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EXHIBIT 10.2
[ARENA LOGO]
AMENDED AND RESTATED
ARENA PHARMACEUTICALS, INC.
2000 EQUITY COMPENSATION PLAN
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TABLE OF CONTENTS
AMENDED AND RESTATED ARENA PHARMACEUTICALS, INC.
2000 EQUITY COMPENSATION PLAN
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Introduction .............................................................................................1
Administration............................................................................................1
Committee..........................................................................................1
Committee Authority................................................................................1
Committee Determinations ..........................................................................1
Grants ...................................................................................................2
Shares Subject to the Plan ...............................................................................2
Shares Authorized .................................................................................2
Adjustments .......................................................................................2
Eligibility for Participation ............................................................................3
Eligible Persons ..................................................................................3
Selection of Grantees .............................................................................3
Granting of Options ......................................................................................3
Number of Shares ..................................................................................3
Type of Option and Price ..........................................................................3
Option Term .......................................................................................4
Exercisability of Options .........................................................................4
Termination of Employment, Disability or Death ....................................................4
Exercise of Options ...............................................................................6
Limits on Incentive Stock Options .................................................................6
Restricted Stock Grants ..................................................................................7
General Requirements .............................................................................7
Number of Shares .................................................................................7
Requirement of Employment or Service .............................................................7
Restrictions on Transfer and Legend on Stock Certificate .........................................7
Right to Vote and to Receive Dividends ...........................................................7
Lapse of Restrictions ............................................................................8
Withholding of Taxes .....................................................................................8
Required Withholding ..............................................................................8
Election to Withhold Shares .......................................................................8
Transferability of Grants ................................................................................8
No Transferability of Grants ......................................................................8
Transfer of Nonqualified Stock Options ............................................................8
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Change of Control of the Company .........................................................................9
Consequences of a Change of Control ......................................................................9
Notice and Acceleration ...........................................................................9
Assumption of Grants ..............................................................................9
Other Alternatives ................................................................................9
Limitations ......................................................................................10
Requirements for Issuance or Transfer of Shares .........................................................10
Shareholder's Agreement ..........................................................................10
Limitations on Issuance or Transfer of Shares ....................................................10
Amendment and Termination of the Plan ...................................................................10
Amendment ........................................................................................10
Termination of Plan ..............................................................................10
Termination and Amendment of Outstanding Grants ..................................................11
Governing Document ...............................................................................11
Funding of the Plan .....................................................................................11
Rights of Participants ..................................................................................11
No Fractional Shares ....................................................................................11
Headings ................................................................................................11
Effective Date of the Plan ..............................................................................12
Miscellaneous ...........................................................................................12
Grants in Connection With Corporate Transactions and Otherwise ...................................12
Compliance with Law ..............................................................................12
Governing Law ....................................................................................12
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AMENDED AND RESTATED
ARENA PHARMACEUTICALS, INC.
2000 EQUITY COMPENSATION PLAN
The purpose of the Amended and Restated Arena Pharmaceuticals, Inc.
2000 Equity Compensation Plan (the "Plan") is to provide (i) designated
employees of Arena Pharmaceuticals, Inc. (the "Company") and its
subsidiaries, (ii) certain consultants and advisors who perform services for
the Company or its subsidiaries and (iii) non-employee members of the Board
of Directors of the Company (the "Board") with the opportunity to receive
grants of incentive stock options, nonqualified stock options and restricted
stock. The Company believes that the Plan will encourage the participants to
contribute materially to the growth of the Company, thereby benefiting the
Company's shareholders, and will align the economic interests of the
participants with those of the shareholders.
1. ADMINISTRATION
(a) COMMITTEE. The Plan shall be administered and
interpreted by a committee (the "Committee") appointed by the Board. The
Committee shall be comprised of two or more individuals who are "non-employee
directors" as defined under Rule 16b-3 under the Securities Exchange Act of
1934, as amended (or its successor), and "outside directors" as defined under
section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code") (or
its successor), and related Treasury regulations. However, the Board may ratify
or approve any grants as it deems appropriate, and the Board shall be authorized
to take any action that the Committee is authorized to take under the Plan.
