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EXHIBIT 10.20
As amended through December 17, 2002 and adjusted for stock splits in April and
October 2000
MILLENNIUM PHARMACEUTICALS, INC.
1993 INCENTIVE STOCK PLAN
1. PURPOSES OF THE PLAN. The Purposes of this Incentive Stock Plan are to
attract and retain the best available personnel, to provide additional incentive
to the Employees and Consultants of Millennium Pharmaceuticals, Inc. (the
"Company") and to promote the success of the Company's business.
Options granted hereunder may be either Incentive Stock Options or
Nonstatutory Stock Options, at the discretion of the Board and as reflected in
the terms of the written option agreement. The Board also has the discretion to
grant Stock Purchase Rights.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "BOARD" shall mean the Committee, if one has been appointed, or the
Board of Directors of the Company, if no Committee is appointed.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(c) "COMMITTEE" shall mean the Committee appointed by the Board of
Directors in accordance with Section 4(a) of the Plan, if one is appointed.
(d) "COMMON STOCK" shall mean the Common Stock of the Company.
(e) "COMPANY" shall mean Millennium Pharmaceuticals, Inc., a Delaware
corporation.
(f) "CONSULTANT" shall mean any person who is engaged by the Company or
any Parent or Subsidiary to render consulting services and is compensated for
such consulting services, and any director of the Company whether compensated
for such services or not; provided that if and in the event the Company
registers any class of any equity security pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the term
Consultant shall thereafter not include directors who are not compensated for
their services or are paid only a director's fee by the Company.
(g) "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" shall mean the
absence of any interruption or termination of service as an Employee or
Consultant, as applicable. Continuous Status as an Employee or Consultant shall
not be considered interrupted in the case of sick leave, military leave, or any
other leave of absence approved by the Board; Provided that such leave is for a
period of not more than 90 days or reemployment upon the expiration of such
leave is guaranteed by contract or statute.
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(h) "EMPLOYEE" shall mean any person, including officers and directors,
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a director's fee by the Company shall not be sufficient to constitute
"employment" by the Company.
(i) "INCENTIVE STOCK OPTION" shall mean an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code.
(j) "NONSTATUTORY STOCK OPTION" shall mean an Option not intended to
qualify as an Incentive Stock Option.
(k) "OPTION" shall mean a stock option granted pursuant to the Plan.
(l) "OPTIONEE STOCK" shall mean the Common Stock subject to an Option.
(m) "OPTIONEE" shall mean an Employee or Consultant who receives an
Option.
(n) "PARENT" shall mean a "parent corporation," whether now or
hereafter existing, as defined in Section 424 of the Code.
(o) "PLAN" shall mean this 1993 Incentive Stock Plan.
(p) "PURCHASER" shall mean an Employee or Consultant who exercises a
Stock Purchase Right.
(q) "SHARE" shall mean a share of the Common Stock, as adjusted in
accordance with Section 11 of the Plan.
(r) "STOCK PURCHASE RIGHT" shall mean a right to purchase Common Stock
pursuant to the Plan or the right to receive a bonus of Common Stock for past
services.
(s) "SUBSIDIARY" shall mean a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424 of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 11 of the
Plan, the maximum aggregate number of shares under the Plan is 21,600,000 shares
of Common Stock. The Shares may be authorized, but unissued, or reacquired
Common Stock.
If an Option or Stock Purchase Right should expire or become
unexercisable for any reason without having been exercised in full or if Shares
issued pursuant to Stock Purchase Rights are repurchased by the Company, then
the unpurchased Shares which were subject thereto or the repurchased Shares, as
the case may be, shall, unless the Plan shall have been terminated, become
available for future grant or sale under the Plan. Notwithstanding any other
provision of the Plan, shares issued upon exercise of Options
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and later repurchased by the Company shall not become available for future grant
or sale under the Plan.
4. ADMINISTRATION OF THE PLAN.
(a) PROCEDURE. The Plan shall be administered by the Board of
Directors of the Company.
