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Exhibit 10.39
QUALCOMM INCORPORATED
2001 STOCK OPTION PLAN
1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN.
1.1 ESTABLISHMENT. The QUALCOMM Incorporated 2001 Stock Option
Plan (the "PLAN") is hereby established effective as of February 27, 2001 (the
"EFFECTIVE DATE"), subject to the approval by Company shareholders.
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 and retain persons eligible to receive Options under the
Plan 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 Incentive
Stock 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) "AFFILIATE" means (i) an entity, other than a Parent
Corporation, that directly, or indirectly through one or more intermediary
entities, controls the Company or (ii) an entity, other than a Subsidiary
Corporation, that is controlled by the Company directly, or indirectly through
one or more intermediary entities, or (iii) an entity which the Board designates
as an Affiliate. For this purpose, the term "control" (including the term
"controlled by") means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of the relevant
entity, whether through the ownership of voting securities, by contract or
otherwise; or shall have such other meaning assigned such term for the purposes
of registration on Form S-8 under the Securities Act.
(b) "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).
(c) A "CHANGE IN CONTROL" shall mean an Ownership Change
Event or a series of related Ownership Change Events (collectively, a
"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
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ownership of more than fifty percent (50%) of the total combined voting power of
the outstanding voting securities of the Company or, in the case of a
Transaction described in Section 2.1(u)(iii), the corporation or other business
entity to which the assets of the Company were transferred (the "TRANSFEREE"),
as the case may be. The Board shall determine in its discretion whether multiple
sales or exchanges of the voting securities of the Company or multiple Ownership
Change Events are related. Notwithstanding the preceding sentence, a Change in
Control shall not include a Spinoff Transaction.
(d) "CODE" means the Internal Revenue Code of 1986, as
amended, and any applicable regulations promulgated thereunder.
(e) "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.
(f) "COMPANY" means QUALCOMM Incorporated, a Delaware
corporation, or any Successor.
(g) "CONSULTANT" means a person engaged to provide
consulting or advisory services (other than as an Employee or a Director) to a
Participating Company.
(h) "DIRECTOR" means a member of the Board or of the board
of directors of any other Participating Company.
(i) "DISABILITY" means the Participant has been determined
by the long-term disability insurer of the Participating Company Group as
eligible for disability benefits under the long-term disability plan of the
Participating Company Group or the Participant has been determined eligible for
Supplemental Security Income benefits by the Social Security Administration of
the United States of America.
(j) "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. The Company shall determine in good faith and in the exercise of its
discretion whether an individual has become or has ceased to be an Employee and
the effective date of such individual's employment or termination of employment,
as the case may be.
(k) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
(l) "FAIR MARKET VALUE" means, as of any date, the value
of the Stock determined as follows:
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(i) If the Stock is listed on any established stock
exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market,
the Fair Market Value of a share of Stock shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or market (or if the stock is traded on more than one exchange or
market, the exchange or market with the greatest volume of trading in the Stock)
on the last market trading day prior to the day of determination, as reported in
The Wall Street Journal or such other source as the Board deems reliable.
(ii) In the absence of such markets for the Stock,
the Fair Market Value shall be determined in good faith by the Board.
(m) "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.
(n) "INSIDER" means an Officer, a Director of the Company
or other person whose transactions in Stock are subject to Section 16 of the
Exchange Act.
(o) "NON-CONTROL AFFILIATE" means any entity in which any
Participating Company has an ownership interest and which the Board shall
designate as a Non-Control Affiliate.
(p) "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.
(q) "NORMAL RETIREMENT AGE" means the date on which a
Participant has attained the age of sixty (60) years and has completed ten years
of continuous Service.
(r) "OFFICER" means any person designated by the Board as
an officer of the Company.
(s) "OPTION" means a right to purchase Stock pursuant to
the terms and conditions of the Plan. An Option may be either an Incentive Stock
Option or a Nonstatutory Stock Option.
(t) "OPTION AGREEMENT" means an agreement, in such form as
the Board may approve, between the Company and a Participant setting forth the
terms, conditions and restrictions of an Option granted to the Participant and
any shares acquired upon the exercise thereof.
(u) 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, as determined by the Board in its discretion, of the assets
of the Company; or (iv) a liquidation or dissolution of the Company.
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(v) "PARENT CORPORATION" means any present or future
"parent corporation" of the Company, as defined in Section 424(e) of the Code.
(w) "PARTICIPANT" means any eligible person who has been
granted one or more Options.
(x) "PARTICIPATING COMPANY" means the Company or any
Parent Corporation or Subsidiary Corporation or Affiliate.
