Attached files
file | filename |
---|---|
10-Q - INTERLEUKIN GENETICS INC | v193469_10q.htm |
EX-31.1 - INTERLEUKIN GENETICS INC | v193469_ex31-1.htm |
EX-10.1 - INTERLEUKIN GENETICS INC | v193469_ex10-1.htm |
EX-32.1 - INTERLEUKIN GENETICS INC | v193469_ex32-1.htm |
EX-31.2 - INTERLEUKIN GENETICS INC | v193469_ex31-2.htm |
Exhibit
10.2
INTERLEUKIN
GENETICS, INC.
2004
EMPLOYEE, DIRECTOR AND CONSULTANT STOCK PLAN
1.
|
DEFINITIONS.
|
|
Unless
otherwise specified or unless the context otherwise requires, the
following terms, as used in this Interleukin Genetics, Inc. 2004 Employee,
Director and Consultant Stock Plan, have the following
meanings:
|
|
Administrator
means the Board of Directors, unless it has delegated power to act on its
behalf to the Committee, in which case the Administrator means the
Committee.
|
|
Affiliate means
a corporation which, for purposes of Section 424 of the Code, is a parent
or subsidiary of the Company, direct or
indirect.
|
|
Board of
Directors means the Board of Directors of the
Company.
|
|
Code means the
United States Internal Revenue Code of 1986, as
amended.
|
|
Committee means
the committee of the Board of Directors to which the Board of Directors
has delegated power to act under or pursuant to the provisions of the
Plan.
|
|
Common Stock
means shares of the Company’s common stock, $.001 par value per
share.
|
|
Company means
Interleukin Genetics, Inc., a Delaware
corporation.
|
|
Disability or
Disabled
means permanent and total disability as defined in Section 22(e)(3) of the
Code.
|
|
Employee means
any employee of the Company or of an Affiliate (including, without
limitation, an employee who is also serving as an officer or director of
the Company or of an Affiliate), designated by the Administrator to be
eligible to be granted one or more Stock Rights under the
Plan.
|
|
“Fair Market
Value of a Share of Common Stock
means:
|
(1)
If the
Common Stock is listed on a national securities exchange or traded in the
over-the-counter market and sales prices are regularly reported for the Common
Stock, the closing or last price of the Common Stock on the Composite Tape or
other comparable reporting system for the trading day on the applicable date and
if such applicable date is not a trading day, the last market trading day prior
to such date;
(2) If the
Common Stock is not traded on a national securities exchange but is traded on
the over-the-counter market, if sales prices are not regularly reported for the
Common Stock for the trading day referred to in clause (1), and if bid and
asked prices for the Common Stock are regularly reported, the mean between the
bid and the asked price for the Common Stock at the close of trading in the
over-the-counter market for the trading day on which Common Stock was traded
immediately preceding the applicable date; and
(3) If the
Common Stock is neither listed on a national securities exchange nor traded in
the over-the-counter market, such value as the Administrator, in good faith,
shall determine.”
|
ISO means an
option meant to qualify as an incentive stock option under
Section 422 of the Code.
|
|
Non-Qualified
Option means an option which is not intended to qualify as an
ISO.
|
|
Option means an
ISO or Non-Qualified Option granted under the
Plan.
|
|
Option
Agreement means an agreement between the Company and a Participant
delivered pursuant to the Plan, in such form as the Administrator shall
approve.
|
|
Participant
means an Employee, director or consultant of the Company or an Affiliate
to whom one or more Stock Rights are granted under the Plan. As
used herein, “Participant” shall include “Participant’s Survivors” where
the context requires.
|
|
Plan means this
Interleukin Genetics, Inc. 2004 Employee, Director and Consultant Stock
Plan.
|
|
Shares means
shares of the Common Stock as to which Stock Rights have been or may be
granted under the Plan or any shares of capital stock into which the
Shares are changed or for which they are exchanged within the provisions
of Paragraph 3 of the Plan. The Shares issued under the
Plan may be authorized and unissued shares or shares held by the Company
in its treasury, or both.
|
|
Stock
Grant means a grant by the Company of Shares under the
Plan.
|
|
Stock Grant
Agreement means an agreement between the Company and a Participant
delivered pursuant to the Plan, in such form as the Administrator shall
approve.
|
2
|
Stock Right
means a right to Shares of the Company granted pursuant to the Plan — an
ISO, a Non-Qualified Option or a Stock
Grant.
|
|
Survivor means
a deceased Participant’s legal representatives and/or any person or
persons who acquired the Participant’s rights to a Stock Right by will or
by the laws of descent and
distribution.
|
2.
|
PURPOSES OF THE
PLAN.
|
The Plan is intended to encourage
ownership of Shares by Employees and directors of and certain consultants to the
Company in order to attract such people, to induce them to work for the benefit
of the Company or of an Affiliate and to provide additional incentive for them
to promote the success of the Company or of an Affiliate. The Plan
provides for the granting of ISOs, Non-Qualified Options and Stock
Grants.
3.
|
SHARES SUBJECT TO THE
PLAN.
|
The number of Shares which may be
issued from time to time pursuant to this Plan shall be 2,000,000, or the equivalent
of such number of Shares after the Administrator, in its sole discretion, has
interpreted the effect of any stock split, stock dividend, combination,
recapitalization or similar transaction in accordance with Paragraph 23 of the
Plan. If an Option ceases to be “outstanding”, in whole or in part,
or if the Company shall reacquire any Shares issued pursuant to a Stock Grant,
the Shares which were subject to such Option and any Shares so reacquired by the
Company shall be available for the granting of other Stock Rights under the
Plan. Any Option shall be treated as “outstanding” until such Option
is exercised in full, or terminates or expires under the provisions of the Plan,
or by agreement of the parties to the pertinent Option
Agreement.