(i) Subject to subparagraph (ii), the Board of Directors may
appoint a Committee consisting of not less than two members of the Board of
Directors to administer the Plan on behalf of the Board of Directors, subject to
such terms and conditions as the Board of Directors may prescribe. Once
appointed, the Committee shall continue to serve until otherwise directed by the
Board of Directors. Members of the Board who are either eligible for Options
and/or Stock Purchase Rights or have been granted Options and/or Stock Purchase
Rights may vote on any matters affecting the administration of the Plan or the
grant of any Options and/or Stock Purchase Rights pursuant to the Plan, except
that no such member shall act upon the granting of an Option and/or Stock
Purchase Right to such member, but any such member may be counted in determining
the existence of a quorum at any meeting of the Board during which action is
taken with respect to the granting of Options and/or Stock Purchase Rights to
the member.
(ii) Notwithstanding the foregoing subparagraph (i), if and in
any event the Company registers any class of any equity security pursuant to
Section 12 of the Exchange Act, from the effective date of such registration
until six months after the termination of such registration, any grants of
Options and/or Stock Purchase Rights to officers or directors shall only be made
by the Board of Directors; provided, however, that if a majority of the Board of
Directors is eligible to participate in this Plan or any other stock option or
other stock plan of the Company or any of its affiliates, or has been eligible
at any time during the prior one-year period (or, if shorter, the period
following the initial registration of the Company's equity securities under
Section 12 of the Exchange Act) any grants of Options and/or Stock Purchase
Rights to directors must be made by, or only in accordance with the
recommendation of, a Committee consisting of three or more persons, who may but
need not be directors or employees of the Company, appointed by the Board of
Directors and having full authority to act in the matter, none of whom is
eligible to participate in this Plan or any other stock option or other stock
plan of the Company or any of its affiliates, or has been eligible at any time
during the prior one-year period (or, if shorter, the period following the
initial registration of the Company's equity securities under Section 12 of the
Exchange Act). Any Committee administering the Plan with respect to grants to
officers who are not also directors shall conform to the requirement of the
preceding sentence. Once appointed, the Committee shall continue to serve until
otherwise directed by the Board of Directors.
(iii) Subject to the foregoing subparagraphs (i) and (ii), from
time to time the Board of Directors may increase the size of the Committee and
appoint additional members thereof, remove members (with or without cause) and
appoint new
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members in substitution therefor, fill vacancies however caused, or
remove all members of the Committee and thereafter directly administer the Plan.
(b) POWERS OF THE BOARD. Subject to the provisions of the Plan, the
Board shall have the authority, in its discretion: (i) to grant Incentive Stock
Options, Nonstatutory Stock Options or Stock Purchase Rights; (ii) to determine,
upon review of relevant information and in accordance with Section 7 of the
Plan, the fair market value of the Common Stock; (iii) to determine the exercise
price per share of Options or Stock Purchase Rights, to be granted, which
exercise price shall be determined in accordance with Section 7 of the Plan;
(iv) to determine the Employees or Consultants to whom, and the time or times at
which, Options or Stock Purchase Rights shall be granted and the number of
shares to be represented by each Option or Stock Purchase Right; (v) to
interpret the Plan; (vi) to prescribe, amend and rescind rules and regulations
relating to the Plan; (vii) to determine the terms and provisions of each Option
and Stock Purchase Right granted (which need not be identical) and, with the
consent of the holder thereof, modify or amend any provisions (including
provisions relating to exercise price) of any Option or Stock Purchase Right;
(viii) to authorize any person to execute on behalf of the Company any
instrument required to effectuate the grant of an Option or Stock Purchase Right
previously granted by the Board; and (ix) to make all other determinations
deemed necessary or advisable for the administration of the Plan.
(c) EFFECT OF BOARD'S DECISION. All decisions, determinations and
interpretations of the Board shall be final and binding on all Optionees,
Purchasers and any other holders of any Options or Stock Purchase Rights granted
under the Plan.