(y) "PARTICIPATING COMPANY GROUP" means, at any point in
time, all entities collectively which are then Participating Companies.
(z) "PRIOR PLAN OPTION" means, any option granted pursuant
to the Company's 1991 Stock Option Plan which is outstanding on or after the
date on which the Board adopts the Plan or which is granted thereafter and prior
to the Effective Date.
(aa) "RULE 16b-3" means Rule 16b-3 under the Exchange Act,
as amended from time to time, or any successor rule or regulation.
(bb) "SECTION 162(m)" means Section 162(m) of the Code.
(cc) "SECURITIES ACT" means the Securities Act of 1933, as
amended.
(dd) "SERVICE" means
(i) a Participant's employment or service with the
Participating Company Group, whether in the capacity of an Employee, a Director
or a Consultant. A Participant's Service shall not be deemed to have terminated
merely because of a change in the capacity in which the Participant renders
Service to the Participating Company Group or a change in the Participating
Company for which the Participant renders such Service, provided that there is
no interruption or termination of the Participant's Service. Furthermore, only
to such extent as may be provided by the Company's leave policy, a Participant's
Service with the Participating Company Group shall not be deemed to have
terminated if the Participant takes any military leave, sick leave, or other
leave of absence approved by the Company. Notwithstanding the foregoing, a leave
of absence shall be treated as Service for purposes of vesting only to such
extent as may be provided by the Company's leave policy. The Participant's
Service shall be deemed to have terminated either upon an actual termination of
Service or upon the entity for which the Participant performs Service ceasing to
be a Participating Company; except that if the entity for which Participant
performs Service is a Subsidiary Corporation and ceases to be a Participating
Company as a result of the distribution of the voting stock of such Subsidiary
Corporation to the shareholders of the Company, Service shall not be deemed to
have terminated as a result of such distribution. Subject to the foregoing, the
Company, in its discretion, shall determine whether the Participant's Service
has terminated and the effective date of such termination.
(ii) Notwithstanding any other provision of this
Section, a Participant's Service shall not be deemed to have terminated merely
because the Participating Company for which the Participant renders Service
ceases to be a member of the Participating
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Company Group by reason of a Spinoff Transaction, nor shall Service be deemed to
have terminated upon resumption of Service from the Spinoff Company to a
Participating Company. For all purposes under this Plan, a Participant's Service
shall include Service, whether in the capacity of an Employee, Director or a
Consultant, for the Spinoff Company provided a Participant was employed by the
Participating Company Group immediately prior to the Spinoff Transaction.
Notwithstanding the foregoing, if the Company's auditors determine that the
provisions or operation of the preceding two sentences would cause the Company
to incur a compensation expense and provided further that in the absence of the
preceding two sentences no such compensation expense would be incurred, then the
two preceding sentences shall be without force or effect, and the vesting and
exercisability of each outstanding Option and any shares acquired upon the
exercise thereof shall be determined under any other applicable provision of the
Plan or the Option Agreement evidencing such Option.
(ee) "SPINOFF COMPANY" means a Participating Company which
ceases to be such as a result of a Spinoff Transaction.
(ff) "SPINOFF TRANSACTION" means a transaction in which
the voting stock of an entity in the Participating Company Group is distributed
to the shareholders of a parent corporation as defined by Section 424(e) of the
Code, of such entity.
(gg) "STOCK" means the common stock of the Company, as
adjusted from time to time in accordance with Section 4.2.
(hh) "SUBSIDIARY CORPORATION" means any present or future
"subsidiary corporation" of the Company, as defined in Section 424(f) of the
Code.
(ii) "SUCCESSOR" means a corporation into or with which
the Company is merged or consolidated or which acquires all or substantially all
of the assets of the Company and which is designated by the Board as a Successor
for purposes of the Plan.
(jj) "TEN PERCENT STOCKHOLDER" means a person who, at the
time an Option is granted to such person, 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 and its designees.
3.2 AUTHORITY OF OFFICERS. Any Officer shall have the authority
to act on behalf of the Company with respect to any matter, right, obligation,
determination or election
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which is the responsibility of or which is allocated to the Company herein,
provided the Board has delegated such authority to the Officer with respect to
such matter, right, obligation, determination or election.