(b) COMMITTEE AUTHORITY. Except as otherwise determined
by the Board, the Committee shall have the sole authority to (i) determine the
individuals to whom grants shall be made under the Plan, (ii) determine the
type, size and terms of the grants to be made to each such individual, (iii)
determine the time when the grants will be made and the duration of any
applicable exercise or restriction period, including the criteria for
exercisability and the acceleration of exercisability and (iv) deal with any
other matters arising under the Plan.
(c) COMMITTEE DETERMINATIONS. The Committee shall have
full power and authority to administer and interpret the Plan, to make factual
determinations and to adopt or amend such rules, regulations, agreements and
instruments for implementing the Plan and for the conduct of its business as it
deems necessary or advisable, in its sole discretion. The Committee's
interpretations of the Plan and all determinations made by the Committee
pursuant to the powers vested in it hereunder shall be conclusive and binding on
all persons having any interest in the Plan or in any awards granted hereunder.
All powers of the Committee shall be executed in its sole discretion, in the
best interest of the Company, not as a fiduciary, and in keeping with the
objectives of the Plan and need not be uniform as to similarly situated
individuals.
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2. GRANTS
Awards under the Plan may consist of grants of incentive stock options
as described in Section 5 ("Incentive Stock Options"), nonqualified stock
options as described in Section 5 ("Nonqualified Stock Options") (Incentive
Stock Options and Nonqualified Stock Options are collectively referred to as
"Options") and restricted stock as described in Section 6 ("Restricted Stock")
(hereinafter collectively referred to as "Grants"). All Grants shall be subject
to the terms and conditions set forth herein and to such other terms and
conditions consistent with this Plan as the Committee deems appropriate and as
are specified in writing by the Committee to the individual in a grant
instrument or an amendment to the grant instrument (the "Grant Instrument"). The
Committee shall approve the form and provisions of each Grant Instrument. Grants
under a particular Section of the Plan need not be uniform as among the
grantees.
3. SHARES SUBJECT TO THE PLAN
(a) SHARES AUTHORIZED. Subject to the adjustment
specified below, the aggregate number of shares of common stock of the Company
("Company Stock") that may be issued or transferred under the Plan is Two
Million (2,000,000) shares. The maximum aggregate number of shares of Company
Stock that shall be subject to Grants made under the Plan to any individual
during any calendar year shall be Two Hundred Thousand (200,000) shares. The
shares may be authorized but unissued shares of Company Stock or reacquired
shares of Company Stock, including shares purchased by the Company on the open
market for the purposes of the Plan. If and to the extent Options granted under
the Plan terminate, expire, or are canceled, forfeited, exchanged or surrendered
without having been exercised or if any shares of Restricted Stock are
forfeited, the shares subject to such Grants shall again be available for
purposes of the Plan.
(b) ADJUSTMENTS. If there is any change in the number or
kind of shares of Company Stock outstanding (i) by reason of a stock dividend,
spinoff, recapitalization, stock split, or combination or exchange of shares,
(ii) by reason of a merger, reorganization or consolidation in which the Company
is the surviving corporation, (iii) by reason of a reclassification or change in
par value, or (iv) by reason of any other extraordinary or unusual event
affecting the outstanding Company Stock as a class without the Company's receipt
of consideration, or if the value of outstanding shares of Company Stock is
substantially reduced as a result of a spinoff or the Company's payment of an
extraordinary dividend or distribution, the maximum number of shares of Company
Stock available for Grants, the maximum number of shares of Company Stock that
any individual participating in the Plan may be granted in any year, the number
of shares covered by outstanding Grants, the kind of shares issued under the
Plan, and the price per share or the applicable market value of such Grants
shall be appropriately adjusted by the Committee to reflect any increase or
decrease in the number of, or change in the kind or value of, issued shares of
Company Stock to preclude, to the extent practicable, the enlargement or
dilution of rights and benefits under such Grants; provided, however, that any
fractional shares resulting from such adjustment shall be
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eliminated. Any adjustments determined by the Committee shall be final, binding
and conclusive.