5. ELIGIBILITY.
(a) Options and Stock Purchase Rights may be granted to Employees and
Consultants, provided that Incentive Stock Options may only be granted to
Employees. An Employee or Consultant who has been granted an Option or Stock
Purchase Right may, if such Employee or Consultant is otherwise eligible, be
granted additional Option(s) or Stock Purchase Right(s).
(b) Each Option shall be designated in the written option agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designations, to the extent that the aggregate fair market
value of the Shares with respect to which Options designated as Incentive Stock
Options are exercisable for the first time by any Optionee during any calendar
year (under all plans of the Company) exceeds $100,000, such Options shall be
treated as Nonstatutory Stock Options.
(c) For purposes of Section 5(b), Options shall be taken into account
in the order in which they were granted, and the fair market value of the Shares
shall be determined as of the time the Option with respect to such Shares is
granted.
(d) The Plan shall not confer upon any Optionee or holder of a Stock
Purchase Right any right with respect to continuation of employment by or the
rendition of
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consulting services to the Company, nor shall it interfere in any way with his
or her right or the Company's right to terminate his or her employment or
services at any time, with or without cause.
6. TERM OF PLAN. The Plan shall become effective upon the earlier to occur
of its adoption by the Board of Directors or its approval by vote of the holders
of a majority of the outstanding shares of the Company entitled to vote on the
adoption of the Plan. It shall continue in effect for a term of ten (10) years
unless sooner terminated under Section 14 of the Plan.
7. EXERCISE PRICE AND CONSIDERATION.
(a) The per Share exercise price for the Shares to be issued pursuant
to exercise of an Option or Stock Purchase Right shall be such price as is
determined by the Board, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of the grant
of such Incentive Stock Option, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the per Share exercise price shall be no less than 110% of the
fair market value per Share on the date of grant.
(B) granted to any Employee, the per Share exercise
price shall be no less than 100% of the fair market value per Share on the date
of grant.
(ii) In the case of a Nonstatutory Stock Option or a Stock
Purchase Right.
(A) granted to a person who, at the time of the grant of
such Option, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
per Share exercise price shall be no less than 110% of the fair market value per
Share on the date of the grant.
(B) granted to any person, the per Share exercise price
shall be no less than 85% of the fair market value per Share on the date of
grant.
For purposes of this Section 7(a), in the event that an Option or Stock
Purchase Right is amended to reduce the exercise price, the date of grant of
such Option or Stock Purchase Right shall thereafter be considered to be the
date of such amendment.
(b) The fair market value shall be determined by the Board in its
discretion; provided, however, that where there is a public market for the
Common Stock, the fair market value per Share shall be the mean of the bid and
asked prices (or the closing price per share if the Common Stock is listed on
the National Association of Securities Dealers
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Automated Quotation ("NASDAQ") National Market System of the Common Stock for
the date of grant, as reported in the Wall Street Journal (or, if not so
reported, as otherwise reported by the NASDAQ System) or, in the event the
Common Stock is listed on a stock exchange, the fair market value per Share
shall be the closing price on such exchange on the date of grant of the Option
or Stock Purchase Right, as reported in the Wall Street Journal.
(c) The consideration to be paid for the Shares to be issued upon
exercise of an Option or Stock Purchase Right, including the method of payment,
shall be determined by the Board and may consist entirely of:
(i) cash;
(ii) check (personal, cashier's or certified);
(iii) money order;
(iv) promissory note;
(v) other Shares of Common Stock having a fair market value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which the Option is being exercised;
(vi) if there is a public market for the Shares and they are
registered under the Securities Act of 1933, as amended, delivery of a properly
executed exercise notice together with irrevocable instructions to a broker to
promptly deliver to the Company the amount of sale or loan proceeds required to
pay the exercise price;
(vii) delivery of an irrevocable subscription agreement for the
Shares which irrevocably obligates the Optionee to take and pay for the Shares
not more than twelve months after the date of delivery of such subscription
agreement;
(viii) or any combination of such methods of payment; or
(ix) such other consideration and method of payment for the
issuance of Shares to the extent permitted under Sections 152 and 153 of the
General Corporation Law of Delaware.