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 power and authority:
(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;
(c) 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 Participant's termination of Service 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;
(d) to approve one or more forms of Option Agreement;
(e) to amend, modify, extend, cancel (subject to the
limitations in Section 11) or renew any Option or to waive any restrictions or
conditions applicable to any Option or any shares acquired upon the exercise
thereof;
(f) 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 a Participant's
termination of Service;
(g) to delegate to any proper Officer the authority to
grant one or more Options, without further approval of the Board, to any person
eligible pursuant to Section 5, other than a person who, at the time of such
grant, is an Insider; provided, however, that (i) the exercise price per share
of each such Option shall be equal to the Fair Market Value per share of the
Stock on the effective date of grant, and (ii) each such Option shall be subject
to the terms and conditions of the appropriate standard form of Option Agreement
approved by the Board and shall conform to the provisions of the Plan and such
other guidelines as shall be established from time to time by the Board;
(h) to determine the Fair Market Value of shares of Stock
or other property;
(i) to construe, interpret and apply the provisions of the
Plan and Options granted under it, in its discretion; to establish, amend and
revoke rules and regulations
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for its administration; and to take all such actions and make all such decisions
as may be necessary or appropriate for the operation and administration of the
Plan, including, without limitation, all such decisions and determinations as
may be expressly delegated to the Board by the terms of the Plan. The Board, in
the exercise of this power, may correct any defect, omission or inconsistency in
the Plan or in any Option Agreement, in a manner and to the extent it shall
deem, in its discretion, necessary, desirable, appropriate or expedient to make
the Plan fully effective.
3.4 SCOPE OF REVIEW OF BOARD ACTION.
(a) The Board's action taken pursuant to the authority set
forth in Sections 3.3(a) through (g) above, and any action, decision or
determination with respect to any matter reserved to the Board in its sole and
absolute discretion under the terms of this Plan shall be final, binding, and
conclusive on the Participating Company Group, any Participant and any person
having an interest in the Plan or any Option granted hereunder.
(b) Except as otherwise provided in Section 3.4(a), the
Board's determination of the construction and interpretation of any provision of
the Plan and any actions, decisions or determinations reserved to the Board in
its discretion which are made in good faith shall be final, binding and
conclusive on the Participating Company Group, any Participant, and any person
having an interest in the Plan or any Option granted hereunder.
3.5 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.
3.6 COMMITTEE COMPLYING WITH SECTION 162(m). If the Company is a
"publicly held corporation" within the meaning of Section 162(m), the Board may
establish a Committee of "outside directors" within the meaning of Section
162(m) 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).
3.7 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
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(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, and to retain complete control over the litigation
and/or settlement of such suit, action or proceeding.
3.8 ARBITRATION. Any dispute or claim concerning any Options
granted (or not granted) pursuant to this Plan and any other disputes or claims
relating to or arising out of the Plan shall be fully, finally and exclusively
resolved by binding arbitration conducted pursuant to the Commercial Arbitration
Rules of the American Arbitration Association in San Diego, California. By
accepting an Option, Participants and the Company waive their respective rights
to have any such disputes or claims tried by a judge or jury.
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 One Hundred Fifty Nine Million, Five
Hundred and Forty Thousand, Five Hundred and Seventeen (159,540,517). The share
reserve shall consist of authorized but unissued or reacquired shares of Stock
or any combination thereof. However, the share reserve, determined at any time,
shall be reduced by the number of shares subject to the Prior Plan Options. If
an outstanding Option, including a Prior Plan Option, for any reason expires or
is terminated or canceled or if shares of Stock are acquired upon the exercise
of an Option subject to a Company repurchase option and are repurchased by the
Company at the Participant's exercise or purchase price, the shares of Stock
allocable to the unexercised portion of such Option or Prior Plan 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 and to any outstanding Options, in the ISO Share Issuance
Limit set forth in Section 4.1, in the Section 162(m) Grant Limit set forth in
Section 5.3, 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 2.1(u) 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 discretion. Notwithstanding the foregoing, any fractional share resulting
from an adjustment pursuant to this Section shall be rounded down to the nearest
whole number, 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.
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5. ELIGIBILITY AND OPTION LIMITATIONS.
5.1 PERSONS ELIGIBLE FOR OPTIONS.
(a) Except as otherwise provided in this Section 5.1,
Options may be granted only to Employees, Consultants, and Directors. Options
are granted in the sole and absolute discretion of the Board and eligibility in
accordance with this Section shall not entitle any person to be granted an
Option, or, having been granted an Option, to be granted an additional Option.
(b) INCENTIVE STOCK OPTIONS. An Incentive Stock Option may
be granted only to a person who, on the effective date of grant, is an Employee
of the Company, a Parent Corporation or a Subsidiary Corporation (each being an
"ISO-QUALIFYING Corporation"). Any person who is not an Employee of an
ISO-Qualifying Corporation on the effective date of the grant of an Option to
such person may be granted only a Nonstatutory Stock Option.
