EXHIBIT 10.1
ALGORX PHARMACEUTICALS, INC.
2001 EQUITY INCENTIVE PLAN, AS AMENDED AND RESTATED
1. PURPOSES.
(A) ELIGIBLE AWARD RECIPIENTS. The persons eligible to receive Awards
are the Employees, Directors and Consultants of the Company and its Affiliates.
(B) AVAILABLE STOCK AWARDS. The purpose of the Plan is to provide a
means by which eligible recipients of Stock Awards may be given an opportunity
to benefit from increases in value of the Common Stock through the granting of
the following Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock
Options, (iii) Stock Bonuses, (iv) Stock Units, (v) Stock Appreciation Rights
and (vi) Stock Purchase Rights.
(C) GENERAL PURPOSE. The Company, by means of the Plan, seeks to retain
the services of the group of persons eligible to receive Stock Awards or Cash
Awards, to secure and retain the services of new members of this group and to
provide incentives for such persons to exert maximum efforts for the success of
the Company and its Affiliates.
2. DEFINITIONS.
(A) "AFFILIATE" means any parent corporation or subsidiary corporation
of the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.
(B) "APPLICABLE LAWS" means the legal requirements relating to the
administration of equity compensation plans, including under applicable U.S.
state corporate laws, U.S. federal and applicable state securities laws, other
U.S. federal and state laws, the Code, any applicable stock exchange or Nasdaq
rules or regulations and the applicable laws, rules and regulations of any other
country or jurisdiction where Awards are granted under the Plan, as such laws,
rules, regulations and requirements shall be in place from time to time.
(C) "AWARD" means a Stock Award or a Cash Award granted in accordance
with the terms of this Plan.
(D) "BOARD" means the Board of Directors of the Company.
(E) "CASH AWARD" means an award conferring or including the right to be
granted cash under Section 7(d) below.
(F) "CASH AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Cash Award evidencing the terms and conditions of an
individual Cash Award grant. Each Cash Award Agreement shall be subject to the
terms and conditions of this Plan.
(G) "CODE" means the Internal Revenue Code of 1986, as amended.
(H) "COMMITTEE" means a committee of one or more members of the Board
appointed by the Board in accordance with subsection 3(c).
(I) "COMMON STOCK" means the common stock of the Company.
(J) "COMPANY" means ALGORX PHARMACEUTICALS, INC., a Delaware
corporation.
(K) "CONSULTANT" means any person, including an advisor and other than
an Employee, (i) engaged by the Company or an Affiliate to render consulting or
advisory services and who is compensated for such services or (ii) who is a
member of the Board of Directors of an Affiliate. However, the term "Consultant"
shall not include either Directors who are not compensated by the Company for
their services as Directors or Directors who are merely paid a director's fee by
the Company for their services as Directors.
(L) "CONTINUOUS SERVICE" means that the Participant's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. The Participant's Continuous Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Participant renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Participant
renders such service, provided that there is no interruption or termination of
the Participant's Continuous Service. For example, a change in status from an
Employee of the Company to a Consultant of an Affiliate or a Director will not
constitute an interruption of Continuous Service. The Board or the chief
executive officer of the Company, in that party's sole discretion, may determine
whether Continuous Service shall be considered interrupted in the case of any
leave of absence approved by that party, including sick leave, military leave or
any other personal leave.
(M) "COVERED EMPLOYEE" means the chief executive officer and the four
(4) other highest compensated officers of the Company for whom total
compensation is required to be reported to stockholders under the Exchange Act,
as determined for purposes of Section 162(m) of the Code.
(N) "DIRECTOR" means a member of the Board of Directors of the Company.
(O) "DISABILITY" means the permanent and total disability of a person
within the meaning of Section 22(e)(3) of the Code.
(P) "EMPLOYEE" means any person employed by the Company or an
Affiliate. Mere service as a Director or payment of a director's fee by the
Company or an Affiliate shall not be sufficient to constitute "employment" by
the Company or an Affiliate.
(Q) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(R) "FAIR MARKET VALUE" means, as of any date, the value of the Common
Stock determined as follows:
2.
(I) If the Common 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 Common 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 the exchange or market with the greatest volume
of trading in the Common 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 Common Stock, the
Fair Market Value shall be determined in good faith by the Board.
(S) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(T) "LISTING DATE" means the first date upon which any security of the
Company is listed (or approved for listing) upon notice of issuance on any
securities exchange or designated (or approved for designation) upon notice of
issuance as a national market security on an interdealer quotation system.
(U) "NON-EMPLOYEE DIRECTOR" means a Director who is not a current
Employee or Officer of the Company or an Affiliate.
(V) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify
as an Incentive Stock Option.
(W) "OFFICER" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(X) "OPTION" means an Incentive Stock Option or a Nonstatutory Stock
Option granted pursuant to the Plan.
(Y) "OPTION AGREEMENT" means a written agreement between the Company
and an Optionholder evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of the
Plan.
(Z) "OPTIONHOLDER" means a person to whom an Option is granted pursuant
to the Plan or, if applicable, such other person who holds an outstanding
Option.
(AA) "OUTSIDE DIRECTOR" means a Director who either (i) is not a
current employee of the Company or an "affiliated corporation" (within the
meaning of Treasury Regulations promulgated under Section 162(m) of the Code),
is not a former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.
3.
(BB) "PARTICIPANT" means a person to whom a Stock Award or Cash Award
is granted pursuant to the Plan or, if applicable, such other person who holds
an outstanding Stock Award or Cash Award.
(CC) "PLAN" means this AlgoRx Pharmaceuticals, Inc. 2001 Equity
Incentive Plan, as amended and restated.
