Exhibit 10.1
ONCOTHYREON INC.
2010 EMPLOYEE STOCK PURCHASE PLAN
     1. Purpose. The purpose of the Plan is to provide employees of the Company
and its Designated Subsidiaries with an opportunity to purchase Common Stock
through accumulated Contributions (as defined in Section 2(j) below). The
Company’s intention is to have the Plan qualify as an “employee stock purchase
plan” under Section 423 of the Code. The provisions of the Plan, accordingly,
will be construed so as to extend and limit Plan participation in a uniform and
nondiscriminatory basis consistent with the requirements of Section 423 of the
Code.
     2. Definitions.
          (a) “Administrator” means the Board or any Committee designated by the
Board to administer the Plan pursuant to Section 14.
          (b) “Applicable Laws” means the requirements relating to the
administration of equity-based awards under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where options are, or will be, granted under
the Plan.
          (c) “Board” means the Board of Directors of the Company.
          (d) “Change in Control” means the occurrence of any of the following
events:
               (i) Change in Ownership of the Company. A change in the ownership
of the Company which occurs on the date that any one person, or more than one
person acting as a group (“Person”), acquires ownership of the stock of the
Company that, together with the stock held by such Person, constitutes more than
fifty percent (50%) of the total voting power of the stock of the Company. For
purposes of this clause (i), if any Person is considered to own more than fifty
percent (50%) of the total voting power of the stock of the Company, the
acquisition of additional stock by the same Person will not be considered a
Change in Control; or
               (ii) Change in Effective Control of the Company. If the Company
has a class of securities registered pursuant to Section 12 of the Exchange Act,
a change in the effective control of the Company which occurs on the date that a
majority of members of the Board is replaced during any twelve (12)-month period
by Directors whose appointment or election is not endorsed by a majority of the
members of the Board prior to the date of the appointment or election. For
purposes of this clause (ii), if any Person is considered to be in effective
control of the Company, the acquisition of additional control of the Company by
the same Person will not be considered a Change in Control; or
               (iii) Change in Ownership of a Substantial Portion of the
Company’s Assets. A change in the ownership of a substantial portion of the
Company’s assets which occurs on

 

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the date that any Person acquires (or has acquired during the twelve (12)-month
period ending on the date of the most recent acquisition by such person or
persons) assets from the Company that have a total gross fair market value equal
to or more than fifty percent (50%) of the total gross fair market value of all
of the assets of the Company immediately prior to such acquisition or
acquisitions. For purposes of this subsection (iii), gross fair market value
means the value of the assets of the Company, or the value of the assets being
disposed of, determined without regard to any liabilities associated with such
assets.
          For purposes of this Section 2(d), persons will be considered to be
acting as a group if they are owners of a corporation that enters into a merger,
consolidation, purchase or acquisition of stock, or similar business transaction
with the Company.
          Notwithstanding the foregoing, a transaction will not be deemed a
Change in Control unless the transaction qualifies as a change in control event
within the meaning of Code Section 409A, as it has been and may be amended from
time to time, and any proposed or final Treasury Regulations and Internal
Revenue Service guidance that has been promulgated or may be promulgated
thereunder from time to time.
          Further and for the avoidance of doubt, a transaction will not
constitute a Change in Control if: (i) its sole purpose is to change the state
of the Company’s incorporation, or (ii) its sole purpose is to create a holding
company that will be owned in substantially the same proportions by the persons
who held the Company’s securities immediately before such transaction.
          (e) “Code” means the U.S. Internal Revenue Code of 1986, as amended.
Reference to a specific section of the Code or Treasury Regulation thereunder
will include such section or regulation, any valid regulation or other official
applicable guidance promulgated under such section, and any comparable provision
of any future legislation or regulation amending, supplementing or superseding
such section or regulation.
          (f) “Committee” means a committee of the Board appointed in accordance
with Section 14 hereof.
          (g) “Common Stock” means the common stock of the Company.
          (h) “Company” means Oncothyreon Inc., a Delaware corporation, or any
successor thereto.
          (i) “Compensation” means (i) the regular base salary paid to a
Participant by the Company and/or Employer plus (ii) all overtime payments,
bonuses, commissions, profit-sharing distributions or other incentive-type
payments received during such period. Such Compensation will be calculated
before deduction of (A) any income or employment tax withholdings or (B) any
contributions made by the Participant to any Code Section 401(k) salary deferral
plan or any Code Section 125 cafeteria benefit program now or hereafter
established by the Company or Employer. However, Compensation will not include
any contributions made by the Company or any Employer on the Participant’s
behalf to any employee benefit or welfare plan now or hereafter established