4.
|
ADMINISTRATION OF THE
PLAN.
|
The Administrator of the Plan will be
the Board of Directors, except to the extent the Board of Directors delegates
its authority to the Committee, in which case the Committee shall be the
Administrator. Subject to the provisions of the Plan, the
Administrator is authorized to:
|
a.
|
Interpret
the provisions of the Plan or of any Option or Stock Grant and to make all
rules and determinations which it deems necessary or advisable for the
administration of the Plan;
|
|
b.
|
Determine
which Employees, directors and consultants shall be granted Stock
Rights;
|
3
|
c.
|
Determine
the number of Shares for which a Stock Right or Stock Rights shall be
granted, provided, however, that in no event shall Stock Rights with
respect to more than 1,000,000 Shares be granted to any Participant in any
fiscal year.
|
|
d.
|
Specify
the terms and conditions upon which a Stock Right or Stock Rights may be
granted; and
|
|
e.
|
Adopt
any sub-plans applicable to residents of any specified jurisdiction as it
deems necessary or appropriate in order to comply with or take advantage
of any tax laws applicable to the Company or to Plan Participants or to
otherwise facilitate the administration of the Plan, which sub-plans may
include additional restrictions or conditions applicable to Options or
Shares acquired upon exercise of
Options.
|
provided,
however, that all such interpretations, rules, determinations, terms and
conditions shall be made and prescribed in the context of preserving the tax
status under Section 422 of the Code of those Options which are designated as
ISOs. Subject to the foregoing, the interpretation and construction
by the Administrator of any provisions of the Plan or of any Stock Right granted
under it shall be final, unless otherwise determined by the Board of Directors,
if the Administrator is the Committee. In addition, if the
Administrator is the Committee, the Board of Directors may take any action under
the Plan that would otherwise be the responsibility of the
Committee.
If permissible under applicable law,
the Board of Directors or the Committee may allocate all or any portion of its
responsibilities and powers to any one or more of its members and may delegate
all or any portion of its responsibilities and powers to any other person
selected by it. Any such allocation or delegation may be revoked by
the Board of Directors or the Committee at any time.
5.
|
ELIGIBILITY FOR
PARTICIPATION.
|
The Administrator will, in its sole
discretion, name the Participants in the Plan, provided, however, that each
Participant must be an Employee, director or consultant of the Company or of an
Affiliate at the time a Stock Right is granted. Notwithstanding the
foregoing, the Administrator may authorize the grant of a Stock Right to a
person not then an Employee, director or consultant of the Company or of an
Affiliate; provided, however, that the actual grant of such Stock Right shall be
conditioned upon such person becoming eligible to become a Participant at or
prior to the time of the execution of the Agreement evidencing such Stock
Right. ISOs may be granted only to
Employees. Non-Qualified Options and Stock Grants may be granted to
any Employee, director or consultant of the Company or an
Affiliate. The granting of any Stock Right to any individual shall
neither entitle that individual to, nor disqualify him or her from,
participation in any other grant of Stock Rights.
4
6.
|
TERMS AND CONDITIONS
OF OPTIONS.
|
Each Option shall be set forth in
writing in an Option Agreement, duly executed by the Company and, to the extent
required by law or requested by the Company, by the Participant. The
Administrator may provide that Options be granted subject to such terms and
conditions, consistent with the terms and conditions specifically required under
this Plan, as the Administrator may deem appropriate including, without
limitation, subsequent approval by the shareholders of the Company of this Plan
or any amendments thereto. The Option Agreements shall be subject to
at least the following terms and conditions:
|
A.
|
Non-Qualified
Options: Each Option intended to be a Non-Qualified
Option shall be subject to the terms and conditions which the
Administrator determines to be appropriate and in the best interest of the
Company, subject to the following minimum standards for any such
Non-Qualified Option:
|
|
a.
|
Option
Price: Each Option Agreement shall state the option price (per share) of
the Shares covered by each Option, which option price shall be determined
by the Administrator but shall not be less than the par value per share of
Common Stock.
|
|
b.
|
Each
Option Agreement shall state the number of Shares to which it
pertains;
|
|
c.
|
Each
Option Agreement shall state the date or dates on which it first is
exercisable and the date after which it may no longer be exercised, and
may provide that the Option rights accrue or become exercisable in
installments over a period of months or years, or upon the occurrence of
certain conditions or the attainment of stated goals or events;
and
|
|
d.
|
Exercise
of any Option may be conditioned upon the Participant’s execution of a
Share purchase agreement in form satisfactory to the Administrator
providing for certain protections for the Company and its other
shareholders, including requirements
that:
|
|
i.
|
The
Participant’s or the Participant’s Survivors’ right to sell or transfer
the Shares may be restricted; and
|
|
ii.
|
The
Participant or the Participant’s Survivors may be required to execute
letters of investment intent and must also acknowledge that the Shares
will bear legends noting any applicable
restrictions.
|
|
B.
|
ISOs: Each
Option intended to be an ISO shall be issued only to an Employee and be
subject to the following terms and conditions, with such additional
restrictions or changes as the Administrator determines are appropriate
but not in conflict with Section 422 of the Code and relevant regulations
and rulings of the Internal Revenue
Service:
|
5
|
a.
|
Minimum
standards: The ISO shall meet the minimum standards required of
Non-Qualified Options, as described in Paragraph 6(A) above, except clause
(a) thereunder.