(DD) "QUALIFYING PERFORMANCE CRITERIA" means any one or more of the
following performance criteria, either individually, alternatively or in any
combination, applied to either the Company as a whole or to a business unit,
Affiliate or business segment, either individually, alternatively or in any
combination, and measured either annually or cumulatively over a period of
years, on an absolute basis or relative to a pre-established target, to previous
years' results or to a designated comparison group, in each case as specified by
the Committee in the Award: (i) cash flow; (ii) earnings (including gross
margin, earnings before interest and taxes, earnings before taxes, and net
earnings); (iii) earnings per share; (iv) growth in earnings or earnings per
share; (v) stock price; (vi) return on equity or average stockholders' equity;
(vii) total stockholder return; (viii) return on capital; (ix) return on assets
or net assets; (x) return on investment; (xi) revenue; (xii) income or net
income; (xiii) operating income or net operating income; (xiv) operating profit
or net operating profit; (xv) operating margin; (xvi) return on operating
revenue; (xvii) market share; (xviii) contract awards or backlog; (xix) overhead
or other expense reduction; (xx) growth in stockholder value relative to the
moving average of the S&P 500 Index or a peer group index; (xxi) credit rating;
(xxii) strategic plan development and implementation; (xxiii) improvement in
workforce diversity, and (xxiv) any other similar criteria. The Committee may
appropriately adjust any evaluation of performance under a Qualifying
Performance Criteria to exclude any of the following events that occurs during a
performance period: (A) asset write-downs; (B) litigation or claim judgments or
settlements; (C) the effect of changes in tax law, accounting principles or
other such laws or provisions affecting reported results; (D) accruals for
reorganization and restructuring programs; and (E) any extraordinary
non-recurring items as described in Accounting Principles Board Opinion No. 30
and/or in management's discussion and analysis of financial condition and
results of operations appearing in the Company's annual report to stockholders
for the applicable year.
(EE) "RULE 16B-3" means Rule 16b-3 promulgated under the Exchange Act
or any successor to Rule 16b-3, as in effect from time to time.
(FF) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(GG) "STOCK APPRECIATION RIGHT" means a right to receive cash and/or
shares of Common Stock based on a change in the Fair Market Value of a specific
number of shares of Common Stock granted under Section 7(c).
(HH) "STOCK AWARD" means any right granted under the Plan, including an
Option, a Stock Bonus, a Stock Unit, a Stock Appreciation Right and a Stock
Purchase Right, but excluding a Cash Award.
4.
(II) "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.
(JJ) "STOCK BONUS" means the award of a certain number of shares of
Common Stock granted under Section 7(a) below.
(KK) "STOCK PURCHASE RIGHT" means the right to purchase a certain
number of shares of Common Stock under Section 7(b) below.
(LL) "STOCK UNIT" means an award giving the right to receive shares of
Common Stock granted under Section 7(a) below.
(MM) "TEN PERCENT STOCKHOLDER" means a person who owns (or is deemed to
own pursuant to Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of any of its Affiliates.
3. ADMINISTRATION.
(A) ADMINISTRATION BY BOARD. The Board shall administer the Plan unless
and until the Board delegates administration to a Committee, as provided in
subsection 3(c).
(B) POWERS OF BOARD. The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:
(I) To determine from time to time which of the persons
eligible under the Plan shall be granted Awards; when and how each Award shall
be granted; what type or combination of types of Award shall be granted; the
provisions of each Award granted (which need not be identical), including the
time or times when a person shall be permitted to receive Common Stock pursuant
to a Stock Award; and the number of shares of Common Stock with respect to which
a Stock Award shall be granted to each such person.
(II) To construe and interpret the Plan and Awards granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement or
Cash Award Agreement, in a manner and to the extent it shall deem necessary or
expedient to make the Plan fully effective.
(III) To amend the Plan, a Stock Award or a Cash Award as
provided in Section 12.
(IV) Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the best interests of
the Company which are not in conflict with the provisions of the Plan.
5.
(C) DELEGATION TO COMMITTEE.
(I) GENERAL. The Board may delegate administration of the Plan
to a Committee or Committees of one (1) or more members of the Board, and the
term "Committee" shall apply to any person or persons to whom such authority has
been delegated. In addition, if permitted by the Applicable Laws, the Board (or
a Committee to whom such authority has been delegated) may delegate
administration of the Plan to one or more officers of the Company with respect
to the granting of awards to non-officer employees. If administration is
delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board,
including the power to delegate to a subcommittee or one or more officers any of
the administrative powers the Committee is authorized to exercise (and
references in this Plan to the Board shall thereafter be to the Committee or
subcommittee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
(II) COMMITTEE COMPOSITION WHEN COMMON STOCK IS PUBLICLY
TRADED. At such time as the Common Stock is publicly traded, in the case of a
Committee administering the Plan in accordance with the requirements of Rule
16b-3 or Section 162(m) of the Code, the Committee shall conform to the
requirements of the applicable statute and the rules and regulations promulgated
thereunder. The Committee shall in all events conform to any requirements of the
Applicable Laws, including any applicable Nasdaq or stock exchange listing
requirements.
(D) EFFECT OF BOARD'S DECISION. All determinations, interpretations and
constructions made by the Board or the Committee, as applicable, in good faith
shall not be subject to review by any person and shall be final, binding and
conclusive on all persons.
4. SHARES SUBJECT TO THE PLAN.
(A) SHARE RESERVE. Subject to the provisions of Section 11 relating to
adjustments upon changes in Common Stock, the Common Stock that may be issued
pursuant to Stock Awards shall not exceed in the aggregate three million five
hundred forty nine thousand nine hundred fifty-six (3,549,956) shares of Common
Stock (consisting as of January 19, 2005 of 2,392,345 shares underlying
outstanding options and 1,157,611 shares underlying unallocated options as
adjusted for the Company's 10-for-1 reverse stock split effected on February __,
2005), plus an annual increase on the first day of each of the Company's fiscal
years beginning on January 1, 2006 equal to the lesser of (i) two million five
hundred thousand (2,500,000) shares of Common Stock, (ii) five percent (5%) of
the shares of Common Stock outstanding on the last day of the immediately
preceding fiscal year, or (iii) such lesser number of shares of Common Stock as
the Board shall determine.
