Exhibit 99.1
MILLENNIUM PHARMACEUTICALS, INC.
2007 INCENTIVE PLAN
1. PURPOSE
The purpose of this 2007 Incentive Plan (the "Plan") of Millennium
Pharmaceuticals, Inc., a Delaware corporation (the "Company"), is to
advance the interests of the Company's stockholders by enhancing the
Company's ability to attract, retain and motivate persons who are expected
to make important contributions to the Company and by providing such
persons with equity ownership opportunities and performance-based
incentives that are intended to better align the interests of such persons
with those of the Company's stockholders. Except where the context
otherwise requires, the term "Company" shall include any of the Company's
present or future parent or subsidiary corporations as defined in Sections
424(e) or (f) of the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder (the "Code") and any other business
venture (including, without limitation, joint venture or limited liability
company) in which the Company has a controlling interest, as determined by
the Board of Directors of the Company (the "Board").
2. ELIGIBILITY
All of the Company's employees, officers, directors, consultants and
advisors are eligible to be granted options, stock appreciation rights,
restricted stock, restricted stock units and other stock-based awards or
cash awards (each, an "Award") under the Plan. Each person who receives an
Award under the Plan is deemed a "Participant".
3. ADMINISTRATION AND DELEGATION
(a) ADMINISTRATION BY BOARD OF DIRECTORS. The Plan will be administered by
the Board. The Board shall have authority to grant Awards and to
adopt, amend and repeal such administrative rules, guidelines and
practices relating to the Plan as it shall deem advisable. The Board
may construe and interpret the terms of the Plan and any Award
agreements entered into under the Plan. The Board may correct any
defect, supply any omission or reconcile any inconsistency in the Plan
or any Award in the manner and to the extent it shall deem expedient
to carry the Plan into effect and it shall be the sole and final judge
of such expediency. All decisions by the Board shall be made in the
Board's sole discretion and shall be final and binding on all persons
having or claiming any interest in the Plan or in any Award. No
director or person acting pursuant to the authority delegated by the
Board shall be liable for any action or determination relating to or
under the Plan made in good faith.
(b) APPOINTMENT OF COMMITTEES. To the extent permitted by applicable law,
the Board may delegate any or all of its powers under the Plan to one
or more committees or subcommittees of the Board (a "Committee").
During such time as the common stock of the Company (the "Common
Stock") is registered under the Securities Exchange Act of 1934 (the
"Exchange Act"), the Board shall appoint one such Committee of not
less than two members, each member of which shall be an "outside
director" within the meaning of Section 162(m) of the Code and a
"non-employee director" as defined in Rule16b-3 promulgated under the
Exchange Act. All references in the Plan to the "Board" shall mean the
Board or a Committee of the Board or the officers referred to in
Section 3(c) to the extent that the Board's powers or authority under
the Plan have been delegated to such Committee or officers.
(c) DELEGATION TO OFFICERS. To the extent permitted by applicable law, the
Board may delegate to one or more officers of the Company the power to
grant Awards (subject to any limitations under the Plan) to employees
or officers of the Company or any of its present or future subsidiary
corporations and to exercise such other powers under the Plan as the
Board may determine, provided that the Board shall fix the terms of
the Awards to be granted by such officers (including the exercise
price of such Awards, which may include a formula by which the
exercise price will be determined) and the maximum number of shares
subject to Awards that the officers may grant; provided further,
however, that no officer shall be authorized to grant
Awards to any "executive officer" of the Company (as defined by
Rule 3b-7 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) or to any "officer" of the Company (as defined by
Rule 16a-1 under the Exchange Act), and, unless permitted under
Delaware law, no officer shall be permitted to grant Restricted Stock
Awards to any participant.
4. STOCK AVAILABLE FOR AWARDS
(a) NUMBER OF SHARES. Subject to adjustment under Section 10, Awards may
be made under the Plan for up to 25,000,000 shares of common stock,
$.001 par value per share, of the Company (the "Common Stock"). For
purposes of counting the number of shares available for the grant of
Awards under the Plan, (i) shares of Common Stock covered by
independent stock appreciation rights shall be counted against the
number of shares available for the grant of Awards under the Plan;
provided, however, that independent stock appreciation rights that may
be settled in cash only shall not be so counted; (ii) if any Award (A)
expires or is terminated, surrendered or canceled without having been
fully exercised or is forfeited in whole or in part (including as the
result of shares of Common Stock subject to such Award being
repurchased by the Company at the original issuance price pursuant to
a contractual repurchase right) or (B) results in any Common Stock not
being issued (including as a result of an independent stock
appreciation right that was settleable either in cash or in stock
actually being settled in cash), the unused Common Stock covered by
such Award shall again be available for the grant of Awards under the
Plan; provided, however, in the case of Incentive Stock Options (as
hereinafter defined), the foregoing shall be subject to any
limitations under the Code; and (iii) shares of Common Stock tendered
to the Company by a Participant to (A) purchase shares of Common Stock
upon the exercise of an Award or (B) satisfy tax withholding
obligations (including shares retained from the Award creating the tax
obligation) shall not be added back to the number of shares available
for the future grant of Awards under the Plan. However, in the case of
Incentive Stock Options (as hereinafter defined), the foregoing
provisions shall be subject to any limitations under the Code. Shares
issued under the Plan may consist in whole or in part of authorized
but unissued shares or treasury shares. Awards settled in cash shall
not count against the share limit specified in this Section 4(a).
(b) SUB-LIMITS. Subject to adjustment under Section 10, the following
sub-limits on the number of shares subject to Awards shall apply:
(1) Section 162(m) Per-Participant Limits.