4. ELIGIBILITY FOR PARTICIPATION
(a) ELIGIBLE PERSONS. All employees of the Company and
its subsidiaries ("Employees"), including Employees who are officers or members
of the Board, and members of the Board who are not Employees ("Non-Employee
Directors"), shall be eligible to participate in the Plan. Consultants and
advisors who perform services to the Company or any of its subsidiaries ("Key
Advisors") shall be eligible to participate in the Plan if the Key Advisors
render bona fide services and such services are not in connection with the offer
or sale of securities in a capital-raising transaction, and the Key Advisors do
not directly or indirectly promote or maintaining a market for the Company's
securities.
(b) SELECTION OF GRANTEES. The Committee shall select the
Employees, Non-Employee Directors and Key Advisors who shall receive Grants and
shall determine the number of shares of Company Stock subject to a particular
Grant in the manner as the Committee shall determine. Employees, Key Advisors
and Non-Employee Directors who receive Grants under this Plan shall hereinafter
be referred to as "Grantees."
5. GRANTING OF OPTIONS
(a) NUMBER OF SHARES. The Committee shall determine the
number of shares of Company Stock that will be subject to each Grant of Options
to Employees, Non-Employee Directors and Key Advisors.
(b) TYPE OF OPTION AND PRICE.
(i) The Committee may grant Incentive Stock
Options that are intended to qualify as "incentive stock options" within the
meaning of section 422 of the Code or Nonqualified Stock Options that are not
intended so to qualify or any combination of Incentive Stock Options and
Nonqualified Stock Options, all in accordance with the terms and conditions set
forth herein. Incentive Stock Options may be granted only to Employees.
Nonqualified Stock Options may be granted to Employees, Non-Employee Directors
and Key Advisors.
(ii) The purchase price (the "Exercise Price") of
Company Stock subject to an Option shall be determined by the Committee and may
be equal to, greater than, or less than the Fair Market Value (as defined below)
of a share of Company Stock on the date the Option is granted; provided,
however, that (w) the Exercise Price of a Nonqualified Stock Option shall not be
less than 85% of the Fair Market Value of a share of Company Stock on the date
of grant (unless clause (z) below applies), (x) the Exercise Price of an
Incentive Stock Option shall be equal to, or greater than, 100% of the Fair
Market Value of a share of Company Stock on the date the Incentive Stock Option
is granted, (y) an Incentive Stock Option shall not be granted to an Employee
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who, at the time of grant, owns stock possessing more than 10 percent of the
total combined voting power of all classes of stock of the Company or any parent
or subsidiary of the Company, unless the Exercise Price per share is not less
than 110% of the Fair Market Value of Company Stock on the date of grant, and
(z) to the extent required by applicable law, a Nonqualified Stock Option shall
not be granted to a person who, at the time of grant, owns stock possessing more
than 10 percent of the total combined voting power of all classes of stock of
the Company or any parent or subsidiary of the Company, unless the Exercise
Price per share is not less than 110% of the Fair Market Value of Company Stock
on the date of grant.
(iii) The Fair Market Value per share shall be
determined as follows: (x) if the principal trading market for the Company Stock
is a national securities exchange or the Nasdaq National Market, the last
reported sale price thereof on the relevant date or (if there were no trades on
that date) the latest preceding date upon which a sale was reported, or (y) if
the Company Stock is not principally traded on such exchange or market, the mean
between the last reported "bid" and "asked" prices of Company Stock on the
relevant date, as reported on Nasdaq or, if not so reported, as reported by the
National Daily Quotation Bureau, Inc. or as reported in a customary financial
reporting service, as applicable and as the Committee determines. If the Company
Stock is publicly traded and is not subject to reported transactions or "bid" or
"asked" quotations as set forth above, the Fair Market Value per share shall be
as determined by the Committee.
(c) OPTION TERM. The Committee shall determine the term
of each Option. The term of any Option shall not exceed ten years from the date
of grant. However, an Incentive Stock Option that is granted to an Employee who,
at the time of grant, owns stock possessing more than 10 percent of the total
combined voting power of all classes of stock of the Company, or any parent or
subsidiary of the Company, may not have a term that exceeds five years from the
date of grant.