 

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(other than Code Section 401(k) or Code Section 125 contributions deducted from
such calculation of Compensation).
          (j) “Contributions” means the payroll deductions and other additional
payments that the Company may permit to be made by a Participant to fund the
exercise of options granted pursuant to the Plan.
          (k) “Designated Subsidiary” means any Subsidiary that has been
designated by the Administrator from time to time in its sole discretion as
eligible to participate in the Plan.
          (l) “Director” means a member of the Board.
          (m) “Eligible Employee” means any individual who is a common law
employee of the Company or a Designated Subsidiary and is customarily employed
for at least twenty (20) hours per week and more than five (5) months in any
calendar year by the Employer, or any lesser number of hours per week and/or
number of months in any calendar year established by the Administrator (if
required under applicable local law) for purposes of any separate Offering. For
purposes of the Plan, the employment relationship will be treated as continuing
intact while the individual is on sick leave or other leave of absence that the
Employer approves. Where the period of leave exceeds three (3) months and the
individual’s right to reemployment is not guaranteed either by statute or by
contract, the employment relationship will be deemed to have terminated three
(3) months and one (1) day following the commencement of such leave. The
Administrator, in its discretion, from time to time may, prior to an Enrollment
Date for all options to be granted on such Enrollment Date, determine (on a
uniform and nondiscriminatory basis) that the definition of Eligible Employee
will or will not include an individual if he or she: (i) has not completed at
least two (2) years of service since his or her last hire date (or such lesser
period of time as may be determined by the Administrator in its discretion),
(ii) customarily works not more than twenty (20) hours per week (or such lesser
period of time as may be determined by the Administrator in its discretion),
(iii) customarily works not more than five (5) months per calendar year (or such
lesser period of time as may be determined by the Administrator in its
discretion), (iv) is a highly compensated employee within the meaning of Section
414(q) of the Code with compensation above a certain level or is an officer or
subject to the disclosure requirements of Section 16(a) of the Exchange Act,
provided the exclusion is applied with respect to each Offering in an identical
manner to all highly compensated individuals of the Employer whose Employees are
participating in that Offering.
          (n) “Employer” means the employer of the applicable Eligible
Employee(s).
          (o) “Enrollment Date” means the first Trading Day of each Offering
Period.
          (p) “Exchange Act” means the Securities Exchange Act of 1934, as
amended, including the rules and regulations promulgated thereunder.
          (q) “Exercise Date” means the last Trading Day of each Purchase
Period.
          (r) “Fair Market Value” means, as of any date and unless the
Administrator determines otherwise, the value of Common Stock determined as
follows:

 

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               (i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the NASDAQ
Global Select Market, the NASDAQ Global Market or the NASDAQ Capital Market of
The NASDAQ Stock Market, its Fair Market Value will be the closing sales price
for such stock as quoted on such exchange or system on the date of determination
(or on the last preceding Trading Day for which such quotation exists if the
date of determination is not a Trading Day), as reported in The Wall Street
Journal or such other source as the Administrator deems reliable;
               (ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
will be the mean between the high bid and low asked prices for the Common Stock
on the date of determination (or on the last preceding Trading Day if the date
of determination is not a Trading Day), as reported in The Wall Street Journal
or such other source as the Administrator deems reliable; or
               (iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof will be determined in good faith by the
Administrator.
          (s) “New Exercise Date” means a new Exercise Date if the Administrator
shortens any Offering Period then in progress.
          (t) “Offering” means an offer under the Plan of an option that may be
exercised during an Offering Period as further described in Section 4. For
purposes of this Plan, the Administrator may designate separate Offerings under
the Plan (the terms of which need not be identical) in which Employees of one or
more Employers will participate, even if the dates of the applicable Offering
Periods of each such Offering are identical.
          (u) “Offering Periods” means the periods of approximately eighteen
(18) months during which an option granted pursuant to the Plan may be
exercised, commencing on the first Trading Day on or after June 15 and
December 15 of each year and terminating on the last Trading Day in the periods
ending eighteen (18) months later. The duration and timing of Offering Periods
may be changed pursuant to Sections 4 and 20.
          (v) “Parent” means a “parent corporation,” whether now or hereafter
existing, as defined in Section 424(e) of the Code.
          (w) “Participant” means an Eligible Employee that participates in the
Plan.
          (x) “Plan” means this Oncothyreon Inc. 2010 Employee Stock Purchase
Plan.
          (y) “Purchase Period” means the approximately six (6) month period
commencing after one Exercise Date and ending with the next Exercise Date,
except that the first Purchase Period of any Offering Period will commence on
the Enrollment Date and end with the next Exercise Date.
          (z) “Purchase Price” means an amount equal to eighty-five percent
(85%) of the Fair Market Value of a share of Common Stock on the Enrollment Date
or on the Exercise Date, whichever is lower; provided however, that the Purchase
Price may be determined for subsequent