(B) REVERSION OF SHARES TO THE SHARE RESERVE. If any Stock Award shall
for any reason expire or otherwise terminate, in whole or in part, without
having been exercised in full or is surrendered for any reason, the shares of
Common Stock not acquired under such Stock Award shall revert to and again
become available for issuance under the Plan.
6.
(C) SOURCE OF SHARES. The shares of Common Stock subject to the Plan
may be unissued shares or reacquired shares, bought on the market or otherwise.
5. ELIGIBILITY.
(A) ELIGIBILITY FOR SPECIFIC AWARDS. Incentive Stock Options may be
granted only to Employees. Cash Awards and Stock Awards other than Incentive
Stock Options may be granted to Employees, Directors and Consultants.
(B) TEN PERCENT STOCKHOLDERS. A Ten Percent stockholder shall not be
granted an Incentive Stock Option unless the exercise price of such Option is at
least one hundred ten percent (110%) of the Fair Market Value of the Common
Stock at the date of grant and the Option is not exercisable after the
expiration of five (5) years from the date of grant.
(C) SECTION 162(M) LIMITATION. Subject to the provisions of Section 11
relating to adjustments upon changes in the shares of Common Stock, no Employee
shall be eligible to be granted Stock Awards covering more than one million
(1,000,000) shares of Common Stock during any calendar year or (without regard
to adjustments under Section 11 of the Plan) Cash Awards covering more than two
million dollars ($2,000,000) during any calendar year. This subsection 5(c)
shall not apply prior to the Listing Date and, following the Listing Date, this
subsection 5(c) shall not apply until (i) the earliest of: (1) the first
material modification of the Plan (including any increase in the number of
shares of Common Stock reserved for issuance under the Plan in accordance with
Section 4); (2) the issuance of all of the shares of Common Stock reserved for
issuance under the Plan; (3) the expiration of the Plan; or (4) the first
meeting of stockholders at which Directors are to be elected that occurs after
the close of the third calendar year following the calendar year in which
occurred the first registration of an equity security under Section 12 of the
Exchange Act; or (ii) such other date required by Section 162(m) of the Code and
the rules and regulations promulgated thereunder.
(D) CONSULTANTS.
(I) Prior to the Listing Date, a Consultant shall not be
eligible for the grant of a Stock Award if, at the time of grant, either the
offer or the sale of the Company's securities to such Consultant is not exempt
under Rule 701 of the Securities Act ("RULE 701") 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 Rule 701, unless
the Company determines that such grant need not comply with the requirements of
Rule 701 and will satisfy another exemption under the Securities Act as well as
comply with the securities laws of all other relevant jurisdictions.
(II) From and after the Listing Date, a Consultant shall not
be eligible for the grant of a Stock Award 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
7.
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.
(III) Rule 701 and Form S-8 generally are available to
consultants and advisors only if (i) they are natural persons; (ii) they provide
bona fide services to the issuer, its parents, its majority-owned subsidiaries
or (for Rule 701 purposes only) majority-owned subsidiaries of the issuer's
parent; and (iii) the services are not in connection with the offer or sale of
securities in a capital-raising transaction, and do not directly or indirectly
promote or maintain a market for the issuer's securities.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. All Options shall be separately
designated Incentive Stock Options or Nonstatutory Stock Options at the time of
grant, and, if certificates are issued, a separate certificate or certificates
will be issued for shares of Common Stock purchased on exercise of each type of
Option. The provisions of separate Options need not be identical, but each
Option shall include (through incorporation of provisions hereof by reference in
the Option or otherwise) the substance of each of the following provisions:
(A) TERM. Subject to the provisions of subsection 5(b) regarding Ten
Percent stockholders, no Incentive Stock Option shall be exercisable after the
expiration of ten (10) years from the date it was granted.
(B) EXERCISE PRICE OF AN INCENTIVE STOCK OPTION. Subject to the
provisions of subsection 5(b) regarding Ten Percent Stockholders, the exercise
price of each Incentive Stock Option shall be not less than one hundred percent
(100%) of the Fair Market Value of the Common Stock subject to the Option on the
date the Option is granted. Notwithstanding the foregoing, an Incentive Stock
Option may be granted with an exercise price lower than that set forth in the
preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of Section
424(a) of the Code.
(C) EXERCISE PRICE OF A NONSTATUTORY STOCK OPTION. The exercise price
of each Nonstatutory Stock Option shall be not less than eighty-five percent
(85%) of the Fair Market Value of the Common Stock subject to the Option on the
date the Option is granted. Notwithstanding the foregoing, a Nonstatutory Stock
Option may be granted with an exercise price lower than that set forth in the
preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of Section
424(a) of the Code.
(D) CONSIDERATION. The purchase price of Common Stock acquired pursuant
to an Option shall be paid, to the extent permitted by Applicable Laws, either
(i) in cash or by check or wire transfer at the time the Option is exercised or
(ii) at the discretion of the Board at the time of the grant of the Option (or
subsequently in the case of a Nonstatutory Stock Option) (1) by delivery to the
Company of other Common Stock that has a Fair Market Value on the date of
8.
surrender equal to the aggregate exercise price of the shares as to which the
Option is exercised, (2) according to a deferred payment or other similar
arrangement that conforms with Applicable Laws with the Optionholder, (3) if, as
of the date of exercise of an Option the Company then is permitting employees to
engage in a "same-day sale" cashless brokered exercise program involving one or
more brokers, through such a program that complies with the Applicable Laws
(including without limitation the requirements of Regulation T and other
applicable regulations promulgated by the Federal Reserve Board) and that
ensures prompt delivery to the Company of the amount required to pay the
exercise price and any applicable withholding taxes, or (4) in any other form of
legal consideration that may be acceptable to the Board. Unless otherwise
specifically provided in the Option, the purchase price of Common Stock acquired
pursuant to an Option that is paid by delivery to the Company of other Common
Stock acquired, directly or indirectly from the Company, shall be paid only by
shares of the Common Stock of the Company that have been held for more than six
(6) months (or such longer or shorter period of time as is considered
appropriate in the Board's discretion to avoid or minimize any charge to
earnings which the Company might be required to take in connection with such
Option).
