Exhibit 10.1
1997 STOCK OPTION PLAN
OF
MAXYGEN, INC.
(as amended)
1. PURPOSES OF THE PLAN
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The purposes of the 1997 Stock Option Plan (the "Plan") of Maxygen,
Inc., a Delaware corporation (the "Company"), are to:
(a) Encourage selected employees, directors and consultants to
improve operations and increase profits of the Company;
(b) Encourage selected employees, directors and consultants to
accept or continue employment or association with the Company or its
Affiliates; and
(c) Increase the interest of selected employees, directors and
consultants in the Company's welfare through participation in the growth in
value of the common stock of the Company (the "Common Stock").
Options granted under this Plan ("Options") may be "incentive stock
options" ("ISOs") intended to satisfy the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or "nonstatutory
options" ("NSOs").
2. ELIGIBLE PERSONS
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Every person who at the date of grant of an Option is a full-time
employee of the Company or of any Affiliate (as defined below) of the Company
is eligible to receive NSOs or ISOs under this Plan. Every person who at the
date of grant is a consultant to, or nonemployee director of, the Company or
any Affiliate (as defined below) of the Company is eligible to receive NSOs
under this Plan. The term "Affiliate" as used in the Plan means a parent or
subsidiary corporation as defined in the applicable provisions of the Code.
The term "employee" includes an officer or director who is an employee, of the
Company. The term "consultant" includes persons employed by, or otherwise
affiliated with, a consultant.
3. STOCK SUBJECT TO THIS PLAN
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Subject to the provisions of Section 6.1.1 of the Plan, the total
number of shares of stock which may be issued under options granted pursuant
to this Plan shall not exceed 7,500,000 shares of Common Stock. The shares
covered by the portion of any grant under the Plan which expire unexercised
shall become available again for grants under the Plan.
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4. ADMINISTRATION
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4.1 General. This Plan shall be administered by the Board of
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Directors of the Company (the "Board") or, by a committee (the "Committee") of
at least two Board members to which administration of the Plan, or of part of
the Plan, is delegated (in either case, the "Administrator").
4.2 Public Company. From and after such time as the Company registers
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a class of equity securities under Section 12 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), the Committee shall consist of Board
members who are "Non-Employee Directors" as defined under Rule 16b-3
promulgated by the Securities and Exchange Commission ("Rule 16b-3"), or any
successor rule thereto.
4.3 Authority of Administrator. Subject to the other provisions of
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this Plan, the Administrator shall have the authority, in its discretion: (i)
to grant Options; (ii) to determine the fair market value of the Common Stock
subject to Options; (iii) to determine the exercise price of Options granted;
(iv) to determine the persons to whom, and the time or times at which, Options
shall be granted, and the number of shares subject to each Option; (v) to
interpret this Plan; (vi) to prescribe, amend, and rescind rules and
regulations relating to this Plan; (vii) to determine the terms and provisions
of each Option granted (which need not be identical), including but not
limited to, the time or times at which Options shall be exercisable; (viii)
with the consent of the optionee, to modify or amend any Option; (ix) to
accelerate the exercise date of any Option; (x) to authorize any person to
execute on behalf of the Company any instrument evidencing the grant of an
Option; and (xi) to make all other determinations deemed necessary or
advisable for the administration of this Plan. The Administrator may delegate
nondiscretionary administrative duties to such employees of the Company as it
deems proper.
4.4 Interpretation by Administrator. All questions of
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interpretation, implementation, and application of this Plan shall be
determined in its absolute discretion by the Administrator. Such
determinations shall be final and binding on all persons.
