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8-K - WaferGen Bio-systems, Inc. | v197223_8k.htm |
WaferGen
Bio-Systems, Inc.
2008
Stock Incentive Plan
(as
amended)
1. Purposes of the
Plan. The purposes of this Plan are to attract and retain the
best available personnel, to provide additional incentives to Employees,
Directors and Consultants and to promote the success of the Company’s
business.
2. Definitions. The
following definitions shall apply as used herein and in the individual Award
Agreements except as defined otherwise in an individual Award
Agreement. In the event a term is separately defined in an individual
Award Agreement, such definition shall supersede the definition contained in
this Section 2.
(a) “Administrator” means
the Board or any of the Committees appointed to administer the
Plan.
(b) “Affiliate” and “Associate” shall have
the respective meanings ascribed to such terms in Rule 12b-2 promulgated
under the Exchange Act.
(c) “Applicable Laws”
means the legal requirements relating to the Plan and the Awards under
applicable provisions of federal and state securities laws, the corporate laws
of California and, to the extent other than California, the corporate law of the
state of the Company’s incorporation, the Code, the rules of any applicable
stock exchange or national market system, and the rules of any non-U.S.
jurisdiction applicable to Awards granted to residents therein.
(d) “Assumed” means that
pursuant to a Corporate Transaction either (i) the Award is expressly
affirmed by the Company or (ii) the contractual obligations represented by the
Award are expressly assumed (and not simply by operation of law) by the
successor entity or its Parent in connection with the Corporate Transaction with
appropriate adjustments to the number and type of securities of the successor
entity or its Parent subject to the Award and the exercise or purchase price
thereof which at least preserves the compensation element of the Award existing
at the time of the Corporate Transaction as determined in accordance with the
instruments evidencing the agreement to assume the Award.
(e) “Award” means the
grant of an Option, SAR, Dividend Equivalent Right, Restricted Stock, Restricted
Stock Unit or other right or benefit under the Plan.
(f) “Award Agreement”
means the written agreement evidencing the grant of an Award executed by the
Company and the Grantee, including any amendments thereto.
(g) “Board” means the
Board of Directors of the Company.
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(h) “Cause” means, with
respect to the termination by the Company or a Related Entity of the Grantee’s
Continuous Service, that such termination is for “Cause” as such term (or word
of like import) is expressly defined in a then-effective written agreement
between the Grantee and the Company or such Related Entity, or in the absence of
such then-effective written agreement and definition, is based on, in the
determination of the Administrator, the
Grantee’s: (i) performance of any act or failure to perform any
act in bad faith and to the detriment of the Company or a Related Entity;
(ii) dishonesty, intentional misconduct or material breach of any agreement
with the Company or a Related Entity; or (iii) commission of a crime
involving dishonesty, breach of trust, or physical or emotional harm to any
person; provided, however, that with regard to any agreement that defines
“Cause” on the occurrence of or in connection with a Corporate Transaction or a
Change in Control, such definition of “Cause” shall not apply until a Corporate
Transaction or a Change in Control actually occurs.
(i) “Change in
Control” means a change in
ownership or control of the Company affected through either of the following
transactions:
(i) the
direct or indirect acquisition by any person or related group of persons (other
than an acquisition from or by the Company or by a Company-sponsored employee
benefit plan or by a person that directly or indirectly controls, is controlled
by, or is under common control with, the Company) of beneficial ownership
(within the meaning of Rule 13d-3 of the Exchange Act) of securities
possessing more than fifty percent (50%) of the total combined voting power of
the Company’s outstanding securities pursuant to a tender or exchange offer made
directly to the Company’s stockholders which a majority of the Continuing
Directors who are not Affiliates or Associates of the offeror do not recommend
such stockholders accept, or
(ii) a change
in the composition of the Board over a period of twelve (12) months or less such
that a majority of the Board members (rounded up to the next whole number)
ceases, by reason of one or more contested elections for Board membership, to be
comprised of individuals who are Continuing Directors.
(j) “Code” means the
Internal Revenue Code of 1986, as amended.
(k) “Committee” means any
committee composed of members of the Board appointed by the Board to administer
the Plan.
(l) “Common Stock” means
the common stock of the Company.
(m) “Company” means
WaferGen Bio-systems, Inc., a Nevada corporation, or any successor entity that
adopts the Plan in connection with a Corporate Transaction.
(n) “Consultant” means any
person (other than an Employee or a Director, solely with respect to rendering
services in such person’s capacity as a Director) who is engaged by the Company
or any Related Entity to render consulting or advisory services to the Company
or such Related Entity.
(o) “Continuing Directors”
means members of the Board who either (i) have been Board members
continuously for a period of at least twelve (12) months or
(ii) have been Board members for less than twelve (12) months and were
elected or nominated for election as Board members by at least a majority of the
Board members described in clause (i) who were still in office at the time
such election or nomination was approved by the Board.
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(p) “Continuous Service”
means that the provision of services to the Company or a Related Entity in any
capacity of Employee, Director or Consultant is not interrupted or
terminated. In jurisdictions requiring notice in advance of an
effective termination as an Employee, Director or Consultant, Continuous Service
shall be deemed terminated upon the actual cessation of providing services to
the Company or a Related Entity notwithstanding any required notice period that
must be fulfilled before a termination as an Employee, Director or Consultant
can be effective under Applicable Laws. A Grantee’s Continuous
Service shall be deemed to have terminated either upon an actual termination of
Continuous Service or upon the entity for which the Grantee provides services
ceasing to be a Related Entity. Continuous Service shall not be
considered interrupted in the case of (i) any approved leave of absence,
(ii) transfers among the Company, any Related Entity, or any successor, in
any capacity of Employee, Director or Consultant, or (iii) any change in
status as long as the individual remains in the service of the Company or a
Related Entity in any capacity of Employee, Director or Consultant (except as
otherwise provided in the Award Agreement). An approved leave of
absence shall include sick leave, military leave, or any other authorized
personal leave. For purposes of each Incentive Stock Option granted
under the Plan, if such leave exceeds three (3) months, and reemployment upon
expiration of such leave is not guaranteed by statute or contract, then the
Incentive Stock Option shall be treated as a Non-Qualified Stock Option on the
day three (3) months and one (1) day following the expiration of such three (3)
month period.