(c) CONSULTANT OPTIONS. A Consultant shall not be eligible
for the grant of an Option if, at the time of grant, a Form S-8 Registration
Statement under the Securities Act ( "Form S-8") is not available to register
either the offer or the sale of the Company's securities to such Consultant
because of the nature of the services that the Consultant is providing to the
Company, or because the Consultant is not a natural person, or as otherwise
provided by the rules governing the use of Form S-8, unless the Company
determines both (i) that such grant (A) shall be registered in another manner
under the Securities Act (e.g., on a Form S-3 Registration Statement) or (B)
does not require registration under the Securities Act in order to comply with
the requirements of the Securities Act, if applicable, and (ii) that such grant
complies with the securities laws of all other relevant jurisdictions.
5.2 FAIR MARKET VALUE LIMITATION. To the extent that Options
designated as Incentive Stock Options (granted under all stock plans of the
ISO-Qualifying Corporation, including the Plan) become exercisable by a
Participant for the first time during any calendar year for stock having a Fair
Market Value greater than One Hundred Thousand Dollars ($100,000), the portions
of such Options which exceed such amount shall be treated as Nonstatutory Stock
Options. For purposes of this Section, 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, such 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, the Participant may designate which portion of such Option the
Participant is exercising. In the absence of such designation, the Participant
shall be deemed to have exercised the Incentive Stock Option portion of the
Option first.
5.3 SECTION 162(m) GRANT LIMIT. Subject to adjustment as provided
in Section 4.2, at any such time as the Company is a "publicly held corporation"
within the meaning of Section 162(m), no Employee or prospective Employee shall
be granted one or more Options within any fiscal year of the Company which in
the aggregate are for the purchase of
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more than Three Million (3,000,000) shares (the "SECTION 162(m) GRANT Limit").
An Option which is canceled in the same fiscal year of the Company in which it
was granted shall continue to be counted against the Section 162(m) Grant Limit
for such period.
6. TERMS AND CONDITIONS OF OPTIONS.
Options shall be evidenced by Option Agreements specifying, among
other things, 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 or by communicating with the Company in such other
manner as the Company may authorize. Option Agreements may incorporate all or
any of the terms of the Plan by reference and shall comply with and be subject
to the following terms and conditions:
6.1 EXERCISE PRICE. The exercise price for each Option shall be
established in the discretion of the Board; provided, however, that (A) the
exercise price per share for an Option shall be not less than the Fair Market
Value of a share of Stock on the effective date of grant of the Option, and (B)
no Incentive Stock Option granted to a Ten Percent Stockholder 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 EXERCISABILITY AND TERM OF OPTIONS.
(a) OPTION EXERCISABILITY. 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 Incentive Stock Option shall be exercisable after the
expiration of ten (10) years after the effective date of grant of such Option,
and (B) no Incentive Stock Option granted to a Ten Percent Stockholder shall be
exercisable after the expiration of five (5) years after the effective date of
grant of such Option. Subject to the foregoing, unless otherwise specified by
the Board in the grant of an Option, any Option granted hereunder shall
terminate ten (10) years after the effective date of grant of the Option, unless
earlier terminated in accordance with its provisions, or the terms of the Plan.
(b) PARTICIPANT RESPONSIBILITY FOR EXERCISE OF OPTION.
Each Participant is responsible for taking any and all actions as may be
required to exercise any Option in a timely manner, and for properly executing
any documents as may be required for the exercise of an Option in accordance
with such rules and procedures as may be established from time to time. By
signing an Option Agreement each Participant acknowledges that information
regarding the procedures and requirements for the exercise of any Option is
available upon such Participant's request. The Company shall have no duty or
obligation to notify any Participant of the expiration date of any Option.
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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, or attestation to the ownership,
of shares of Stock owned by the Participant having a Fair Market Value not less
than the exercise price, (iii) by delivery of a properly executed notice
together with irrevocable instructions to a broker providing for the assignment
to the Company 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) provided that the Participant is an
Employee (unless otherwise not prohibited by law, including, without limitation,
any regulation promulgated by the Board of Governors of the Federal Reserve
System) and in the Company's sole and absolute discretion at the time the Option
is exercised, by delivery of the Participant's promissory note in a form
approved by the Company for the aggregate exercise price, provided that, if the
Company is incorporated in the State of Delaware, the Participant shall pay in
cash that portion of the aggregate exercise price not less than the par value of
the shares being acquired, (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
approval 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
foregoing forms of consideration to be used in payment of the exercise price or
which otherwise restrict one or more forms of consideration.
(b) LIMITATIONS ON FORMS OF CONSIDERATION.
