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EXHIBIT 10.4
EDEN BIOSCIENCE CORPORATION
2000 STOCK INCENTIVE PLAN
SECTION 1. PURPOSE
The purpose of the Eden Bioscience Corporation Stock Incentive Plan (the
"Plan") is to enhance the long-term shareholder value of Eden Bioscience
Corporation, a Washington corporation (the "Company"), by offering opportunities
to selected persons to participate in the Company's growth and success, and to
encourage them to remain in the service of the Company and its Related
Corporations (as defined in Section 2) and to acquire and maintain stock
ownership in the Company.
SECTION 2. DEFINITIONS
For purposes of the Plan, the following terms shall be defined as set
forth below:
"AWARD" means a grant of Options or Stock Awards, or any combination
thereof, pursuant to the Plan.
"BOARD" means the Board of Directors of the Company.
"CAUSE," unless otherwise defined in an employment or services agreement
between the Company or a Related Corporation and a Participant, means
dishonesty, fraud, misconduct, unauthorized use or disclosure of confidential
information or trade secrets, or conviction or confession of a crime punishable
by law (except minor violations), in each case as determined by the Plan
Administrator, and its determination shall be conclusive and binding.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COMMON STOCK" means the common stock, par value $0.0025 per share, of
the Company.
"COMPANY" means Eden Bioscience Corporation, a Washington corporation.
"CORPORATE TRANSACTION" means either of the following events:
(a) Consummation of any merger or consolidation of the Company with or
into another corporation or
(b) Consummation of any sale, lease, exchange or other transfer in one
transaction or a series of related transactions of all or substantially all the
Company's outstanding securities or all or substantially all the Company's
assets;
provided, however, that a Corporation Transaction shall not include (i) a merger
of the Company
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in which the holders of shares of Common Stock immediately prior
to the merger hold at least a majority of the shares of Common Stock in the
Successor Corporation immediately after the merger; (ii) a mere reincorporation
of the Company; (iii) a transaction undertaken for the sole purpose of creating
a holding company; or (iv) a transfer of the Company's assets to a
majority-owned subsidiary corporation (as defined in Section 8) of the Company.
"DISABILITY," unless otherwise defined by the Plan Administrator, means
a mental or physical impairment of the Participant that is expected to result in
death or that has lasted or is expected to last for a continuous period of 12
months or more and that causes the Participant to be unable, in the opinion of
the Company, to perform his or her duties for the Company or a Related
Corporation and to be engaged in any substantial gainful activity.
"EFFECTIVE DATE" has the meaning set forth in Section 16.
"EMPLOYMENT TERMINATION DATE" has the meaning set forth in Section 7.6.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FAIR MARKET VALUE" means the per share value of the Common Stock as
established in good faith by the Plan Administrator, or if the Common Stock is
(a) listed on the Nasdaq National Market, the closing sales price for the Common
Stock as reported by that market for a single trading day or (b) listed on the
New York Stock Exchange or the American Stock Exchange, the closing sales price
for the Common Stock as such price is officially quoted in the composite tape of
transactions on such exchange for a single trading day. If there is no such
reported price for the Common Stock for the date in question, then such price on
the last preceding date for which such price exists shall be determinative of
Fair Market Value.
"GOOD REASON" means the occurrence of any of the following events or
conditions and the failure of the Successor Corporation to cure such event or
condition within 30 days after receipt of written notice from the Participant:
(a) a change in the Participant's status, title, position or
responsibilities (including reporting responsibilities) that, in the
Participant's reasonable judgment, represents a substantial reduction in the
status, title, position or responsibilities as in effect immediately prior
thereto; the assignment to the Participant of any duties or responsibilities
that, in the Participant's reasonable judgment, are materially inconsistent with
such status, title, position or responsibilities; or any removal of the
Participant from or failure to reappoint or reelect the Participant to any of
such positions, except in connection with the termination of the Participant's
employment for Cause, as a result of his or her Disability or death, or by the
Participant other than for Good Reason;
(b) a reduction in the Participant's annual base salary;
(c) the Successor Corporation's requiring the Participant (without the
Participant's consent) to be based at any place outside a 50-mile radius of his
or her place of employment prior to a Corporate Transaction, except for
reasonably required travel on the Successor Corporation's business that is not
materially greater than such travel requirements prior to the Corporate
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Transaction;
(d) the Successor Corporation's failure to (i) continue in effect any
material compensation or benefit plan (or the substantial equivalent thereof) in
which the Participant was participating at the time of a Corporate Transaction,
including, but not limited to, the Plan, or (ii) provide the Participant with
compensation and benefits substantially equivalent (in terms of benefit levels
and/or reward opportunities) to those provided for under each material employee
benefit plan, program and practice as in effect immediately prior to the
Corporate Transaction;
(e) any material breach by the Successor Corporation of its obligations
to the Participant under the Plan or any substantially equivalent plan of the
Successor Corporation; or
(f) any purported termination of the Participant's employment or service
relationship for Cause by the Successor Corporation that is not in accordance
with the definition of Cause under the Plan.