(q) “Corporate
Transaction” means any of the following transactions, provided, however,
that the Administrator shall determine under parts (iv) and (v) whether multiple
transactions are related, and its determination shall be final, binding and
conclusive:
(i) a merger
or consolidation in which the Company is not the surviving entity, except for a
transaction the principal purpose of which is to change the state in which the
Company is incorporated;
(ii) the sale,
transfer or other disposition of all or substantially all of the assets of the
Company;
(iii) the
complete liquidation or dissolution of the Company;
(iv) any
reverse merger or series of related transactions culminating in a reverse merger
(including, but not limited to, a tender offer followed by a reverse merger) in
which the Company is the surviving entity but (A) the shares of Common
Stock outstanding immediately prior to such merger are converted or exchanged by
virtue of the merger into other property, whether in the form of securities,
cash or otherwise, or (B) in which securities possessing more than fifty
percent (50%) of the total combined voting power of the Company’s outstanding
securities are transferred to a person or persons different from those who held
such securities immediately prior to such merger or the initial transaction
culminating in such merger; or
(v) acquisition
in a single or series of related transactions by any person or related group of
persons (other than the Company or by a Company-sponsored employee benefit plan)
of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act)
of securities possessing more than fifty percent (50%) of the total combined
voting power of the Company’s outstanding securities but excluding any such
transaction or series of related transactions that the Administrator determines
shall not be a Corporate Transaction.
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(r) “Covered Employee”
means an Employee who is a “covered employee” under Section 162(m)(3) of
the Code.
(s) “Director” means a
member of the Board or the board of directors of any Related
Entity.
(t) “Disability” means as
defined under the long-term disability policy of the Company or the Related
Entity to which the Grantee provides services regardless of whether the Grantee
is covered by such policy. If the Company or the Related Entity to
which the Grantee provides service does not have a long-term disability plan in
place, “Disability” means that a Grantee is unable to carry out the
responsibilities and functions of the position held by the Grantee by reason of
any medically determinable physical or mental impairment for a period of not
less than ninety (90) consecutive days. A Grantee will not be
considered to have incurred a Disability unless he or she furnishes proof of
such impairment sufficient to satisfy the Administrator in its
discretion.
(u) “Dividend Equivalent
Right” means a right entitling the Grantee to compensation measured by
dividends paid with respect to Common Stock.
(v) “Employee” means any
person, including an Officer or Director, who is in the employ of the Company or
any Related Entity, subject to the control and direction of the Company or any
Related Entity as to both the work to be performed and the manner and method of
performance. The payment of a director’s fee by the Company or a
Related Entity shall not be sufficient to constitute “employment” by the
Company.
(w) “Exchange Act” means
the Securities Exchange Act of 1934, as amended.
(x) “Fair Market Value”
means, as of any date, the value of Common Stock determined as
follows:
(i) If the
Common Stock is listed on one or more established stock exchanges or national
market systems, including without limitation The NASDAQ Global Select Market,
The NASDAQ Global Market or The NASDAQ Capital Market of The NASDAQ Stock Market
LLC, its Fair Market Value shall be the closing sales price for such stock (or
the closing bid, if no sales were reported) as quoted on the principal exchange
or system on which the Common Stock is listed (as determined by the
Administrator) on the date of determination (or, if no closing sales price or
closing bid was reported on that date, as applicable, on the last trading date
such closing sales price or closing bid was reported), as reported in The Wall
Street Journal or such other source as the Administrator deems
reliable;
(ii) If the
Common Stock is regularly quoted on an automated quotation system (including the
OTC Bulletin Board) or by a recognized securities dealer, its Fair Market Value
shall be the closing sales price for such stock as quoted on such system or by
such securities dealer on the date of determination, but if selling prices are
not reported, the Fair Market Value of a share of Common Stock shall be the mean
between the high bid and low asked prices for the Common Stock on the date of
determination (or, if no such prices were reported on that date, on the last
date such prices were reported), as reported in The Wall Street Journal or such
other source as the Administrator deems reliable; or
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(iii) In the
absence of an established market for the Common Stock of the type described in
(i) and (ii), above, the Fair Market Value thereof shall be determined by the
Administrator in good faith and in a manner consistent with Applicable
Laws.
(y) “Grantee” means an
Employee, Director or Consultant who receives an Award under the
Plan.
(z) “Immediate Family”
means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse,
former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in law,
daughter-in-law, brother-in-law, or sister-in-law, including adoptive
relationships, any person sharing the Grantee’s household (other than a tenant
or employee), a trust in which these persons (or the Grantee) have more than
fifty percent (50%) of the beneficial interest, a foundation in which these
persons (or the Grantee) control the management of assets, and any other entity
in which these persons (or the Grantee) own more than fifty percent (50%) of the
voting interests.
(aa) “Incentive Stock
Option” means an Option intended to qualify as an incentive stock option
within the meaning of Section 422 of the Code.
(bb) “Non-Qualified Stock
Option” means an Option not intended to qualify as an Incentive Stock
Option.
(cc) “Officer” means a
person who is an officer of the Company or a Related Entity within the meaning
of Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder.
(dd) “Option” means an
option to purchase Shares pursuant to an Award Agreement granted under the
Plan.
(ee) “Parent” means a
“parent corporation”, whether now or hereafter existing, as defined in
Section 424(e) of the Code.
(ff) “Performance-Based
Compensation” means compensation qualifying as “performance-based
compensation” under Section 162(m) of the Code.
(gg) “Plan” means this 2008
Stock Incentive Plan.