4.5 Rule 16b-3. With respect to persons subject to Section 16 of the
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Exchange Act, if any, transactions under this Plan are intended to comply with
the applicable conditions of Rule 16b-3, or any successor rule thereto. To the
extent a transaction under this Plan or action by the Administrator fails to
so comply, it shall, to the extent deemed advisable by the Administrator, be
modified to comply with Rule 16b-3. Notwithstanding the above, it shall be the
responsibility of such persons, not of the Company or the Administrator, to
comply with the requirements of Section 16 of the Exchange Act; and neither
the Company nor the Administrator shall be liable if this Plan or any
transaction under this Plan fails to comply with the applicable conditions of
Rule
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16b-3 or any successor rule thereto, or if any such person incurs any
liability under Section 16 of the Exchange Act.
5. GRANTING OF OPTIONS; OPTION AGREEMENT
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5.1 No Options shall be granted under this Plan after ten years
from the date of adoption of this Plan by the Board.
5.2 Each Option shall be evidenced by a written stock option
agreement (the "Option Agreement"), in form satisfactory to the Company,
executed by the Company and the person to whom such Option is granted;
provided, however, that the failure by the Company, the optionee, or both to
execute the Option Agreement shall not invalidate the granting of an Option,
although the exercise of each option shall be subject to Section 6.1.3.
5.3 The Option Agreement shall specify whether each Option it
evidences is an NSO or an ISO.
5.4 Subject to Section 6.3.3 with respect to ISOs, the
Administrator may approve the grant of Options under this Plan to persons who
are expected to become employees, directors or consultants of the Company, but
are not employees, directors or consultants at the date of approval.
6. TERMS AND CONDITIONS OF OPTIONS
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Each Option granted under this Plan shall be subject to the terms and
conditions set forth in Section 6.1. NSOs shall be also subject to the terms
and conditions set forth in Section 6.2, but not those set forth in Section 6.3.
ISOs shall also be subject to the terms and conditions set forth in Section 6.3,
but not those set forth in Section 6.2.
6.1 Terms and Conditions to Which All Options Are Subject. Options
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granted under this Plan shall be subject to the following terms and
conditions:
6.1.1 Changes in Capital. Subject to Section 6.1.2, if the stock of
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the Company is changed by reason of a stock split, reverse stock split, stock
dividend, or recapitalization, combination or reclassification, appropriate
adjustments shall be made by the Board in (a) the number and class of shares
of stock subject to this Plan and each Option outstanding under this Plan, and
(b) the exercise price of each outstanding Option; provided, however, that the
Company shall not be required to issue fractional shares as a result of any
such adjustments. Each such adjustment shall be subject to approval by the
Board in its absolute discretion.
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6.1.2 Corporate Transactions. In the event of the proposed dissolution
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or liquidation of the Company, the Administrator shall notify each optionee at
least 30 days prior to such proposed action. To the extent not previously
exercised, all Options will terminate immediately prior to the consummation of
such proposed action. In the event of a merger or consolidation of the Company
with or into another corporation or entity in which the Company does not
survive, or in the event of a sale of all or substantially all of the assets
of the Company in which the stockholders of the Company receive securities of
the acquiring entity or an affiliate thereof, all Options shall be assumed or
equivalent options shall be substituted by the successor corporation (or other
entity) or a parent or subsidiary of such successor corporation (or other
entity). If such successor does not agree to assume the Options or to
substitute equivalent options therefor, unless the Administrator shall
determine otherwise, the Options shall be fully exercisable for a period of 30
days form the date notice is given under this Section 6.1.2 and shall
terminate upon expiration of such 30-day period.
6.1.3 Time of Option Exercise. Subject to Section 5 and Section 6.3.4,
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Options granted under this Plan shall be exercisable (a) immediately as of the
effective date of the Option Agreement granting the Option, or (b) in
accordance with a schedule related to the date of the grant of the Option, the
date of first employment, or such other date as may be set by the
Administrator (in any case, the "Vesting Base Date") and specified in the
Option Agreement relating to such Option; provided, however, that the right to
exercise an Option must vest at the rate of at least 20% per year over five
years from the date the option was granted. Options granted to officers,
directors or consultants may become fully exercisable, subject to reasonable
conditions such as continued employment, at any time or during any period
established by the Board of the Administrator in accordance with this Plan. In
any case, no Option shall be exercisable until a written Option Agreement in
form satisfactory to the Company is executed by the Company and the optionee.