(i) TENDER OF STOCK. Notwithstanding the foregoing,
an Option may not be exercised by tender to the Company, or attestation to the
ownership, of shares of Stock to the extent such tender or attestation 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, or
attestation to the ownership, of shares of Stock unless such shares either have
been owned by the Participant for more than six (6) months (and were not used
for another Option exercise by attestation during such period) or were not
acquired, directly or indirectly, from the Company.
(ii) 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.
(iii) 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. The Board shall have the authority to permit
or require the Participant 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
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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
Participant shall pay the unpaid principal and accrued interest, if any, to the
extent necessary to comply with such applicable regulations.
6.4 TRANSFERABILITY. An Incentive Stock Option shall not be
transferable except by will or by the laws of descent and distribution, and
shall be exercisable during the lifetime of the person to whom the Incentive
Stock Option is granted only by such person. A Nonstatutory Stock Option shall
not be transferable in any manner (including without limitation, sale,
alienation, anticipation, pledge, encumbrance, or assignment) other than, (i) by
will or by the laws of descent and distribution, (ii) by written designation of
a beneficiary, in a form acceptable to the Company, with such designation taking
effect upon the death of a Participant, (iii) by delivering written notice to
the Company, in a form acceptable to the Company (including such
representations, warranties and indemnifications as the Company shall require a
Participant to make to protect the Company's interests and ensure that this
Nonstatutory Stock Option has been transferred under the circumstances approved
by the Company), by gift to a Participant's spouse, former spouse, children,
stepchildren, grandchildren, parent, stepparent, grandparent, sibling, niece,
nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, persons having one of the foregoing types of
relationship with a Participant due to adoption, any person sharing a
Participant's household (other than a tenant or employee), a foundation in which
these persons or the Participant control the management of assets, and any other
entity in which these persons (or the Participant) own more than fifty percent
of the voting interests. A transfer to an entity in which more than fifty
percent of the voting interests are owned by these persons (or the Participant)
in exchange for an interest in that entity is specifically included as a
permissible type of transfer. In addition, a transfer to a trust created solely
for the benefit (i.e., a Participant and/or any or all of the foregoing persons
hold more than 50 percent of the beneficial interest in the trust) of a
Participant and/or any or all of the foregoing persons is also a permissible
transferee, or (iv) such other transferees as may be authorized by the Board in
its sole and absolute discretion. During a Participant's life this Nonstatutory
Stock Option is exercisable only by the Participant or a transferee satisfying
the above conditions. Except in the event of a Participant's death, upon
transfer of a Nonstatutory Stock Option to any or all of the foregoing persons,
the Participant, as the Optionee, is liable for any and all taxes due upon
exercise of those transferred Nonstatutory Stock Options. At no time will a
transferee who is considered an affiliate under Rule 144(a)(1) be able to sell
any or all such Stock without complying with Rule 144. The right of a transferee
to exercise the transferred portion of this Nonstatutory Stock Option shall
terminate in accordance with the Participant's right of exercise under this
Nonstatutory Stock Option and is further subject to such representations,
warranties and indemnifications from the transferee that the Company requires
the transferee to make to protect the Company's interests and ensure that this
Nonstatutory Stock Option has been transferred under the circumstances approved
by the Company. Once a portion of a Nonstatutory Stock Option is transferred, no
further transfer may be made of that portion of the Nonstatutory Stock Option.
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6.5 EFFECT OF TERMINATION OF SERVICE.
(a) OPTION EXERCISABILITY. Subject to earlier termination
of the Option as otherwise provided herein and unless otherwise provided by the
Board in the grant of an Option and set forth in the Option Agreement, an Option
shall be exercisable after a Participant's termination of Service only during
the applicable time period determined in accordance with this Section and
thereafter shall terminate.
(i) DISABILITY. If the Participant's Service
terminates because of the Disability of the Participant, the Option shall
continue for the period of such Disability under the terms and conditions of the
Option Agreement and may be exercised by the Participant at any time during the
period of Disability but in any event no later than the date of expiration of
the Option's term as set forth in the Option Agreement evidencing such Option
(the "OPTION EXPIRATION DATE").
(ii) DEATH. If the Participant's Service terminates
because of the death or because of the Disability of the Participant and such
termination is subsequently followed by the death of the Participant, (A) the
exercisability and vesting of the Option and, in the case of an immediately
exercisable Option, any Shares acquired upon exercise thereof shall be
accelerated effective upon the Participant's death, and (B) the Option, to the
extent unexercised and exercisable on the date of the Participant's death, may
be exercised by the Participant's legal representative or other person who
acquired the right to exercise the Option by reason of the Participant's death
at any time prior to the expiration of twelve (12) months after the date of the
Participant's death, but in any event no later than the Option Expiration Date.