(i) The maximum number of shares of Common Stock with respect to
which Awards may be granted to any single Participant under
the Plan shall be 2,000,000 per fiscal year of which no more
than 1,000,000 of such Awards shall be Restricted Stock
Awards (as defined in Section 7). The maximum number of
shares of Common Stock that may be subject to a Performance
Award that provides for a performance period longer than one
fiscal year shall be based upon the foregoing annual maximum
limits multiplied by the number of full fiscal years in the
performance period. For purposes of the foregoing limit, the
combination of an Option in tandem with a SAR (as each is
hereafter defined) shall be treated as a single Award.
(ii) In addition to the foregoing annual grant limits, the
maximum payment which may be made to any single Participant
in any fiscal year pursuant to a cash-based annual bonus
Performance Award under the Plan shall not exceed
$5,000,000. The maximum payment that may be subject to a
Performance Award that provides for a performance period
longer than one fiscal year shall be based upon the
foregoing annual maximum payment multiplied by the number of
full fiscal years in the performance period. The per
Participant limit described in this Section 4(b)(1) shall be
construed and applied
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consistently with Section 162(m) of the Code or any
successor provision thereto, and the regulations thereunder
("Section 162(m)").
(2) LIMIT ON AWARDS OTHER THAN OPTIONS, SARS AND PERFORMANCE AWARDS.
The maximum number of shares of Common Stock that shall be
available for Awards of Restricted Stock, Restricted Stock Units
or Other Awards payable in the form of Common Stock that either
require no purchase by the Participant or do not condition
vesting upon achieving specified performance goals pursuant to
Section 9 is 50% of the Common Stock authorized under the 2007
Incentive Plan (excluding any Awards that have returned to the
pool of shares available for grant in accordance with Section
4(a)) of the total shares of Common Stock authorized for Awards
hereunder.
(c) SUBSTITUTE AWARDS. In connection with a merger or consolidation of an
entity with the Company or the acquisition by the Company of property
or stock of an entity, the Board may grant Awards in substitution for
any options or other stock or stock-based awards granted by such
entity or an affiliate thereof. Substitute Awards may be granted on
such terms as the Board deems appropriate in the circumstances,
notwithstanding any limitations on Awards contained in the Plan.
Substitute Awards shall not count against the overall share limit set
forth in Section 4(a), except as may be required by reason of Section
422 and related provisions of the Code.
5. STOCK OPTIONS
(a) GENERAL. The Board may grant options to purchase Common Stock (each,
an "Option") and determine the number of shares of Common Stock to be
covered by each Option, the exercise price of each Option and the
conditions and limitations applicable to the exercise of each Option,
including conditions relating to applicable federal or state
securities laws, as it considers necessary or advisable. An Option
that is not intended to be an Incentive Stock Option (as hereinafter
defined) shall be designated a "Nonstatutory Stock Option."
(b) INCENTIVE STOCK OPTIONS. An Option that the Board intends to be an
"incentive stock option" as defined in Section 422 of the Code (an
"Incentive Stock Option") shall only be granted to employees of
Millennium Pharmaceuticals, Inc., any of Millennium Pharmaceuticals,
Inc.'s present or future parent or subsidiary corporations as defined
in Sections 424(e) or (f) of the Code, and any other entities the
employees of which are eligible to receive Incentive Stock Options
under the Code, and shall be subject to and shall be construed
consistently with the requirements of Section 422 of the Code. The
Company shall have no liability to a Participant, or any other party,
if an Option (or any part thereof) that is intended to be an Incentive
Stock Option is not an Incentive Stock Option or for any action taken
by the Board, including without limitation the conversion of an
Incentive Stock Option to a Nonstatutory Stock Option.
(c) EXERCISE PRICE. The Board shall establish the exercise price of each
Option and specify such exercise price in the applicable option
agreement. The exercise price shall be not less than 100% of the Fair
Market Value (as defined below) on the date the Option is granted;
provided that if the Board approves the grant of an Option with an
exercise price to be determined on a future date, the exercise price
shall be not less than 100% of the Fair Market Value on such future
date.
(d) DURATION OF OPTIONS. Except as may be required under the Code, each
Option shall be exercisable at such times and subject to such terms
and conditions as the Board may specify in the applicable option
agreement, provided, however, that no Option will be granted for a
term in excess of 10 years.
(e) EXERCISE OF OPTION. Options may be exercised by delivery to the
Company of a written notice of exercise signed by the proper person or
by any other form of notice (including electronic notice) approved by
the Board, together with payment in full as specified in Section 5(f)
for the number of shares for which the Option is exercised. Shares of
Common Stock subject to the
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Option will be delivered by the Company following exercise either as
soon as practicable or, subject to such conditions as the Board shall
specify, on a deferred basis (with the Company's obligation to be
evidenced by an instrument providing for future delivery of the
deferred shares at the time or times specified by the Board).
(f) PAYMENT UPON EXERCISE. Common Stock purchased upon the exercise of an
Option granted under the Plan shall be paid for as follows:
(1) in cash or by check, payable to the order of the Company;
(2) except as may otherwise be provided in the applicable option
agreement, by (i) delivery of an irrevocable and unconditional
undertaking by a creditworthy broker to deliver promptly to the
Company sufficient funds to pay the exercise price and any
required tax withholding or (ii) delivery by the Participant to
the Company of a copy of irrevocable and unconditional
instructions to a creditworthy broker to deliver promptly to the
Company cash or a check sufficient to pay the exercise price and
any required tax withholding;
(3) to the extent provided for in the applicable option agreement or
approved by the Board, in its sole discretion, by delivery
(either by actual delivery or attestation) of shares of Common
Stock owned by the Participant valued at their Fair Market Value,
provided (i) such method of payment is then permitted under
applicable law, (ii) such Common Stock, if acquired directly from
the Company, was owned by the Participant for such minimum period
of time, if any, as may be established by the Board in its
discretion and (iii) such Common Stock is not subject to any
repurchase, forfeiture, unfulfilled vesting or other similar
requirements;
(4) to the extent permitted by applicable law and provided for in the
applicable option agreement or approved by the Board, in its sole
discretion, by (i) delivery of a promissory note of the
Participant to the Company on terms determined by the Board, or
(ii) payment of such other lawful consideration as the Board may
determine; or
(5) by any combination of the above permitted forms of payment.