6.1.4 Option Grant Date. Except in the case of advance approvals
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described in Section 5.4, the date of grant of an Option under this Plan shall
be the date as of which the Administrator approves the grant.
6.1.5 Nonassignability of Option Rights. Except as otherwise
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determined by the Administrator and expressly set forth in the Option
Agreement, no Option granted under this Plan shall be assignable or otherwise
transferable by the optionee except by will or by the laws of descent and
distribution. During the life of the optionee, except as otherwise determined
by the Administrator and expressly set forth in the Option Agreement, an
Option shall be exercisable only by the optionee.
6.1.6 Payment. Except as provided below, payment in full, in cash,
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shall be made for all stock purchased at the time written notice of exercise
of an Option is
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given to the Company, and proceeds of any payment shall
constitute general funds of the Company. At the time an Option is granted or
exercised, the Administrator, in the exercise of its absolute discretion after
considering any tax or accounting consequences, may authorize any one or more
of the following additional methods of payment:
(a) Acceptance of the optionee's full recourse promissory note for
all or part of the Option price, payable on such terms and bearing such
interest rate as determined by the Administrator (but in no event less than
the minimum interest rate specified under the Code at which no additional
interest would be imputed and in no event more than the maximum interest rate
allowed under applicable usury laws), which promissory note may be either
secured or unsecured in such manner as the Administrator shall approve
(including, without limitation, by a security interest in the shares of the
Company); and
(b) Delivery by the optionee of Common Stock already owned by the
optionee for all or part of the Option price, provided the value (determined
as set forth in Section 6.1.11) of such Common Stock is equal on the date of
exercise to the Option price, or such portion thereof as the optionee is
authorized to pay by delivery of such stock; provided, however, that if an
optionee has exercised any portion of any Option granted by the Company by
delivery of Common Stock, the optionee may not, within six months following
such exercise, exercise any Option granted under this Plan by delivery of
Common Stock without the consent of the Administrator.
6.1.7 Termination of Employment.
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(a) If, for any reason other than death, disability or "cause" (as
defined below), an optionee ceases to be employed by the Company or any of its
Affiliates (such event being called a "Termination"), Options held at the date
of Termination (to the extent then exercisable) may be exercised in whole or
in part at any time within 90 days of the date of such Termination, or such
other period of not less than 30 days after the date of such Termination as is
specified in the Option Agreement (but in no event after the Expiration Date).
(b) If an optionee dies or becomes disabled (within the meaning of
Section 22(c)(3) of the Code) while employed by the Company or an Affiliate or
within the period that the Option remains exercisable after Termination,
Options then held (to the extent then exercisable) may be exercised, in whole
or in part, by the optionee, by the optionee's personal representative or by
the person to whom the Option is transferred by devise or the laws of descent
and distribution, at any time within 12 months after the death or 12 months
after the disability of the optionee, or such other period of not less than
six months from the date of Termination as is specified in the Option
Agreement (but in no event after the Expiration Date).
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(c) If an optionee is terminated for "cause," all Options then
held shall terminate and no longer be exercisable as of the date of
Termination.
(d) For purposes of this Section 6.1.7, "employment" includes
service as a director or as a consultant.
(e) For purposes of this Section 6.1.7, an optionee's employment
shall not be deemed to terminate by reason of sick leave, military leave or
other leave of absence approved by the Administrator, if the period of any
such leave does not exceed 90 days or, if longer, if the optionee's right to
reemployment by the Company or any Affiliate is guaranteed either
contractually or by statute.