(iii) NORMAL RETIREMENT AGE. If the Participant's
Service terminates at or after Normal Retirement Age of the Participant, the
Option, to the extent unexercised and exercisable on the date on which the
Participant's Service terminated, may be exercised by the Participant at any
time prior to the expiration of twelve (12) months after the date on which the
Participant's Service terminated, but in any event no later than the Option
Expiration Date.
(iv) TERMINATION AFTER LAYOFF. If the Participant's
Service ceases as a result of "Layoff" (as defined below), then, subject to the
Participant's execution of a general release of claims satisfactory to the
Company, (A) the exercisability and vesting of the Option and, in the case of an
immediately exercisable Option, any shares acquired upon the exercise thereof
shall be accelerated effective as of the date on which the Participant's Service
terminated by ten percent (10%) of the shares which would otherwise be unvested
on such date, and (B) the Option, to the extent unexercised and exercisable on
the date on which the Participant's Service terminated, may be exercised by the
Participant (or the Participant's guardian or legal representative) at any time
prior to the expiration of six (6) months after the date on which the
Participant's Service terminated, but in any event no later than the Option
Expiration Date. Notwithstanding the foregoing, if the Company's auditors
determine that the provisions or operation of the preceding sentence would cause
the Company to incur a compensation expense and provided further that in the
absence of the preceding sentence no such compensation expense would be
incurred, then the preceding sentence shall be without force or effect, and the
vesting and exercisability of each outstanding Option and any shares acquired
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upon the exercise thereof shall be determined under any other applicable
provision of the Plan or the Option Agreement evidencing such Option.
(v) TERMINATION UPON TRANSFER TO NON-CONTROL
AFFILIATE. If at the request of the Company, Participant transfers Service to a
Non-Control Affiliate and the Participant's Service ceases as a result, then,
subject to the Participant's execution of a general release of claims form
reasonably satisfactory to the Company, the Option, to the extent unexercised
and exercisable on the date on which the Participant's Service terminated, may
be exercised by the Participant (or the Participant's guardian or legal
representative) at any time prior to the expiration of twelve (12) months after
the date on which the Participant's Service terminated, but in any event no
later than the Option Expiration Date.
(vi) TERMINATION AFTER CHANGE IN CONTROL. If the
Participant's Service ceases as a result of Termination After Change in Control
(as defined below), then (A) the exercisability and vesting of the Option and,
in the case of an immediately exercisable Option, any shares acquired upon the
exercise thereof shall be accelerated effective as of the date on which the
Participant's Service terminated, and (B) the Option, to the extent unexercised
and exercisable on the date on which the Participant's Service terminated, may
be exercised by the Participant (or the Participant's guardian or legal
representative) at any time prior to the expiration of six (6) months after the
date on which the Participant's Service terminated, but in any event no later
than the Option Expiration Date.
(vii) OTHER TERMINATION OF SERVICE. If the
Participant's Service with the Participating Company Group terminates prior to
Normal Retirement Age for any reason except Disability, death, Layoff, Transfer
to a Non-Control Affiliate, or Termination after Change in Control, the Option,
to the extent unexercised and exercisable by the Participant on the date on
which the Participant's Service terminates, may be exercised by the Participant
at any time prior to the expiration of thirty (30) days after the date on which
the Participant's Service terminates, but in any event no later than the Option
Expiration Date.
(b) EXTENSION IF EXERCISE PREVENTED BY LAW.
Notwithstanding the foregoing, other than termination for Cause, if the exercise
of an Option within the applicable time periods set forth in Section 6.5(a) is
prevented by the provisions of Section 10 below, the Option shall remain
exercisable until three (3) months after the date the Participant is notified by
the Company that the Option is exercisable, but in any event no later than the
Option Expiration Date.
(c) EXTENSION IF PARTICIPANT SUBJECT TO SECTION 16(b).
Notwithstanding the foregoing, other than termination for Cause, if a sale
within the applicable time periods set forth in Section 6.5(a) of shares
acquired upon the exercise of the Option would subject the Participant to suit
under Section 16(b) of the Exchange Act, the 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 Participant would no longer be subject to
such suit, (ii) the one hundred and ninetieth (190th) day after the
Participant's termination of Service, or (iii) the Option Expiration Date.
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(d) CERTAIN DEFINITIONS.