|
|
b.
|
Option
Price: Immediately before the ISO is granted, if the
Participant owns, directly or by reason of the applicable attribution
rules in Section 424(d) of the
Code:
|
|
i.
|
10%
or less
of the total combined voting power of all classes of stock of the Company
or an Affiliate, the Option price per share of the Shares covered by each
ISO shall not be less than 100% of the Fair Market Value per share of the
Shares on the date of the grant of the Option;
or
|
|
ii.
|
More
than 10% of the total combined voting power of all classes of stock of the
Company or an Affiliate, the Option price per share of the Shares covered
by each ISO shall not be less than 110% of the said Fair Market Value on
the date of grant.
|
|
c.
|
Term
of Option: For Participants who
own:
|
|
i.
|
10%
or less
of the total combined voting power of all classes of stock of the Company
or an Affiliate, each ISO shall terminate not more than ten years from the
date of the grant or at such earlier time as the Option Agreement may
provide; or
|
|
ii.
|
More
than 10% of the total combined voting power of all classes of stock of the
Company or an Affiliate, each ISO shall terminate not more than five years
from the date of the grant or at such earlier time as the Option Agreement
may provide.
|
|
d.
|
Limitation
on Yearly Exercise: The Option Agreements shall restrict the
amount of ISOs which may become exercisable in any calendar year (under
this or any other ISO plan of the Company or an Affiliate) so that the
aggregate Fair Market Value (determined at the time each ISO is granted)
of the stock with respect to which ISOs are exercisable for the first time
by the Participant in any calendar year does not exceed
$100,000.
|
7.
|
TERMS AND CONDITIONS
OF STOCK GRANTS.
|
Each offer of a Stock Grant to a
Participant shall state the date prior to which the Stock Grant must be accepted
by the Participant, and the principal terms of each Stock Grant shall be set
forth in a Stock Grant Agreement, duly executed by the Company and, to the
extent required by law or requested by the Company, by the
Participant. The Stock Grant Agreement shall be in a form approved by
the Administrator and shall contain terms and conditions which the Administrator
determines to be appropriate and in the best interest of the Company, subject to
the following minimum standards:
6
|
(a)
|
Each
Stock Grant Agreement shall state the purchase price (per share), if any,
of the Shares covered by each Stock Grant, which purchase price shall be
determined by the Administrator but shall not be less than the minimum
consideration required by the Delaware General Corporation Law on the date
of the grant of the Stock Grant;
|
|
(b)
|
Each
Stock Grant Agreement shall state the number of Shares to which the Stock
Grant pertains; and
|
|
(c)
|
Each
Stock Grant Agreement shall include the terms of any right of the Company
to restrict or reacquire the Shares subject to the Stock Grant, including
the time and events upon which such reacquisition rights shall accrue and
the purchase price therefor, if
any.
|
8.
|
EXERCISE OF OPTIONS
AND ISSUE OF SHARES.
|
An Option (or any part or installment
thereof) shall be exercised by giving written notice to the Company or its
designee, together with provision for payment of the full purchase price in
accordance with this Paragraph for the Shares as to which the Option is being
exercised, and upon compliance with any other condition(s) set forth in the
Option Agreement. Such notice shall be signed by the person
exercising the Option, shall state the number of Shares with respect to which
the Option is being exercised and shall contain any representation required by
the Plan or the Option Agreement. Payment of the purchase price for
the Shares as to which such Option is being exercised shall be made (a) in
United States dollars in cash or by check, or (b) at the discretion of the
Administrator, through delivery of shares of Common Stock having a Fair Market
Value equal as of the date of the exercise to the cash exercise price of the
Option and held for at least six months, or (c) at the discretion of the
Administrator, by delivery of the grantee’s personal note, for full, partial or
no recourse, bearing interest payable not less than annually at market rate on
the date of exercise and at no less than 100% of the applicable Federal rate, as
defined in Section 1274(d) of the Code, with or without the pledge of such
Shares as collateral, or (d) at the discretion of the Administrator, in
accordance with a cashless exercise program established with a securities
brokerage firm, and approved by the Administrator, or (e) at the discretion
of the Administrator, by any combination of (a), (b), (c) and (d) above.
Notwithstanding the foregoing, the Administrator shall accept only such payment
on exercise of an ISO as is permitted by Section 422 of the Code.
The Company shall then reasonably
promptly deliver the Shares as to which such Option was exercised to the
Participant (or to the Participant’s Survivors, as the case may
be). In determining what constitutes “reasonably promptly,” it is
expressly understood that the issuance and delivery of the Shares may be delayed
by the Company in order to comply with any law or regulation (including, without
limitation, state securities or “blue sky” laws) which requires the Company to
take any action with respect to the Shares prior to their
issuance. The Shares shall, upon delivery, be fully paid,
non-assessable Shares.
7
The Administrator shall have the right
to accelerate the date of exercise of any installment of any Option; provided
that the Administrator shall not accelerate the exercise date of any installment
of any Option granted to an Employee as an ISO (and not previously converted
into a Non-Qualified Option pursuant to Paragraph 26) if such
acceleration would violate the annual vesting limitation contained in Section
422(d) of the Code, as described in Paragraph 6.B.d.
The Administrator may, in its
discretion, amend any term or condition of an outstanding Option provided (i)
such term or condition as amended is permitted by the Plan, (ii) any such
amendment shall be made only with the consent of the Participant to whom the
Option was granted, or in the event of the death of the Participant, the
Participant’s Survivors, if the amendment is adverse to the Participant, and
(iii) any such amendment of any ISO shall be made only after the Administrator
determines whether such amendment would constitute a “modification” of any
Option which is an ISO (as that term is defined in Section 424(h) of the Code)
or would cause any adverse tax consequences for the holder of such
ISO.