"GRANT DATE" means the date on which the Plan Administrator completes
the corporate action relating to the grant of an Award and all conditions
precedent to the grant have been satisfied, provided that conditions to the
exercisability or vesting of Awards shall not defer the Grant Date.
"INCENTIVE STOCK OPTION" means an Option to purchase Common Stock
granted under Section 7 with the intention that it qualify as an "incentive
stock option" as that term is defined in Section 422 of the Code.
"NONQUALIFIED STOCK OPTION" means an Option to purchase Common Stock
granted under Section 7 other than an Incentive Stock Option.
"OPTION" means the right to purchase Common Stock granted under Section
7.
"OPTION EXPIRATION DATE" has the meaning set forth in Section 7.6.
"OPTION TERM" has the meaning set forth in Section 7.3.
"PARTICIPANT" means (a) the person to whom an Award is granted; (b) for
a Participant who has died, the personal representative of the Participant's
estate, the person(s) to whom the Participant's rights under the Award have
passed by will or by the applicable laws of descent and distribution, or the
beneficiary designated in accordance with Section 11; or (c) the person(s) to
whom an Award has been transferred in accordance with Section 11.
"PLAN ADMINISTRATOR" means the Board or any committee or committees
designated by the Board or any person to whom the Board has delegated authority
to administer the Plan under Section 3.1.
"RELATED CORPORATION" means any entity that, directly or indirectly, is
in control of or is controlled by the Company.
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"RETIREMENT" means retirement on or after the individual's normal
retirement date under the Company's 401(k) plan or other similar successor plan
applicable to salaried employees, unless otherwise defined by the Plan
Administrator from time to time for purposes of the Plan.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"STOCK AWARD" means an Award of shares of Common Stock or units
denominated in Common Stock granted under Section 9, the rights of ownership of
which may be subject to restrictions prescribed by the Plan Administrator.
"SUCCESSOR CORPORATION" has the meaning set forth in Section 12.3.1.
"VESTING COMMENCEMENT DATE" means the Grant Date or such other date
selected by the Plan Administrator as the date from which an Option begins to
vest for purposes of Section 7.4.
SECTION 3. ADMINISTRATION
3.1 PLAN ADMINISTRATOR
The Plan shall be administered by the Board and/or a committee or
committees (which term includes subcommittees) appointed by, and consisting of
two or more members of, the Board (a "Plan Administrator"). If and so long as
the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act,
the Board shall consider in selecting the members of any committee acting as
Plan Administrator, with respect to any persons subject or likely to become
subject to Section 16 of the Exchange Act, the provisions regarding (a) "outside
directors" as contemplated by Section 162(m) of the Code and (b) "nonemployee
directors" as contemplated by Rule 16b-3 under the Exchange Act. Notwithstanding
the foregoing, the Board may delegate the responsibility for administering the
Plan with respect to designated classes of eligible persons to different
committees consisting of two or more members of the Board, subject to such
limitations as the Board deems appropriate. Committee members shall serve for
such term as the Board may determine, subject to removal by the Board at any
time. To the extent consistent with applicable law, the Board may authorize one
or more senior executive officers of the Company to grant Awards to designated
classes of eligible persons, within the limits specifically prescribed by the
Board.
3.2 ADMINISTRATION AND INTERPRETATION BY PLAN ADMINISTRATOR
Except for the terms and conditions explicitly set forth in the Plan,
the Plan Administrator shall have exclusive authority, in its discretion, to
determine all matters relating to Awards under the Plan, including the selection
of individuals to be granted Awards, the type of Awards, the number of shares of
Common Stock subject to an Award, all terms, conditions, restrictions and
limitations, if any, of an Award and the terms of any instrument that evidences
the Award. The Plan Administrator shall also have exclusive authority to
interpret the Plan and the terms of any instrument evidencing the Award and may
from time to time adopt and change rules and regulations of general application
for the Plan's administration. The Plan Administrator's
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interpretation of the Plan and its rules and regulations, and all actions taken
and determinations made by the Plan Administrator pursuant to the Plan, shall be
conclusive and binding on all parties involved or affected. The Plan
Administrator may delegate administrative duties to such of the Company's
officers as it so determines.
SECTION 4. STOCK SUBJECT TO THE PLAN
4.1 AUTHORIZED NUMBER OF SHARES
Subject to adjustment from time to time as provided in Section 12.1, the
number of shares of Common Stock that shall be available for issuance under the
Plan shall be:
(a) 1,500,000 shares; plus
(b) an annual increase to be added as of the first day of the Company's
fiscal year beginning in 2002 equal to the least of (i) 1,500,000 shares and
(ii) 5% of the outstanding Common Stock of the Company as of the end of the
Company's immediately preceding fiscal year on a fully diluted basis (assuming
exercise of all outstanding Options and warrants and conversion of all
outstanding convertible preferred stock) and (iii) a lesser amount determined by
the Board; provided that any shares from any such increases in previous years
that are not actually issued shall be added to the aggregate number of shares
available for issuance under the Plan and; plus
(c) any authorized shares (i) not issued or subject to outstanding
options under the Company's Amended and Restated 1995 Combined Incentive and
Nonqualified Stock Option Plan (the "Prior Plan") on the date the initial
registration of the Common Stock under Section 12 of the Exchange Act first
becomes effective and (ii) any shares subject to outstanding options under the
Prior Plan on such date that cease to be subject to such options (other than by
reason of exercise of the options to the extent they are exercised for vested
and nonforfeitable shares), up to an aggregate maximum of 2,824,834 shares,
which shares shall cease, as of such date, to be available for grant and
issuance under the Prior Plan, but shall be available for issuance under the
Plan.
