because of the death of the Optionee,
the Nonemployee Director Option, to the extent unexercised and
exercisable on the date on which the Optionee's Service
terminated, may be exercised by the Optionee's legal
representative or other person who acquired the right to exercise
the Nonemployee Director Option by reason of the Optionee's death
at any time prior to the expiration of twelve (12) months after
the date on which the Optionee's Service terminated, but in any
event no later than the Option Expiration Date. The Optionee's
Service shall be deemed to have terminated on account of death if
the Optionee dies within six (6) months after the Optionee's
termination of Service.
(C) OTHER TERMINATION OF SERVICE. If the Optionee's Service
with the Participating Company Group terminates for any reason,
except Disability or death, the Nonemployee Director Option, to
the extent unexercised and exercisable by the Optionee on the
date on which the Optionee's Service terminated, may be exercised
by the Optionee within six (6) months after the date on which the
Optionee's Service terminated, but in any event no later than the
Option Expiration Date.
(ii) EXTENSION IF OPTIONEE SUBJECT TO SECTION 16(b).
Notwithstanding the foregoing, if a sale within the applicable time
periods set forth in section 6.5(e)(i) of shares acquired upon the
exercise of the Nonemployee Director Option would subject the Optionee
to suit under Section 16(b) of the Exchange Act, the Nonemployee
Director Option shall remain exercisable until the earliest to occur
of (i) the tenth (10th) day following the date on which a sale of such
shares by the Optionee would no longer be subject to such suit, (ii)
the one hundred and ninetieth (190th) day after the Optionee's
termination of Service, and (iii) the Option Expiration Date.
7. STANDARD FORMS OF OPTION AGREEMENT.
7.1 INCENTIVE STOCK OPTIONS. Unless otherwise provided by the Board at the
time the Option is granted, an Option designated as an "Incentive Stock Option"
shall comply with and be subject to the terms and conditions set forth in the
form of Incentive Stock Option Agreement adopted by the Board concurrently with
its adoption of the Plan and as amended from time to time.
7.2 NONSTATUTORY STOCK OPTIONS. Unless otherwise provided by the Board at
the time the Option is granted, an Option designated as a "Nonstatutory Stock
Option" shall comply with and be subject to the terms and conditions set forth
in the form of Nonstatutory Stock Option Agreement adopted by the Board
concurrently with its adoption of the Plan and as amended from time to time.
7.3 STANDARD TERM OF OPTIONS. Except as otherwise provided in Section 6.2
or by the Board in the grant of an Option, any Option granted hereunder shall
have a term of ten (10) years from the effective date of grant of the Option.
7.4 AUTHORITY TO VARY TERMS. The Board shall have the authority from time
to time to vary the terms of any of the standard forms of Option Agreement
described in this Section 7 either in connection with the grant or amendment of
an individual Option or in connection with the authorization of a new standard
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form or forms; provided, however, that the terms and conditions of any such new,
revised or amended standard form or forms of Option Agreement are not
inconsistent with the terms of the Plan.
8. TRANSFER OF CONTROL.
8.1 DEFINITIONS.
(a) An "OWNERSHIP CHANGE EVENT" shall be deemed to have occurred if
any of the following occurs 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;
(iii) the sale, exchange, or transfer of all or substantially all
of the assets of the Company; or
(iv) a liquidation or dissolution of the Company.
(b) A "TRANSFER OF CONTROL" shall mean an Ownership Change Event or a
series of related Ownership Change Events (collectively, the "TRANSACTION")
wherein the stockholders of the Company immediately before the Transaction
do not retain immediately after the Transaction, in substantially the same
proportions as their ownership of shares of the Company's voting stock
immediately before the Transaction, direct or indirect beneficial ownership
of more than fifty percent (50%) of the total combined voting power of the
outstanding voting stock of the Company or the corporation or corporations
to which the assets of the Company were transferred (the "TRANSFEREE
CORPORATION(S)"), as the case may be. For purposes of the preceding
sentence, indirect beneficial ownership shall include, without limitation,
an interest resulting from ownership of the voting stock of one or more
corporations which, as a result of the Transaction, own the Company or the
Transferee Corporation(s), as the case may be, either directly or through
one or more subsidiary corporations. The Board shall have the right to
determine whether multiple sales or exchanges of the voting stock of the
Company or multiple Ownership Change Events are related, and its
determination shall be final, binding and conclusive.