(hh) “Post-Termination Exercise
Period” means the period specified in the Award Agreement and to the
extent required by Applicable Laws, shall be a period of not less than thirty
(30) days commencing on the date of termination (other than termination by the
Company or any Related Entity for Cause) of the Grantee’s Continuous Service, or
such longer period as may be required by Applicable Laws upon death or
Disability.
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(ii) “Related Entity” means
any Parent or Subsidiary of the Company.
(jj) “Replaced” means that
pursuant to a Corporate Transaction the Award is replaced with a comparable
stock award or a cash incentive program of the Company, the successor entity (if
applicable) or Parent of either of them which preserves the compensation element
of such Award existing at the time of the Corporate Transaction and provides for
subsequent payout in accordance with the same (or a more favorable) vesting
schedule applicable to such Award. The determination of Award
comparability shall be made by the Administrator and its determination shall be
final, binding and conclusive.
(kk) “Restricted Stock”
means Shares issued under the Plan to the Grantee for such consideration, if
any, and subject to such restrictions on transfer, rights of first refusal,
repurchase provisions, forfeiture provisions, and other terms and conditions as
established by the Administrator.
(ll) “Restricted Stock
Units” means an Award which may be earned in whole or in part upon the
passage of time or the attainment of performance criteria established by the
Administrator and which may be settled for cash, Shares or other securities or a
combination of cash, Shares or other securities as established by the
Administrator.
(mm) “Rule 16b-3”
means Rule 16b-3 promulgated under the Exchange Act or any successor
thereto.
(nn) “SAR” means a stock
appreciation right entitling the Grantee to Shares or cash compensation, as
established by the Administrator, measured by appreciation in the value of
Common Stock.
(oo) “Share” means a share
of the Common Stock.
(pp) “Subsidiary” means a
“subsidiary corporation”, whether now or hereafter existing, as defined in
Section 424(f) of the Code.
3. Stock Subject to the
Plan.
(a) Subject
to the provisions of Section 10 below, the maximum aggregate number of
Shares which may be issued pursuant to all Awards (including Incentive Stock
Options) is Six Million Five Hundred Thousand (6,500,000)
Shares. Notwithstanding the foregoing, the maximum aggregate number
of Shares which may be issued pursuant to all Awards of Restricted Stock and
Restricted Stock Units is Three Million Two Hundred Fifty Thousand (3,250,000)
Shares. The Shares may be authorized, but unissued, or reacquired
Common Stock.
(b) Any
Shares covered by an Award (or portion of an Award) which is forfeited, canceled
or expires (whether voluntarily or involuntarily) shall be deemed not to have
been issued for purposes of determining the maximum aggregate number of Shares
which may be issued under the Plan. Shares that actually have been
issued under the Plan pursuant to an Award shall not be returned to the Plan and
shall not become available for future issuance under the Plan, except that if
unvested Shares are forfeited or repurchased by the Company, such Shares shall
become available for future grant under the Plan. To the extent not
prohibited by the listing requirements of The NASDAQ Stock Market LLC (or other
established stock exchange or national market system on which the Common Stock
is traded) and Applicable Law, any Shares covered by an Award which are
surrendered (i) in payment of the Award exercise or purchase price or
(ii) in satisfaction of tax withholding obligations incident to the
exercise of an Award shall be deemed not to have been issued for purposes of
determining the maximum number of Shares which may be issued pursuant to all
Awards under the Plan, unless otherwise determined by the
Administrator.
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4. Administration of the
Plan.
(a) Plan
Administrator.
(i) Administration with Respect
to Directors and Officers. With respect to grants of Awards to
Directors or Employees who are also Officers or Directors of the Company, the
Plan shall be administered by (A) the Board or (B) a Committee
designated by the Board, which Committee shall be constituted in such a manner
as to satisfy the Applicable Laws and to permit such grants and related
transactions under the Plan to be exempt from Section 16(b) of the Exchange Act
in accordance with Rule 16b-3. Once appointed, such Committee
shall continue to serve in its designated capacity until otherwise directed by
the Board.
(ii) Administration With Respect
to Consultants and Other Employees. With respect to grants of
Awards to Employees or Consultants who are neither Directors nor Officers of the
Company, the Plan shall be administered by (A) the Board or (B) a Committee
designated by the Board, which Committee shall be constituted in such a manner
as to satisfy the Applicable Laws. Once appointed, such Committee
shall continue to serve in its designated capacity until otherwise directed by
the Board. The Board may authorize one or more Officers to grant such
Awards and may limit such authority as the Board determines from time to
time.
(iii) Administration With Respect
to Covered Employees. Notwithstanding the foregoing, grants of
Awards to any Covered Employee intended to qualify as Performance-Based
Compensation shall be made only by a Committee (or subcommittee of a Committee)
which is comprised solely of two or more Directors eligible to serve on a
committee making Awards qualifying as Performance-Based
Compensation. In the case of such Awards granted to Covered
Employees, references to the “Administrator” or to a “Committee” shall be deemed
to be references to such Committee or subcommittee.
(iv) Administration
Errors. In the event an Award is granted in a manner
inconsistent with the provisions of this subsection (a), such Award shall
be presumptively valid as of its grant date to the extent permitted by the
Applicable Laws.