Shares issued under the Plan shall be drawn from authorized and unissued
shares or shares now held or subsequently acquired by the Company.
4.2 REUSE OF SHARES
Any shares of Common Stock that have been made subject to an Award that
cease to be subject to the Award (other than by reason of exercise or settlement
of the Award to the extent it
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is exercised for or settled in vested and nonforfeitable shares) shall again be
available for issuance in connection with future grants of Awards under the
Plan. In the event shares issued under the Plan are reacquired by the Company
pursuant to any forfeiture provision or right of repurchase, such shares shall
again be available for the purposes of the Plan; provided, that the aggregate
number of shares that may be issued upon the exercise of Incentive Stock Options
shall in no event exceed the number of shares available for issuance as set
forth in Section 4.1., subject to adjustment from time to time as provided in
Section 12.1.
SECTION 5. ELIGIBILITY
Awards may be granted under the Plan to those officers, directors and
employees of the Company and its Related Corporations as the Plan Administrator
from time to time selects. Awards may also be granted to consultants, agents,
advisors and independent contractors who provide services to the Company and its
Related Corporations; provided, however, that such Participants (a) are natural
persons or an alter ego entity; (b) render bona fide services that are not in
connection with the offer and sale of the Company's securities in a
capital-raising transaction; and (c) render bona fide services that do not
directly or indirectly promote or maintain a market for the Company's
securities.
SECTION 6. AWARDS
6.1 FORM AND GRANT OF AWARDS
The Plan Administrator shall have the authority, in its sole discretion,
to determine the type or types of Awards to be granted under the Plan. Awards
may be granted singly or in combination.
6.2 SETTLEMENT OF AWARDS
The Company may settle Awards through the delivery of shares of Common
Stock, the granting of replacement Awards or any combination thereof as the Plan
Administrator shall determine. Any Award settlement, including payment
deferrals, may be subject to such conditions, restrictions and contingencies as
the Plan Administrator shall determine. The Plan Administrator may permit or
require the deferral of any Award payment, subject to such rules and procedures
as it may establish, which may include provisions for the payment or crediting
of interest, or dividend equivalents, including converting such credits into
deferred stock equivalents.
6.3 ACQUIRED COMPANY AWARDS
Notwithstanding anything in the Plan to the contrary, the Plan
Administrator may grant Awards under the Plan in substitution for awards issued
under other plans, or assume under the Plan awards issued under other plans, if
the other plans are or were plans of other acquired entities ("Acquired
Entities") (or the parent of the Acquired Entity) and the new Award is
substituted, or the old award is assumed, by reason of a merger, consolidation,
acquisition of property or stock, reorganization or liquidation (the
"Acquisition Transaction"). In the event that
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a written agreement pursuant to which the Acquisition Transaction is completed
is approved by the Board and said agreement sets forth the terms and conditions
of the substitution for or assumption of outstanding awards of the Acquired
Entity, said terms and conditions shall be deemed to be the action of the Plan
Administrator without any further action by the Plan Administrator, except as
may be required for compliance with Rule 16b-3 under the Exchange Act, and the
persons holding such awards shall be deemed to be Participants.
SECTION 7. AWARDS OF OPTIONS
7.1 GRANT OF OPTIONS
The Plan Administrator is authorized under the Plan, in its sole
discretion, to issue Options as Incentive Stock Options or as Nonqualified Stock
Options, which shall be appropriately designated.
7.2 OPTION EXERCISE PRICE
The exercise price for shares purchased under an Option shall be as
determined by the Plan Administrator, but shall not be less than 100% of the
Fair Market Value of the Common Stock on the Grant Date with respect to
Incentive Stock Options and not less than 85% of the Fair Market Value of the
Common Stock on the Grant Date with respect to Nonqualified Stock Options. For
Incentive Stock Options granted to a more than 10% shareholder, the Option
exercise price shall be as specified in Section 8.2.
7.3 TERM OF OPTIONS
The term of each Option (the "Option Term") shall be as established by
the Plan Administrator or, if not so established, shall be ten years from the
Grant Date. For Incentive Stock Options, the Option Term shall be as specified
in Sections 8.2 and 8.4.
7.4 EXERCISE OF OPTIONS
The Plan Administrator shall establish and set forth in each instrument
that evidences an Option the time at which, or the installments in which, the
Option shall vest and become exercisable, which provisions may be waived or
modified by the Plan Administrator at any time. The Plan Administrator may
adjust the vesting schedule of an Option held by a Participant who works less
than "full-time" as that term is defined by the Plan Administrator.