8. OPTIONS.
(a) TERM OF OPTION. The term of each Incentive Stock Option shall be
ten (10) years from the date of grant thereof or such shorter term as may be
provided in the Incentive Stock Option Agreement. The term of each Option that
is not an Incentive Stock Option shall be ten (10) years and one (1) day from
the date of grant thereof or such shorter term as may be provided in the Stock
Option Agreement. However, in the case of an Option granted to an Optionee who,
at the time the Option is granted, owns
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stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, (i) if the Option
is an Incentive Stock Option, the term of the Option shall be five (5) years
from the date of grant thereof or such shorter time as may be provided in the
Stock Option Agreement, or (ii) if the Option is a Nonstatutory Stock Option,
the term of the Option shall be five (5) years and one (1) day from the date of
grant thereof or such other term as may be provided in the Stock Option
Agreement.
(b) EXERCISE OF OPTION.
(i) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Board, including performance criteria with respect to the
Company and/or the Optionee, and as shall be permissible under the terms of the
Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 7 of the Plan. Until
the issuance (as evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company) of the stock certificate
evidencing such Shares, no right to vote or receive dividends or any other
rights as a shareholder shall exist with respect to the Optionee Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option. In the
event that the exercise of an Option is treated in part as the exercise of an
Incentive Stock Option and in part as the exercise of a Nonstatutory Stock
Option pursuant to Section 5(b), the Company shall issue a separate stock
certificate evidencing the Shares treated as acquired upon exercise of an
Incentive Stock Option and a separate stock certificate evidencing the Shares
treated as acquired upon exercise of a Nonstatutory Stock Option and shall
identify each such certificate accordingly in its stock transfer records. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 11 of the Plan.
Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(ii) TERMINATION OF STATUS AS AN EMPLOYEE OR CONSULTANT. In the
event of termination of an Optionee's Continuous Status as an Employee or
Consultant (as the case may be), such Optionee may, but only within thirty (30)
days (or such other period of time not exceeding three (3) months in the case of
an Incentive Stock Option, as is determined by the Board, with such
determination in the case of an Incentive Stock
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Option being made at the time of grant of the Option) after the date of such
termination (but in no event later than the date of expiration of the term of
such Option as set forth in the Option Agreement, exercise the Option to the
extent that such Employee or Consultant was entitled to exercise it at the date
of such termination. To the extent that such Employee or Consultant was not
entitled to exercise the Option at the date of such termination, or if such
Employee or Consultant does not exercise such Option (which such Employee or
Consultant was entitled to exercise) within the time specified herein, the
Option shall terminate.
(iii) DISABILITY OF OPTIONEE. Notwithstanding the provisions of
Section 8(b)(ii) above, in the event of termination of an Optionee's Continuous
Status as an Employee or Consultant as a result of such Employee's or
Consultant's total and permanent disability (as defined in Section 22(e)(3) of
the Code), such Employee or Consultant may, but only within six (6) months (or
such other period of time not exceeding twelve (12) months as is determined by
the Board, with such determination in the case of an Incentive Stock Option
being made at the time of grant of the Option) from the date of such termination
(but in no event later than the date of expiration of the term of such Option as
set forth in the Option Agreement), exercise the Option to the extent such
Employee or Consultant was entitled to exercise it at the date of such
termination. To the extent that such Employee or Consultant was not entitled to
exercise the Option at the date of termination, or if such Employee or
Consultant does not exercise such Option (which such Employee or Consultant was
entitled to exercise) within the tune specified herein, the Option shall
terminate.