9.
|
ACCEPTANCE OF STOCK
GRANT AND ISSUE OF SHARES.
|
A Stock Grant (or any part or
installment thereof) shall be accepted by executing the Stock Grant Agreement
and delivering it to the Company or its designee, together with provision for
payment of the full purchase price, if any, in accordance with this Paragraph
for the Shares as to which such Stock Grant is being accepted, and upon
compliance with any other conditions set forth in the Stock Grant
Agreement. Payment of the purchase price for the Shares as to which
such Stock Grant is being accepted shall be made (a) in United States dollars in
cash or by check, or (b) at the discretion of the Administrator, through
delivery of shares of Common Stock held for at least six months and having a
Fair Market Value equal as of the date of acceptance of the Stock Grant to the
purchase price of the Stock Grant, or (c) at the discretion of the
Administrator, by delivery of the grantee’s personal note, for full or partial
recourse as determined by the Administrator, bearing interest payable not less
than annually at no less than 100% of the applicable Federal rate, as defined in
Section 1274(d) of the Code, or (d) at the discretion of the Administrator, by
any combination of (a), (b) and (c) above.
The Company shall then reasonably
promptly deliver the Shares as to which such Stock Grant was accepted to the
Participant (or to the Participant’s Survivors, as the case may be), subject to
any escrow provision set forth in the Stock Grant Agreement. In
determining what constitutes “reasonably promptly,” it is expressly understood
that the issuance and delivery of the Shares may be delayed by the Company in
order to comply with any law or regulation (including, without limitation, state
securities or “blue sky” laws) which requires the Company to take any action
with respect to the Shares prior to their issuance.
8
The Administrator may, in its
discretion, amend any term or condition of an outstanding Stock Grant or Stock
Grant Agreement provided (i) such term or condition as amended is permitted by
the Plan, and (ii) any such amendment shall be made only with the consent of the
Participant to whom the Stock Grant was made, if the amendment is adverse to the
Participant.
10.
|
RIGHTS AS A
SHAREHOLDER.
|
No Participant to whom a Stock Right
has been granted shall have rights as a shareholder with respect to any Shares
covered by such Stock Right, except after due exercise of the Option or
acceptance of the Stock Grant and tender of the full purchase price, if any, for
the Shares being purchased pursuant to such exercise or acceptance and
registration of the Shares in the Company’s share register in the name of the
Participant.
11.
|
ASSIGNABILITY AND
TRANSFERABILITY OF STOCK
RIGHTS.
|
By its terms, a Stock Right granted to
a Participant shall not be transferable by the Participant other than (i) by
will or by the laws of descent and distribution, or (ii) as approved by the
Administrator in its discretion and set forth in the applicable Option Agreement
or Stock Grant Agreement. Notwithstanding the foregoing, an ISO
transferred except in compliance with clause (i) above shall no longer qualify
as an ISO. The designation of a beneficiary of a Stock Right by a
Participant, with the prior approval of the Administrator and in such form as
the Administrator shall prescribe, shall not be deemed a transfer prohibited by
this Paragraph. Except as provided above, a Stock Right shall only be
exercisable or may only be accepted, during the Participant’s lifetime, only by
such Participant (or by his or her legal representative) and shall not be
assigned, pledged or hypothecated in any way (whether by operation of law or
otherwise) and shall not be subject to execution, attachment or similar
process. Any attempted transfer, assignment, pledge, hypothecation or
other disposition of any Stock Right or of any rights granted thereunder
contrary to the provisions of this Plan, or the levy of any attachment or
similar process upon a Stock Right, shall be null and void.
12.
|
EFFECT ON OPTIONS OF
TERMINATION OF SERVICE OTHER THAN “FOR CAUSE” OR DEATH OR
DISABILITY.
|
Except as otherwise provided in a
Participant’s Option Agreement, in the event of a termination of service
(whether as an employee, director or consultant) with the Company or an
Affiliate before the Participant has exercised an Option, the following rules
apply:
|
a.
|
A
Participant who ceases to be an employee, director or consultant of the
Company or of an Affiliate (for any reason other than termination “for
cause”, Disability, or death for which events there are special rules in
Paragraphs 13, 14, and 15, respectively), may exercise any Option granted
to him or her to the extent that the Option is exercisable on the date of
such termination of service, but only within such term as the
Administrator has designated in a Participant’s Option
Agreement.
|
9
|
b.
|
Except
as provided in Subparagraph (c) below, or Paragraph 14 or 15, in no event
may an Option intended to be an ISO, be exercised later than three months
after the Participant’s termination of
employment.
|
|
c.
|
The
provisions of this Paragraph, and not the provisions of Paragraph 14 or
15, shall apply to a Participant who subsequently becomes Disabled or dies
after the termination of employment, director status or consultancy,
provided, however, in the case of a Participant’s Disability or death
within three months after the termination of employment, director status
or consultancy, the Participant or the Participant’s Survivors may
exercise the Option within one year after the date of the Participant’s
termination of service, but in no event after the date of expiration of
the term of the Option.
|
|
d.
|
Notwithstanding
anything herein to the contrary, if subsequent to a Participant’s
termination of employment, termination of director status or termination
of consultancy, but prior to the exercise of an Option, the Board of
Directors determines that, either prior or subsequent to the Participant’s
termination, the Participant engaged in conduct which would constitute
“cause”, then such Participant shall forthwith cease to have any right to
exercise any Option.