 

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Offering Periods by the Administrator subject to compliance with Section 423 of
the Code (or any successor rule or provision or any other applicable law,
regulation or stock exchange rule) or pursuant to Section 20.
          (aa) “Subsidiary” means a “subsidiary corporation,” whether now or
hereafter existing, as defined in Section 424(f) of the Code.
          (bb) “Trading Day” means a day on which the national stock exchange
upon which the Common Stock is listed is open for trading.
     3. Eligibility.
          (a) Offering Periods. Any Eligible Employee on a given Enrollment Date
will be eligible to participate in the Plan, subject to the requirements of
Section 5. Employees who are citizens or residents of a non-U.S. jurisdiction
may be excluded from participation in the Plan or an Offering if the
participation of such Employees is prohibited under the laws of the applicable
jurisdiction or if complying with the laws of the applicable jurisdiction would
cause the Plan or an Offering to violate Section 423 of the Code.
          (b) Limitations. Any provisions of the Plan to the contrary
notwithstanding, no Eligible Employee will be granted an option under the Plan
(i) to the extent that, immediately after the grant, such Eligible Employee (or
any other person whose stock would be attributed to such Eligible Employee
pursuant to Section 424(d) of the Code) would own capital stock of the Company
or any Parent or Subsidiary of the Company and/or hold outstanding options to
purchase such stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of the capital stock of the Company or of
any Parent or Subsidiary of the Company, or (ii) to the extent that his or her
rights to purchase stock under all employee stock purchase plans (as defined in
Section 423 of the Code) of the Company or any Parent or Subsidiary of the
Company accrues at a rate, which exceeds twenty-five thousand dollars ($25,000)
worth of stock (determined at the Fair Market Value of the stock at the time
such option is granted) for each calendar year in which such option is
outstanding at any time, as determined in accordance with Section 423 of the
Code and the regulations thereunder.
     4. Offering Periods. The Plan will be implemented by consecutive and
overlapping Offering Periods with a new Offering Period commencing on the first
Trading Day on or after June 15 and December 15 each year, or on such other date
as the Administrator will determine. The Administrator will have the power to
change the duration of Purchase Periods and/or Offering Periods (including the
commencement dates thereof) with respect to future Offerings without stockholder
approval if such change is announced prior to the scheduled beginning of the
first Purchase Period and/or Offering Period to be affected thereafter.
     5. Participation. An Eligible Employee may participate in the Plan by
(i) submitting to the Company’s stock administration office (or its designee),
on or before a date determined by the Administrator prior to an applicable
Enrollment Date, a properly completed subscription agreement authorizing
Contributions in the form provided by the Administrator for such purpose, or
(ii) following an electronic or other enrollment procedure determined by the
Administrator.

 