To the extent that an Option has vested and become exercisable, the
Option may be exercised from time to time by delivery to the Company of a
written stock option exercise agreement or notice, in a form and in accordance
with procedures established by the Plan Administrator, setting forth the number
of shares with respect to which the Option is being exercised, the restrictions
imposed on the shares purchased under such exercise agreement, if any, and such
representations and agreements as may be required by the Plan Administrator,
accompanied by payment in full as described in Section 7.5. An Option may be
exercised only for whole shares and may not be exercised for less than a
reasonable number of shares at any one
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time, as determined by the Plan Administrator.
7.5 PAYMENT OF EXERCISE PRICE
The exercise price for shares purchased under an Option shall be paid in
full to the Company by delivery of consideration equal to the product of the
Option exercise price and the number of shares purchased. Such consideration
must be paid in cash or by check (acceptable to the Plan Administrator) or,
unless the Plan Administrator in its sole discretion determines otherwise,
either at the time the Option is granted or at any time before it is exercised,
in any combination of
(a) cash;
(b) check (acceptable to the Plan Administrator);
(c) tendering (either actually or, if the Common Stock is registered
under Section 12(b) or 12(g) of the Exchange Act, by attestation) shares of
Common Stock already owned by the Participant for at least six months (or any
shorter period necessary to avoid a charge to the Company's earnings for
financial reporting purposes) that on the day prior to the exercise date have a
Fair Market Value equal to the aggregate exercise price of the shares being
purchased under the Option;
(d) if the Common Stock is registered under Section 12(b) or 12(g) of
the Exchange Act, delivery of a properly executed exercise notice, together with
irrevocable instructions to a brokerage firm designated by the Company to
deliver promptly to the Company the aggregate amount of sale or loan proceeds to
pay the Option exercise price and any withholding tax obligations that may arise
in connection with the exercise, all in accordance with the regulations of the
Federal Reserve Board; or
(e) such other consideration as the Plan Administrator may permit.
In addition, to assist a Participant (including a Participant who is an
officer or a director of the Company) in acquiring shares of Common Stock
pursuant to an Award granted under the Plan, the Plan Administrator, in its sole
discretion, may authorize, either at the Grant Date or at any time before the
acquisition of Common Stock pursuant to the Award, (i) the payment by a
Participant of a full-recourse promissory note or (ii) the guarantee by the
Company of a full-recourse loan obtained by the Participant from a third party.
Subject to the foregoing, the Plan Administrator shall in its sole discretion
specify the terms of any loans or loan guarantees, including the interest rate
and terms of and security for repayment.
7.6 POST-TERMINATION EXERCISES
The Plan Administrator shall establish and set forth in each instrument
that evidences an Option whether the Option shall continue to be exercisable,
and the terms and conditions of such exercise, if a Participant ceases to be
employed by, or to provide services to, the Company or its Related Corporations,
which provisions may be waived or modified by the Plan Administrator at
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any time. If not so established in the instrument evidencing the Option, the
Option shall be exercisable according to the following terms and conditions,
which may be waived or modified by the Plan Administrator at any time:
(a) Any portion of an Option that is not vested and exercisable on the
date of termination of the Participant's employment or service relationship (the
"Employment Termination Date") shall expire on such date.
(b) Any portion of an Option that is vested and exercisable on the
Employment Termination Date shall expire upon the earliest to occur of
(i) if the Participant's Employment Termination Date occurs for
reasons other than Cause, Retirement, Disability or death, the three-month
anniversary of such Employment Termination Date;
(ii) if the Participant's Employment Termination Date occurs by
reason of Retirement, Disability or death, the one-year anniversary of such
Employment Termination Date; and
(iii) the last day of the Option Term (the "Option Expiration
Date").
Notwithstanding the foregoing, if the Participant dies after the
Employment Termination Date while the Option is otherwise exercisable, the
portion of the Option that is vested and exercisable on such Employment
Termination Date shall expire upon the earlier to occur of (y) the Option
Expiration Date and (z) the first anniversary of the date of death, unless the
Plan Administrator determines otherwise.
Also notwithstanding the foregoing, in case of termination of the
Participant's employment or service relationship for Cause, the Option shall
automatically expire at the time the Company first notifies the Participant of
such termination, unless the Plan Administrator determines otherwise. If a
Participant's employment or service relationship with the Company is suspended
pending an investigation of whether the Participant shall be terminated for
Cause, all the Participant's rights under any Option likewise shall be suspended
during the period of investigation. If any facts that would constitute
termination for Cause are discovered after the Participant's relationship with
the Company or a Related Corporation has ended, any Option then held by the
Participant may be immediately terminated by the Plan Administrator, in its sole
discretion.
(c) A Participant's transfer of employment or service relationship
between or among the Company and a Related Corporation, or a change in status
from an employee to a consultant, agent, advisor or independent contractor or a
change in status from a consultant, agent, advisor or independent contractor to
an employee, shall not be considered a termination of employment or service
relationship for purposes of this Section 7. The effect of a Company-approved
leave of absence on the terms and conditions of an Option shall be determined by
the Plan Administrator, in its sole discretion.