(f) For purposes of this Section 6.1.7, "cause" shall mean
Termination (i) by reason of optionee's commission of a felony, misdemeanor or
other illegal conduct involving dishonesty, fraud or other matters of moral
turpitude, (ii) by reason of optionee's dishonesty towards, fraud upon, or
deliberate injury or attempted injury to the Company or any of its Affiliates,
or (iii) by reason of optionee's willfully engaging in misconduct which is
materially and demonstrably injurious to the Company or any of its Affiliates.
6.1.8 Repurchase of Stock. At the option of the Administrator, the
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stock to be delivered pursuant to the exercise of any Option granted to an
employee, director or consultant under this Plan may be subject to a right of
repurchase in favor of the Company with respect to any employee, or director
or consultant whose employment, or director or consulting relationship with
the Company is terminated. Such right of repurchase shall be exercisable as
the Administrator may determine in the grant of option, either:
(a) at the Option exercise price and (i) shall lapse at the rate
of at least 20% per year over five years from the date the Option is granted
(without regard to the date it was exercised or becomes exercisable), and must
be exercised for cash or cancellation of purchase money indebtedness within 90
days after such termination of employment (or in the case of securities issued
upon exercise of options after the date of termination, within 90 days after
the date of the exercise); or
(b) at the higher of the Option exercise price or the value
(determined as set forth in Section 6.1.11) of the stock being repurchased on
the date of termination, and must be exercised for cash or cancellation of
purchase money indebtedness within 90 days of termination of employment (or in
the case of securities issued upon exercise of options after the date of
termination, within 90 days after the date of exercise), and such right shall
terminate when the Company's securities become publicly traded.
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In addition to the restrictions set forth in subparagraphs (a) and (b)
above, the shares held by an officer, director or consultant of the issuer or an
affiliate of the issuer may be subject to additional or greater restrictions, at
the absolute discretion of the Administrator.
6.1.9 Withholding and Employment Taxes. At the time of exercise of an
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Option or at such other time as the amount of such obligations becomes
determinable (the "Tax Date"), the optionee shall remit to the Company in cash
all applicable federal and state withholding and employment taxes. If
authorized by the Administrator in its absolute discretion, after considering
any tax or accounting consequences, an optionee may elect to (i) deliver a
full recourse promissory note on such terms as the Administrator deems
appropriate, (ii) tender to the Company previously owned shares of Stock or
other securities of the Company, or (iii) have shares of Common Stock which
are acquired upon exercise of the Option withheld by the Company to pay some
or all of the amount of tax that is required by law to be withheld by the
Company as a result of the exercise of such Option. Any election pursuant to
clause (ii) above, where the optionee is tendering Common Stock issued
pursuant to the exercise of an Option, shall require that such shares have
been held at least six months prior to the Tax Date. Any securities tendered
or withheld in accordance with this Section 6.1.9 shall be valued by the
Company as of the Tax Date.
6.1.10 Other Provisions. Each Option granted under this Plan may
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contain such other terms, provisions, and conditions not inconsistent with
this Plan as may be determined by the Administrator, and each ISO granted
under this Plan shall include such provisions and conditions as are necessary
to qualify the Option as an "incentive stock option" within the meaning of
Section 422 of the Code. If Options provide for a right of first refusal in
favor of the Company with respect to stock acquired by employees, directors or
consultants, such Options shall provide that the right of first refusal shall
terminate upon the earlier of (i) the closing of the Company's initial
registered public offering to the public generally, or (ii) the date ten years
after the grant date as set forth in Section 6.1.4.
6.1.11 Determination of Value. For purposes of the Plan, the value of
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Common Stock or other securities of the Company shall be determined as
follows:
(a) If the stock of the Company is listed on any established stock
exchange or a national market system, including without limitation the
National Market System of the National Association of Securities Dealers, Inc.
Automated Quotation System, its fair market value shall be the closing sales
price for such stock or the closing bid if no sales were reported, as quoted
on such system or exchange (or the largest such exchange) for the date the
value is to be determined (or if there are no sales
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for such date, then for the last preceding business day on which there were
sales), as reported in the Wall Street Journal or similar publication.