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     6. Contributions.
          (a) At the time a Participant enrolls in the Plan pursuant to
Section 5, he or she will elect to have payroll deductions made on each pay day
or other Contributions (to the extent permitted by the Administrator) made
during the Offering Period in an amount not exceeding fifteen percent (15%) of
the Compensation, which he or she receives on each pay day during the Offering
Period; provided, however, that should a pay day occur on an Exercise Date, a
Participant will have any payroll deductions made on such day applied to his or
her account under the subsequent Purchase Period or Offering Period. The
Administrator, in its sole discretion, may permit all Participants in a
specified Offering to contribute amounts to the Plan through payment by cash,
check or other means set forth in the subscription agreement prior to each
Exercise Date of each Purchase Period, provided that payment through means other
than payroll deductions shall be permitted only if the Participant has not
already had the maximum permitted amount withheld through payroll deductions
during the Offering Period. A Participant’s subscription agreement will remain
in effect for successive Offering Periods unless terminated as provided in
Section 10 hereof.
          (b) Payroll deductions for a Participant will commence on the first
pay day following the Enrollment Date and will end on the last pay day prior to
the Exercise Date of such Offering Period to which such authorization is
applicable, unless sooner terminated by the Participant as provided in
Section 10 hereof.
          (c) All Contributions made for a Participant will be credited to his
or her account under the Plan and payroll deductions will be made in whole
percentages only. A Participant may not make any additional payments into such
account.
          (d) A Participant may discontinue his or her participation in the Plan
as provided in Section 10, or may increase or decrease the rate of his or her
Contributions during the Offering Period by (i) properly completing and
submitting to the Company’s stock administration office (or its designee), on or
before a date determined by the Administrator prior to an applicable Exercise
Date, a new subscription agreement authorizing the change in Contribution rate
in the form provided by the Administrator for such purpose, or (ii) following an
electronic or other procedure prescribed by the Administrator; provided,
however, that a Participant may only make one Contribution change during each
month of the Offering Period. If a Participant has not followed such procedures
to change the rate of Contributions, the rate of his or her Contributions will
continue at the originally elected rate throughout the Offering Period and
future Offering Periods (unless terminated as provided in Section 10). The
Administrator may, in its sole discretion, limit the nature and/or number of
Contribution rate changes that may be made by Participants during any Purchase
Period or Offering Period, and may establish such other conditions or
limitations as it deems appropriate for Plan administration. Any change in
payroll deduction rate made pursuant to this Section 6(d) will be effective as
of the first full payroll period following five (5) business days after the date
on which the change is made by the Participant (unless the Administrator, in its
sole discretion, elects to process a given change in payroll deduction rate more
quickly).
          (e) Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 3(b), a Participant’s
Contributions may be decreased to zero percent (0%) at any time during an
Offering Period. Subject to Section 423(b)(8) of the Code

 

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and Section 3(b) hereof, Contributions will recommence at the rate originally
elected by the Participant effective as of the beginning of the first Offering
Period scheduled to end in the following calendar year, unless terminated by the
Participant as provided in Section 10.
          (f) Notwithstanding any provisions to the contrary in the Plan, the
Administrator may allow Eligible Employees to participate in the Plan via cash
contributions instead of payroll deductions if (i) payroll deductions are not
permitted under applicable local law, and (ii) the Administrator determines that
cash contributions are permissible under Section 423 of the Code.
          (g) At the time the option is exercised, in whole or in part, or at
the time some or all of the Common Stock issued under the Plan is disposed of
(or any other time that a taxable event related to the Plan occurs), the
Participant must make adequate provision for the Company’s or Employer’s
federal, state, local or any other tax liability payable to any authority
including taxes imposed by jurisdictions outside of the U.S., national
insurance, social security or other tax withholding obligations, if any, which
arise upon the exercise of the option or the disposition of the Common Stock (or
any other time that a taxable event related to the Plan occurs). At any time,
the Company or the Employer may, but will not be obligated to, withhold from the
Participant’s Compensation the amount necessary for the Company or the Employer
to meet applicable withholding obligations, including any withholding required
to make available to the Company or the Employer any tax deductions or benefits
attributable to sale or early disposition of Common Stock by the Eligible
Employee. In addition, the Company or the Employer may, but will not be
obligated to, withhold from the proceeds of the sale of Common Stock or any
other method of withholding the Company or the Employer deems appropriate to the
extent permitted by U.S. Treasury Regulation Section 1.423-2(f).
     7. Grant of Option. On the Enrollment Date of each Offering Period, each
Eligible Employee participating in such Offering Period will be granted an
option to purchase on each Exercise Date during such Offering Period (at the
applicable Purchase Price) up to a number of shares of Common Stock determined
by dividing such Eligible Employee’s Contributions accumulated prior to such
Exercise Date and retained in the Eligible Employee’s account as of the Exercise
Date by the applicable Purchase Price; provided that in no event will an
Eligible Employee be permitted to purchase during each Offering Period more than
fifteen thousand (15,000) shares of the Company’s Common Stock (subject to:
(i) the limitations set forth in Section 3(b), (ii) the limitations set forth in
Section 13 and (iii) any adjustment pursuant to Section 19). The Eligible
Employee may accept the grant of such option with respect to an Offering Period
by electing to participate in the Plan in accordance with the requirements of
Section 5. The Administrator may, for future Offering Periods, increase or
decrease, in its absolute discretion, the maximum number of shares of Common
Stock that an Eligible Employee may purchase during each Offering Period.
Exercise of the option will occur as provided in Section 8, unless the
Participant has withdrawn pursuant to Section 10. The option will expire on the
last day of the Offering Period.
     8. Exercise of Option.
          (a) Unless a Participant withdraws from the Plan as provided in
Section 10, his or her option for the purchase of shares of Common Stock will be
exercised automatically on the Exercise Date, and the maximum number of full
shares subject to the option will be purchased for