(i) "CAUSE" shall mean any of the following: (1)
the Participant's theft, dishonesty, or falsification of any Participating
Company documents or records; (2) the Participant's improper use or disclosure
of a Participating Company's confidential or proprietary information; (3) any
action by the Participant which has a detrimental effect on a Participating
Company's reputation or business; (4) the Participant's failure or inability to
perform any reasonable assigned duties after written notice from a Participating
Company of, and a reasonable opportunity to cure, such failure or inability; (5)
any material breach by the Participant of any employment or service agreement
between the Participant and a Participating Company, which breach is not cured
pursuant to the terms of such agreement; (6) the Participant's conviction
(including any plea of guilty or nolo contendere) of any criminal act which
impairs the Participant's ability to perform his or her duties with a
Participating Company; or (7) violation of a material Company policy.
(ii) "GOOD REASON" shall mean any one or more of
the following:
(1) without the Participant's express
written consent, the assignment to the Participant of any duties, or any
limitation of the Participant's responsibilities, substantially inconsistent
with the Participant's positions, duties, responsibilities and status with the
Participating Company Group immediately prior to the date of the Change in
Control;
(2) without the Participant's express
written consent, the relocation of the principal place of the Participant's
employment or service to a location that is more than fifty (50) miles from the
Participant's principal place of employment or service immediately prior to the
date of the Change in Control, or the imposition of travel requirements
substantially more demanding of the Participant than such travel requirements
existing immediately prior to the date of the Change in Control;
(3) any failure by the Participating Company
Group to pay, or any material reduction by the Participating Company Group of,
(A) the Participant's base salary in effect immediately prior to the date of the
Change in Control (unless reductions comparable in amount and duration are
concurrently made for all other employees of the Participating Company Group
with responsibilities, organizational level and title comparable to the
Participant's), or (B) the Participant's bonus compensation, if any, in effect
immediately prior to the date of the Change in Control (subject to applicable
performance requirements with respect to the actual amount of bonus compensation
earned by the Participant);
(4) any failure by the Participating Company
Group to (A) continue to provide the Participant with the opportunity to
participate, on terms no less favorable than those in effect for the benefit of
any employee or service provider group which customarily includes a person
holding the employment or service provider position or a comparable position
with the Participating Company Group then held by the Participant, in any
benefit or compensation plans and programs, including, but not limited to, the
Participating Company Group's life, disability, health, dental, medical,
savings, profit sharing, stock purchase
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and retirement plans, if any, in which the Participant was participating
immediately prior to the date of the Change in Control, or their equivalent, or
(B) provide the Participant with all other fringe benefits (or their equivalent)
from time to time in effect for the benefit of any employee group which
customarily includes a person holding the employment or service provider
position or a comparable position with the Participating Company Group then held
by the Participant;
(5) any breach by the Participating Company
Group of any material agreement between the Participant and a Participating
Company concerning Participant's employment; or
(6) any failure by the Company to obtain the
assumption of any material agreement between Participant and the Company
concerning Participant's employment by a successor or assign of the Company.
(iii) "LAYOFF" shall mean the involuntary
termination of the Participant's Service for reasons other than Cause,
constructive termination, death, or Disability.
(iv) "TERMINATION AFTER CHANGE IN CONTROL" shall
mean either of the following events occurring within twenty-four (24) months
after a Change in Control:
(1) termination by the Participating Company
Group of the Participant's Service with the Participating Company Group for any
reason other than for Cause; or
(2) the Participant's resignation for Good
Reason from all capacities in which the Participant is then rendering Service to
the Participating Company Group within a reasonable period of time following the
event constituting Good Reason.
Notwithstanding any provision herein to the contrary, Termination After Change
in Control shall not include any termination of the Participant's Service with
the Participating Company Group which (1) is for Cause; (2) is a result of the
Participant's death or Disability; (3) is a result of the Participant's
voluntary termination of Service other than for Good Reason; or (4) occurs prior
to the effectiveness of a Change in Control.
7. STANDARD FORMS OF AGREEMENTS.
7.1 OPTION AGREEMENT. Unless otherwise provided by the Board at
the time the Option is granted, an Option shall comply with and be subject to
the terms and conditions set forth in the form of Option Agreement approved by
the Board concurrently with its adoption of the Plan and as amended from time to
time.
7.2 AUTHORITY TO VARY TERMS. The Board shall have the authority
from time to time to vary the terms of any standard form of agreement described
in this Section either in connection with the grant or amendment of an
individual Option or in connection with the authorization of a new standard form
or forms; provided, however, that the terms and conditions of any such new,
revised or amended standard form or forms of agreement are not inconsistent with
the terms of the Plan.