(iv) DEATH OF OPTIONEE. In the event of the death of an
Optionee:
(i) during the term of the Option who is at the time of
his or her death an Employee or Consultant of the Company and who shall have
been in Continuous Status as an Employee or Consultant since the date of grant
of the Option, the Option may be exercised, at any time within six (6) months
(but in no event later then the date of expiration of the term of such Option as
set forth in the Option Agreement), by Optionees estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to
the extent of the right to exercise that would have accrued had the Optionee
continued living and remained in Continuous Status as an Employee or Consultant
six (6) months (or such other period of time as is determined by the Board at
the time of grant of the Option) after the date of death; or
(ii) within thirty (30) days (or such other period of
time not exceeding three (3) months as is determined by the Board, with such
determination in the case of an Incentive Stock Option being made at the time of
grant of the Option) after the termination of Continuous Status as an Employee
or Consultant, the Option may be exercised, at any time within six (6) months
(or such other period of time as is determined by the Board at the time of grant
of the Option) following the date of death (but in no event later than the date
of expiration of the term of such Option as set forth in the Option Agreement),
by the Optionee's estate or by a person who acquired the right to
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exercise the Option by bequest or inheritance, but only to the extent of the
right to exercise that had accrued at the date of termination.
9. STOCK PURCHASE RIGHTS.
(a) RIGHTS TO PURCHASE. After the Board of Directors determines that it
will offer an Employee or Consultant a Stock Purchase Right, it shall deliver to
the offeree a stock purchase agreement or stock bonus agreement, as the case may
be, setting forth the terms, conditions and restrictions relating to the offer,
including the number of Shares which such person shall be entitled to purchase,
and the time within which such person must accept such offer, which shall in no
event exceed six (6) months from the date upon which the Board of Directors or
its Committee made the determination to grant the Stock Purchase Right. The
offer shall be accepted by execution of a stock purchase agreement or stock
bonus agreement in the form determined by the Board of Directors.
(b) ISSUANCE OF SHARES. Forthwith after payment therefor, the Shares
purchased shall be duly issued; provided, however, that the Board may require
that the Purchaser make adequate provision for any Federal and State withholding
obligations of the Company as a condition to the Purchaser purchasing such
Shares.
(c) REPURCHASE OPTION. Unless the Board determines otherwise, the stock
purchase agreement or stock bonus agreement shall grant the Company a repurchase
option exercisable upon the voluntary or involuntary termination of the
Purchaser's employment with the Company for any reason (including death or
disability). If the Board so determines, the purchase price for shares
repurchased may be paid by cancellation of any indebtedness of the Purchaser to
the Company. The repurchase option shall lapse at such rate as the Board may
determine.
(d) OTHER PROVISIONS. The stock purchase agreement or stock bonus
agreement shall contain such other terms, provisions and conditions not
inconsistent with the Plan as may be determined by the Board of Directors.
10. NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS. The Options and
Stock Purchase Rights may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee or Purchaser, only by the Optionee or Purchaser.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
(a) CHANGES IN CAPITALIZATION. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option,
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shall be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Common Stock, or any
other increase or decrease in the number of issued shares of Common Stock
effected without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration." Such adjustment shall
be made by the Administrator, whose determination in that respect shall be
final, binding and conclusive.
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, all Options will terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Administrator. The Administrator may, in the exercise of its
sole discretion in such instances, declare that all Options shall terminate as
of a date fixed by the Administrator and give each Optionee the right to
exercise any Option held as to all or any part of the Optionee Stock, including
Shares as to which the Option would not otherwise be exercisable.