(E) TRANSFERABILITY OF AN INCENTIVE STOCK OPTION. 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 Optionholder
only by the Optionholder; provided however that to the extent the regulations
governing Incentive Stock Options, as amended from time to time, permit
transferability of Incentive Stock Options under additional circumstances, then
the Board may grant Incentive Stock Options with greater rights of
transferability in conformity with such regulations. Notwithstanding the
foregoing, the Optionholder may, by delivering written notice to the Company, in
a form satisfactory to the Company, designate a third party who, in the event of
the death of the Optionholder, shall thereafter be entitled to exercise the
Option.
(F) TRANSFERABILITY OF A NONSTATUTORY STOCK OPTION. A Nonstatutory
Stock Option shall be transferable to the extent provided in the Option
Agreement. If the Nonstatutory Stock Option does not provide for
transferability, then the Nonstatutory 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 Optionholder only by the Optionholder or
in the event of the Disability of the Optionholder by a guardian or conservator
who has been appointed to act for the Optionholder and has been granted this
authority as part of that appointment. Notwithstanding the foregoing, the
Optionholder may, by delivering written notice to the Company, in a form
satisfactory to the Company, designate a third party who, in the event of the
death of the Optionholder, shall thereafter be entitled to exercise the Option.
(G) VESTING GENERALLY. The total number of shares of Common Stock
subject to an Option may, but need not, vest and therefore become exercisable in
periodic installments that may, but need not, be equal. The Option may be
subject to such other terms and conditions on the time or times when it may be
exercised (which may be based on performance or other criteria) as the Board may
deem appropriate. The vesting provisions of individual Options may vary. The
provisions of this subsection 6(g) are subject to any Option provisions
governing the minimum number of shares of Common Stock as to which an Option may
be exercised.
(H) TERMINATION OF CONTINUOUS SERVICE. In the event an Optionholder's
Continuous Service terminates (other than upon the Optionholder's death or
Disability), the Optionholder
9.
may exercise his or her Option (to the extent that the Optionholder was vested
in the shares subject to the Option as of the date of termination) but only
within such period of time ending on the earlier of (i) the date three (3)
months following the termination of the Optionholder's Continuous Service (or
such longer or shorter period specified in the Option Agreement), or (ii) the
expiration of the term of the Option as set forth in the Option Agreement. If,
after termination, the Optionholder does not exercise his or her Option as to
the vested shares within the time specified in the Option Agreement, the Option
shall terminate.
(I) EXTENSION OF TERMINATION DATE. An Optionholder's Option Agreement
may also provide that if the exercise of the Option following the termination of
the Optionholder's Continuous Service (other than upon the Optionholder's death
or Disability) would be prohibited at any time solely because the issuance of
shares of Common Stock would violate the registration requirements under the
Securities Act, then the Option shall terminate on the earlier of (i) the
expiration of the term of the Option set forth in subsection 6(a) or (ii) the
expiration of a period of three (3) months after the termination of the
Optionholder's Continuous Service during which the exercise of the Option would
not be in violation of such registration requirements.
(J) DISABILITY OF OPTIONHOLDER. In the event that an Optionholder's
Continuous Service terminates as a result of the Optionholder's Disability, the
Optionholder or the Optionholder's guardian or conservator who has been
appointed to act for the Optionholder may exercise the Optionholder's Option (to
the extent that the Optionholder was vested in the shares subject to the Option
as of the date of termination), but only within such period of time ending on
the earlier of (i) the date twenty-four (24) months following such termination
(or such longer or shorter period specified in the Option Agreement) or (ii) the
expiration of the term of the Option as set forth in the Option Agreement. If,
after termination, the Optionholder or the Optionholder's guardian or
conservator does not exercise the Optionholder's Option as to the vested shares
within the time specified herein, the Option shall terminate.
(K) DEATH OF OPTIONHOLDER. In the event (i) an Optionholder's
Continuous Service terminates as a result of the Optionholder's death or (ii)
the Optionholder dies within the period (if any) specified in the Option
Agreement after the termination of the Optionholder's Continuous Service for a
reason other than death, then the Option may be exercised (to the extent the
Optionholder was vested in the shares subject to the Option as of the date of
death) by the Optionholder's estate, by a person who acquired the right to
exercise the Option by bequest or inheritance or by a person designated to
exercise the Option upon the Optionholder's death pursuant to subsection 6(e) or
6(f), but only within the period ending on the earlier of (1) the date
twenty-four (24) months following the date of death (or such longer or shorter
period specified in the Option Agreement) or (2) the expiration of the term of
such Option as set forth in the Option Agreement. If, after death, the Option is
not exercised as to the vested shares within the time specified herein, the
Option shall terminate.
(L) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionholder may elect at any time before the Optionholder's
Continuous Service terminates to exercise the Option as to any part or all of
the shares of Common Stock subject to the Option prior to the full vesting of
the Option. Any unvested shares of Common Stock so purchased may
10.
be subject to a repurchase option in favor of the Company or to any other
restriction the Board determines to be appropriate.
7. PROVISIONS OF AWARDS OTHER THAN OPTIONS.
(A) STOCK BONUS AND STOCK UNIT AWARDS. Each Stock Award Agreement
reflecting the issuance of a Stock Bonus or Stock Unit shall be in such form and
shall contain such terms and conditions as the Board shall deem appropriate. The
terms and conditions of such agreements may change from time to time, and the
terms and conditions of separate agreements need not be identical, but each such
agreement shall include (through incorporation of provisions hereof by reference
in the agreement or otherwise) the substance of each of the following
provisions:
(I) CONSIDERATION. A Stock Bonus or Stock Unit may be awarded in
consideration for such property or services as is permitted under Applicable
Law, including for past services actually rendered to the Company or an
Affiliate for its benefit.