 

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such Participant at the applicable Purchase Price with the accumulated
Contributions from his or her account. No fractional shares of Common Stock will
be purchased; any Contributions accumulated in a Participant’s account, which
are not sufficient to purchase a full share will be retained in the
Participant’s account for the subsequent Purchase Period or Offering Period,
subject to earlier withdrawal by the Participant as provided in Section 10. Any
other funds left over in a Participant’s account after the Exercise Date will be
returned to the Participant. During a Participant’s lifetime, a Participant’s
option to purchase shares hereunder is exercisable only by him or her.
          (b) If the Administrator determines that, on a given Exercise Date,
the number of shares of Common Stock with respect to which options are to be
exercised may exceed (i) the number of shares of Common Stock that were
available for sale under the Plan on the Enrollment Date of the applicable
Offering Period, or (ii) the number of shares of Common Stock available for sale
under the Plan on such Exercise Date, the Administrator may in its sole
discretion (x) provide that the Company will make a pro rata allocation of the
shares of Common Stock available for purchase on such Enrollment Date or
Exercise Date, as applicable, in as uniform a manner as will be practicable and
as it will determine in its sole discretion to be equitable among all
Participants exercising options to purchase Common Stock on such Exercise Date,
and continue all Offering Periods then in effect or (y) provide that the Company
will make a pro rata allocation of the shares available for purchase on such
Enrollment Date or Exercise Date, as applicable, in as uniform a manner as will
be practicable and as it will determine in its sole discretion to be equitable
among all participants exercising options to purchase Common Stock on such
Exercise Date, and terminate any or all Offering Periods then in effect pursuant
to Section 20. The Company may make a pro rata allocation of the shares
available on the Enrollment Date of any applicable Offering Period pursuant to
the preceding sentence, notwithstanding any authorization of additional shares
for issuance under the Plan by the Company’s stockholders subsequent to such
Enrollment Date.
     9. Delivery. As soon as reasonably practicable after each Exercise Date on
which a purchase of shares of Common Stock occurs, the Company will arrange the
delivery to each Participant the shares purchased upon exercise of his or her
option in a form determined by the Administrator (in its sole discretion) and
pursuant to rules established by the Administrator. The Company may permit or
require that shares be deposited directly with a broker designated by the
Company or to a designated agent of the Company, and the Company may utilize
electronic or automated methods of share transfer. The Company may require that
shares be retained with such broker or agent for a designated period of time
and/or may establish other procedures to permit tracking of disqualifying
dispositions of such shares. No Participant will have any voting, dividend, or
other stockholder rights with respect to shares of Common Stock subject to any
option granted under the Plan until such shares have been purchased and
delivered to the Participant as provided in this Section 9.
     10. Withdrawal.
          (a) A Participant may withdraw all but not less than all the
Contributions credited to his or her account and not yet used to exercise his or
her option under the Plan at any time by (i) submitting to the Company’s stock
administration office (or its designee) a written notice of withdrawal in the
form determined by the Administrator for such purpose, or (ii) following an
electronic or other withdrawal procedure determined by the Administrator. All of
the Participant’s

 