(g) FAIR MARKET VALUE. For purposes of this Plan, the Fair Market Value of
a share of Common Stock for purposes of the Plan will be determined as
follows:
(1) for so long as the Common Stock trades on a national securities
exchange, the NASDAQ National Market or the NASDAQ Capital
Market, the closing sale price (for the primary trading session)
on the Date of Grant;
(2) if the Common Stock does not trade on any such exchange or
market, average of the closing bid and asked prices as reported
by the National Association of Securities Dealers, Inc. Automated
Quotation System ("Nasdaq") for the Date of Grant;
(3) if no such closing sale price information is available, the
average of bids and asked prices that Nasdaq reports for the Date
of Grant;
(4) if there are no such closing bid and asked prices, the average of
the bid and asked prices as reported by any other commercial
service for the Date of Grant; or
(5) in the event that Company has no publicly-traded stock, the Board
will determine the Fair Market Value for purposes of the Plan
using any measure of value it determines to be appropriate
(including, as it considers appropriate, relying on appraisals)
in a manner consistent with the valuation principles under Code
Section 409A, except as the Board may expressly determine
otherwise;
For any date that is not a trading day, the Fair Market Value of a share of
Common Stock for such date will be determined by using the closing sale
price or average of the bid and asked prices, as appropriate, for the
immediately preceding trading day and with the timing in the formulas above
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adjusted accordingly. The Board can substitute a particular time of day or
other measure of "closing sale price" or "bid and asked prices" if
appropriate because of exchange or market procedures or can, in its sole
discretion, use weighted averages either on a daily basis or such longer
period as complies with Code Section 409A.
The Board has sole discretion to determine the Fair Market Value for
purposes of this Plan, and all Awards are conditioned on the participants'
agreement that the determination of Fair Market Value is conclusive and
binding even though others might make a different determination.
(h) LIMITATION ON REPRICING. Unless such action is approved by the
Company's stockholders: (i) no outstanding Option granted under the
Plan may be amended to provide an exercise price per share that is
lower than the then-current exercise price per share of such
outstanding Option (other than adjustments pursuant to Section 10) and
(2) the Board may not cancel any outstanding option (whether or not
granted under the Plan) and grant in substitution therefore new Awards
under the Plan covering the same or a different number of shares of
Common Stock and having an exercise price per share lower than the
then-current exercise price per share of the cancelled option.
6. STOCK APPRECIATION RIGHTS.
(a) GENERAL. The Board may grant Awards consisting of a stock appreciation
right ("SAR") entitling the holder, upon exercise, to receive an
amount of Common Stock or cash or a combination thereof (such form to
be determined by the Board) determined in whole or in part by
reference to appreciation, from and after the date of grant, in the
fair market value of a share of Common Stock. The date as of which
such appreciation or other measure is determined shall be the exercise
date.
(b) GRANTS. SARs may be granted in tandem with, or independently of,
Options granted under the Plan.
(1) TANDEM AWARDS. When SARs are expressly granted in tandem with
Options, (i) the SAR will be exercisable only at such time or
times, and to the extent, that the related Option is exercisable
(except to the extent designated by the Board in connection with
a Reorganization Event or a Change of Control Event) and will be
exercisable in accordance with the procedure required for
exercise of the related Option; (ii) the SAR will terminate and
no longer be exercisable upon the termination or exercise of the
related Option, except to the extent designated by the Board in
connection with a Reorganization Event or a Change of Control
Event and except that a SAR granted with respect to less than the
full number of shares covered by an Option will not be reduced
until the number of shares as to which the related Option has
been exercised or has terminated exceeds the number of shares not
covered by the SAR; (iii) the Option will terminate and no longer
be exercisable upon the exercise of the related SAR; and (iv) the
SAR will be transferable only with the related Option.
(2) INDEPENDENT SARS. An SAR not expressly granted in tandem with an
Option will become exercisable at such time or times, and on such
conditions, as the Board may specify in the SAR Award.
(c) GRANT PRICE. The grant price or exercise price of a SAR shall not be
less than 100% of the Fair Market Value per share of Common Stock on
the date of grant of the SAR; provided that if the Board approves the
grant of a SAR with an exercise price to be determined on a future
date, the exercise price shall be not less than 100% of the Fair
Market Value on such future date.
(d) LIMITATION ON REPRICING. Unless such action is approved by the
Company's stockholders: (i) no outstanding SAR granted under the Plan
may be amended to provide an exercise price per
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share that is lower than the then-current exercise price per share
of such outstanding SAR (other than adjustments pursuant to
Section 10) and (2) the Board may not cancel any outstanding SAR
(whether or not granted under the Plan) and grant in substitution
therefore new Awards under the Plan covering the same or a different
number of shares of Common Stock and having an exercise price per
share lower than the then-current exercise price per share of the
cancelled SAR.
(e) TERM. The term of a SAR shall not be more than 10 years from the date
of grant.
(f) EXERCISE. SARs may be exercised by delivery to the Company of a
written notice of exercise signed by the proper person or by any other
form of notice (including electronic notice) approved by the Board,
together with any other documents required by the Board.