(II) VESTING. Shares of Common Stock awarded under an agreement
reflecting a Stock Bonus and a Stock Unit award may, but need not, be subject to
a share repurchase option, forfeiture restriction or other conditions in favor
of the Company in accordance with a vesting or lapse schedule to be determined
by the Board.
(III) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. In the event
a Participant's Continuous Service terminates, the Company may reacquire any or
all of the shares of Common Stock held by the Participant which have not vested
or which are otherwise subject to forfeiture or other conditions as of the date
of termination under the terms of the agreement.
(IV) TRANSFERABILITY. Rights to acquire shares of Common Stock under
a Stock Bonus or a Stock Unit agreement shall be transferable by the Participant
only by will, by the laws of descent and distribution, in the event of the
Disability of a Participant to a guardian or conservator who has been appointed
to act for the Optionholder or upon such terms and conditions as are set forth
in the agreement, as the Board shall determine in its discretion, so long as
Common Stock awarded under the agreement remains subject to the terms of the
agreement.
(B) STOCK PURCHASE RIGHTS. Each Stock Award Agreement reflecting a Stock
Purchase Right shall be in such form and shall contain such terms and conditions
as the Board shall deem appropriate. The terms and conditions of such agreements
may change from time to time, and the terms and conditions of each separate
Stock Award Agreement reflecting a Stock Purchase Right need not be identical,
but each such agreement shall include (through incorporation of provisions
hereof by reference in the agreement or otherwise) the substance of each of the
following provisions:
(I) PURCHASE PRICE. The per-share purchase price of Stock
Purchase Rights shall be as determined by the Board.
(II) CONSIDERATION. The purchase price of Common Stock acquired
pursuant to the Stock Purchase Right agreement shall be paid in accordance with
Section 6(d) above.
11.
(III) VESTING. Shares of Common Stock acquired under the Stock
Purchase Right agreement may, but need not, be subject to a share repurchase
option, forfeiture restriction or other conditions in favor of the Company in
accordance with a vesting or lapse schedule to be determined by the Board.
(IV) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. In the event a
Participant's Continuous Service terminates, the Company may repurchase or
otherwise reacquire any or all of the shares of Common Stock held by the
Participant which have not vested or as to which forfeiture conditions are
triggered as of the date of termination under the terms of the Stock Purchase
Right agreement.
(V) TRANSFERABILITY. Rights to acquire shares of Common Stock under
the Stock Award Agreement reflecting a Stock Purchase Right shall be
transferable by the Participant only by will, by the laws of descent and
distribution, in the event of the Disability of a Participant to a guardian or
conservator who has been appointed to act for the Optionholder or upon such
terms and conditions as are set forth in such agreement, as the Board shall
determine in its discretion, so long as Common Stock awarded under the agreement
remains subject to the terms of such agreement.
(C) STOCK APPRECIATION RIGHTS.
(I) GENERAL. Stock Appreciation Rights may be granted either alone,
in addition to, or in tandem with other Awards granted under the Plan. The Board
may grant Stock Appreciation Rights to eligible Participants subject to terms
and conditions not inconsistent with this Plan and determined by the Board. The
specific terms and conditions applicable to the Participant shall be provided
for in the Stock Award Agreement. Stock Appreciation Rights shall be
exercisable, in whole or in part, at such times as the Board shall specify in
the Stock Award Agreement.
(II) EXERCISE OF STOCK APPRECIATION RIGHT. Upon the exercise of a
Stock Appreciation Right, in whole or in part, the Participant shall be entitled
to a payment in an amount equal to the excess of the Fair Market Value on the
date of exercise of a fixed number of shares of Common Stock covered by the
exercised portion of the Stock Appreciation Right, over the Fair Market Value on
the grant date of the shares of Common Stock covered by the exercised portion of
the Stock Appreciation Right (or such other amount calculated with respect to
shares of Common Stock subject to the award as the Board may determine). The
amount due to the Participant upon the exercise of a Stock Appreciation Right
shall be paid in such form of consideration as determined by the Board and may
be in cash, shares of Common Stock or a combination thereof, over the period or
periods specified in the Stock Award Agreement. A Stock Award Agreement may
place limits on the amount that may be paid over any specified period or periods
upon the exercise of a Stock Appreciation Right, on an aggregate basis or as to
any Participant. A Stock Appreciation Right shall be considered exercised when
the Company receives written notice of exercise in accordance with the terms of
the Stock Award Agreement from the person entitled to exercise the Stock
Appreciation Right.
12.
(III) NONASSIGNABILITY OF SARS. Except as determined by the Board,
no Stock Appreciation Right shall be assignable or otherwise transferable by the
Participant except by will or by the laws of descent and distribution.
(D) CASH AWARDS. Cash Awards may be granted either alone, in addition to,
or in tandem with other Stock Awards granted under the Plan. After the Board
determines that it will offer a Cash Award, it shall advise the Participant, by
means of a Cash Award Agreement, of the terms, conditions and restrictions
related to the Cash Award.
(E) SECTION 162(M) COMPLIANCE. Any Cash Award or Stock Award (other than
an Option or any other Stock Award having a purchase price equal to 100% of the
Fair Market Value on the date such award is made) that is intended as "qualified
performance-based compensation" within the meaning of Section 162(m) of the Code
must vest or become exercisable contingent on the achievement of one or more
Qualifying Performance Criteria. The performance criteria for any portion of a
Cash Award that is intended to satisfy the requirements for "performance-based
compensation" under Section 162(m) of the Code shall be a measure established by
the Board based on one or more Qualifying Performance Criteria selected by the
Board and specified in writing not later than 90 days after the commencement of
the period of service to which the performance goals relates, provided that the
outcome is substantially uncertain at that time. Notwithstanding anything to the
contrary herein, the Committee shall have the discretion to determine the time
and manner of compliance with Section 162(m) of the Code as required under
applicable regulations and to conform the procedures related to the award to the
requirements of Section 162(m).
8. COVENANTS OF THE COMPANY.
(A) AVAILABILITY OF SHARES. During the terms of the Stock Awards, the
Company shall keep available at all times the number of shares of Common Stock
required to satisfy such Stock Awards.