(b) Powers of the
Administrator. Subject to Applicable Laws and the provisions
of the Plan (including any other powers given to the Administrator hereunder),
and except as otherwise provided by the Board, the Administrator shall have the
authority, in its discretion:
(i) to select
the Employees, Directors and Consultants to whom Awards may be granted from time
to time hereunder;
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(ii) to
determine whether and to what extent Awards are granted hereunder;
(iii) to
determine the number of Shares or the amount of other consideration to be
covered by each Award granted hereunder;
(iv) to
approve forms of Award Agreements for use under the Plan;
(v) to
determine the terms and conditions of any Award granted hereunder;
(vi) to
establish additional terms, conditions, rules or procedures to accommodate the
rules or laws of applicable non-U.S. jurisdictions and to afford Grantees
favorable treatment under such rules or laws; provided, however, that no Award
shall be granted under any such additional terms, conditions, rules or
procedures with terms or conditions which are inconsistent with the provisions
of the Plan;
(vii) to amend
the terms of any outstanding Award granted under the Plan, provided that
(A) any amendment that would adversely affect the Grantee’s rights under an
outstanding Award shall not be made without the Grantee’s written consent,
provided, however, that an amendment or modification that may cause an Incentive
Stock Option to become a Non-Qualified Stock Option shall not be treated as
adversely affecting the rights of the Grantee (B) the reduction of the exercise
price of any Option awarded under the Plan and the base appreciation amount of
any SAR awarded under the Plan shall be subject to stockholder approval and
(C) canceling an Option or SAR at a time when its exercise price or base
appreciation amount (as applicable) exceeds the Fair Market Value of the
underlying Shares, in exchange for another Option, SAR, Restricted Stock, or
other Award shall be subject to stockholder approval, unless the cancellation
and exchange occurs in connection with a Corporate
Transaction. Notwithstanding the foregoing, canceling an Option or
SAR in exchange for another Option, SAR, Restricted Stock, or other Award with
an exercise price, purchase price or base appreciation amount (as applicable)
that is equal to or greater than the exercise price or base appreciation amount
(as applicable) of the original Option or SAR shall not be subject to
stockholder approval;
(viii) to
construe and interpret the terms of the Plan and Awards, including without
limitation, any notice of award or Award Agreement, granted pursuant to the Plan; and
(ix) to take
such other action, not inconsistent with the terms of the Plan, as the
Administrator deems appropriate.
The
express grant in the Plan of any specific power to the Administrator shall not
be construed as limiting any power or authority of the Administrator; provided
that the Administrator may not exercise any right or power reserved to the
Board. Any decision made, or action taken, by the Administrator or in
connection with the administration of this Plan shall be final, conclusive and
binding on all persons having an interest in the Plan.
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(c) Indemnification. In
addition to such other rights of indemnification as they may have as members of
the Board or as Officers or Employees of the Company or a Related Entity,
members of the Board and any Officers or Employees of the Company or a Related
Entity to whom authority to act for the Board, the Administrator or the Company
is delegated shall be defended and indemnified by the Company to the extent
permitted by law on an after-tax basis against all reasonable expenses,
including attorneys’ fees, actually and necessarily incurred in connection with
the defense of any claim, investigation, action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan, or any Award granted hereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by the Company) or paid
by them in satisfaction of a judgment in any such claim, investigation, action,
suit or proceeding, except in relation to matters as to which it shall be
adjudged in such claim, investigation, action, suit or proceeding that such
person is liable for gross negligence, bad faith or intentional misconduct;
provided, however, that within thirty (30) days after the institution of such
claim, investigation, action, suit or proceeding, such person shall offer to the
Company, in writing, the opportunity at the Company’s expense to defend the
same.
5. Eligibility. Awards
other than Incentive Stock Options may be granted to Employees, Directors and
Consultants. Incentive Stock Options may be granted only to Employees
of the Company or a Parent or a Subsidiary of the Company. An
Employee, Director or Consultant who has been granted an Award may, if otherwise
eligible, be granted additional Awards. Awards may be granted to such
Employees, Directors or Consultants who are residing in non-U.S. jurisdictions
as the Administrator may determine from time to time.
6. Terms and Conditions of
Awards.
(a) Types of Awards. The
Administrator is authorized under the Plan to award any type of arrangement to
an Employee, Director or Consultant that is not inconsistent with the provisions
of the Plan and that by its terms involves or might involve the issuance of
(i) Shares, (ii) cash or (iii) an Option, a SAR, or similar right
with a fixed or variable price related to the Fair Market Value of the Shares
and with an exercise or conversion privilege related to the passage of time, the
occurrence of one or more events, or the satisfaction of performance criteria or
other conditions. Such awards include, without limitation, Options,
SARs, sales or bonuses of Restricted Stock, Restricted Stock Units or Dividend
Equivalent Rights, and an Award may consist of one such security or benefit, or
two (2) or more of them in any combination or alternative.
(b) Designation of
Award. Each Award shall be designated in the Award
Agreement. In the case of an Option, the Option shall be designated
as either an Incentive Stock Option or a Non-Qualified Stock
Option. However, notwithstanding such designation, an Option will
qualify as an Incentive Stock Option under the Code only to the extent the
$100,000 dollar limitation of Section 422(d) of the Code is not
exceeded. The $100,000 limitation of Section 422(d) of the Code
is calculated based on the aggregate Fair Market Value of the Shares subject to
Options designated as Incentive Stock Options which become exercisable for the
first time by a Grantee during any calendar year (under all plans of the Company
or any Parent or Subsidiary of the Company). For purposes of this
calculation, Incentive Stock 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 grant date of the relevant Option. In the event
that the Code or the regulations promulgated thereunder are amended after the
date the Plan becomes effective to provide for a different limit on the Fair
Market Value of Shares permitted to be subject to Incentive Stock Options, then
such different limit will be automatically incorporated herein and will apply to
any Options granted after the effective date of such amendment.