7. RESTRICTED STOCK; RESTRICTED STOCK UNITS.
(a) GENERAL. The Board may grant Awards entitling recipients to acquire
shares of Common Stock ("Restricted Stock"), subject to the right of
the Company to repurchase all or part of such shares at their issue
price or other stated or formula price (or to require forfeiture of
such shares if issued at no cost) from the recipient in the event that
conditions specified by the Board in the applicable Award are not
satisfied prior to the end of the applicable restriction period or
periods established by the Board for such Award. Instead of granting
Awards for Restricted Stock, the Board may grant Awards entitling the
recipient to receive shares of Common Stock to be delivered at the
time such shares of Common Stock vest ("Restricted Stock Units")
(Restricted Stock and Restricted Stock Units are each referred to
herein as a "Restricted Stock Award").
(b) TERMS AND CONDITIONS. The Board shall determine the terms and
conditions of a Restricted Stock Award, including the conditions for
vesting and repurchase (or forfeiture) and the issue price, if any.
(c) LIMITATIONS ON VESTING. Notwithstanding any other provision of this
Plan, the Board may, in its discretion, either at the time a
Restricted Stock Award is made or at any time thereafter, waive its
right to repurchase shares of Common Stock (or waive the forfeiture
thereof) or remove or modify any part or all of the restrictions
applicable to the Restricted Stock Award, provided that the Board may
only exercise such rights in extraordinary circumstances which shall
include, without limitation, death or disability of the Participant;
estate planning needs of the Participant; a merger, consolidation,
sale, reorganization, recapitalization, or Change of Control Event of
the Company; or any other nonrecurring significant event affecting the
Company, a Participant or the Plan.
(d) ADDITIONAL PROVISIONS RELATING TO RESTRICTED STOCK.
(1) DIVIDENDS. Participants holding shares of Restricted Stock will
be entitled to all ordinary cash dividends paid with respect to
such shares, unless otherwise provided by the Board. If any such
dividends or distributions are paid in shares, or consist of a
dividend or distribution to holders of Common Stock other than an
ordinary cash dividend, the shares, cash or other property will
be subject to the same restrictions on transferability and
forfeitability as the shares of Restricted Stock with respect to
which they were paid. Each dividend payment will be made no later
than the end of the calendar year in which the dividends are paid
to shareholders of that class of stock or, if later, the 15th day
of the third month following the date the dividends are paid to
shareholders of that class of stock.
(2) STOCK CERTIFICATES. The Company may require that any stock
certificates issued in respect of shares of Restricted Stock
shall be deposited in escrow by the Participant, together with a
stock power endorsed in blank, with the Company (or its
designee). At the expiration of the applicable restriction
periods, the Company (or such designee) shall deliver the
certificates no longer subject to such restrictions to the
Participant or if the Participant has died, to the
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beneficiary designated, in a manner determined by the Board, by a
Participant to receive amounts due or exercise rights of the
Participant in the event of the Participant's death (the
"Designated Beneficiary"). In the absence of an effective
designation by a Participant, "Designated Beneficiary" shall mean
the Participant's estate.
(e) ADDITIONAL PROVISIONS RELATING TO RESTRICTED STOCK UNITS.
(1) SETTLEMENT. Upon the vesting of and/or lapsing of any other
restrictions (i.e., settlement) with respect to each Restricted
Stock Unit, the Participant shall be entitled to receive from the
Company one share of Common Stock or an amount of cash equal to
the Fair Market Value of one share of Common Stock, as provided
in the applicable Award agreement. The Board may, in its
discretion, provide that settlement of Restricted Stock Units
shall be deferred, on a mandatory basis or at the election of the
Participant.
(2) VOTING RIGHTS. A Participant shall have no voting rights with
respect to any Restricted Stock Units.
(3) DIVIDEND EQUIVALENTS. To the extent provided by the Board, in its
sole discretion, a grant of Restricted Stock Units may provide
Participants with the right to receive an amount equal to any
dividends or other distributions declared and paid on an equal
number of outstanding shares of Common Stock ("Dividend
Equivalents"). Dividend Equivalents may be paid currently or
credited to an account for the Participants, may be settled in
cash and/or shares of Common Stock and may be subject to the same
restrictions on transfer and forfeitability as the Restricted
Stock Units with respect to which paid, as determined by the
Board in its sole discretion, subject in each case to such terms
and conditions as the Board shall establish, in each case to be
set forth in the applicable Award agreement.
8. OTHER STOCK-BASED AWARDS.
(a) GENERAL. Other Awards of shares of Common Stock, and other Awards that
are valued in whole or in part by reference to, or are otherwise based
on, shares of Common Stock or other property, may be granted hereunder
to Participants ("Other Stock-Based-Awards"), including without
limitation Awards entitling recipients to receive shares of Common
Stock to be delivered in the future. Such Other Stock-Based Awards
shall also be available as a form of payment in the settlement of
other Awards granted under the Plan or as payment in lieu of
compensation to which a Participant is otherwise entitled. Other
Stock-Based Awards may be paid in shares of Common Stock or cash, as
the Board shall determine. Subject to the provisions of the Plan, the
Board shall determine the terms and conditions of each Other
Stock-Based Award, including any purchase price applicable thereto.
(b) LIMITATIONS ON VESTING. Notwithstanding any other provision of this
Plan, the Board may, in its discretion, either at the time an Other
Stock-Based-Award is made or at any time thereafter, waive its right
to repurchase shares of Common Stock (or waive the forfeiture thereof)
or remove or modify any part or all of the restrictions applicable to
the Other Stock-Based-Award, provided that the Board may only exercise
such rights in extraordinary circumstances which shall include,
without limitation, death or disability of the Participant; estate
planning needs of the Participant; a merger, consolidation, sale,
reorganization, recapitalization, or Change of Control Event of the
Company; or any other nonrecurring significant event affecting the
Company, a Participant or the Plan.