(B) SECURITIES LAW COMPLIANCE. The Company shall seek to obtain from each
regulatory commission or agency having jurisdiction over the Plan such authority
as may be required to grant Stock Awards and to issue and sell shares of Common
Stock upon exercise of the Stock Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any
such Stock Award. If, after reasonable efforts, the Company is unable to obtain
from any such regulatory commission or agency the authority which counsel for
the Company deems necessary for the lawful issuance and sale of Common Stock
under the Plan, the Company shall be relieved from any liability for failure to
issue and sell Common Stock upon exercise of such Stock Awards unless and until
such authority is obtained, and if such authority cannot be obtained with
reasonable efforts, then the Company shall have no liability or further
obligation hereunder.
9. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of Common Stock pursuant to Stock Awards shall
constitute general funds of the Company.
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10. MISCELLANEOUS.
(A) ACCELERATION OF EXERCISABILITY AND VESTING. The Board shall have the
power to accelerate the time at which a Stock Award may first be exercised or
the time during which a Stock Award or any part thereof will vest in accordance
with the Plan, notwithstanding the provisions in the Stock Award stating the
time at which it may first be exercised or the time during which it will vest.
(B) STOCKHOLDER RIGHTS. No Participant shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares of
Common Stock subject to such Stock Award unless and until such Participant has
satisfied all requirements for exercise of the Stock Award and/or the issuance
of shares of Common Stock subject to the Stock Award pursuant to its terms.
(C) NO EMPLOYMENT OR OTHER SERVICE RIGHTS; VALUE OF COMPENSATION. Nothing
in the Plan or any instrument executed or Stock Award or Cash Award granted
pursuant thereto shall confer upon any Participant any right to continue to
serve the Company or an Affiliate in the capacity in effect at the time the
Stock Award or Cash Award was granted or shall affect the right of the Company
or an Affiliate to terminate (i) the employment of an Employee with or without
notice and with or without cause, (ii) the service of a Consultant pursuant to
the terms of such Consultant's agreement with the Company or an Affiliate or
(iii) the service of a Director pursuant to the Bylaws of the Company or an
Affiliate, and any applicable provisions of the corporate law of the state in
which the Company or the Affiliate is incorporated, as the case may be. The
value of Stock Awards granted under this Plan will not be included as
compensation, earnings, salaries or other similar terms used when calculating a
participant's benefits under any employee benefit plan sponsored by the Company
or any Subsidiary except as such plan otherwise expressly provides.
(D) INCENTIVE STOCK OPTION $100,000 LIMITATION. To the extent that the
aggregate Fair Market Value (determined at the time of grant) of Common Stock
with respect to which Incentive Stock Options are exercisable for the first time
by any Optionholder during any calendar year (under all plans of the Company and
its Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or
portions thereof which exceed such limit (according to the order in which they
were granted) shall be treated as Nonstatutory Stock Options.
(E) INVESTMENT ASSURANCES. The Company may require a Participant, as a
condition of exercising or acquiring Common Stock under any Stock Award, (i) to
give written assurances satisfactory to the Company as to the Participant's
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (ii) to
give written assurances satisfactory to the Company stating that the Participant
is acquiring Common Stock subject to the Stock Award for the Participant's own
account and not with any present intention of selling or otherwise distributing
the Common Stock. The foregoing requirements, and any assurances given pursuant
to such requirements, shall be inoperative if (1) the issuance of the shares of
Common Stock upon the exercise or acquisition of Common Stock under the Stock
Award has been registered
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under a then currently effective registration statement under the Securities Act
or (2) as to any particular requirement, a determination is made by counsel for
the Company that such requirement need not be met in the circumstances under the
then applicable securities laws. The Company may, upon advice of counsel to the
Company, place legends on stock certificates issued under the Plan as such
counsel deems necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends restricting the transfer
of the Common Stock.
(F) WITHHOLDING OBLIGATIONS. As a condition of the grant, vesting or
settlement of, or the issuance of shares subject to, a Stock Award granted under
the Plan, the Participant (or in the case of the Participant's death, the person
exercising the Stock Award or otherwise entitled to receive shares or other
property subject to a Stock Award) will make such arrangements as the Board or
the Committee may require for the satisfaction of any applicable federal, state,
local or foreign withholding tax obligations that may arise in connection with
such grant, vesting or exercise of the Stock Award or the issuance of shares.
The Company will not be required to issue any shares of Common Stock under the
Plan until such obligations are satisfied by the Participant (or such other
person). To the extent provided by the terms of a Stock Award Agreement, the
Participant may satisfy any federal, state or local tax withholding obligation
relating to the exercise or acquisition of Common Stock under a Stock Award by
any of the following means (in addition to the Company's right to withhold from
any compensation paid to the Participant by the Company) or by a combination of
such means: (i) tendering a cash payment; (ii) authorizing the Company to
withhold shares of Common Stock from the shares of Common Stock otherwise
issuable to the Participant as a result of the exercise or acquisition of Common
Stock under the Stock Award, provided, however, that no shares of Common Stock
are withheld with a value exceeding the minimum amount of tax required to be
withheld by law; or (iii) delivering to the Company owned and unencumbered
shares of Common Stock. Withholding obligations with respect to Cash Awards
shall be satisfied through the Company's withholding of the appropriate amount
from cash to be paid under the Cash Award.
11. ADJUSTMENTS UPON CHANGES IN STOCK.
(A) CAPITALIZATION ADJUSTMENTS. If any change is made in the Common Stock
subject to the Plan, or subject to any Stock Award, without the receipt of
consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan will be appropriately
adjusted in the class(es) and maximum number of securities subject to the Plan
pursuant to subsection 4(a), the number of shares of Common Stock set forth in
Section 4(a)(i) and the maximum number of securities subject to awards that may
be granted to any person pursuant to subsection 5(c), and the outstanding Stock
Awards will be appropriately adjusted in the class(es) and number of securities
and price per share of Common Stock subject to such outstanding Stock Awards.