(d) EXERCISABILITY OF OPTIONS. Options shall become
exercisable in accordance with such terms and conditions, consistent with the
Plan, as may be determined by the Committee and specified in the Grant
Instrument. Options shall vest over a period of not more than five years and at
a rate of not less than 20% per year. The Committee may accelerate the
exercisability of any or all outstanding Options at any time for any reason.
(e) TERMINATION OF EMPLOYMENT, DISABILITY OR DEATH.
(i) Except as provided below, an Option may only
be exercised while the Grantee is employed by, or providing service to, the
Company as an Employee, Key Advisor or member of the Board. In the event that a
Grantee ceases to be employed by, or provide service to, the Company for any
reason other than "disability," death, or termination for "cause," any Option
which is otherwise exercisable by the Grantee shall terminate unless exercised
within 90 days after the date on which the Grantee ceases to be employed by, or
provide service to, the Company (or within such
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other period of time as may be specified by the Committee), but in any event no
later than the date of expiration of the Option term. Except as otherwise
provided by the Committee, any of the Grantee's Options that are not otherwise
exercisable as of the date on which the Grantee ceases to be employed by, or
provide service to, the Company shall terminate as of such date.
(ii) In the event the Grantee ceases to be
employed by, or provide service to, the Company on account of a termination for
"cause" by the Company, any Option held by the Grantee shall terminate as of the
date the Grantee ceases to be employed by, or provide service to, the Company.
In addition, notwithstanding any other provisions of this Section 5, if the
Committee determines that the Grantee has engaged in conduct that constitutes
"cause" at any time while the Grantee is employed by, or providing service to,
the Company or after the Grantee's termination of employment or service, any
Options held by the Grantee shall immediately terminate, unless otherwise
provided by the Committee.
(iii) In the event the Grantee ceases to be
employed by, or provide service to, the Company because the Grantee is
"disabled," any Option which is otherwise exercisable by the Grantee shall
terminate unless exercised within one year after the date on which the Grantee
ceases to be employed by, or provide service to, the Company (or within such
other period of time as may be specified by the Committee), but in any event no
later than the date of expiration of the Option term. Any of the Grantee's
Options which are not otherwise exercisable as of the date on which the Grantee
ceases to be employed by, or provide service to, the Company shall terminate as
of such date.
(iv) If the Grantee dies while employed by, or
providing service to, the Company or within 90 days after the date on which the
Grantee ceases to be employed or provide service on account of a termination
specified in Section 5(e)(i) above (or within such other period of time as may
be specified by the Committee), any Option that is otherwise exercisable by the
Grantee shall terminate unless exercised within one year after the date on which
the Grantee ceases to be employed by, or provide service to, the Company (or
within such other period of time as may be specified by the Committee), but in
any event no later than the date of expiration of the Option term. Any of the
Grantee's Options that are not otherwise exercisable as of the date on which the
Grantee ceases to be employed by, or provide service to, the Company shall
terminate as of such date.
(v) For purposes of this Section 5(e) and
Section 6:
(A) The term "Company" shall mean the
Company and its parent and subsidiary corporations, or other entities, as
determined by the Committee.
(B) "Employed by, or provide service
to, the Company" shall mean employment or service as an Employee, Key Advisor or
member of the Board (so that, for purposes of exercising Options and satisfying
conditions with respect to Restricted
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Stock, a Grantee shall not be considered to have terminated employment or
service until the Grantee ceases to be an Employee, Key Advisor and member of
the Board), unless the Committee determines otherwise.
(C) "Disability" shall mean a Grantee's
becoming disabled within the meaning of section 22(e)(3) of the Code, or as
otherwise determined by the Committee.