|
|
e.
|
A
Participant to whom an Option has been granted under the Plan who is
absent from work with the Company or with an Affiliate because of
temporary disability (any disability other than a permanent and total
Disability as defined in Paragraph 1 hereof), or who is on leave of
absence for any purpose, shall not, during the period of any such absence,
be deemed, by virtue of such absence alone, to have terminated such
Participant’s employment, director status or consultancy with the Company
or with an Affiliate, except as the Administrator may otherwise expressly
provide.
|
|
f.
|
Except
as required by law or as set forth in a Participant’s Option Agreement,
Options granted under the Plan shall not be affected by any change of a
Participant’s status within or among the Company and any Affiliates, so
long as the Participant continues to be an employee, director or
consultant of the Company or any
Affiliate.
|
13.
|
EFFECT ON OPTIONS OF
TERMINATION OF SERVICE “FOR
CAUSE”.
|
Except as otherwise provided in a
Participant’s Option Agreement, the following rules apply if the Participant’s
service (whether as an employee, director or consultant) with the Company or an
Affiliate is terminated “for cause” prior to the time that all his or her
outstanding Options have been exercised:
|
a.
|
All
outstanding and unexercised Options as of the time the Participant is
notified his or her service is terminated “for cause” will immediately be
forfeited.
|
10
|
b.
|
For
purposes of this Plan, “cause” shall include (and is not limited to)
dishonesty with respect to the Company or any Affiliate, insubordination,
substantial malfeasance or non-feasance of duty, unauthorized disclosure
of confidential information, breach by the Participant of any provision of
any employment, consulting, advisory, nondisclosure, non-competition or
similar agreement between the Participant and the Company, and conduct
substantially prejudicial to the business of the Company or any
Affiliate. The determination of the Administrator as to the
existence of “cause” will be conclusive on the Participant and the
Company.
|
|
c.
|
“Cause”
is not limited to events which have occurred prior to a Participant’s
termination of service, nor is it necessary that the Administrator’s
finding of “cause” occur prior to termination. If the
Administrator determines, subsequent to a Participant’s termination of
service but prior to the exercise of an Option, that either prior or
subsequent to the Participant’s termination the Participant engaged in
conduct which would constitute “cause”, then the right to exercise any
Option is forfeited.
|
|
d.
|
Any
definition in an agreement between the Participant and the Company or an
Affiliate, which contains a conflicting definition of “cause” for
termination and which is in effect at the time of such termination, shall
supersede the definition in this Plan with respect to that
Participant.
|
14.
|
EFFECT ON OPTIONS OF
TERMINATION OF SERVICE FOR
DISABILITY.
|
Except as otherwise provided in a
Participant’s Option Agreement, a Participant who ceases to be an employee,
director or consultant of the Company or of an Affiliate by reason of Disability
may exercise any Option granted to such Participant:
|
a.
|
To
the extent that the Option has become exercisable but has not been
exercised on the date of Disability;
and
|
|
b.
|
In
the event rights to exercise the Option accrue periodically, to the extent
of a pro rata portion through the date of Disability of any additional
vesting rights that would have accrued on the next vesting date had the
Participant not become Disabled. The proration shall be based
upon the number of days accrued in the current vesting period prior to the
date of Disability.
|
A Disabled Participant may exercise
such rights only within the period ending one year after the date of the
Participant’s termination of employment, directorship or consultancy, as the
case may be, notwithstanding that the Participant might have been able to
exercise the Option as to some or all of the Shares on a later date if the
Participant had not become Disabled and had continued to be an employee,
director or consultant or, if earlier, within the originally prescribed term of
the Option.
11
The Administrator shall make the
determination both of whether Disability has occurred and the date of its
occurrence (unless a procedure for such determination is set forth in another
agreement between the Company and such Participant, in which case such procedure
shall be used for such determination). If requested, the Participant
shall be examined by a physician selected or approved by the Administrator, the
cost of which examination shall be paid for by the Company.
15.
|
EFFECT ON OPTIONS OF
DEATH WHILE AN EMPLOYEE, DIRECTOR OR
CONSULTANT.
|
Except as otherwise provided in a
Participant’s Option Agreement, in the event of the death of a Participant while
the Participant is an employee, director or consultant of the Company or of an
Affiliate, such Option may be exercised by the Participant’s
Survivors:
|
a.
|
To
the extent that the Option has become exercisable but has not been
exercised on the date of death; and
|
|
b.
|
In
the event rights to exercise the Option accrue periodically, to the extent
of a pro rata portion through the date of death of any additional vesting
rights that would have accrued on the next vesting date had the
Participant not died. The proration shall be based upon the
number of days accrued in the current vesting period prior to the
Participant’s date of death.
|
If the Participant’s Survivors wish to
exercise the Option, they must take all necessary steps to exercise the Option
within one year after the date of death of such Participant, notwithstanding
that the decedent might have been able to exercise the Option as to some or all
of the Shares on a later date if he or she had not died and had continued to be
an employee, director or consultant or, if earlier, within the originally
prescribed term of the Option.
16.
|
EFFECT OF TERMINATION
OF SERVICE ON STOCK GRANTS.
|
In the event of a termination of
service (whether as an employee, director or consultant) with the Company or an
Affiliate for any reason before the Participant has accepted a Stock Grant, such
offer shall terminate.