(c) SALE OF ASSETS OR MERGER. Subject to the provisions of paragraph
(d) hereof, in the event of a proposed sale of all or substantially all of the
assets of the Company, or the merger of the Company with or into another
corporation, all Options shall be assumed or equivalent options shall be
substituted by the successor corporation or a parent or subsidiary of such
successor corporation. In the event that such successor corporation refuses to
assume all Options or to substitute equivalent options, the Administrator shall,
in lieu of such assumption or substitution, provide for the Optionees to have
the right to exercise Options held by them as to all of the Optionee Stock,
including Shares as to which such Options would not otherwise be exercisable. If
the Administrator makes an Option fully exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the Administrator shall
notify the Optionee that the Option shall be fully exercisable for a period of
time determined by the Administrator from the date of such notice, and the
Option will terminate upon the expiration of such period. For purposes of this
paragraph, an Option granted under the Plan shall be deemed to be assumed if,
following the sale of assets or merger, the Option confers the right to
purchase, for each Share of Optionee Stock subject to the Option immediately
prior to such sale of assets or merger, the consideration (whether stock, cash
or other securities or property) received in the sale of assets or merger by
holders of Common Stock for each Share held on the effective date of the
transaction (and, if such holders were offered a choice of consideration, the
type of consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the sale of
assets or merger was not solely Common Stock of the successor corporation or its
parent, the Administrator may, with the consent of the successor corporation and
the Optionee, provide for the per share consideration to be received upon
exercise of the Option to be solely Common Stock of the successor corporation or
its parent equal in fair market value (determined as set forth in Section 7(b)
hereof) to the per share consideration received by holders of Common Stock in
the sale of assets or merger.
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(d) NO OTHER ADJUSTMENTS. Except as expressly provided or authorized
herein, no issuance by the Company of shares of stock of any class, or
securities convertible into or exercisable for shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.
11.A. CHANGE OF CONTROL.
(a) Change of Control occurs:
(i) when a person, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934) acquires
beneficial ownership of the Company's capital stock equal to 50% or more of
either (i) the then-outstanding shares of the Company's common stock or (ii) 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 (i) a
reorganization, merger or consolidation, provided that, in each case, the
persons who were the Company's stockholders immediately prior to the
reorganization, merger or consolidation 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 (ii) 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 of Directors (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 of Directors (x) who was a
member of the Board of Directors on the date of the initial adoption of this
provision by the Board of Directors 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 of Directors 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 of
Directors, is excluded from clause (iii)(y) above.
(b) Notwithstanding any provision to the contrary in this Plan, if
an Optionee or a Purchaser (a "Participant") voluntarily terminates his or her
employment with the Company for Good Reason or if the Company terminates the
Participant's employment without Cause during the period one month before
through twelve months after the date of a Change in Control, then, on the
Participant's termination date:
(i) all of the Participant's outstanding Options and Stock
Purchase Rights will immediately vest in full and will remain exercisable until
the earlier of (a) the
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first anniversary of the Participant's termination of employment or (b) the end
of the term of the Option or Stock Purchase Right; and
(ii) any reacquisition or repurchase rights held by the Company
with respect to any of the Participant's Options and Stock Purchase Rights will
lapse.
(c) For purposes of this Section only:
CAUSE means (1) 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); (2) the Participant's conviction of a
felony involving moral turpitude; or (3) 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.
COMPANY includes any successor entity.
GOOD REASON means the occurrence, without the Participant's express
written consent, of:
(1) a reduction in the Participant's title, annual base salary
or a significant reduction in responsibilities as in effect immediately prior
to, or as increased after, the effective date of the Change of Control; or
(2) 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 or a
relocation that increases the Participant's commuting distance to and from the
relocated place of employment to more than fifty miles.
(d) If the benefits to the Participant resulting from
Section 11A(b)(i) and 11A(b)(ii) 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
11A(d), 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 Stock 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 11A(d) unless the Company
and the Participant otherwise agree in writing. The accountants may make
reasonable assumptions and
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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.
12. TIME OF GRANTING OPTIONS. The date of grant of an Option or Stock
Purchase Right shall, for all purposes, be the date on which the Board makes the
determination granting such Option or Stock Purchase Right. Notice of the
determination shall be given to each Employee or Consultant to whom an Option or
Stock Purchase Right is so granted within a reasonable time after the date of
such grant.
13. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may amend or terminate the
Plan from time to time in such respects as the Board may deem advisable;
provided that, the following revisions or amendments shall require approval of
the shareholders of the Company in the manner described in Section 17 of the
Plan:
(i) any increase in the number of Shares subject to the Plan,
other than in connection with an adjustment under Section 11 of the Plan;
(ii) any change in the designation of the class of persons
eligible to be granted Options and Stock Purchase Rights; or
(iii) if the Company has a class of equity securities registered
under Section 12 of the Exchange Act at the time of such revision or amendment,
any material increase in the benefits accruing to participants under the Plan.