(D) "Cause" shall mean, except to the
extent otherwise specified by the Committee, a finding by the Committee that the
Grantee has breached his or her employment or service contract with the Company,
or has been engaged in disloyalty to the Company, including, without limitation,
fraud, embezzlement, theft, commission of a felony or proven dishonesty in the
course of his or her employment or service, or has disclosed trade secrets or
confidential information of the Company to persons not entitled to receive such
information, or has breached any written noncompetition or nonsolicitation
agreement between the Grantee and the Company or has engaged in such other
behavior detrimental to the interests of the Company as the Committee
determines. In the event a Grantee's employment or service is terminated for
cause, in addition to the immediate termination of all Grants, the Grantee shall
automatically forfeit all shares underlying any exercised portion of an Option
for which the Company has not yet delivered the share certificates, upon refund
by the Company of the Exercise Price paid by the Grantee for such shares.
(f) EXERCISE OF OPTIONS. A Grantee may exercise an Option
that has become exercisable, in whole or in part, by delivering a notice of
exercise to the Company with payment of the Exercise Price. The Grantee shall
pay the Exercise Price for an Option as specified by the Committee (x) in cash,
(y) with the approval of the Committee, by delivering shares of Company Stock
owned by the Grantee (including Company Stock acquired in connection with the
exercise of an Option, subject to such restrictions as the Committee deems
appropriate) and having a Fair Market Value on the date of exercise equal to the
Exercise Price or (z) by such other method as the Committee may approve,
including payment through a broker in accordance with procedures permitted by
Regulation T of the Federal Reserve Board. Shares of Company Stock used to
exercise an Option shall have been held by the Grantee for the requisite period
of time to avoid adverse accounting consequences to the Company with respect to
the Option. The Grantee shall pay the Exercise Price and the amount of any
withholding tax due (pursuant to Section 7) at the time of exercise.
(g) LIMITS ON INCENTIVE STOCK OPTIONS. Each Incentive
Stock Option shall provide that, if the aggregate Fair Market Value of the stock
on the date of the grant with respect to which Incentive Stock Options are
exercisable for the first time by a Grantee during any calendar year, under the
Plan or any other stock option plan of the Company or a parent or subsidiary,
exceeds $100,000, then the option, as to the excess, shall be treated as a
Nonqualified Stock Option. An Incentive Stock Option shall not be granted to any
person who is not an Employee of the Company or a parent or subsidiary (within
the meaning of section 424(f) of the Code).
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6. RESTRICTED STOCK GRANTS
The Committee may issue or transfer shares of Company Stock to an
Employee, Non-Employee Director or Key Advisor under a Grant of Restricted
Stock, upon such terms as the Committee deems appropriate. The following
provisions are applicable to Restricted Stock:
(a) GENERAL REQUIREMENTS. Shares of Company Stock issued
or transferred pursuant to Restricted Stock Grants may be issued or transferred
for consideration or for no consideration, and subject to restrictions or no
restrictions, as determined by the Committee. The Committee may establish
conditions under which restrictions on shares of Restricted Stock shall lapse
over a period of time or according to such other criteria as the Committee deems
appropriate. The period of time during which the Restricted Stock will remain
subject to restrictions will be designated in the Grant Instrument as the
"Restriction Period."
(b) NUMBER OF SHARES. The Committee shall determine the
number of shares of Company Stock to be issued or transferred pursuant to a
Restricted Stock Grant and the restrictions applicable to such shares.
(c) REQUIREMENT OF EMPLOYMENT OR SERVICE. If the Grantee
ceases to be employed by, or provide service to, the Company (as defined in
Section 5(e)) during a period designated in the Grant Instrument as the
Restriction Period, or if other specified conditions are not met, the Restricted
Stock Grant shall terminate as to all shares covered by the Grant as to which
the restrictions have not lapsed, and those shares of Company Stock must be
immediately returned to the Company. The Committee may, however, provide for
complete or partial exceptions to this requirement as it deems appropriate.
(d) RESTRICTIONS ON TRANSFER AND LEGEND ON STOCK
CERTIFICATE. During the Restriction Period, a Grantee may not sell, assign,
transfer, pledge or otherwise dispose of the shares of Restricted Stock except
to a Successor Grantee under Section 8(a). Each certificate for a share of
Restricted Stock shall contain a legend giving appropriate notice of the
restrictions in the Grant. The Grantee shall be entitled to have the legend
removed from the stock certificate covering the shares subject to restrictions
when all restrictions on such shares have lapsed. The Committee may determine
that the Company will not issue certificates for shares of Restricted Stock
until all restrictions on such shares have lapsed, or that the Company will
retain possession of certificates for shares of Restricted Stock until all
restrictions on such shares have lapsed.