The Board shall make such adjustments, and its determination shall be final,
binding and conclusive. (The conversion of any convertible securities of the
Company shall not be treated as a transaction "without receipt of consideration"
by the Company.)
15.
(B) DISSOLUTION OR LIQUIDATION. In the event of a dissolution or
liquidation of the Company, then all outstanding Stock Awards shall terminate
immediately prior to such event unless otherwise provided by the Board.
(C) ASSET SALE, MERGER, CONSOLIDATION OR REVERSE MERGER. In the event of
(i) a sale, lease or other disposition of all or substantially all of the assets
of the Company, (ii) a merger or consolidation in which the Company is not the
surviving corporation or (iii) a reverse merger in which the Company is the
surviving corporation but the shares of Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise (individually, a "Corporate
Transaction"), then any surviving corporation or acquiring corporation shall
assume any Stock Awards outstanding under the Plan or shall substitute similar
stock awards (including an award to acquire the same consideration paid to the
stockholders in the Corporate Transaction for those outstanding under the Plan).
In the event any surviving corporation or acquiring corporation refuses to
assume such Stock Awards or to substitute similar stock awards for those
outstanding under the Plan, then with respect to Stock Awards held by
Participants whose Continuous Service has not terminated, the vesting of such
Stock Awards (and, if applicable, the time during which such Stock Awards may be
exercised) shall be accelerated in full, and the Stock Awards shall terminate if
not exercised (if applicable) at or prior to the Corporate Transaction; provided
however that the Board may provide that outstanding Awards will terminate upon
consummation of a Corporate Transaction in exchange for a cash payment to the
holders equal to the "spread" on the vested shares of Common Stock as of
immediately prior to, the consummation of the Corporate Transaction. With
respect to any other Stock Awards outstanding under the Plan, such Stock Awards
shall terminate if not exercised (if applicable) prior to the Corporate
Transaction.
12. AMENDMENT OF THE PLAN AND STOCK AWARDS.
(A) AMENDMENT OF PLAN. The Board at any time, and from time to time, may
amend the Plan. However, except as provided in Section 11 relating to changes
and adjustments upon changes in Common Stock, no amendment shall be effective
unless approved by the stockholders of the Company to the extent stockholder
approval is necessary to satisfy the requirements of Applicable Laws. In
addition, without limiting the foregoing, unless approved by the stockholders of
the Company, no such amendment shall be made that would (i) materially increase
the maximum number of shares for which Stock Awards may be granted under the
Plan (other than an increase pursuant to Section 11); (ii) reduce the minimum
exercise price for Options granted under the Plan; (iii) reduce the exercise
price of outstanding Options; or (iv) change the class of persons eligible to
receive Awards under the Plan.
(B) STOCKHOLDER APPROVAL. The Board may, in its sole discretion, submit
any other amendment to the Plan for stockholder approval, including, but not
limited to, amendments to the Plan intended to satisfy the requirements of
Section 162(m) of the Code and the regulations thereunder regarding the
exclusion of performance-based compensation from the limit on corporate
deductibility of compensation paid to certain executive officers.
(C) CONTEMPLATED AMENDMENTS. It is expressly contemplated that the Board
may amend the Plan in any respect the Board deems necessary or advisable to
provide eligible Employees with the maximum benefits provided or to be provided
under the provisions of the
16.
Code and the regulations promulgated thereunder relating to Incentive Stock
Options and/or to bring the Plan and/or Incentive Stock Options granted under it
into compliance therewith.
(D) NO IMPAIRMENT OF RIGHTS; AMENDMENT AND RESTATEMENT OF PLAN. The Board
at any time, and from time to time, may amend the terms of any one or more Stock
Awards (including by amendment of the Plan); provided, however, that the rights
under any Award shall not be impaired by any such amendment unless (i) the
Company requests the consent of the Participant and (ii) the Participant
consents in writing. Notwithstanding the above, Awards granted prior to
[EFFECTIVE DATE OF AMENDMENT] shall be governed by the Plan as it existed prior
to such date, and Awards granted after such date shall be governed by the Plan
as amended and restated effective on such date.
13. TERMINATION OR SUSPENSION OF THE PLAN.
(A) PLAN TERM. The Board may suspend or terminate the Plan at any
time. Unless sooner terminated, the Plan shall terminate on January 18,
2015. No Stock Awards may be granted under the Plan while the Plan is
suspended or after it is terminated.
(B) NO IMPAIRMENT OF RIGHTS. Suspension or termination of the Plan shall
not impair rights and obligations under any Stock Award granted while the Plan
is in effect except with the written consent of the Participant.
14. EFFECTIVE DATE OF PLAN.
The Plan and any amendments shall become effective as determined by the
Board, but no Stock Award shall be exercised (or no shares of Common Stock shall
be issued pursuant to the terms of a Stock Award) unless and until the Plan has
been approved by the stockholders of the Company, which approval shall be within
twelve (12) months before or after the date the Plan is adopted by the Board.
15. CHOICE OF LAW.
The law of the State of Delaware shall govern all questions concerning the
construction, validity and interpretation of this Plan, without regard to such
state's conflict of laws rules.
16. NON-EMPLOYEE DIRECTOR OPTION PROGRAM
(A) Automatic Option Grants to Non-Employee Directors.
(I) GRANT DATES. Option grants to Non-Employee Directors shall
automatically be made on the dates specified below:
(1) Each Non-Employee Director who is first elected or
appointed to the Board at any time after the Listing Date shall automatically be
granted, on the date of such initial election or appointment, a Nonstatutory
Stock Option to purchase twenty thousand (20,000) shares of Common Stock (the
"INITIAL GRANT").
17.
(2) Commencing with the Listing Date, on the date of each
annual stockholders meeting, each individual who is to continue after such
meeting to serve as a Non-Employee Director shall automatically be granted a
Nonstatutory Stock Option to purchase Five Thousand (5,000) Shares (the "ANNUAL
GRANT"), provided, however, that such individual has served as a Non-Employee
Director for at least six (6) months as of the date of the stockholders meeting.