For purposes of this Paragraph 16 and
Paragraph 17 below, a Participant to whom a Stock Grant has been offered and
accepted under the Plan who is absent from work with the Company or with an
Affiliate because of temporary disability (any disability other than a permanent
and total Disability as defined in Paragraph 1 hereof), or who is on leave of
absence for any purpose, shall not, during the period of any such absence, be
deemed, by virtue of such absence alone, to have terminated such Participant’s
employment, director status or consultancy with the Company or with an
Affiliate, except as the Administrator may otherwise expressly
provide.
12
In addition, for purposes of this
Paragraph 16 and Paragraph 17 below, any change of employment or other service
within or among the Company and any Affiliates shall not be treated as a
termination of employment, director status or consultancy so long as the
Participant continues to be an employee, director or consultant of the Company
or any Affiliate.
17.
|
EFFECT ON STOCK GRANTS
OF TERMINATION OF SERVICE OTHER THAN “FOR CAUSE” OR DEATH OR
DISABILITY.
|
Except as otherwise provided in a
Participant’s Stock Grant Agreement, in the event of a termination of service
(whether as an employee, director or consultant), other than termination “for
cause,” Disability, or death for which events there are special rules in
Paragraphs 18, 19, and 20, respectively, before all Company rights of repurchase
shall have lapsed, then the Company shall have the right to repurchase that
number of Shares subject to a Stock Grant as to which the Company’s repurchase
rights have not lapsed.
18.
|
EFFECT ON STOCK GRANTS
OF TERMINATION OF SERVICE “FOR
CAUSE”.
|
Except as otherwise provided in a
Participant’s Stock Grant Agreement, the following rules apply if the
Participant’s service (whether as an employee, director or consultant) with the
Company or an Affiliate is terminated “for cause”:
|
a.
|
All
Shares subject to any Stock Grant shall be immediately subject to
repurchase by the Company at the purchase price, if any,
thereof.
|
|
b.
|
For
purposes of this Plan, “cause” shall include (and is not limited to)
dishonesty with respect to the employer, insubordination, substantial
malfeasance or non-feasance of duty, unauthorized disclosure of
confidential information, breach by the Participant of any provision of
any employment, consulting, advisory, nondisclosure, non-competition or
similar agreement between the Participant and the Company, and conduct
substantially prejudicial to the business of the Company or any
Affiliate. The determination of the Administrator as to the
existence of “cause” will be conclusive on the Participant and the
Company.
|
|
c.
|
“Cause”
is not limited to events which have occurred prior to a Participant’s
termination of service, nor is it necessary that the Administrator’s
finding of “cause” occur prior to termination. If the
Administrator determines, subsequent to a Participant’s termination of
service, that either prior or subsequent to the Participant’s termination
the Participant engaged in conduct which would constitute “cause,” then
the Company’s right to repurchase all of such Participant’s Shares shall
apply.
|
|
d.
|
Any
definition in an agreement between the Participant and the Company or an
Affiliate, which contains a conflicting definition of “cause” for
termination and which is in effect at the time of such termination, shall
supersede the definition in this Plan with respect to that
Participant.
|
13
19.
|
EFFECT ON STOCK GRANTS
OF TERMINATION OF SERVICE FOR
DISABILITY.
|
Except as otherwise provided in a
Participant’s Stock Grant Agreement, the following rules apply if a Participant
ceases to be an employee, director or consultant of the Company or of an
Affiliate by reason of Disability: to the extent the Company’s rights
of repurchase have not lapsed on the date of Disability, they shall be
exercisable; provided, however, that in the event such rights of repurchase
lapse periodically, such rights shall lapse to the extent of a pro rata portion
of the Shares subject to such Stock Grant through the date of Disability as
would have lapsed had the Participant not become Disabled. The
proration shall be based upon the number of days accrued prior to the date of
Disability.
The Administrator shall make the
determination both of whether Disability has occurred and the date of its
occurrence (unless a procedure for such determination is set forth in another
agreement between the Company and such Participant, in which case such procedure
shall be used for such determination). If requested, the Participant
shall be examined by a physician selected or approved by the Administrator, the
cost of which examination shall be paid for by the Company.
20.
|
EFFECT ON STOCK GRANTS
OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR
CONSULTANT.
|
Except as otherwise provided in a
Participant’s Stock Grant Agreement, the following rules apply in the event of
the death of a Participant while the Participant is an employee, director or
consultant of the Company or of an Affiliate: to the extent the
Company’s rights of repurchase have not lapsed on the date of death, they shall
be exercisable; provided, however, that in the event such rights of repurchase
lapse periodically, such rights shall lapse to the extent of a pro rata portion
of the Shares subject to such Stock Grant through the date of death as would
have lapsed had the Participant not died. The proration shall be
based upon the number of days accrued prior to the Participant’s
death.
21.
|
PURCHASE FOR
INVESTMENT.
|
Unless the offering and sale of the
Shares to be issued upon the particular exercise or acceptance of a Stock Right
shall have been effectively registered under the Securities Act of 1933, as now
in force or hereafter amended (the “1933 Act”), the Company shall be under no
obligation to issue the Shares covered by such exercise unless and until the
following conditions have been fulfilled:
14
|
a.
|
The
person(s) who exercise(s) or accept(s) such Stock Right shall warrant to
the Company, prior to the receipt of such Shares, that such person(s) are
acquiring such Shares for their own respective accounts, for investment,
and not with a view to, or for sale in connection with, the distribution
of any such Shares, in which event the person(s) acquiring such Shares
shall be bound by the provisions of the following legend which shall be
endorsed upon the certificate(s) evidencing their Shares issued pursuant
to such exercise or such grant:
|
|
“The
shares represented by this certificate have been taken for investment and
they may not be sold or otherwise transferred by any person, including a
pledgee, unless (1) either (a) a Registration Statement with respect to
such shares shall be effective under the Securities Act of 1933, as
amended, or (b) the Company shall have received an opinion of counsel
satisfactory to it that an exemption from registration under such Act is
then available, and (2) there shall have been compliance with all
applicable state securities laws.”