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(c) Conditions of
Award. Subject to the terms of the Plan, the Administrator
shall determine the provisions, terms, and conditions of each Award including,
but not limited to, the Award vesting schedule, repurchase provisions, rights of
first refusal, forfeiture provisions, form of payment (cash, Shares, or other
consideration) upon settlement of the Award, payment contingencies, and
satisfaction of any performance criteria. The performance criteria
established by the Administrator may be based on any one of, or combination of,
the following: (i) increase in share price, (ii) earnings per share, (iii) total
stockholder return, (iv) operating margin, (v) gross margin, (vi) return on
equity, (vii) return on assets, (viii) return on investment, (ix) operating
income, (x) net operating income, (xi) pre-tax profit, (xii) cash flow, (xiii)
revenue, (xiv) expenses, (xv) earnings before interest, taxes and depreciation,
(xvi) economic value added and (xvii) market share. The performance
criteria may be applicable to the Company, Related Entities and/or any
individual business units of the Company or any Related
Entity. Partial achievement of the specified criteria may result in a
payment or vesting corresponding to the degree of achievement as specified in
the Award Agreement. In addition, the performance criteria shall be
calculated in accordance with generally accepted accounting principles, but
excluding the effect (whether positive or negative) of any change in accounting
standards and any extraordinary, unusual or nonrecurring item, as determined by
the Administrator, occurring after the establishment of the performance criteria
applicable to the Award intended to be performance-based
compensation. Each such adjustment, if any, shall be made solely for
the purpose of providing a consistent basis from period to period for the
calculation of performance criteria in order to prevent the dilution or
enlargement of the Grantee’s rights with respect to an Award intended to be
performance-based compensation.
(d) Acquisitions and Other
Transactions. The Administrator may issue Awards under the
Plan in settlement, assumption or substitution for, outstanding awards or
obligations to grant future awards in connection with the Company or a Related
Entity acquiring another entity, an interest in another entity or an additional
interest in a Related Entity whether by merger, stock purchase, asset purchase
or other form of transaction.
(e) Deferral of Award
Payment. The Administrator may establish one or more programs
under the Plan to permit selected Grantees the opportunity to elect to defer
receipt of consideration upon exercise of an Award, satisfaction of performance
criteria, or other event that absent the election would entitle the Grantee to
payment or receipt of Shares or other consideration under an
Award. The Administrator may establish the election procedures, the
timing of such elections, the mechanisms for payments of, and accrual of
interest or other earnings, if any, on amounts, Shares or other consideration so
deferred, and such other terms, conditions, rules and procedures that the
Administrator deems advisable for the administration of any such deferral
program.
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(f) Separate
Programs. The Administrator may establish one or more separate
programs under the Plan for the purpose of issuing particular forms of Awards to
one or more classes of Grantees on such terms and conditions as determined by
the Administrator from time to time.
(g) Individual Limitations on
Awards.
(i) Individual Option and SAR
Limit. The maximum number of Shares with respect to which
Options and SARs may be granted to any Grantee in any calendar year shall be One
Million (1,000,000) Shares. The foregoing limitation shall be
adjusted proportionately in connection with any change in the Company’s
capitalization pursuant to Section 10, below. To the extent
required by Section 162(m) of the Code or the regulations thereunder, in
applying the foregoing limitation with respect to a Grantee, if any Option or
SAR is canceled, the canceled Option or SAR shall continue to count against the
maximum number of Shares with respect to which Options and SARs may be granted
to the Grantee. For this purpose, the repricing of an Option (or in
the case of a SAR, the base amount on which the stock appreciation is calculated
is reduced to reflect a reduction in the Fair Market Value of the Common Stock)
shall be treated as the cancellation of the existing Option or SAR and the grant
of a new Option or SAR.
(ii) Individual Limit for
Restricted Stock and Restricted Stock Units. For awards of
Restricted Stock and Restricted Stock Units that are intended to be
Performance-Based Compensation, the maximum number of Shares with respect to
which such Awards may be granted to any Grantee in any calendar year shall be
Five Hundred Thousand (500,000) Shares. The foregoing limitation
shall be adjusted proportionately in connection with any change in the Company’s
capitalization pursuant to Section 10, below.
(h) Early
Exercise. The Award Agreement may, but need not, include a
provision whereby the Grantee may elect at any time while an Employee, Director
or Consultant to exercise any part or all of the Award prior to full vesting of
the Award. Any unvested Shares received pursuant to such exercise may
be subject to a repurchase right in favor of the Company or a Related Entity or
to any other restriction the Administrator determines to be
appropriate.
(i) Term of
Award. The term of each Award shall shall be no more than
seven (7) years from the date of grant thereof. However, in the
case of an Incentive Stock Option granted to a Grantee who, at the time the
Option is granted, 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 of the Company, the term of the Incentive Stock Option shall be
five (5) years from the date of grant thereof or such shorter term as may
be provided in the Award Agreement. Notwithstanding the foregoing,
the specified term of any Award shall not include any period for which the
Grantee has elected to defer the receipt of the Shares or cash issuable pursuant
to the Award.
(j) Transferability of
Awards. Incentive
Stock Options 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 Grantee, only by
the Grantee. Other
Awards shall be transferable (i) by will and by the laws of descent and
distribution and (ii) during the lifetime of the Grantee, to the extent and
in the manner authorized by the Administrator by gift or pursuant to a domestic
relations order to members of the Grantee’s Immediate
Family. Notwithstanding the foregoing, the Grantee may designate one
or more beneficiaries of the Grantee’s Award in the event of the Grantee’s death
on a beneficiary designation form provided by the Administrator.
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(k) Time of Granting
Awards. The date of grant of an Award shall for all purposes
be the date on which the Administrator makes the determination to grant such
Award, or such other later date as is determined by the
Administrator.
7. Award Exercise or Purchase
Price, Consideration and Taxes.
(a) Exercise or Purchase
Price. The exercise or purchase price, if any, for an Award
shall be as follows:
(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 of the Company, the
per Share exercise price shall be not less than one hundred ten percent (110%)
of the Fair Market Value per Share on the date of grant; or
(B) granted
to any Employee other than an Employee described in the preceding paragraph, the
per Share exercise price shall be not less than one hundred percent (100%) of
the Fair Market Value per Share on the date of grant.
(ii) In the
case of a Non-Qualified Stock Option, the per Share exercise price shall be such
price as is determined by the Administrator.
(iii) In the
case of SARs, the base appreciation amount shall not be less than one hundred
percent (100%) of the Fair Market Value per Share on the date of
grant.