(b) SHAREHOLDER APPROVAL. If any amendment requiring shareholder
approval under Section 13(a) of the Plan is made subsequent to the first
registration of any class of equity securities by the Company under Section 12
of the Exchange Act, such shareholder approval shall be solicited as described
in Section 17 of the Plan.
(c) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of the Plan shall not affect Options or Stock Purchase Rights
already granted and such Options or Stock Purchase Rights shall remain in full
force and effect as if this Plan had not been amended or terminated, unless
mutually agreed otherwise between the Optionee or Purchaser (as the case may be)
and the Board, which agreement must be in writing and signed by the Optionee or
Purchaser (as the case may be) and the Company.
14. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued pursuant
to the exercise of an Option or Stock Purchase Rights unless the exercise of
such Option or Stock Purchase Rights 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
Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may then
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be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.
As a condition to the exercise of an Option or Stock Purchase Rights, the
Company may require the person exercising such Option or Stock Purchase Rights
to represent and warrant at the time of any such exercise that the Shares are
being purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required by any of the aforementioned relevant provisions of
law.
15. RESERVATION OF SHARES. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
The inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the Company of any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.
16. OPTION, STOCK PURCHASE AND STOCK BONUS AGREEMENTS. Options shall be
evidenced by written option agreements in such form as the Board shall approve.
Upon the exercise of Stock Purchase Rights, the Purchaser shall sign a stock
purchase agreement or stock bonus agreement in such form as the Board shall
approve.
17. SHAREHOLDER APPROVAL.
(a) Continuance of the Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months before or after the date
the Plan is adopted. If such shareholder approval is obtained at a duly held
shareholders' meeting, it must be obtained by the affirmative vote of the
holders of a majority of the outstanding shares of the Company, or if such
shareholder approval is obtained by written consent, it must be obtained by the
unanimous written consent of all shareholders of the Company; provided, however,
that approval at a meeting or by written consent may be obtained by a lesser
degree of shareholder approval, if the Board determines, in its discretion after
consultation with the Company's legal counsel, that such a lesser degree of
shareholder approval will comply with all applicable laws and will not adversely
affect the qualification of the Plan under Section 422 of the Code.
(b) If and in the event that the Company registers any class of equity
securities pursuant to Section 12 of the Exchange Act, any required approval of
the shareholders of the Company obtained after such registration shall be
solicited substantially in accordance with Section 14(a) of the Exchange Act and
the rules and regulations promulgated thereunder.
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(c) If any required approval by the shareholders of the Plan itself or
of any amendment thereto is solicited at any time otherwise than in the manner
described in Section 17(b) hereof, then the Company shall, at or prior to the
first annual meeting of shareholders held subsequent to the later of (1) the
first registration of any class of equity securities of the Company under
Section 12 of the Exchange Act or (2) the granting of an Option hereunder to an
officer or director after such registration, do the following:
(i) furnish in writing to the holders entitled to vote for the
Plan substantially the same information which would be required (if proxies to
be voted with respect to approval or disapproval of the Plan or amendment were
then being solicited) by the rules and regulations in effect under Section 14(a)
of the Exchange Act at the time such information is furnished; and
(ii) file with, or mail for filing to, the Securities and
Exchange Commission four copies of the written information referred to in
subsection (i) hereof not later than the date on which such information is first
sent or given to shareholders.
18. INFORMATION TO OPTIONEES AND PURCHASERS. The Company shall provide to
each Optionee and Purchaser, during the period for which such Optionee or
Purchaser has one or more Options or Stock Purchase Rights outstanding, copies
of all annual reports and other information which are provided to all
shareholders of the Company. The Company shall not be required to provide such
information if the issuance of Options or Stock Purchase Rights under the Plan
is limited to key employees whose duties in connection with the Company assure
their access to equivalent information.
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