(e) RIGHT TO VOTE AND TO RECEIVE DIVIDENDS. Unless the
Committee determines otherwise, during the Restriction Period, the Grantee shall
have the right to vote shares of Restricted Stock and to receive any dividends
or other distributions paid on such shares, subject to any restrictions deemed
appropriate by the Committee.
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(f) LAPSE OF RESTRICTIONS. All restrictions imposed on
Restricted Stock shall lapse upon the expiration of the applicable Restriction
Period and the satisfaction of all conditions imposed by the Committee. The
Committee may determine, as to any or all Restricted Stock Grants, that the
restrictions shall lapse without regard to any Restriction Period.
7. WITHHOLDING OF TAXES
(a) REQUIRED WITHHOLDING. All Grants under the Plan shall
be subject to applicable federal (including FICA), state and local tax
withholding requirements. The Company shall have the right to deduct from all
Grants paid in cash, or from other wages paid to the Grantee, any federal, state
or local taxes required by law to be withheld with respect to such Grants. In
the case of Options and other Grants paid in Company Stock, the Company may
require the Grantee or other person receiving such shares to pay to the Company
the amount of any such taxes that the Company is required to withhold with
respect to such Grants, or the Company may deduct from other wages paid by the
Company the amount of any withholding taxes due with respect to such Grants.
(b) ELECTION TO WITHHOLD SHARES. If the Committee so
permits, a Grantee may elect to satisfy the Company's income tax withholding
obligation with respect to an Option or Restricted Stock by having shares
withheld up to an amount that does not exceed the Grantee's minimum applicable
withholding tax rate for federal (including FICA), state and local tax
liabilities. The election must be in a form and manner prescribed by the
Committee and shall be subject to the prior approval of the Committee.
8. TRANSFERABILITY OF GRANTS
(a) NO TRANSFERABILITY OF GRANTS. Except as provided
below, only the Grantee may exercise rights under a Grant during the Grantee's
lifetime. A Grantee may not transfer those rights except by will or by the laws
of descent and distribution or, with respect to Grants other than Incentive
Stock Options, if permitted in any specific case by the Committee, pursuant to a
domestic relations order (as defined under the Code or Title I of the Employee
Retirement Income Security Act of 1974, as amended, or the regulations
thereunder), or otherwise permitted by the Committee. When a Grantee dies, the
personal representative or other person entitled to succeed to the rights of the
Grantee ("Successor Grantee") may exercise such rights. A Successor Grantee must
furnish proof satisfactory to the Company of his or her right to receive the
Grant under the Grantee's will or under the applicable laws of descent and
distribution.
(b) TRANSFER OF NONQUALIFIED STOCK OPTIONS.
Notwithstanding the foregoing, if permitted by applicable law, the Committee may
provide, in a Grant Instrument, that a Grantee may transfer Nonqualified Stock
Options to family members, one or more trusts for the benefit of family members,
or one or more entities for the benefit of family members, consistent with
applicable securities laws, according to such terms as the Committee may
determine; provided that the Grantee receives no
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consideration for the transfer of an Option and the transferred Option shall
continue to be subject to the same terms and conditions as were applicable to
the Option immediately before the transfer.