(iv) In the
case of Awards intended to qualify as Performance-Based Compensation, the
exercise or purchase price, if any, shall be not less than one hundred percent
(100%) of the Fair Market Value per Share on the date of grant.
(v) In the
case of the sale of Shares, the per Share purchase price, if any, shall be such
price as is determined by the Administrator.
(vi) In the
case of other Awards, such price as is determined by the
Administrator.
(vii) Notwithstanding
the foregoing provisions of this Section 7(a), in the case of an Award issued
pursuant to Section 6(d), above,
the exercise or purchase price for the Award shall be determined in accordance
with the provisions of the relevant instrument evidencing the agreement to issue
such Award.
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(b) Consideration. Subject
to Applicable Laws, the consideration to be paid for the Shares to be issued
upon exercise or purchase of an Award including the method of payment, shall be
determined by the Administrator. In addition to any other types of
consideration the Administrator may determine, the Administrator is authorized
to accept as consideration for Shares issued under the Plan the
following:
(i) cash;
(ii) check;
(iii) delivery
of Grantee’s promissory note with such recourse, interest, security, and
redemption provisions as the Administrator determines as appropriate (but only
to the extent that the acceptance or terms of the promissory note would not
violate an Applicable Law);
(iv) surrender
of Shares or delivery of a properly executed form of attestation of ownership of
Shares as the Administrator may require which have a Fair Market Value on the
date of surrender or attestation equal to the aggregate exercise price of the
Shares as to which said Award shall be exercised;
(v) with
respect to Options, payment through a broker-dealer sale and remittance
procedure pursuant to which the Grantee (A) shall provide written instructions
to a Company designated brokerage firm to effect the immediate sale of some or
all of the purchased Shares and remit to the Company sufficient funds to cover
the aggregate exercise price payable for the purchased Shares and (B) shall
provide written directives to the Company to deliver the certificates for the
purchased Shares directly to such brokerage firm in order to complete the sale
transaction;
(vi) with
respect to Options, payment through a “net exercise” such that, without the
payment of any funds, the Grantee may exercise the Option and receive the net
number of Shares equal to (i) the number of Shares as to which the Option
is being exercised, multiplied by (ii) a fraction, the numerator of which
is the Fair Market Value per Share (on such date as is determined by the
Administrator) less the Exercise Price per Share, and the denominator of which
is such Fair Market Value per Share (the number of net Shares to be received
shall be rounded down to the nearest whole number of Shares); or
(vii) any
combination of the foregoing methods of payment.
The
Administrator may at any time or from time to time, by adoption of or by
amendment to the standard forms of Award Agreement described in
Section 4(b)(iv), or by other means, grant Awards which do not permit all
of the foregoing forms of consideration to be used in payment for the Shares or
which otherwise restrict one or more forms of consideration.
(c) Taxes. No
Shares shall be delivered under the Plan to any Grantee or other person until
such Grantee or other person has made arrangements acceptable to the
Administrator for the satisfaction of any non-U.S., federal, state, or local
income and employment tax withholding obligations, including, without
limitation, obligations incident to the receipt of Shares. Upon
exercise or vesting of an Award the Company shall withhold or collect from the
Grantee an amount sufficient to satisfy such tax obligations, including, but not
limited to, by surrender of the whole number of Shares covered by the Award
sufficient to satisfy the minimum applicable tax withholding obligations
incident to the exercise or vesting of an Award (reduced to the lowest whole
number of Shares if such number of Shares withheld would result in withholding a
fractional Share with any remaining tax withholding settled in
cash).
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8. Exercise of
Award.
(a) Procedure for Exercise;
Rights as a Stockholder.
(i) Any Award
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator under the terms of the Plan and specified in
the Award Agreement.
(ii) An Award
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 Award by the person
entitled to exercise the Award and full payment for the Shares with respect to
which the Award is exercised has been made, including, to the extent selected,
use of the broker-dealer sale and remittance procedure to pay the purchase price
as provided in Section 7(b)(v).
(b) Exercise of Award Following
Termination of Continuous Service. To the extent required
under Applicable Laws, in the event of termination of a Grantee’s Continuous
Service for any reason other than Disability or death (but not in the event of a
Grantee’s change of status from Employee to Consultant or from Consultant to
Employee), such Grantee may, but only during the Post-Termination Exercise
Period (but in no event later than the expiration date of the term of such Award
as set forth in the Award Agreement), exercise the portion of the Grantee’s
Award that was vested at the date of such termination or such other portion of
the Grantee’s Award as may be determined by the Administrator. The
Grantee’s Award Agreement may provide that upon the termination of the Grantee’s
Continuous Service for Cause, the Grantee’s right to exercise the Award shall
terminate concurrently with the termination of Grantee’s Continuous
Service. In the event of a Grantee’s change of status from Employee
to Consultant, an Employee’s Incentive Stock Option shall convert automatically
to a Non-Qualified Stock Option on the day three (3) months and one day
following such change of status. To the extent that the Grantee’s
Award was unvested at the date of termination, or if the Grantee does not
exercise the vested portion of the Grantee’s Award within the Post-Termination
Exercise Period, the Award shall terminate. If Applicable Laws allow
for a shorter or longer Post-Termination Exercise Period, the Award may be
exercised following the termination of a Grantee’s Continuous Service only to
the extent provided in the Award Agreement.