9. PERFORMANCE AWARDS.
(a) GRANTS. Restricted Stock Awards, Other Stock-Based Awards, cash or any
combination thereof under the Plan may be made subject to the
achievement of performance goals pursuant to this
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Section 9 ("Performance Awards"), subject to the limit in
Section 4(b)(1) on shares covered by such grants.
(b) COMMITTEE. Grants of Performance Awards to any Covered Employee
intended to qualify as "performance-based compensation" under Section
162(m) ("Performance-Based Compensation") shall be made only by a
Committee (or subcommittee of a Committee) comprised solely of two or
more directors eligible to serve on a committee making Awards
qualifying as "performance-based compensation" under Section 162(m).
In the case of such Awards granted to Covered Employees, references to
the Board or to a Committee shall be deemed to be references to such
Committee or subcommittee. "Covered Employee" shall mean any person
who is a "covered employee" under Section 162(m)(3) of the Code.
(c) PERFORMANCE MEASURES. For any Award that is intended to qualify as
Performance-Based Compensation, the Committee shall specify that the
degree of granting, vesting and/or payout shall be subject to the
achievement of one or more objective performance measures established
by the Committee, which shall be based on the relative or absolute
attainment of specified levels of one or any combination of the
following: (a) net income or net loss, in each case on a GAAP or
non-GAAP basis, (b) earnings before or after discontinued operations,
interest, taxes, depreciation and/or amortization, (c) operating
profit before or after discontinued operations and/or taxes, (d)
sales, (e) sales growth, (f) earnings growth, (g) cash flow or cash
position, (h) gross margins, (i) stock price, (j) market share, (k)
return on sales, assets, equity or investment, (l) improvement of
financial ratings, (m) achievement of balance sheet or income
statement objectives, (n) total shareholder return, (o) research,
development or regulatory accomplishments, or (p) significant
transactional accomplishments, and may be absolute in their terms or
measured against or in relationship to other companies comparably,
similarly or otherwise situated. Such performance measures may be
adjusted to exclude any one or more of (i) extraordinary items or
events, (ii) gains or losses on the dispositions of discontinued
operations, (iii) the cumulative effects of changes in accounting
principles, (iv) the writedown of any asset, and (v) charges for
restructuring and rationalization programs. Such performance measures:
(i) may vary by Participant and may be different for different Awards;
(ii) may be particular to a Participant or the department, branch,
line of business, subsidiary or other unit in which the Participant
works and may cover such period as may be specified by the Committee;
and (iii) shall be set by the Committee within the time period
prescribed by, and shall otherwise comply with the requirements of,
Section 162(m). Awards that are not intended to qualify as
Performance-Based Compensation may be based on these or such other
performance measures as the Board may determine.
(d) ADDITIONAL SECTION 162(m) PER-PARTICIPANT LIMITS. Performance Awards
shall be subject to the per-participant limits set forth in Section
4(b)(1).
(e) PAYMENT. At the end of the performance period with respect to which a
Performance Award is granted, the Section 162(m) Committee shall
determine the amount, if any, to be paid to the Participant based on
the level of the performance goals established by the Section 162(m)
Committee for purposes of the Performance Award, and shall authorize
the Company to pay the Participant the amount so determined. The
Section 162(m) Committee may at any time, in its sole discretion,
cancel a Performance Award or reduce or eliminate the amount payable
with respect to a Performance Award without the consent of the
Participant, and the Section 162(m) Committee may not waive the
achievement of the applicable performance goals except in the case of
death or disability of the Participant.
(f) PERFORMANCE-BASED COMPENSATION. In the case of a Performance Award to
an officer likely to be a "covered participant" within the meaning of
Section 162(m), the Section 162(m) Committee shall have the power to
impose such other restrictions on Performance Awards as it may deem
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necessary or appropriate to ensure that such Awards satisfy all
requirements for "performance-based compensation" within the meaning
of Section 162(m)(4)(C) of the Code, or any successor provision
thereto.
(g) ADJUSTMENTS. Notwithstanding any provision of the Plan, with respect
to any Performance Award that is intended to qualify as
Performance-Based Compensation, the Committee may adjust downwards,
but not upwards, the cash or number of Shares payable pursuant to such
Award, and the Committee may not waive the achievement of the
applicable performance measures except in the case of the death or
disability of the Participant or a Change of Control Event of the
Company.
(h) OTHER. The Committee shall have the power to impose such other
restrictions on Performance Awards as it may deem necessary or
appropriate to ensure that such Awards satisfy all requirements for
Performance-Based Compensation.
10. ADJUSTMENTS FOR CHANGES IN COMMON STOCK AND CERTAIN OTHER EVENTS.
(a) CHANGES IN CAPITALIZATION. In the event of any stock split, reverse
stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in
capitalization or event, or any dividend or distribution to holders of
Common Stock other than an ordinary cash dividend, (i) the number and
class of securities available under this Plan, (ii) the sub-limits set
forth in Section 4(b), (iii) the number and class of securities and
exercise price per share of each outstanding Option and each Option
issuable under Section 5, (iv) the share- and per-share provisions and
the exercise price of each SAR, (v) the number of shares subject to
and the repurchase price per share subject to each outstanding
Restricted Stock Award and (vi) the share- and per-share-related
provisions and the purchase price, if any, of each outstanding Other
Stock-Based Award, shall be equitably adjusted by the Company (or
substituted Awards may be made, if applicable) in the manner
determined by the Board. Without limiting the generality of the
foregoing, in the event the Company effects a split of the Common
Stock by means of a stock dividend and the exercise price of and the
number of shares subject to an outstanding Option are adjusted as of
the date of the distribution of the dividend (rather than as of the
record date for such dividend), then an optionee who exercises an
Option between the record date and the distribution date for such
stock dividend shall be entitled to receive, on the distribution date,
the stock dividend with respect to the shares of Common Stock acquired
upon such Option exercise, notwithstanding the fact that such shares
were not outstanding as of the close of business on the record date
for such stock dividend.