8.2 EFFECT OF TRANSFER OF CONTROL ON OPTIONS. In the event of a Transfer of
Control, the percentage of the Option that has vested shall be adjusted to 100%
(if not already at that percentage) on the date that the Company mails the
Optionee notice of the Transfer of Control at the last address shown on the
records of the Company for such Optionee (the "NOTICE"), unless the surviving,
continuing, successor, or purchasing corporation or parent corporation thereof,
as the case may be (the "ACQUIRING CORPORATION"), either assumes the Company's
rights and obligations under outstanding Options or substitutes for outstanding
Options substantially equivalent options for the Acquiring Corporation's stock.
Any Options which are neither assumed or substituted for by the Acquiring
Corporation in connection with the Transfer of Control nor exercised as of the
date fifteen days after the Notice of the Transfer of Control shall terminate
and cease to be outstanding effective upon the later of (i) the date of the
Transfer of Control or (ii) fifteen days after mailing of the Notice. For
purposes of this Section 8.2, an Option shall be deemed assumed if, following
the Transfer of Control, the Option confers the right to purchase in accordance
with its terms and conditions, for each share of Stock subject to the Option
immediately prior to the Transfer of Control, the consideration (whether stock,
cash or other securities or property) to which a holder of a share of Stock on
the effective date of the Transfer of Control was entitled. Notwithstanding the
foregoing, shares acquired upon
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exercise of an Option prior to the Transfer of Control and any consideration
received pursuant to the Transfer of Control with respect to such shares shall
continue to be subject to all applicable provisions of the Option Agreement
evidencing such Option except as otherwise provided in such Option Agreement.
Furthermore, notwithstanding the foregoing, if the corporation the stock of
which is subject to the outstanding options immediately prior to an Ownership
Change Event described in Section 8.1(a)(i) constituting a Transfer of Control
is the surviving or continuing corporation and immediately after such ownership
Change Event less than fifty percent (50%) of the total combined voting power of
its voting stock is held by another corporation or by other corporations that
are members of an affiliated group within the meaning of Section 1504(a) of the
Code without regard to the provisions of Section 1504(b) of the Code, the
outstanding options shall not terminate unless the Board otherwise provides in
its sole discretion.
9. PROVISION OF INFORMATION. At least annually, copies of the Company's balance
sheet and income statement for the just completed fiscal year shall be made
available to each Optionee and purchaser of shares of Stock upon the exercise of
an Option. The Company shall not be required to provide such information to
persons whose duties in connection with the Company assure them access to
equivalent information.
10. NONTRANSFERABILITY OF OPTIONS. During the lifetime of the Optionee, an
Option shall be exercisable only by the Optionee or the Optionee's guardian or
legal representative. No Option shall be assignable or transferable by the
Optionee, except by will or by the laws of descent and distribution.
11. INDEMNIFICATION. In addition to such other rights of indemnification as they
may have as members of the Board or officers or employees of the Participating
Company Group, members of the Board and any officers or employees of the
Participating Company Group 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.
12. TERMINATION OR AMENDMENT OF PLAN. The Board may terminate or amend the Plan
at any time. However, subject to changes in applicable law, regulations or rules
that would permit otherwise, 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), (b) no change in the class of persons eligible to receive
Incentive Stock Options, and (c) no other amendment of the Plan that would
require approval of the Company's stockholders under any applicable law,
regulation or rule. In any event, no termination or amendment of the Plan may
adversely affect any then outstanding Option or any unexercised portion thereof,
without the consent of the Optionee, unless such termination or amendment is
required to enable an Option designated as an Incentive Stock Option to qualify
as an Incentive Stock Option or is necessary to comply with any applicable law,
regulation or rule.
13. STOCKHOLDER APPROVAL. The Plan or any increase in the maximum number of
shares of Stock issuable thereunder as provided in Section 4.1 (the "MAXIMUM
SHARES") shall be approved by the stockholders of the Company within twelve (12)
months of the date of adoption thereof by the Board. Options granted prior to
stockholder approval of the Plan or in excess of the maximum Shares previously,
approved by the stockholders shall become exercisable no earlier than the date
of stockholder approval of the Plan or such increase in the Maximum Shares, as
the case may be.
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