(c) Disability of
Grantee. To the extent required under Applicable Laws, in the
event of termination of a Grantee’s Continuous Service as a result of his or her
Disability, such Grantee may, but only within twelve (12) months from the date
of such termination (or such longer period as specified in the Award Agreement
but in no event later than the expiration date of the term of such Award as set
forth in the Award Agreement), exercise the portion of the Grantee’s Award that
was vested at the date of such termination; provided, however, that if such
Disability is not a “disability” as such term is defined in
Section 22(e)(3) of the Code, in the case of an Incentive Stock Option such
Incentive Stock Option shall automatically convert to a Non-Qualified Stock
Option on the day three (3) months and one day following such
termination. To the extent that the Grantee’s Award was unvested at
the date of termination, or if Grantee does not exercise the vested portion of
the Grantee’s Award within the time specified herein, the Award shall
terminate. If Applicable Laws allow for a shorter or longer
Post-Termination Exercise Period upon a Grantee’s Continuous Service as a result
of Disability, the Award may be exercised following the termination of a
Grantee’s Continuous Service only to the extent provided in the Award
Agreement.
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(d) Death of
Grantee. To the extent required under Applicable Laws, in the
event of a termination of the Grantee’s Continuous Service as a result of his or
her death, or in the event of the death of the Grantee during the
Post-Termination Exercise Period or during the twelve (12) month period
following the Grantee’s termination of Continuous Service as a result of his or
her Disability, the Grantee’s estate or a person who acquired the right to
exercise the Award by bequest or inheritance may exercise the portion of the
Grantee’s Award that was vested as of the date of termination, within twelve
(12) months from the date of death (or such longer period as specified in the
Award Agreement but in no event later than the expiration of the term of such
Award as set forth in the Award Agreement). To the extent that, at
the time of death, the Grantee’s Award was unvested, or if the Grantee’s estate
or a person who acquired the right to exercise the Award by bequest or
inheritance does not exercise the vested portion of the Grantee’s Award within
the time specified herein, the Award shall terminate. If Applicable
Laws allow for a shorter or longer Post-Termination Exercise Period upon a
termination of the Grantee’s Continuous Service as a result of his or her death,
the Award may be exercised following the termination of a Grantee’s Continuous
Service only to the extent provided in the Award Agreement.
(e) Extension if Exercise
Prevented by Law. Notwithstanding the foregoing, if the
exercise of an Award within the applicable time periods set forth in this
Section 8 is prevented by the provisions of Section 9 below, the Award
shall remain exercisable until one (1) month after the date the Grantee is
notified by the Company that the Award is exercisable, but in any event no later
than the expiration of the term of such Award as set forth in the Award
Agreement.
9. Conditions Upon Issuance of
Shares.
(a) If at any
time the Administrator determines that the delivery of Shares pursuant to the
exercise, vesting or any other provision of an Award is or may be unlawful under
Applicable Laws, the vesting or right to exercise an Award or to otherwise
receive Shares pursuant to the terms of an Award shall be suspended until the
Administrator determines that such delivery is lawful and shall be further
subject to the approval of counsel for the Company with respect to such
compliance. The Company shall have no obligation to affect any
registration or qualification of the Shares under federal or state
laws.
(b) As a
condition to the exercise of an Award, the Company may require the person
exercising such Award 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 Applicable
Laws.
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10. Adjustments Upon Changes in
Capitalization. Subject to any required action by the
stockholders of the Company and Section 11 hereof, the number of Shares covered
by each outstanding Award, and the number of Shares which have been authorized
for issuance under the Plan but as to which no Awards have yet been granted or
which have been returned to the Plan, the exercise or purchase price of each
such outstanding Award, the maximum number of Shares with respect to which
Awards may be granted to any Grantee in any calendar year, as well as any other
terms that the Administrator determines require adjustment shall be
proportionately adjusted for (i) any increase or decrease in the number of
issued Shares resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Shares, or similar transaction affecting
the Shares, (ii) any other increase or decrease in the number of issued
Shares effected without receipt of consideration by the Company, or (iii)
any other transaction with respect to Common Stock including a corporate merger,
consolidation, acquisition of property or stock, separation (including a
spin-off or other distribution of stock or property), reorganization,
liquidation (whether partial or complete) or any similar transaction; provided,
however that conversion of any convertible securities of the Company shall not
be deemed to have been “effected without receipt of
consideration.” In the event of any distribution of cash or other
assets to stockholders other than a normal cash dividend, the Administrator
shall also make such adjustments as provided in this Section 10 or substitute,
exchange or grant Awards to effect such adjustments (collectively
“adjustments”). Any such adjustments to outstanding Awards will be
effected in a manner that precludes the enlargement of rights and benefits under
such Awards. In connection with the foregoing adjustments, the
Administrator may, in its discretion, prohibit the exercise of Awards or other
issuance of Shares, cash or other consideration pursuant to Awards during
certain periods of time. Except as the Administrator determines, no issuance by
the Company of shares of any class, or securities convertible into shares of any
class, shall affect, and no adjustment by reason hereof shall be made with
respect to, the number or price of Shares subject to an Award.
11. Corporate Transactions and
Changes in Control.
(a) Termination of Award to
Extent Not Assumed in Corporate Transaction. Effective upon
the consummation of a Corporate Transaction, all outstanding Awards under the
Plan shall terminate. However, all such Awards shall not terminate to
the extent they are Assumed in connection with the Corporate
Transaction.
(b) Acceleration of Award Upon
Corporate Transaction or Change in Control.
(i) Corporate
Transaction. Except as provided otherwise in an individual
Award Agreement, in the event of a Corporate Transaction and:
(A) for the
portion of each Award that is Assumed or Replaced, then such Award (if Assumed),
the replacement Award (if Replaced), or the cash incentive program (if Replaced)
automatically shall become fully vested, exercisable and payable and be released
from any repurchase or forfeiture rights (other than repurchase rights
exercisable at Fair Market Value) for all of the Shares (or other consideration)
at the time represented by such Assumed or Replaced portion of the Award,
immediately upon termination of the Grantee’s Continuous Service if such
Continuous Service is terminated by the successor company or the Company without
Cause within twelve (12) months after the Corporate Transaction;
and
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(B) for the
portion of each Award that is neither Assumed nor Replaced, such portion of the
Award shall automatically become fully vested and exercisable and be released
from any repurchase or forfeiture rights (other than repurchase rights
exercisable at Fair Market Value) for all of the Shares (or other consideration)
at the time represented by such portion of the Award, immediately prior to the
specified effective date of such Corporate Transaction, provided that the
Grantee’s Continuous Service has not terminated prior to such
date. For Awards that have an exercise feature, the portion of the
Award that is not Assumed shall terminate under subsection (a) of this Section
11 to the extent not exercised prior to the consummation of such Corporate
Transaction.