9. CHANGE OF CONTROL OF THE COMPANY
As used herein, a "Change of Control" shall be deemed to have occurred
if:
(a) Any "person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act), other than the those persons who are
shareholders of the Company on the effective date of the Plan, becomes a
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing more than 50% of the
voting power of the then outstanding securities of the Company, provided that a
Change of Control shall not be deemed to occur as a result of a change of
ownership resulting from the death of a shareholder; or
(b) The shareholders of the Company approve (or, if
shareholder approval is not required, the Committee approves) an agreement
providing for (i) the merger or consolidation of the Company with another
corporation where the shareholders of the Company, immediately prior to the
merger or consolidation, will not beneficially own, immediately after the merger
or consolidation, shares entitling such shareholders to more than 50% of all
votes to which all shareholders of the surviving corporation would be entitled
in the election of directors, (ii) the sale or other disposition of all or
substantially all of the assets of the Company, or (iii) a liquidation or
dissolution of the Company;
10. CONSEQUENCES OF A CHANGE OF CONTROL
(a) NOTICE AND ACCELERATION. Upon a Change of Control,
unless the Committee determines otherwise, (i) the Company shall provide each
Grantee with outstanding Grants written notice of such Change of Control, (ii)
all outstanding Options shall automatically accelerate and become fully
exercisable, and (iii) the restrictions and conditions on all outstanding
Restricted Stock shall immediately lapse.
(b) ASSUMPTION OF GRANTS. Upon a Change of Control where
the Company is not the surviving corporation (or survives only as a subsidiary
of another corporation), unless the Committee determines otherwise, all
outstanding Options that are not exercised shall be assumed by, or replaced with
comparable options or rights by, the surviving corporation.
(c) OTHER ALTERNATIVES. Notwithstanding the foregoing,
subject to subsection (d) below, in the event of a Change of Control, the
Committee may take one or both of the following actions: the Committee may (i)
require that Grantees surrender their outstanding Options in exchange for a
payment by the Company, in cash or Company Stock as determined by the Committee,
in an amount equal to the amount by which the then Fair Market Value of the
shares of Company Stock subject to the
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Grantee's unexercised Options exceeds the Exercise Price of the Options or (ii)
after giving Grantees an opportunity to exercise their outstanding Options,
terminate any or all unexercised Options at such time as the Committee deems
appropriate. Such surrender or termination shall take place as of the date of
the Change of Control or such other date as the Committee may specify.
(d) LIMITATIONS. Notwithstanding anything in the Plan to
the contrary, in the event of a Change of Control, the Committee shall not have
the right to take any actions described in the Plan (including without
limitation actions described in Subsection (c) above) that would make the Change
of Control ineligible for pooling of interests accounting treatment or that
would make the Change of Control ineligible for desired tax treatment if, in the
absence of such right, the Change of Control would qualify for such treatment
and the Company intends to use such treatment with respect to the Change of
Control.
11. REQUIREMENTS FOR ISSUANCE OR TRANSFER OF SHARES
(a) SHAREHOLDER'S AGREEMENT. The Committee may require
that a Grantee execute a shareholder's agreement, with such terms as the
Committee deems appropriate, with respect to any Company Stock issued or
distributed pursuant to this Plan.
(b) LIMITATIONS ON ISSUANCE OR TRANSFER OF SHARES. No
Company Stock shall be issued or transferred in connection with any Grant
hereunder unless and until all legal requirements applicable to the issuance or
transfer of such Company Stock have been complied with to the satisfaction of
the Committee. The Committee shall have the right to condition any Grant made to
any Grantee hereunder on such Grantee's undertaking in writing to comply with
such restrictions on his or her subsequent disposition of such shares of Company
Stock as the Committee shall deem necessary or advisable as a result of any
applicable law, regulation or official interpretation thereof, and certificates
representing such shares may be legended to reflect any such restrictions.
Certificates representing shares of Company Stock issued or transferred under
the Plan will be subject to such stop-transfer orders and other restrictions as
may be required by applicable laws, regulations and interpretations, including
any requirement that a legend be placed thereon.
12. AMENDMENT AND TERMINATION OF THE PLAN
(a) AMENDMENT. The Committee may amend or terminate the
Plan at any time; provided, however, that the Committee shall not amend the Plan
without shareholder approval if such approval is required by section 422 of the
Code or, section 162(m) of the Code.
(b) TERMINATION OF PLAN. The Plan shall terminate on the
day immediately preceding the tenth anniversary of its effective date, unless
the Plan is
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terminated earlier by the Committee or is extended by the Committee with the
approval of the shareholders.