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8. CHANGE IN CONTROL. In the event of a Change in Control, the
surviving, continuing, successor, or purchasing corporation or other business
entity or parent thereof, as the case may be (the "ACQUIRING CORPORATION"), may,
without the consent of any Participant, either assume the Company's rights and
obligations under outstanding Options or substitute for outstanding Options
substantially equivalent options for the Acquiring Corporation's stock. In the
event the Acquiring Corporation elects not to assume or substitute for
outstanding Options in connection with a Change in Control, the exercisability
and vesting of each such outstanding Option and any shares acquired upon the
exercise thereof held by Participants whose Service has not terminated prior to
such date shall be accelerated, effective as of the date ten (10) days prior to
the date of the Change in Control. The exercise or vesting of any Option and any
shares acquired upon the exercise thereof that was permissible solely by reason
of this Section and the provisions of such Option Agreement shall be conditioned
upon the consummation of the Change in Control. Any Options which are neither
assumed or substituted for by the Acquiring Corporation in connection with the
Change in Control nor exercised as of the date of the Change in Control shall
terminate and cease to be outstanding effective as of the date of the Change in
Control. Notwithstanding the foregoing, shares acquired upon exercise of an
Option prior to the Change in Control and any consideration received pursuant to
the Change in 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 2.1(u)(i) constituting a Change in 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 discretion.
9. TAX WITHHOLDING.
9.1 TAX WITHHOLDING IN GENERAL. The Company shall have the right
to deduct from any and all payments made under the Plan, or to require the
Participant, through cash payment or otherwise, including by means of a Cashless
Exercise of an Option, to make adequate provision for, the federal, state, local
and foreign taxes, if any, required by law to be withheld by the Participating
Company Group with respect to an Option or the shares acquired pursuant thereto.
The Company shall have no obligation to deliver shares of Stock or to release
shares of Stock from an escrow established pursuant to an Option Agreement until
the Participating Company Group's tax withholding obligations have been
satisfied by the Participant.
9.2 WITHHOLDING IN SHARES. The Company shall have the right, but
not the obligation, to deduct from the shares of Stock issuable to a Participant
upon the exercise of an Option, or to accept from the Participant 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 tax withholding obligations of the
Participating Company Group. The Fair Market Value of any shares of Stock
withheld or tendered to satisfy any such tax withholding obligations shall not
exceed the amount determined by the applicable minimum statutory withholding
rates.
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10. COMPLIANCE WITH SECURITIES LAW.
The grant of Options and the issuance of shares of Stock upon
exercise of Options shall be subject to compliance with all applicable
requirements of federal, state and foreign law with respect to such securities.
Options may not be exercised if the issuance of shares of Stock upon exercise
would constitute a violation of any applicable federal, state or foreign
securities laws or other law or regulations or the requirements of any stock
exchange or market system upon which the Stock may then be listed. In addition,
no Option may be exercised unless (A) a registration statement under the
Securities Act shall at the time of exercise of the Option be in effect with
respect to the shares issuable upon exercise of the Option or (B) in the opinion
of legal counsel to the Company, the shares issuable upon exercise of the Option
may be issued in accordance with the terms of an applicable exemption from the
registration requirements of the Securities Act. The inability of the Company to
obtain from any regulatory body having jurisdiction the authority, if any,
deemed by the Company's legal counsel to be necessary to the lawful issuance and
sale of any shares hereunder shall relieve the Company of any liability in
respect of the failure to issue or sell such shares as to which such requisite
authority shall not have been obtained. As a condition to the exercise of any
Option, the Company may require the Participant to satisfy any qualifications
that may be necessary or appropriate, to evidence compliance with any applicable
law or regulation and to make any representation or warranty with respect
thereto as may be requested by the Company.
11. 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. No
termination or amendment of the Plan shall affect any then outstanding Option
unless expressly provided by the Board. In any event, no termination or
amendment of the Plan may adversely affect any then outstanding Option without
the consent of the Participant, 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.
12. MISCELLANEOUS PROVISIONS.
12.1 REPURCHASE RIGHTS. Shares issued under the Plan may be
subject to a right of first refusal, one or more repurchase options, or other
conditions and restrictions as determined by the Board in its sole and absolute
discretion at the time the Option is granted. The Company shall have the right
to assign at any time any repurchase right it may have, whether or not such
right is then exercisable, to one or more persons as may be selected by the
Company. Upon request by the Company, each Participant shall execute any
agreement evidencing such transfer restrictions prior to the receipt of shares
of Stock hereunder and shall promptly present to the Company any and all
certificates representing shares of Stock acquired hereunder for the placement
on such certificates of appropriate legends evidencing any such transfer
restrictions.
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12.2 PROVISION OF INFORMATION. Each Participant shall be given
access to information concerning the Company equivalent to that information
generally made available to the Company's common stockholder.
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