|
|
b.
|
At
the discretion of the Administrator, the Company shall have received an
opinion of its counsel that the Shares may be issued upon such particular
exercise or acceptance in compliance with the 1933 Act without
registration thereunder.
|
22.
|
DISSOLUTION OR
LIQUIDATION OF THE COMPANY.
|
Upon the dissolution or liquidation of
the Company, all Options granted under this Plan which as of such date shall not
have been exercised and all Stock Grants which have not been accepted will
terminate and become null and void; provided, however, that if the rights of a
Participant or a Participant’s Survivors have not otherwise terminated and
expired, the Participant or the Participant’s Survivors will have the right
immediately prior to such dissolution or liquidation to exercise or accept any
Stock Right to the extent that the Stock Right is exercisable or subject to
acceptance as of the date immediately prior to such dissolution or
liquidation.
23.
|
ADJUSTMENTS.
|
Upon the occurrence of any of the
following events, a Participant’s rights with respect to any Stock Right granted
to him or her hereunder shall be adjusted as hereinafter provided, unless
otherwise specifically provided in a Participant’s Option Agreement or Stock
Grant Agreement:
A. Stock Dividends and Stock
Splits. If (i) the shares of Common Stock shall be
subdivided or combined into a greater or smaller number of shares or if the
Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, or (ii) additional shares or new or different
shares or other securities of the Company or other non-cash assets are
distributed with respect to such shares of Common Stock, the number of shares of
Common Stock deliverable upon the exercise or acceptance of such Stock Right may
be appropriately increased or decreased proportionately, and appropriate
adjustments may be made including, in the purchase price per share, to reflect
such events.
15
B. Corporate
Transactions. If the Company is to be consolidated with or
acquired by another entity in a merger, sale of all or substantially all of the
Company’s assets other than a transaction to merely change the state of
incorporation (a “Corporate Transaction”), the Administrator or the board of
directors of any entity assuming the obligations of the Company hereunder (the
“Successor Board”), shall, as to outstanding Options, either (i) make
appropriate provision for the continuation of such Options by substituting on an
equitable basis for the Shares then subject to such Options either the
consideration payable with respect to the outstanding shares of Common Stock in
connection with the Corporate Transaction or securities of any successor or
acquiring entity; or (ii) upon written notice to the Participants, provide that
all Options must be exercised (either to the extent then exercisable or, at the
discretion of the Administrator, or, upon a change of control of the Company,
all Options being made fully exercisable for purposes of this Subparagraph),
within a specified number of days of the date of such notice, at the end of
which period the Options shall terminate; or (iii) terminate all Options in
exchange for a cash payment equal to the excess of the Fair Market Value of the
Shares subject to such Options (either to the extent then exercisable or, at the
discretion of the Administrator, all Options being made fully exercisable for
purposes of this Subparagraph) over the exercise price thereof.
With respect to outstanding Stock
Grants, the Administrator or the Successor Board, shall either (i) make
appropriate provisions for the continuation of such Stock Grants by substituting
on an equitable basis for the Shares then subject to such Stock Grants either
the consideration payable with respect to the outstanding Shares of Common Stock
in connection with the Corporate Transaction or securities of any successor or
acquiring entity; or (ii) upon written notice to the Participants, provide that
all Stock Grants must be accepted (to the extent then subject to acceptance)
within a specified number of days of the date of such notice, at the end of
which period the offer of the Stock Grants shall terminate; or (iii) terminate
all Stock Grants in exchange for a cash payment equal to the excess of the Fair
Market Value of the Shares subject to such Stock Grants over the purchase price
thereof, if any. In addition, in the event of a Corporate
Transaction, the Administrator may waive any or all Company repurchase rights
with respect to outstanding Stock Grants.
C. Recapitalization or
Reorganization. In the event of a recapitalization or
reorganization of the Company other than a Corporate Transaction pursuant to
which securities of the Company or of another corporation are issued with
respect to the outstanding shares of Common Stock, a Participant upon exercising
or accepting a Stock Right after the recapitalization or reorganization shall be
entitled to receive for the purchase price paid upon such exercise or acceptance
the number of replacement securities which would have been received if such
Stock Right had been exercised or accepted prior to such recapitalization or
reorganization.
D. Modification of
ISOs. Notwithstanding the foregoing, any adjustments made
pursuant to Subparagraph A, B or C above with respect to ISOs shall be made only
after the Administrator determines whether such adjustments would constitute a
“modification” of such ISOs (as that term is defined in Section 424(h) of
the Code) or would cause any adverse tax consequences for the holders of such
ISOs. If the Administrator determines that such adjustments made with
respect to ISOs would constitute a modification of such ISOs, it may refrain
from making such adjustments, unless the holder of an ISO specifically requests
in writing that such adjustment be made and such writing indicates that the
holder has full knowledge of the consequences of such “modification” on his or
her income tax treatment with respect to the ISO.
16
24.
|
ISSUANCES OF
SECURITIES.
|
Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into 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
subject to Stock Rights. Except as expressly provided herein, no
adjustments shall be made for dividends paid in cash or in property (including
without limitation, securities) of the Company prior to any issuance of Shares
pursuant to a Stock Right.