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(b) If the stock of the Company is regularly quoted by a
recognized securities dealer but selling prices are not reported, its fair
market value shall be the mean between the high bid and low asked prices for
the stock on the date the value is to be determined (or if there are no quoted
prices for the date of grant, then for the last preceding business day on
which there were quoted prices).
(c) In the absence of an established market for the stock, the
fair market value thereof shall be determined in good faith by the
Administrator, by consideration of such factors as the Administrator in its
discretion deems appropriate among the recent issue price of other securities
of the Company, the Company's net worth, prospective earning power, dividend-
paying capacity, and other relevant factors, including the goodwill of the
Company, the economic outlook in the Company's industry, the Company's
position in the industry and its management, and the values of stock of other
corporations in the same or a similar line of business.
6.1.12 Option Term. Subject to Section 6.3.5, no Option shall be
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exercisable more than ten years after the date of grant, or such lesser period
of time as is set forth in the stock option agreement (the end of the maximum
exercise period stated in the Option Agreement is referred to in this Plan as
the "Expiration Date").
6.1.13 Exercise Price. The exercise price of any Option granted to any
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person who owns, directly or by attribution under the Code currently Section
424(d), stock possessing more than ten percent of the total combined voting
power of all classes of stock of the Company or of any Affiliate (a "Ten
Percent Stockholder") shall in no event be less than 110% of the fair market
value (determined in accordance with Section 6.1.11) of the stock covered by
the Option at the time the Option is granted.
6.2 Terms and Conditions to Which Only NSOs Are Subject. Except as
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set forth in Section 6.1.13, the exercise price of a NSO shall be not less
than 85% of the fair market value (determined in accordance with Section
6.1.11) of the stock subject to the Option on the date of grant.
6.3 Terms and Conditions to Which Only ISOs Are Subject. Options
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granted under this Plan which are designated as ISOs shall be subject to the
following terms and conditions:
6.3.1 Exercise Price. Except as set forth in Section 6.1.13, the
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exercise price of an ISO shall be determined in accordance with the applicable
provisions of the Code and shall in no event be less than the fair market
value (determined in
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accordance with Section 6.1.11) of the stock covered by the Option at the time
the Option is granted.
6.3.2 Disqualifying Dispositions. If stock acquired by exercise of an
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ISO granted pursuant to this Plan is disposed of in a "disqualifying
disposition" within the meaning of Section 422 of the Code, the holder of the
stock immediately before the disposition shall promptly notify the Company in
writing of the date and terms of the disposition and shall provide such other
information regarding the Option as the Company may reasonably require.
6.3.3 Grant Date. If an ISO is granted in anticipation of employment
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as provided in Section 5.4, the Option shall be deemed granted, without
further approval, on the date the grantee assumes the employment relationship
forming the basis for such grant, and, in addition, satisfies all requirements
of this Plan for Options granted on that date.
6.3.4 Vesting. Notwithstanding any other provision of this Plan, ISOs
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granted under all incentive stock option plans of the Company and its
subsidiaries may not "vest" for more than $100,000 in fair market value of
stock (measured on the grant dates(s)) in any calendar year. For purposes of
the preceding sentence, an option "vests" when it first becomes exercisable.
If, by their terms, such ISOs taken together would vest to a greater extent in
a calendar year, and unless otherwise provided by the Administrator, ISOs with
lower exercise prices shall vest before ISOs with higher exercise prices,
regardless of the grant date.
6.3.5 Term. Notwithstanding Section 6.1.12, no ISO granted to any Ten
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Percent Stockholder shall be exercisable more than five years after the date
of grant.