(b) REORGANIZATION EVENTS.
(1) DEFINITION. A "Reorganization Event" shall mean: (a) any merger
or consolidation of the Company with or into another entity as a
result of which all of the Common Stock of the Company is
converted into or exchanged for the right to receive cash,
securities or other property or is cancelled, (b) any exchange of
all of the Common Stock of the Company for cash, securities or
other property pursuant to a share exchange transaction or (c)
any liquidation or dissolution of the Company.
(2) CONSEQUENCES OF A REORGANIZATION EVENT ON AWARDS OTHER THAN
RESTRICTED STOCK AWARDS. In connection with a Reorganization
Event, the Board may take any one or more of the following
actions as to all or any (or any portion of) outstanding Awards
other than Restricted Stock Awards on such terms as the Board
determines: (i) provide that Awards shall be assumed, or
substantially equivalent Awards shall be substituted, by the
acquiring or succeeding corporation (or an affiliate thereof),
(ii) upon written notice to a Participant, provide that the
Participant's unexercised Options or other unexercised Awards
will terminate immediately prior to the consummation of such
Reorganization Event unless
9
exercised by the Participant within a specified period following
the date of such notice, (iii) provide that outstanding Awards
shall become exercisable, realizable, or deliverable, or
restrictions applicable to an Award shall lapse, in whole or in
part prior to or upon such Reorganization Event, (iv) in the
event of a Reorganization Event under the terms of which holders
of Common Stock will receive upon consummation thereof a cash
payment for each share surrendered in the Reorganization Event
(the "Acquisition Price"), make or provide for a cash payment to
a Participant equal to the excess, if any, of (A) the Acquisition
Price times the number of shares of Common Stock subject to the
Participant's Options or other Awards (to the extent the exercise
price does not exceed the Acquisition Price) over (B) the
aggregate exercise price of all such outstanding Options or other
Awards and any applicable tax withholdings, in exchange for the
termination of such Options or other Awards, (v) provide that, in
connection with a liquidation or dissolution of the Company,
Awards shall convert into the right to receive liquidation
proceeds (if applicable, net of the exercise price thereof and
any applicable tax withholdings) and (vi) any combination of the
foregoing. In taking any of the actions permitted under this
Section 10(b), the Board shall not be obligated by the Plan to
treat all Awards, or all Awards of the same type, identically.
For purposes of clause (i) above, an Option shall be considered
assumed if, following consummation of the Reorganization Event,
the Option confers the right to purchase, for each share of
Common Stock subject to the Option immediately prior to the
consummation of the Reorganization Event, the consideration
(whether cash, securities or other property) received as a result
of the Reorganization Event by holders of Common Stock for each
share of Common Stock held immediately prior to the consummation
of the Reorganization Event (and if holders were offered a choice
of consideration, the type of consideration chosen by the holders
of a majority of the outstanding shares of Common Stock);
provided, however, that if the consideration received as a result
of the Reorganization Event is not solely common stock of the
acquiring or succeeding corporation (or an affiliate thereof),
the Company may, with the consent of the acquiring or succeeding
corporation, provide for the consideration to be received upon
the exercise of Options to consist solely of common stock of the
acquiring or succeeding corporation (or an affiliate thereof)
equivalent in value (as determined by the Board) to the per share
consideration received by holders of outstanding shares of Common
Stock as a result of the Reorganization Event.
(3) CONSEQUENCES OF A REORGANIZATION EVENT ON RESTRICTED STOCK
AWARDS. Upon the occurrence of a Reorganization Event other than
a liquidation or dissolution of the Company, the repurchase and
other rights of the Company under each outstanding Restricted
Stock Award shall inure to the benefit of the Company's successor
and shall, unless the Board determines otherwise, apply to the
cash, securities or other property which the Common Stock was
converted into or exchanged for pursuant to such Reorganization
Event in the same manner and to the same extent as they applied
to the Common Stock subject to such Restricted Stock Award. Upon
the occurrence of a Reorganization Event involving the
liquidation or dissolution of the Company, except to the extent
specifically provided to the contrary in the instrument
evidencing any Restricted Stock Award or any other agreement
between a Participant and the Company, all restrictions and
conditions on all Restricted Stock Awards then outstanding shall
automatically be deemed terminated or satisfied.
(c) CHANGE OF CONTROL.
(1) DEFINITION. A "Change of Control Event" occurs:
(i) when a person, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) acquires
beneficial ownership of the Company's capital stock equal
10
to 50% or more of either (x) the then-outstanding shares of
the Company's common stock or (y) the combined voting power
of the Company's then-outstanding securities to vote
generally in the election of directors;
(ii) upon the consummation by the Company of (x) a Reorganization
Event, provided that, the persons who were the Company's
stockholders immediately prior to the Reorganization Event
do not, immediately after, own more than 50% of the combined
voting power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated
company's then outstanding voting securities, or (y) a
liquidation or dissolution of the Company or the sale of all
or substantially all of the Company's assets; or
(iii) when the Continuing Directors (as defined below) do not
constitute a majority of the Board (or, if applicable, the
board of directors of a successor corporation to the
Company), where the term "Continuing Director" means at any
date a member of the Board (x) who was a member of the Board
on the date of the initial adoption of this Plan by the
Board or (y) who was nominated or elected subsequent to such
date by at least a majority of the directors who were
Continuing Directors at the time of such nomination or
election or whose election to the Board was recommended or
endorsed by at least a majority of the directors who were
Continuing Directors at the time of such nomination or
election. But, any individual whose initial assumption of
office occurred as a result of an actual or threatened
election contest with respect to the election or removal of
directors or other actual or threatened solicitation of
proxies or consents, by or on behalf of a person other than
the Board, is excluded from clause (iii)(y) above.