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SECTION 8. INCENTIVE STOCK OPTION LIMITATIONS
To the extent required by Section 422 of the Code, Incentive Stock
Options shall be subject to the following additional terms and conditions:
8.1 DOLLAR LIMITATION
To the extent the aggregate Fair Market Value (determined as of the
Grant Date) of Common Stock with respect to which Incentive Stock Options are
exercisable for the first time during any calendar year (under the Plan and all
other stock option plans of the Company) exceeds $100,000, such portion in
excess of $100,000 shall be treated as a Nonqualified Stock Option. In the event
the Participant holds two or more such Options that become exercisable for the
first time in the same calendar year, such limitation shall be applied on the
basis of the order in which such Options are granted.
8.2 MORE THAN 10% SHAREHOLDERS
If an individual owns more than 10% of the total combined voting power
of all classes of the stock of the Company or of its parent or subsidiary
corporations, then the exercise price per share of an Incentive Stock Option
granted to such individual shall not be less than 110% of the Fair Market Value
of the Common Stock on the Grant Date and the Option Term shall not exceed five
years. The determination of more than 10% ownership shall be made in accordance
with Section 422 of the Code.
8.3 ELIGIBLE EMPLOYEES
Individuals who are not employees of the Company or one of its parent or
subsidiary corporations may not be granted Incentive Stock Options.
8.4 TERM
Subject to Section 8.2, the Option Term shall not exceed ten years.
8.5 EXERCISABILITY
An Option designated as an Incentive Stock Option shall cease to qualify
for favorable tax treatment as an Incentive Stock Option to the extent it is
exercised (if permitted by the terms of the Option) (a) more than three months
after the Employment Termination Date if termination was for reasons other than
death or disability, (b) more than one year after the Employment Termination
Date if termination was by reason of disability, or (c) after the Participant
has been on leave of absence for more than 90 days, unless the Participant's
reemployment rights are guaranteed by statute or contract.
8.6 TAXATION OF INCENTIVE STOCK OPTIONS
In order to obtain certain tax benefits afforded to Incentive Stock
Options under Section 422 of the Code, the Participant must hold the shares
issued upon the exercise of an
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Incentive Stock Option for two years after the Grant Date and one year from the
date of exercise. A Participant may be subject to the alternative minimum tax at
the time of exercise of an Incentive Stock Option. The Participant shall give
the Company prompt notice of any disposition of shares acquired by the exercise
of an Incentive Stock Option prior to the expiration of such holding periods.
8.7 PROMISSORY NOTES
The amount of any promissory note delivered pursuant to Section 7.5 in
connection with an Incentive Stock Option shall bear interest at a rate
specified by the Plan Administrator, but in no case less than the rate required
to avoid imputation of interest (taking into account any exceptions to the
imputed interest rules) for federal income tax purposes.
8.8 SHAREHOLDER APPROVAL
If the shareholders of the Company do not approve the Plan within 12
months after the Board of Director's adoption of the Plan, any outstanding
Incentive Stock Options shall become Nonqualified Stock Options.
8.9 CODE DEFINITIONS
For purposes of this Section 8, "parent corporation," "subsidiary
corporation" and "disability" have the meanings attributed to those terms for
purposes of Section 422 of the Code.
SECTION 9. STOCK AWARDS
9.1 GRANT OF STOCK AWARDS
The Plan Administrator is authorized to make Awards of Common Stock or
Awards denominated in units of Common Stock ("Stock Awards") on such terms and
conditions and subject to such repurchase or forfeiture provisions, if any
(which may be based on continuous service with the Company or the achievement of
performance goals), as the Plan Administrator shall determine, in its sole
discretion, which terms, conditions and restrictions shall be set forth in the
instrument evidencing the Award. The terms, conditions and restrictions that the
Plan Administrator shall have the power to determine shall include, without
limitation, the manner in which shares subject to Stock Awards are held during
the periods they are subject to restrictions and the circumstances under which
repurchase or forfeiture of the Stock Award shall occur by reason of termination
of the Participant's employment or service relationship.
9.2 ISSUANCE OF SHARES
Upon the satisfaction of any terms, conditions and restrictions
prescribed in respect to a Stock Award, or upon the Participant's release from
any terms, conditions and restrictions of a Stock Award, as determined by the
Plan Administrator, the Company shall release, as soon as practicable, to the
Participant or, in the case of the Participant's death, to the personal
representative of the Participant's estate or as the appropriate court directs,
the appropriate
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number of shares of Common Stock.
9.3 WAIVER OF RESTRICTIONS
Notwithstanding any other provisions of the Plan, the Plan Administrator
may, in its sole discretion, waive the repurchase or forfeiture period and any
other terms, conditions or restrictions on any Stock Award under such
circumstances and subject to such terms and conditions as the Plan Administrator
shall deem appropriate.