25.
|
FRACTIONAL
SHARES.
|
No fractional shares shall be issued
under the Plan and the person exercising a Stock Right shall receive from the
Company cash in lieu of such fractional shares equal to the Fair Market Value
thereof.
26.
|
CONVERSION OF ISOs
INTO NON-QUALIFIED OPTIONS; TERMINATION OF
ISOs.
|
The Administrator, at the written
request of any Participant, may in its discretion take such actions as may be
necessary to convert such Participant’s ISOs (or any portions thereof) that have
not been exercised on the date of conversion into Non-Qualified Options at any
time prior to the expiration of such ISOs, regardless of whether the Participant
is an employee of the Company or an Affiliate at the time of such
conversion. At the time of such conversion, the Administrator (with
the consent of the Participant) may impose such conditions on the exercise of
the resulting Non-Qualified Options as the Administrator in its discretion may
determine, provided that such conditions shall not be inconsistent with this
Plan. Nothing in the Plan shall be deemed to give any Participant the
right to have such Participant’s ISOs converted into Non-Qualified Options, and
no such conversion shall occur until and unless the Administrator takes
appropriate action. The Administrator, with the consent of the
Participant, may also terminate any portion of any ISO that has not been
exercised at the time of such conversion.
17
27.
|
WITHHOLDING.
|
In the event that any federal, state,
or local income taxes, employment taxes, Federal Insurance Contributions Act
(“F.I.C.A.”) withholdings or other amounts are required by applicable law or
governmental regulation to be withheld from the Participant’s salary, wages or
other remuneration in connection with the exercise or acceptance of a Stock
Right or in connection with a Disqualifying Disposition (as defined in Paragraph
28) or upon the lapsing of any right of repurchase, the Company may withhold
from the Participant’s compensation, if any, or may require that the Participant
advance in cash to the Company, or to any Affiliate of the Company which employs
or employed the Participant, the statutory minimum amount of such withholdings
unless a different withholding arrangement, including the use of shares of the
Company’s Common Stock or a promissory note, is authorized by the Administrator
(and permitted by law). For purposes hereof, the fair market value of
the shares withheld for purposes of payroll withholding shall be determined in
the manner provided in Paragraph 1 above, as of the most recent practicable date
prior to the date of exercise. If the fair market value of the shares
withheld is less than the amount of payroll withholdings required, the
Participant may be required to advance the difference in cash to the Company or
the Affiliate employer. The Administrator in its discretion may
condition the exercise of an Option for less than the then Fair Market Value on
the Participant’s payment of such additional withholding.
28.
|
NOTICE TO COMPANY OF
DISQUALIFYING DISPOSITION.
|
Each Employee who receives an ISO must
agree to notify the Company in writing immediately after the Employee makes a
Disqualifying Disposition of any shares acquired pursuant to the exercise of an
ISO. A Disqualifying Disposition is defined in Section 424(c) of the
Code and includes any disposition (including any sale or gift) of such shares
before the later of (a) two years after the date the Employee was granted the
ISO, or (b) one year after the date the Employee acquired Shares by exercising
the ISO, except as otherwise provided in Section 424(c) of the
Code. If the Employee has died before such stock is sold, these
holding period requirements do not apply and no Disqualifying Disposition can
occur thereafter.
29.
|
TERMINATION OF THE
PLAN.
|
The Plan will terminate on March 4,
2014, the date which is ten years from the earlier of the date
of its adoption by the Board of Directors and the date of its approval by the
shareholders. The Plan may be terminated at an earlier date by vote
of the shareholders or the Board of Directors of the Company; provided, however,
that any such earlier termination shall not affect any Option Agreements or
Stock Grant Agreements executed prior to the effective date of such
termination.
18
30.
|
AMENDMENT OF THE PLAN
AND AGREEMENTS.
|
The Plan may be amended by the
shareholders of the Company. The Plan may also be amended by the
Administrator, including, without limitation, to the extent necessary to qualify
any or all outstanding Stock Rights granted under the Plan or Stock Rights to be
granted under the Plan for favorable federal income tax treatment (including
deferral of taxation upon exercise) as may be afforded incentive stock options
under Section 422 of the Code, and to the extent necessary to qualify the shares
issuable upon exercise or acceptance of any outstanding Stock Rights granted, or
Stock Rights to be granted, under the Plan for listing on any national
securities exchange or quotation in any national automated quotation system of
securities dealers. Any amendment approved by the Administrator which
the Administrator determines is of a scope that requires shareholder approval
shall be subject to obtaining such shareholder approval. Any
modification or amendment of the Plan shall not, without the consent of a
Participant, adversely affect his or her rights under a Stock Right previously
granted to him or her. With the consent of the Participant affected,
the Administrator may amend outstanding Option Agreements and Stock Grant
Agreements in a manner which may be adverse to the Participant but which is not
inconsistent with the Plan. In the discretion of the Administrator,
outstanding Option Agreements and Stock Grant Agreements may be amended by the
Administrator in a manner which is not adverse to the
Participant.
31.
|
EMPLOYMENT OR OTHER
RELATIONSHIP.
|
Nothing in this Plan or any Option
Agreement or Stock Grant Agreement shall be deemed to prevent the Company or an
Affiliate from terminating the employment, consultancy or director status of a
Participant, nor to prevent a Participant from terminating his or her own
employment, consultancy or director status or to give any Participant a right to
be retained in employment or other service by the Company or any Affiliate for
any period of time.
32.
|
GOVERNING
LAW.
|
This Plan shall be construed and
enforced in accordance with the law of the State of
Delaware.
19