(c) TERMINATION AND AMENDMENT OF OUTSTANDING GRANTS. A
termination or amendment of the Plan that occurs after a Grant is made shall not
materially impair the rights of a Grantee unless the Grantee consents or unless
the Committee acts under Section 18(b). The termination of the Plan shall not
impair the power and authority of the Committee with respect to an outstanding
Grant. Whether or not the Plan has terminated, an outstanding Grant may be
terminated or amended under Section 18(b) or may be amended by agreement of the
Company and the Grantee consistent with the Plan.
(d) GOVERNING DOCUMENT. The Plan shall be the controlling
document. No other statements, representations, explanatory materials or
examples, oral or written, may amend the Plan in any manner. The Plan shall be
binding upon and enforceable against the Company and its successors and assigns.
13. FUNDING OF THE PLAN
This Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Grants under this Plan. In no event shall
interest be paid or accrued on any Grant, including unpaid installments of
Grants.
14. RIGHTS OF PARTICIPANTS
Nothing in this Plan shall entitle any Employee, Key Advisor,
Non-Employee Director or other person to any claim or right to be granted a
Grant under this Plan. Neither this Plan nor any action taken hereunder shall be
construed as giving any individual any rights to be retained by or in the employ
of the Company or any other employment rights.
15. NO FRACTIONAL SHARES
No fractional shares of Company Stock shall be issued or delivered
pursuant to the Plan or any Grant. The Committee shall determine whether cash,
other awards or other property shall be issued or paid in lieu of such
fractional shares or whether such fractional shares or any rights thereto shall
be forfeited or otherwise eliminated.
16. HEADINGS
Section headings are for reference only. In the event of a conflict
between a title and the content of a Section, the content of the Section shall
control.
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17. EFFECTIVE DATE OF THE PLAN.
Subject to approval by the Company's shareholders, the Plan shall be
effective on the completion of the Company's Initial Public Offering.
18. MISCELLANEOUS
(a) GRANTS IN CONNECTION WITH CORPORATE TRANSACTIONS AND
OTHERWISE. Nothing contained in this Plan shall be construed to (i) limit the
right of the Committee to make Grants under this Plan in connection with the
acquisition, by purchase, lease, merger, consolidation or otherwise, of the
business or assets of any corporation, firm or association, including Grants to
employees thereof who become Employees of the Company, or for other proper
corporate purposes, or (ii) limit the right of the Company to grant stock
options or make other awards outside of this Plan. Without limiting the
foregoing, the Committee may make a Grant to an employee of another corporation
who becomes an Employee by reason of a corporate merger, consolidation,
acquisition of stock or property, reorganization or liquidation involving the
Company or any of its subsidiaries in substitution for a stock option or
restricted stock grant made by such corporation. The terms and conditions of the
substitute grants may vary from the terms and conditions required by the Plan
and from those of the substituted stock incentives. The Committee shall
prescribe the provisions of the substitute grants.
(b) COMPLIANCE WITH LAW. The Plan, the exercise of
Options and the obligations of the Company to issue or transfer shares of
Company Stock under Grants shall be subject to all applicable laws and to
approvals by any governmental or regulatory agency as may be required. With
respect to persons subject to section 16 of the Exchange Act, it is the intent
of the Company that the Plan and all transactions under the Plan comply with all
applicable provisions of Rule 16b-3 or its successors under the Exchange Act. In
addition, it is the intent of the Company that the Plan and applicable Grants
under the Plan comply with the applicable provisions of section 162(m) and
section 422 of the Code. To the extent that any legal requirement of section 16
of the Exchange Act or section 162(m) or 422 of the Code as set forth in the
Plan ceases to be required under section 16 of the Exchange Act or section
162(m) or 422 of the Code, that Plan provision shall cease to apply. The
Committee may revoke any Grant if it is contrary to law or modify a Grant to
bring it into compliance with any valid and mandatory government regulation. The
Committee may also adopt rules regarding the withholding of taxes on payments to
Grantees. The Committee may, in its sole discretion, agree to limit its
authority under this Section.
(c) GOVERNING LAW. The validity, construction,
interpretation and effect of the Plan and Grant Instruments issued under the
Plan shall exclusively be governed by and determined in accordance with the law
of the State of California.
[END OF PLAN]
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