SECTION 10. WITHHOLDING
10.1 GENERAL
To the extent required by applicable local, state, federal or foreign
law, a Participant shall make arrangements satisfactory to the Company for the
satisfaction of any withholding tax obligations that arise in connection with an
Award. The Company shall not be required to issue any shares of Common Stock or
make any cash distributions under the Plan until such obligations are satisfied.
10.2 SHARE WITHHOLDING
The Plan Administrator may permit or require a Participant to satisfy
all or part of any withholding tax obligations (a) by having the Company
withhold all or a portion of any shares of Common Stock that would otherwise be
issued to the Participant pursuant to an Award (up to the employer's minimum
required tax withholding rate) or (b) by surrendering all or a portion of any
shares that the Participant previously acquired (up to the employer's minimum
required tax withholding rate to the extent the Participant has held the
surrendered shares for less than six months). Such shares of Common Stock shall
be valued at their Fair Market Value on the date when taxes otherwise would be
withheld in cash.
SECTION 11. ASSIGNABILITY
Awards granted under the Plan and any interest therein may not be
assigned, pledged or transferred by the Participant and may not be made subject
to attachment or similar proceedings otherwise than by will or by the applicable
laws of descent and distribution, and, during the Participant's lifetime, such
Awards may be exercised only by the Participant. Notwithstanding the foregoing,
and to the extent permitted by Section 422 of the Code, the Plan Administrator,
in its sole discretion, may permit such assignment, transfer and exercisability
and may permit a Participant to designate a beneficiary who may exercise the
Award or receive payment under the Award after the Participant's death;
provided, however, that any Award so assigned or transferred shall be subject to
all the same terms and conditions contained in the instrument evidencing the
Award.
SECTION 12. ADJUSTMENTS
12.1 ADJUSTMENT OF SHARES
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In the event that, at any time or from time to time, a stock dividend,
stock split, spin-off, combination or exchange of shares, recapitalization,
merger, consolidation, distribution to shareholders other than a normal cash
dividend, or other change in the Company's corporate or capital structure
results in (a) the outstanding shares, or any securities exchanged therefor or
received in their place, being exchanged for a different number or kind of
securities of the Company or of any other corporation or (b) new, different or
additional securities of the Company or of any other corporation being received
by the holders of shares of Common Stock of the Company, then the Plan
Administrator shall make proportional adjustments in (i) the maximum number and
kind of securities subject to the Plan and issuable as Incentive Stock Options
as set forth in Section 4 and (ii) the number and kind of securities that are
subject to any outstanding Awards and the per share price of such securities,
without any change in the aggregate price to be paid therefor. The determination
by the Plan Administrator as to the terms of any of the foregoing adjustments
shall be conclusive and binding. Notwithstanding the foregoing, a dissolution or
liquidation of the Company or a Corporate Transaction shall not be governed by
this Section 12.1 but shall be governed by Sections 12.2 and 12.3, respectively.
12.2 DISSOLUTION OR LIQUIDATION
To the extent not previously exercised or settled, and unless otherwise
determined by the Plan Administrator in its sole discretion, Options and Stock
Awards denominated in units shall terminate immediately prior to the dissolution
or liquidation of the Company. To the extent a forfeiture provision or
repurchase right applicable to an Award has not been waived by the Plan
Administrator, the Award shall be forfeited immediately prior to the
consummation of the dissolution or liquidation.
12.3 CORPORATE TRANSACTION
12.3.1 OPTIONS
(a) In the event of a Corporate Transaction, except as otherwise
provided in the instrument evidencing an Option, each outstanding Option shall
be assumed or continued or an equivalent option or right substituted by the
surviving corporation, the successor corporation or its parent corporation, as
applicable (the "Successor Corporation").
(b) In the event the Successor Corporation refuses to assume, continue
or substitute for an Option, each such outstanding Option shall become vested
and exercisable with respect to 100% of the unvested portion of the Option. In
such case, the Plan Administrator shall notify the Participant in writing or
electronically that the unvested portion of the Option shall be fully vested and
exercisable for a specified time period after the date of such notice, and the
Option shall terminate upon the expiration of such period, in each case
conditioned on the consummation of the Corporate Transaction.
(c) For the purposes of this Section 12.3, the Option shall be
considered assumed, continued or substituted for if following the Corporate
Transaction the option or right confers the right to purchase or receive, for
each share of Common Stock subject to the Option immediately prior to the
Corporate Transaction, the consideration (whether stock, cash, or other
securities or
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property) received in the Corporate Transaction by holders of Common Stock for
each share held on the effective date of the transaction (and if holders were
offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding shares); provided, however, that if
such consideration received in the Corporate Transaction is not solely common
stock of the Successor Corporation, the Plan Administrator may, with the consent
of the Successor Corporation, provide for the consideration to be received upon
the exercise of the Option, for each share of Common Stock subject thereto, to
be solely common stock of the Successor Corporation substantially equal in fair
market value to the per share consideration received by holders of Common Stock
in the Corporate Transaction. The determination of such substantial equality of
value of consideration shall be made by the Plan Administrator and its
determination shall be conclusive and binding.