7. MANNER OF EXERCISE
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7.1 An optionee wishing to exercise an Option shall give written
notice to the Company at its principal executive office, to the attention of
the officer of the Company designated by the Administrator, accompanied by
payment of the exercise price as provided in Section 6.1.6. The date the
Company receives written notice of an exercise hereunder accompanied by
payment of the exercise price will be considered as the date such Option was
exercised.
7.2 Promptly after receipt of written notice of exercise of an Option,
the Company shall, without stock issue or transfer taxes to the optionee or
other person entitled to exercise the Option, deliver to the optionee or such
other person a certificate or certificates for the requisite number of shares
of stock. An optionee or permitted transferee of an optionee shall not have
any privileges as a stockholder with respect to any shares of stock covered by
the Option until the date of issuance (as evidenced by the appropriate entry
on the books of the Company or a duly authorized transfer agent) of such
shares.
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8. EMPLOYMENT OR CONSULTING RELATIONSHIP
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Nothing in this Plan or any Option granted thereunder shall interfere
with or limit in any way the right of the Company or of any of its Affiliates
to terminate any optionee's employment or consulting at any time, nor confer
upon any optionee any right to continue in the employ of, or consult with, the
Company or any of its Affiliates.
9. FINANCIAL INFORMATION
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The Company shall provide to each optionee during the period such
optionee holds an outstanding Option, and to each holder of Common Stock
acquired upon exercise of Options granted under the Plan for so long as such
person is a holder of such Common Stock, annual financial statements of the
Company as prepared either by the Company or independent certified public
accountants of the Company. Such financial statements shall include, at a
minimum, a balance sheet and an income statement, and shall be delivered as
soon as practicable following the end of the Company's fiscal year.
10. CONDITIONS UPON ISSUANCE OF SHARES
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Shares of Common Stock shall not be issued pursuant to the exercise of
an Option unless the exercise of such Option and the issuance and delivery of
such shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended (the
"Securities Act").
11. NONEXCLUSIVITY OF THE PLAN
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The adoption of the Plan shall not be construed as creating any
limitations on the power of the Company to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options other than under the Plan.
12. MARKET STANDOFF
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Each Optionee, if so requested by the Company or any representative of
the underwriters in connection with any registration of the offering of any
securities of the Company under the Securities Act of 1933, as amended (the
"Securities Act"), shall not sell or otherwise transfer any shares of Common
Stock acquired upon exercise of Options during the 180-day period following
the effective date of a registration statement of the company filed under the
Securities Act; provided, however, that such restriction shall apply only to
the first two registration statements of the Company to become effective
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under the Securities Act which includes securities to be sold on behalf of the
Company to the public in an underwritten public offering under the Securities
Act. The Company may impose stop-transfer instructions with respect to
securities subject to the foregoing restriction until the end of such 180-day
period.
13. AMENDMENTS TO PLAN
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The Board may at any time amend, alter, suspend or discontinue this
Plan. Without the consent of an optionee, no amendment, alteration, suspension
or discontinuance may adversely affect outstanding Options except to conform
this Plan and ISOs granted under this Plan to the requirements of federal or
other tax laws relating to incentive stock options. No amendment, alteration,
suspension or discontinuance shall require stockholder approval unless (a)
stockholder approval is required to preserve incentive stock option treatment
for federal income tax purposes, or (b) the Board otherwise concludes that
stockholder approval is advisable.
14. EFFECTIVE DATE OF PLAN
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This Plan shall become effective upon adoption by the Board provided,
however, that no Option shall be exercisable unless and until written consent
of the stockholders of the Company, or approval of stockholders of the Company
voting at a validly called stockholders' meeting, is obtained within 12 months
after adoption by the Board. If such stockholder approval is not obtained
within such time, Options granted hereunder shall terminate and be of no force
and effect from and after expiration of such 12-month period. Options may be
granted and exercised under this Plan only after there has been compliance
with all applicable federal and state securities laws.
Plan adopted by the Board of Directors on March 1, 1997
Plan approved by Stockholders on March 30, 1997.
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