(2) TERMINATION. Notwithstanding any provision to the contrary in
this Plan, if a Participant voluntarily terminates his or her
employment with the Company for Good Reason (as defined below) or
if the Company terminates the Participant's employment without
Cause (as defined below) during the period one month before
through twelve months after the date of a Change of Control,
then, on the Participant's termination date:
(i) all of the Participant's outstanding Awards will immediately
vest in full and will remain exercisable until the earlier
of (x) the first anniversary of the Participant's
termination of employment or (y) the end of the term of the
Award; and
(ii) any reacquisition or repurchase rights held by the Company
with respect to any of the Participant's Awards will lapse.
(3) DEFINITIONS. For purposes of this Section 10(c) only:
(i) "Cause" means (x) the Participant's willful and continued
failure to substantially perform the Participant's material
responsibilities to the Company (except if the failure
results from the Participant's incapacity caused by physical
or mental illness or disability); (y) the Participant's
conviction of a felony involving moral turpitude; or (z) the
Participant's willful conduct which materially injures the
business of the Company, monetarily or otherwise. If a
Participant acts, or fails to act, in good faith and with
the reasonable belief that his or her act, or failure to
act, was in the best interests of the Company, then the act,
or failure to act, will not be deemed willful for purposes
of this definition.
(ii) "Company" includes any successor entity.
(iii) "Good Reason" means the occurrence, without the
Participant's express written consent, of: (x) a reduction
in the Participant's title, annual base salary or a
significant
11
reduction in responsibilities as in effect immediately prior
to, or as increased after, the effective date of the Change
of Control Event; or (y) the relocation of the Participant's
principal place of employment to a location more than fifty
miles from the Participant's principal place of employment
prior to the effective date of the Change of Control Event
or a relocation that increases the Participant's commuting
distance to and from the relocated place of employment to
more than fifty miles.
(4) CERTAIN TAX IMPLICATIONS. Except as may be otherwise provided in
any agreement between a Participant and the Company, if the
benefits to the Participant resulting from Section 10(c)(2) and
any other benefits otherwise payable to a Participant constitute
a parachute payment ("Payment") within the meaning of Section
280G (as amended or replaced) of the Code, and, except for this
Section 10(c)(4), would be subject to the excise tax imposed by
Section 4999 (as amended or replaced) of the Code (the "Excise
Tax"), then the Payment will be the full amount or a lesser
amount (with cash payments reduced before Award compensation),
whichever results in the Participant's receipt, on an after tax
basis, of the greater amount of the Payment whether or not all or
some portion of the Payment may be subject to the Excise Tax.
Accountants selected by the Company will make, in writing and in
good faith, any determination required under this Section
10(c)(4), unless the Company and the Participant otherwise agree
in writing. The accountants may make reasonable assumptions and
approximations in applying the Code to make their determination.
The Company and the Participants will furnish to the accountants
any information and documents that the accountants may reasonably
request. The Company will pay all reasonable costs the
accountants may incur in providing this determination.
11. General Provisions Applicable to Awards
(a) TRANSFERABILITY OF AWARDS. Awards shall not be sold, assigned,
transferred, pledged or otherwise encumbered by the person to whom
they are granted, either voluntarily or by operation of law, except by
will or the laws of descent and distribution and, during the life of
the Participant, shall be exercisable only by the Participant;
provided, however, that the Board may permit or provide in an Award
for the gratuitous transfer of the Award by the Participant to or for
the benefit of any immediate family member, family trust or other
entity established for the benefit of the Participant and/or an
immediate family member thereof if, with respect to such proposed
transferee, the Company would be eligible to use a Form S-8 for the
registration of the sale of the Common Stock subject to such Award
under the Securities Act of 1933, as amended; provided, further, that
the Company shall not be required to recognize any such transfer until
such time as the Participant and such permitted transferee shall, as a
condition to such transfer, deliver to the Company a written
instrument in form and substance satisfactory to the Company
confirming that such transferee shall be bound by all of the terms and
conditions of the Award. References to a Participant, to the extent
relevant in the context, shall include references to authorized
transferees.
(b) DOCUMENTATION. Each Award shall be evidenced in such form (written,
electronic or otherwise) as the Board shall determine. Each Award may
contain terms and conditions in addition to those set forth in the
Plan.
(c) BOARD DISCRETION. Except as otherwise provided by the Plan, each Award
may be made alone or in addition or in relation to any other Award.
The terms of each Award need not be identical, and the Board need not
treat Participants uniformly.
(d) TERMINATION OF STATUS. The Board shall determine the effect on an
Award of the disability, death, termination of employment, authorized
leave of absence or other change in the employment or other status of
a Participant and the extent to which, and the period during which,
12
the Participant, or the Participant's legal representative,
conservator, guardian or Designated Beneficiary, may exercise rights
under the Award.
(e) WITHHOLDING. The Participant must satisfy all applicable federal,
state, and local or other income and employment tax withholding
obligations before the Company will deliver stock certificates or
otherwise recognize ownership of Common Stock under an Award. The
Company may decide to satisfy the withholding obligations through
additional withholding on salary or wages. If the Company elects not
to or cannot withhold from other compensation, the Participant must
pay the Company the full amount, if any, required for withholding or
have a broker tender to the Company cash equal to the withholding
obligations. Payment of withholding obligations is due before the
Company will issue any shares on exercise or release from forfeiture
of an Award or, if the Company so requires, at the same time as is
payment of the exercise price unless the Company determines otherwise.