(d) All Options shall terminate and cease to remain outstanding
immediately following the Corporate Transaction, except to the extent assumed by
the Successor Corporation.
12.3.2 STOCK AWARDS
In the event of a Corporate Transaction, except as otherwise provided in
the instrument evidencing the Award, the vesting of shares subject to Stock
Awards shall accelerate, and the repurchase or forfeiture provisions to which
such shares are subject shall lapse, if and to the same extent that the vesting
of outstanding Options accelerates in connection with the Corporate Transaction.
If Options are to be assumed, continued or substituted by a Successor
Corporation without acceleration upon the occurrence of a Corporate Transaction,
the repurchase or forfeiture provisions to which such Stock Awards are subject
shall continue with respect to shares of the Successor Corporation that may be
issued in exchange for such shares.
12.3.3 ACCELERATION
Except as otherwise provided in the instrument evidencing the Award, any
Awards that are assumed, continued or replaced in the Corporate Transaction and
do not otherwise accelerate at that time shall automatically become 100% vested
and exercisable (and any forfeiture or repurchase provisions to which Stock
Awards are subject shall lapse to the same extent) in the event that the
Participant's employment or service relationship should terminate in
contemplation of the Corporate Transaction or within three years following such
Corporate Transaction, unless such employment or service relationship is
terminated for Cause or by the Participant voluntarily without Good Reason.
12.4 FURTHER ADJUSTMENT OF AWARDS
Subject to Sections 12.2 and 12.3, the Plan Administrator shall have the
discretion, exercisable at any time before a sale, merger, consolidation,
reorganization, liquidation or change in control of the Company, as defined by
the Plan Administrator, to take such further action as it determines to be
necessary or advisable, and fair and equitable to the Participants, with respect
to
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Awards. Such authorized action may include (but shall not be limited to)
establishing, amending or waiving the type, terms, conditions or duration of, or
restrictions on, Awards so as to provide for earlier, later, extended or
additional time for exercise, lifting restrictions and other modifications, and
the Plan Administrator may take such actions with respect to all Participants,
to certain categories of Participants or only to individual Participants. The
Plan Administrator may take such action before or after granting Awards to which
the action relates and before or after any public announcement with respect to
such sale, merger, consolidation, reorganization, liquidation or change in
control that is the reason for such action.
12.5 LIMITATIONS
The grant of Awards shall in no way affect the Company's right to
adjust, reclassify, reorganize or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.
12.6 FRACTIONAL SHARES
In the event of any adjustment in the number of shares covered by any
Award, each such Award shall cover only the number of full shares resulting from
such adjustment.
SECTION 13. MARKET STANDOFF
In connection with any underwritten public offering by the Company of
its equity securities pursuant to an effective registration statement filed
under the Securities Act, a person shall not sell, make any short sale of, loan,
hypothecate, pledge, grant any option for the purchase of, or otherwise dispose
of or transfer for value or otherwise agree to engage in any of the foregoing
transactions with respect to any shares issued pursuant to an Award granted
under the Plan without the prior written consent of the Company or its
underwriters. Such limitations shall be in effect for such period of time as may
be requested by the Company or such underwriters; provided, however, that in no
event shall such period exceed 180 days. The limitations of this Section 14
shall in all events terminate two years after the effective date of the
Company's initial public offering.
In the event of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
Company's outstanding Common Stock effected as a class without the Company's
receipt of consideration, any new, substituted or additional securities
distributed with respect to the purchased shares shall be immediately subject to
the provisions of this Section 14, to the same extent the purchased shares are
at such time covered by such provisions.
In order to enforce the limitations of this Section 14, the Company may
impose stop-transfer instructions with respect to the purchased shares until the
end of the applicable standoff period.
SECTION 14. AMENDMENT AND TERMINATION
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14.1 AMENDMENT OR TERMINATION OF PLAN
The Board may suspend, amend or terminate the Plan or any portion of the
Plan at any time and in such respects as it shall deem advisable; provided,
however, that to the extent required for compliance with Section 422 of the Code
or any applicable law or regulation, shareholder approval shall be required for
any amendment that would (a) increase the total number of shares available for
issuance under the Plan, (b) modify the class of employees eligible to receive
Options, or (c) otherwise require shareholder approval under any applicable law
or regulation. Any amendment made to the Plan that would constitute a
"modification" to Incentive Stock Options outstanding on the date of such
amendment shall not, without the consent of the Participant, be applicable to
such outstanding Incentive Stock Options but shall have prospective effect only.
14.2 TERM OF PLAN
Unless sooner terminated as provided herein, the Plan shall terminate
ten years after the earlier of the Plan's adoption by the Board and approval by
the shareholders.
14.3 CONSENT OF PARTICIPANT
The suspension, amendment or termination of the Plan or the amendment of
an outstanding Award shall not, without the Participant's consent, impair or
diminish any rights or obligations under any Award theretofore granted to the
Participant under the Plan. Any change or adjustment to an outstanding Incentive
Stock Option shall not, without the consent of the Participant, be made in a
manner so as to constitute a "modification" that would cause such Incentive
Stock Option to fail to continue to qualify as an Incentive Stock Option.