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Contributions credited to his or her account will be paid to such Participant
promptly after receipt of notice of withdrawal and such Participant’s option for
the Offering Period will be automatically terminated, and no further
Contributions for the purchase of shares will be made for such Offering Period.
If a Participant withdraws from an Offering Period, Contributions will not
resume at the beginning of the succeeding Offering Period, unless the
Participant re-enrolls in the Plan in accordance with the provisions of
Section 5.
          (b) A Participant’s withdrawal from an Offering Period will not have
any effect upon his or her eligibility to participate in any similar plan that
may hereafter be adopted by the Company or in succeeding Offering Periods that
commence after the termination of the Offering Period from which the Participant
withdraws.
     11. Termination of Employment. Upon a Participant’s ceasing to be an
Eligible Employee, for any reason, he or she will be deemed to have elected to
withdraw from the Plan and the Contributions credited to such Participant’s
account during the Offering Period but not yet used to purchase shares of Common
Stock under the Plan will be returned to such Participant or, in the case of his
or her death, to the person or persons entitled thereto under Section 15, and
such Participant’s option will be automatically terminated.
     12. Interest. No interest will accrue on the Contributions of a participant
in the Plan, except as may be required by applicable law, as determined by the
Company, and if so required by the laws of a particular jurisdiction, shall
apply to all Participants in the relevant Offering except to the extent
otherwise permitted by U.S. Treasury Regulation Section 1.423-2(f).
     13. Stock.
          (a) Subject to adjustment upon changes in capitalization of the
Company as provided in Section 19 hereof, the maximum number of shares of Common
Stock that will be made available for sale under the Plan will be nine hundred
thousand (900,000) shares of Common Stock.
          (b) Until the shares are issued (as evidenced by the appropriate entry
on the books of the Company or of a duly authorized transfer agent of the
Company), a Participant will only have the rights of an unsecured creditor with
respect to such shares, and no right to vote or receive dividends or any other
rights as a stockholder will exist with respect to such shares.
          (c) Shares of Common Stock to be delivered to a Participant under the
Plan will be registered in the name of the Participant or in the name of the
Participant and his or her spouse.
     14. Administration. The Plan will be administered by the Board or a
Committee appointed by the Board, which Committee will be constituted to comply
with Applicable Laws. The Administrator will have full and exclusive
discretionary authority to construe, interpret and apply the terms of the Plan,
to designate separate Offerings under the Plan, to determine eligibility, to
adjudicate all disputed claims filed under the Plan and to establish such
procedures that it deems necessary for the administration of the Plan
(including, without limitation, to adopt such procedures and sub-plans as are
necessary or appropriate to permit the participation in the Plan by employees
who are foreign nationals or employed outside the U.S.). Unless otherwise
determined by the

 

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Administrator, the Employees eligible to participate in each sub-plan will
participate in a separate Offering. Without limiting the generality of the
foregoing, the Administrator is specifically authorized to adopt rules and
procedures regarding eligibility to participate, the definition of Compensation,
handling of Contributions, making of Contributions to the Plan (including,
without limitation, in forms other than payroll deductions), establishment of
bank or trust accounts to hold Contributions, payment of interest, conversion of
local currency, obligations to pay payroll tax, determination of beneficiary
designation requirements, withholding procedures and handling of stock
certificates that vary with applicable local requirements. Every finding,
decision and determination made by the Administrator will, to the full extent
permitted by law, be final and binding upon all parties.
     15. Designation of Beneficiary.
          (a) If permitted by the Administrator, a Participant may file a
designation of a beneficiary who is to receive any shares of Common Stock and
cash, if any, from the Participant’s account under the Plan in the event of such
Participant’s death subsequent to an Exercise Date on which the option is
exercised but prior to delivery to such Participant of such shares and cash. In
addition, if permitted by the Administrator, a Participant may file a
designation of a beneficiary who is to receive any cash from the Participant’s
account under the Plan in the event of such Participant’s death prior to
exercise of the option. If a Participant is married and the designated
beneficiary is not the spouse, spousal consent will be required for such
designation to be effective.
          (b) Such designation of beneficiary may be changed by the Participant
at any time by notice in a form determined by the Administrator. In the event of
the death of a Participant and in the absence of a beneficiary validly
designated under the Plan who is living at the time of such Participant’s death,
the Company will deliver such shares and/or cash to the executor or
administrator of the estate of the Participant, or if no such executor or
administrator has been appointed (to the knowledge of the Company), the Company,
in its discretion, may deliver such shares and/or cash to the spouse or to any
one or more dependents or relatives of the Participant, or if no spouse,
dependent or relative is known to the Company, then to such other person as the
Company may designate.
          (c) All beneficiary designations will be in such form and manner as
the Administrator may designate from time to time. Notwithstanding Sections
15(a) and (b) above, the Company and/or the Administrator may decide not to
permit such designations by Participants in non-U.S. jurisdictions to the extent
permitted by U.S. Treasury Regulation Section 1.423-2(f).
     16. Transferability. Neither Contributions credited to a Participant’s
account nor any rights with regard to the exercise of an option or to receive
shares of Common Stock under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 15 hereof) by the Participant. Any such
attempt at assignment, transfer, pledge or other disposition will be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10 hereof.