If provided for in an Award or approved by the Board in its sole
discretion, a Participant may satisfy such tax obligations in whole or
in part by delivery of shares of Common Stock, including shares
retained from the Award creating the tax obligation, valued at their
Fair Market Value; provided, however, except as otherwise provided by
the Board, that the total tax withholding where stock is being used to
satisfy such tax obligations cannot exceed the Company's minimum
statutory withholding obligations (based on minimum statutory
withholding rates for federal and state tax purposes, including
payroll taxes, that are applicable to such supplemental taxable
income). Shares surrendered to satisfy tax withholding requirements
cannot be subject to any repurchase, forfeiture, unfulfilled vesting
or other similar requirements.
(f) AMENDMENT OF AWARD. Except as otherwise provided in Section 5(h) with
respect to repricings, 7(c) or Section 8(b) with respect to the
vesting of Restricted Stock Awards and Other Stock-Based Awards or
Section 9 with respect to Performance Awards, the Board may amend,
modify or terminate any outstanding Award, including but not limited
to, substituting therefor another Award of the same or a different
type, changing the date of exercise or realization, and converting an
Incentive Stock Option to a Nonstatutory Stock Option, provided that
the Participant's consent to such action shall be required unless (i)
the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant's
rights under the Plan or (ii) the change is permitted under Section 10
hereof.
(g) CONDITIONS ON DELIVERY OF STOCK. The Company will not be obligated to
deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i)
all conditions of the Award have been met or removed to the
satisfaction of the Company, (ii) in the opinion of the Company's
counsel, all other legal matters in connection with the issuance and
delivery of such shares have been satisfied, including any applicable
securities laws and any applicable stock exchange or stock market
rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the
Company may consider appropriate to satisfy the requirements of any
applicable laws, rules or regulations.
(h) ACCELERATION. Except as otherwise provided in Sections 7(c), 8(b) and
9 The Board may at any time provide that any Award shall become
immediately exercisable in full or in part, free of some or all
restrictions or conditions, or otherwise realizable in full or in
part, as the case may be.
12. Miscellaneous
(a) NO RIGHT TO EMPLOYMENT OR OTHER STATUS. No person shall have any claim
or right to be granted an Award, and the grant of an Award shall not
be construed as giving a Participant the right to continued employment
or any other relationship with the Company. The Company expressly
reserves the right at any time to dismiss or otherwise terminate its
relationship with a
13
Participant free from any liability or claim under
the Plan, except as expressly provided in the applicable Award.
(b) NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights
as a stockholder with respect to any shares of Common Stock to be
distributed with respect to an Award until becoming the record holder
of such shares.
(c) EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become effective on
the date the Plan is approved by the Company's stockholders (the
"Effective Date"). No Awards shall be granted under the Plan after the
expiration of 10 years from the Effective Date, but Awards previously
granted may extend beyond that date.
(d) AMENDMENT OF PLAN. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time provided that (i) to the extent
required by Section 162(m), no Award granted to a Participant that is
intended to comply with Section 162(m) after the date of such
amendment shall become exercisable, realizable or vested, as
applicable to such Award, unless and until such amendment shall have
been approved by the Company's stockholders if required by Section
162(m) (including the vote required under Section 162(m)); (ii) no
amendment that would require stockholder approval under the rules of
the NASDAQ Stock Market ("NASDAQ") may be made effective unless and
until such amendment shall have been approved by the Company's
stockholders; and (iii) if the NASDAQ amends its corporate governance
rules so that such rules no longer require stockholder approval of
material amendments to equity compensation plans, then, from and after
the effective date of such amendment to the NASDAQ rules, no amendment
to the Plan (A) materially increasing the number of shares authorized
under the Plan (other than pursuant to Section 4(c) or 10), (B)
expanding the types of Awards that may be granted under the Plan, or
(C) materially expanding the class of participants eligible to
participate in the Plan shall be effective unless stockholder approval
is obtained. In addition, if at any time the approval of the Company's
stockholders is required as to any other modification or amendment
under Section 422 of the Code or any successor provision with respect
to Incentive Stock Options, the Board may not effect such modification
or amendment without such approval. Unless otherwise specified in the
amendment, any amendment to the Plan adopted in accordance with this
Section 12(d) shall apply to, and be binding on the holders of, all
Awards outstanding under the Plan at the time the amendment is
adopted, provided the Board determines that such amendment does not
materially and adversely affect the rights of Participants under the
Plan. No Award shall be made that is conditioned upon stockholder
approval of any amendment to the Plan.
(e) PROVISIONS FOR FOREIGN PARTICIPANTS. The Board may modify Awards or
Options granted to Participants who are foreign nationals or employed
outside the United States or establish subplans or procedures under
the Plan to recognize differences in laws, rules, regulations or
customs of such foreign jurisdictions with respect to tax, securities,
currency, employee benefit or other matters.
(f) COMPLIANCE WITH CODE SECTION 409A. No Award shall provide for deferral
of compensation that does not comply with Section 409A of the Code,
unless the Board, at the time of grant, specifically provides that the
Award is not intended to comply with Section 409A of the Code. The
Company shall have no liability to a Participant, or any other party,
if an Award that is intended to be exempt from, or compliant with,
Section 409A is not so exempt or compliant or for any action taken by
the Board.
(g) GOVERNING LAW. The provisions of the Plan and all Awards made
hereunder shall be governed by and interpreted in accordance with the
laws of the State of Delaware, excluding choice-of-law
14
principles of the law of such state that would require the application
of the laws of a jurisdiction other than such state.
15