Notwithstanding the foregoing, any adjustments made pursuant to Section 12 shall
not be subject to these restrictions.
SECTION 15. GENERAL
15.1 EVIDENCE OF AWARDS
Awards granted under the Plan shall be evidenced by a written instrument
that shall contain such terms, conditions, limitations and restrictions as the
Plan Administrator shall deem advisable and that are not inconsistent with the
Plan.
15.2 NO INDIVIDUAL RIGHTS
Nothing in the Plan or any Award granted under the Plan shall be deemed
to constitute an employment contract or confer or be deemed to confer on any
Participant any right to continue in the employ of, or to continue any other
relationship with, the Company or any Related Corporation or limit in any way
the right of the Company or any Related Corporation to terminate a Participant's
employment or other relationship at any time, with or without Cause.
15.3 ISSUANCE OF SHARES
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Notwithstanding any other provision of the Plan, the Company shall have
no obligation to issue or deliver any shares of Common Stock under the Plan or
make any other distribution of benefits under the Plan unless such issuance,
delivery or distribution would comply with all applicable laws (including,
without limitation, the requirements of the Securities Act), and the applicable
requirements of any securities exchange or similar entity.
The Company shall be under no obligation to any Participant to register
for offering or resale or to qualify for exemption under the Securities Act, or
to register or qualify under state securities laws, any shares of Common Stock,
security or interest in a security paid or issued under, or created by, the
Plan, or to continue in effect any such registrations or qualifications if made.
The Company may issue certificates for shares with such legends and subject to
such restrictions on transfer and stop-transfer instructions as counsel for the
Company deems necessary or desirable for compliance by the Company with federal
and state securities laws.
To the extent that the Plan or any instrument evidencing an Award
provides for issuance of stock certificates to reflect the issuance of shares of
Common Stock, the issuance may be effected on a noncertificated basis, to the
extent not prohibited by applicable law or the applicable rules of any stock
exchange.
15.4 NO RIGHTS AS A SHAREHOLDER
No Option or Stock Award denominated in units shall entitle the
Participant to any cash dividend, voting or other right of a shareholder unless
and until the date of issuance under the Plan of the shares that are the subject
of such Award.
15.5 COMPLIANCE WITH LAWS AND REGULATIONS
Notwithstanding anything in the Plan to the contrary, the Plan
Administrator, in its sole discretion, may bifurcate the Plan so as to restrict,
limit or condition the use of any provision of the Plan to Participants who are
officers or directors subject to Section 16 of the Exchange Act without so
restricting, limiting or conditioning the Plan with respect to other
Participants. Additionally, in interpreting and applying the provisions of the
Plan, any Option granted as an Incentive Stock Option pursuant to the Plan
shall, to the extent permitted by law, be construed as an "incentive stock
option" within the meaning of Section 422 of the Code.
15.6 PARTICIPANTS IN FOREIGN COUNTRIES
The Plan Administrator shall have the authority to adopt such
modifications, procedures and subplans as may be necessary or desirable to
comply with provisions of the laws of foreign countries in which the Company or
its Related Corporations may operate to assure the viability of the benefits
from Awards granted to Participants employed in such countries and to meet the
objectives of the Plan.
15.7 NO TRUST OR FUND
The Plan is intended to constitute an "unfunded" plan. Nothing contained
herein shall
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require the Company to segregate any monies or other property, or shares of
Common Stock, or to create any trusts, or to make any special deposits for any
immediate or deferred amounts payable to any Participant, and no Participant
shall have any rights that are greater than those of a general unsecured
creditor of the Company.
15.8 SEVERABILITY
If any provision of the Plan or any Award is determined to be invalid,
illegal or unenforceable in any jurisdiction, or as to any person, or would
disqualify the Plan or any Award under any law deemed applicable by the Plan
Administrator, such provision shall be construed or deemed amended to conform to
applicable laws, or, if it cannot be so construed or deemed amended without, in
the Plan Administrator's determination, materially altering the intent of the
Plan or the Award, such provision shall be stricken as to such jurisdiction,
person or Award, and the remainder of the Plan and any such Award shall remain
in full force and effect.
15.9 CHOICE OF LAW
The Plan and all determinations made and actions taken pursuant hereto,
to the extent not otherwise governed by the laws of the United States, shall be
governed by the laws of the State of Washington without giving effect to
principles of conflicts of laws.
SECTION 16. EFFECTIVE DATE
The effective date of the Plan is the date on which it is adopted by the
Board so long as it is approved by the Company's shareholders at any time within
12 months of such adoption.
Adopted by the Board on July 6, 2000 and approved by the Company's
shareholders on ----------, -----.
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PLAN ADOPTION AND AMENDMENTS/ADJUSTMENTS
SUMMARY PAGE
<TABLE>
<CAPTION>
SECTION/EFFECT OF DATE OF SHAREHOLDER
DATE OF BOARD ACTION ACTION AMENDMENT APPROVAL
<S> <C> <C> <C>
July 6, 2000 Initial Plan Adoption ____________, 2000
</TABLE>