 

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     17. Use of Funds. The Company may use all Contributions received or held by
it under the Plan for any corporate purpose, and the Company will not be
obligated to segregate such Contributions except under Offerings in which
applicable local law requires that Contributions to the Plan by Participants be
segregated from the Company’s general corporate funds and/or deposited with an
independent third party for Participants in non-U.S. jurisdictions. Until shares
of Common Stock are issued, Participants will only have the rights of an
unsecured creditor with respect to such shares.
     18. Reports. Individual accounts will be maintained for each Participant in
the Plan. Statements of account will be given to participating Eligible
Employees at least annually, which statements will set forth the amounts of
Contributions, the Purchase Price, the number of shares of Common Stock
purchased and the remaining cash balance, if any.
     19. Adjustments, Dissolution, Liquidation, Merger or Change in Control.
          (a) Adjustments. In the event that any dividend or other distribution
(whether in the form of cash, Common Stock, other securities, or other
property), recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase, or exchange
of Common Stock or other securities of the Company, or other change in the
corporate structure of the Company affecting the Common Stock occurs, the
Administrator, in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, will, in such
manner as it may deem equitable, adjust the number and class of Common Stock
that may be delivered under the Plan, the Purchase Price per share and the
number of shares of Common Stock covered by each option under the Plan that has
not yet been exercised, and the numerical limits of Sections 7 and 13.
          (b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, any Offering Period then in progress
will be shortened by setting a New Exercise Date, and will terminate immediately
prior to the consummation of such proposed dissolution or liquidation, unless
provided otherwise by the Administrator. The New Exercise Date will be before
the date of the Company’s proposed dissolution or liquidation. The Administrator
will notify each Participant in writing or electronically, prior to the New
Exercise Date, that the Exercise Date for the Participant’s option has been
changed to the New Exercise Date and that the Participant’s option will be
exercised automatically on the New Exercise Date, unless prior to such date the
Participant has withdrawn from the Offering Period as provided in Section 10
hereof.
          (c) Merger or Change in Control. In the event of a merger or Change in
Control, each outstanding option will be assumed or an equivalent option
substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation refuses to
assume or substitute for the option, the Offering Period with respect to which
such option relates will be shortened by setting a New Exercise Date on which
such Offering Period shall end. The New Exercise Date will occur before the date
of the Company’s proposed merger or Change in Control. The Administrator will
notify each Participant in writing or electronically prior to the New Exercise
Date, that the Exercise Date for the Participant’s option has been changed to
the New Exercise Date and that the Participant’s option will be exercised
automatically on the New

 

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Exercise Date, unless prior to such date the Participant has withdrawn from the
Offering Period as provided in Section 10 hereof.
     20. Amendment or Termination.
          (a) The Administrator, in its sole discretion, may amend, suspend, or
terminate the Plan, or any part thereof, at any time and for any reason. If the
Plan is terminated, the Administrator, in its discretion, may elect to terminate
all outstanding Offering Periods either immediately or upon completion of the
purchase of shares of Common Stock on the next Exercise Date (which may be
sooner than originally scheduled, if determined by the Administrator in its
discretion), or may elect to permit Offering Periods to expire in accordance
with their terms (and subject to any adjustment pursuant to Section 19). If the
Offering Periods are terminated prior to expiration, all amounts then credited
to Participants’ accounts that have not been used to purchase shares of Common
Stock will be returned to the Participants (without interest thereon, except as
otherwise required under local laws, as further set forth in Section 12 hereof)
as soon as administratively practicable.
          (b) Without stockholder consent and without limiting Section 20(a),
the Administrator will be entitled to change the Offering Periods, designate
separate Offerings, limit the frequency and/or number of changes in the amount
withheld during an Offering Period, establish the exchange ratio applicable to
amounts withheld in a currency other than U.S. dollars, permit payroll
withholding in excess of the amount designated by a Participant in order to
adjust for delays or mistakes in the Company’s processing of properly completed
withholding elections, establish reasonable waiting and adjustment periods
and/or accounting and crediting procedures to ensure that amounts applied toward
the purchase of Common Stock for each Participant properly correspond with
Contribution amounts, and establish such other limitations or procedures as the
Administrator determines in its sole discretion advisable that are consistent
with the Plan.
          (c) In the event the Administrator determines that the ongoing
operation of the Plan may result in unfavorable financial accounting
consequences, the Administrator may, in its discretion and, to the extent
necessary or desirable, modify, amend or terminate the Plan to reduce or
eliminate such accounting consequence including, but not limited to:
               (i) amending the Plan to conform with the safe harbor definition
under Statement of Financial Accounting Standards Codification Topic 718 (or any
successor thereto), including with respect to an Offering Period underway at the
time;
               (ii) altering the Purchase Price for any Offering Period
including an Offering Period underway at the time of the change in Purchase
Price;
               (iii) shortening any Offering Period by setting a New Exercise
Date, including an Offering Period underway at the time of the Administrator
action;
               (iv) reducing the maximum percentage of Compensation a
Participant may elect to set aside as Contributions; and