(ii) Change in
Control. Except as provided otherwise in an individual Award
Agreement, following a Change in Control (other than a Change in Control which
also is a Corporate Transaction) and upon the termination of the Continuous
Service of a Grantee if such Continuous Service is terminated by the Company or
Related Entity without Cause within twelve (12) months after a Change in
Control, each Award of such Grantee which is at the time outstanding under the
Plan automatically shall become fully vested and exercisable and be released
from any repurchase or forfeiture rights (other than repurchase rights
exercisable at Fair Market Value), immediately upon the termination of such
Continuous Service.
(c) Effect of Acceleration on
Incentive Stock Options. Any Incentive Stock Option
accelerated under this Section 11
in connection with a Corporate Transaction or Change in Control shall remain
exercisable as an Incentive Stock Option under the Code only to the extent the
$100,000 dollar limitation of Section 422(d) of the Code is not
exceeded.
12. Effective Date and Term of
Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board or its approval by the stockholders of the
Company. It shall continue in effect for a term of ten (10) years
unless sooner terminated. Subject to Section 17 below, and
Applicable Laws, Awards may be granted under the Plan upon its becoming
effective.
13. Amendment, Suspension or
Termination of the Plan.
(a) The Board
may at any time amend, suspend or terminate the Plan; provided, however, that no
such amendment shall be made without the approval of the Company’s stockholders
to the extent such approval is required by Applicable Laws, or if such amendment would
lessen the stockholder approval requirements of Section 4(b)(vi) or this
Section 13(a).
(b) No Award
may be granted during any suspension of the Plan or after termination of the
Plan.
(c) No
suspension or termination of the Plan (including termination of the Plan under
Section 12, above) shall adversely affect any rights under Awards already
granted to a Grantee.
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14. Reservation of
Shares.
(a) The
Company, during the term of the Plan, will at all times reserve and keep
available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.
(b) 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.
15. No Effect on Terms of
Employment/Consulting Relationship. The Plan shall not confer
upon any Grantee any right with respect to the Grantee’s Continuous Service, nor
shall it interfere in any way with his or her right or the right of the Company
or a Related Entity to terminate the Grantee’s Continuous Service at any time,
with or without Cause, and with or without notice. The ability of the
Company or any Related Entity to terminate the employment of a Grantee who is
employed at will is in no way affected by its determination that the Grantee’s
Continuous Service has been terminated for Cause for the purposes of this
Plan.
16. No Effect on Retirement and
Other Benefit Plans. Except as specifically provided in a
retirement or other benefit plan of the Company or a Related Entity, Awards
shall not be deemed compensation for purposes of computing benefits or
contributions under any retirement plan of the Company or a Related Entity, and
shall not affect any benefits under any other benefit plan of any kind or any
benefit plan subsequently instituted under which the availability or amount of
benefits is related to level of compensation. The Plan is not a
“Retirement Plan” or “Welfare Plan” under the Employee Retirement Income
Security Act of 1974, as amended.
17. Stockholder
Approval. Continuance of the Plan shall be subject to approval
by the stockholders of the Company within twelve (12) months before or after the
date the Plan is adopted. Such stockholder approval shall be obtained
in the degree and manner required under Applicable Laws. Any Award
exercised before stockholder approval is obtained shall be rescinded if
stockholder approval is not obtained within the time prescribed, and Shares
issued on the exercise of any such Award shall not be counted in determining
whether stockholder approval is obtained.
18. Information to
Grantees. To the extent required by Applicable Laws, the
Company shall provide to each Grantee, during the period for which such Grantee
has one or more Awards outstanding, copies of financial statements at least
annually. The Company shall not be required to provide such
information to persons whose duties in connection with the Company assure them
access to equivalent information.
19. Unfunded
Obligation. Grantees shall have the status of general
unsecured creditors of the Company. Any amounts payable to Grantees
pursuant to the Plan shall be unfunded and unsecured obligations for all
purposes, including, without limitation, Title I of the Employee Retirement
Income Security Act of 1974, as amended. Neither the Company nor any
Related Entity shall be required to segregate any monies from its general funds,
or to create any trusts, or establish any special accounts with respect to such
obligations. The Company shall retain at all times beneficial
ownership of any investments, including trust investments, which the Company may
make to fulfill its payment obligations hereunder. Any investments or
the creation or maintenance of any trust or any Grantee account shall not create
or constitute a trust or fiduciary relationship between the Administrator, the
Company or any Related Entity and a Grantee, or otherwise create any vested or
beneficial interest in any Grantee or the Grantee’s creditors in any assets of
the Company or a Related Entity. The Grantees shall have no claim against the
Company or any Related Entity for any changes in the value of any assets that
may be invested or reinvested by the Company with respect to the
Plan.
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20. Construction. Captions
and titles contained herein are for convenience only and shall not affect the
meaning or interpretation of any provision of the Plan. Except when
otherwise indicated by the context, the singular shall include the plural and
the plural shall include the singular. Use of the term “or” is not
intended to be exclusive, unless the context clearly requires
otherwise.
21. Nonexclusivity of The
Plan. Neither the adoption of the Plan by the Board, the
submission of the Plan to the stockholders of the Company for approval, nor any
provision of the Plan will be construed as creating any limitations on the power
of the Board to adopt such additional compensation arrangements as it may deem
desirable, including, without limitation, the granting of Awards otherwise than
under the Plan, and such arrangements may be either generally applicable or
applicable only in specific cases.
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