(II) EXERCISE PRICE. The exercise price for Options granted under
this Section 16(a) shall be equal to one hundred percent (100%) of the Fair
Market Value of the Common Stock on the Option grant date.
(III) EXERCISE AND VESTING OF OPTIONS. Except as otherwise
determined by the whole Board, the Common Stock underlying each Option granted
pursuant to Section 16(a)(i)(1) shall vest and become exercisable on the one
year anniversary following the date of grant so long as the Non-Employee
Director remains a Director of the Company. Except as otherwise determined by
the whole Board, the shares of Common Stock underlying each Option granted
pursuant to Section 16(a)(i)(2) shall vest and become exercisable as to eight
and thirty three hundredths percent (8.33%) of the shares subject to the Option
at the end of each one (1) month period following the date of grant, for so long
as the Non-Employee Director continuously remains a Director of the Company;
provided however that the intent of these vesting provisions applicable to an
Annual Grant is that the Non-Employee Director shall be considered fully vested
if he or she continues to serve as a Director from the date of grant for the
Annual Grant through the date immediately preceding the annual stockholders'
meeting in the following calendar year, such that if the date of the next year's
annual stockholders' meeting, after which the Non-Employee Director will no
longer be serving on the Board, falls in such a way that the Non-Employee
Director will not have served on the Board through the entire final one (1)
month period specified above, he or she shall nonetheless be considered fully
vested in the Annual Grant as of the date immediately preceding the annual
stockholders' meeting for the year following the date of grant.
(B) OPTION TERM. Each Option shall have a term of ten (10) years
measured from the Option grant date.
(C) CONSIDERATION. The exercise price for Options granted under this
Section 16 shall be payable in one or more of the alternative forms and in the
manner authorized pursuant to Section 6(d).
(D) TERMINATION OF SERVICE. The following provisions shall govern the
exercise of any Options granted under this Section 16 held by the Participant at
the time he or she ceases to serve as a Non-Employee Director or Consultant:
(I) GENERAL. After termination of service as a Non-Employee
Director, Employee or Consultant (the "CESSATION DATE"), the Participant's
Options granted under this Section 16 shall be exercisable to the extent (but
only to the extent) they are vested on the Cessation Date and only during the
three months after such Cessation Date, but in no event after the date specified
in Section 16(e) (the "EXPIRATION DATE"). To the extent the Participant does
18.
not exercise an Option within the time specified for exercise, the Option shall
automatically terminate.
(II) DEATH OR DISABILITY. If a Participant's cessation of service is
due to death or Disability (as determined by the Board), all Options of that
Participant granted under this Section 16, to the extent vested upon such
Cessation Date, may be exercised for twenty four (24) months after the Cessation
Date, but in no event after the Expiration Date. In the case of a cessation of
service due to death, an Option may be exercised by the person entitled to
exercise the Option under the Participant's will or as determined in probate. In
the case of a cessation of service due to Disability, if a guardian or
conservator has been appointed to act for the Participant and been granted this
authority as part of that appointment, that guardian or conservator may exercise
the Option on behalf of the Participant. Death or Disability occurring after a
Participant's cessation of service shall not cause the cessation of service to
be treated as having occurred due to death or Disability. To the extent an
Option is not so exercised within the time specified for its exercise, the
Option shall automatically terminate.
(E) BOARD DISCRETION. Options granted under this Section 16 are not
intended as the exclusive Awards that may be made to Non-Employee Directors
under this Plan. The Board may, in its discretion, amend the Plan with respect
to the terms of the Options herein, may add or substitute other types of Awards,
may temporarily or permanently suspend Awards hereunder, all without approval of
the Company's stockholders.
(F) CERTAIN TRANSACTIONS AND EVENTS. Section 11 above shall generally
apply to Options granted under this Section 16; provided however that in the
event of a transaction specified in Section 11(c), while the Participant remains
a Non-Employee Director, the shares of Common Stock at the time subject to each
outstanding Option held by such Participant, but not otherwise vested, shall
automatically vest as to one hundred percent (100%) of the otherwise
then-unvested Shares so that each such Option shall, immediately prior to the
effective date of the transaction, become wholly-vested and exercisable for such
shares of Common Stock. Immediately following the consummation of the
transaction, each Option shall terminate and cease to be outstanding, except to
the extent assumed by the successor corporation (or an affiliate thereof).
(G) COMPANY RIGHTS. The grant of Options pursuant to this Section 16 shall
in no way affect the right of the Company to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
(H) GENERAL. The remaining terms of each Option granted pursuant to this
Section 16 shall, as applicable, be the same as terms in effect for Awards
granted under this Plan.
(I) LIMITED TRANSFERABILITY OF OPTIONS. Each Option granted pursuant to
this Section 16 may be assigned in whole or in part during the Participant's
lifetime to one (1) or more members of the Participant's family or to a trust
established exclusively for one (1) or more such family members or to an entity
in which the Participant is majority owner or to the Participant's former
spouse, to the extent such assignment is in connection with the Participant's
estate or financial plan or pursuant to a domestic relations order. The assigned
portion may only
19.
be exercised by the person or persons who acquire a proprietary interest in the
Option pursuant to the assignment. The terms applicable to the assigned portion
shall be the same as those in effect for the Option immediately prior to such
assignment and shall be set forth in such documents issued to the assignee as
the Board may deem appropriate. The Participant may also designate one (1) or
more persons as the beneficiary or beneficiaries of his or her outstanding
Options under this Section 16, and those Options shall, in accordance with such
designation, automatically be transferred to such beneficiary or beneficiaries
upon the Participant's death while holding those Options. Such beneficiary or
beneficiaries shall take the transferred Options subject to all the terms and
conditions of the applicable award agreement evidencing each such transferred
Option, including (without limitation) the limited time period during which the
Option may be exercised following the Participant's death.
20.