 

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               (v) reducing the maximum number of Shares a Participant may
purchase during any Purchase Period or Offering Period.
     Such modifications or amendments will not require stockholder approval or
the consent of any Plan Participants.
     21. Notices. All notices or other communications by a Participant to the
Company under or in connection with the Plan will be deemed to have been duly
given when received in the form and manner specified by the Company at the
location, or by the person, designated by the Company for the receipt thereof.
     22. Conditions Upon Issuance of Shares. Shares of Common Stock will not be
issued with respect to an option unless the exercise of such option and the
issuance and delivery of such shares pursuant thereto will comply with all
applicable provisions of law, domestic or foreign, including, without
limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules
and regulations promulgated thereunder, and the requirements of any stock
exchange upon which the shares may then be listed, and will be further subject
to the approval of counsel for the Company with respect to such compliance.
          As a condition to the exercise of an option, the Company may require
the person exercising such option to represent and warrant at the time of any
such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
     23. Code Section 409A. The Plan is exempt from the application of Code
Section 409A and any ambiguities herein will be interpreted to so be exempt from
Code Section 409A. In furtherance of the foregoing and notwithstanding any
provision in the Plan to the contrary, if the Administrator determines that an
option granted under the Plan may be subject to Code Section 409A or that any
provision in the Plan would cause an option under the Plan to be subject to Code
Section 409A, the Administrator may amend the terms of the Plan and/or of an
outstanding option granted under the Plan, or take such other action the
Administrator determines is necessary or appropriate, in each case, without the
Participant’s consent, to exempt any outstanding option or future option that
may be granted under the Plan from or to allow any such options to comply with
Code Section 409A, but only to the extent any such amendments or action by the
Administrator would not violate Code Section 409A. Notwithstanding the
foregoing, the Company shall have no liability to a Participant or any other
party if the option to purchase Common Stock under the Plan that is intended to
be exempt from or compliant with Code Section 409A is not so exempt or compliant
or for any action taken by the Administrator with respect thereto. The Company
makes no representation that the option to purchase Common Stock under the Plan
is compliant with Code Section 409A.
     24. Stockholder Approval. The Plan will be subject to approval by the
stockholders of the Company within twelve (12) months after the date the Plan is
adopted by the Board. Such stockholder approval will be obtained in the manner
and to the degree required under Applicable Laws.

 

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     25. Term of Plan. The Plan will become effective upon the earlier to occur
of its adoption by the Board or its approval by the stockholders of the Company.
It will continue in effect for a term of ten (10) years, unless sooner
terminated under Section 20.
     26. Governing Law. The Plan shall be governed by, and construed in
accordance with, the laws of the State of Washington (except its choice-of-law
provisions).
     27. Severability. If any provision of the Plan is or becomes or is deemed
to be invalid, illegal, or unenforceable for any reason in any jurisdiction or
as to any Participant, such invalidity, illegality or unenforceability shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as to such jurisdiction or Participant as if the invalid, illegal or
unenforceable provision had not been included.
     28. Automatic Transfer to Low Price Offering Period. To the extent
permitted by Applicable Laws, if the Fair Market Value of the Common Stock on
any Exercise Date in an Offering Period is lower than the Fair Market Value of
the Common Stock on the Enrollment Date of such Offering Period, then all
participants in such Offering Period will be automatically withdrawn from such
Offering Period immediately after the exercise of their option on such Exercise
Date and automatically re-enrolled in the immediately following Offering Period
as of the first day thereof.