exv10w28



 





Exhibit 10.28




ARCHEMIX CORP.




2007 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK PLAN





	1.	 	DEFINITIONS.
	 
	 	 	Unless otherwise specified or unless the context otherwise requires, the following terms, as
used in this Archemix Corp. 2007 Employee, Director and Consultant Stock Plan, have the
following meanings:






Administrator means the Board of Directors, unless it has delegated power to
act on its behalf to the Committee, in which case the Administrator means the
Committee.




Affiliate means a corporation which, for purposes of Section 424 of the
Code, is a parent or subsidiary of the Company, direct or indirect.




Agreement means an agreement between the Company and a Participant delivered
pursuant to the Plan, in such form as the Administrator shall approve.




Board of Directors means the Board of Directors of the Company.




Cause means dishonesty with respect to the Company or any Affiliate,
insubordination, substantial malfeasance or non-feasance of duty, unauthorized
disclosure of confidential information, breach by the Participant of any provision
of any employment, consulting, advisory, nondisclosure, non-competition or similar
agreement between the Participant and the Company, and conduct substantially
prejudicial to the business of the Company or any Affiliate; provided, however, that
any provision in an agreement between the Participant and the Company or an
Affiliate, which contains a conflicting definition of Cause for termination and
which is in effect at the time of such termination, shall supersede this definition
with respect to that Participant. The determination of the Administrator as to the
existence of Cause will be conclusive on the Participant and the Company.




Code means the United States Internal Revenue Code of 1986, as amended.




Committee means the committee of the Board of Directors to which the Board
of Directors has delegated power to act under or pursuant to the provisions of the
Plan.




Common Stock means shares of the Company’s common stock, $0.001 par value
per share.



 









 






Company means Archemix Corp., a Delaware corporation.




Disability or Disabled means permanent and total disability as
defined in Section 22(e)(3) of the Code.




Employee means any employee of the Company or of an Affiliate (including,
without limitation, an employee who is also serving as an officer or director of the
Company or of an Affiliate), designated by the Administrator to be eligible to be
granted one or more Stock Rights under the Plan.




Fair Market Value of a Share of Common Stock means:




(1) If the Common Stock is listed on a national securities exchange or traded in the
over-the-counter market and sales prices are regularly reported for the Common
Stock, the closing or, if not applicable, the last price of the Common Stock on the
composite tape or other comparable reporting system for the trading day on the
applicable date and if such applicable date is not a trading day, the last market
trading day prior to such date;




(2) If the Common Stock is not traded on a national securities exchange but is
traded on the over-the-counter market, if sales prices are not regularly reported
for the Common Stock for the trading day referred to in clause (1), and if bid and
asked prices for the Common Stock are regularly reported, the mean between the bid
and the asked price for the Common Stock at the close of trading in the
over-the-counter market for the trading day on which Common Stock was traded on the
applicable date and if such applicable date is not a trading day, the last market
trading day prior to such date; and




(3) If the Common Stock is neither listed on a national securities exchange nor
traded in the over-the-counter market, such value as the Administrator, in good
faith, shall determine.




ISO means an option meant to qualify as an incentive stock option under
Section 422 of the Code.




Non-Qualified Option means an option which is not intended to qualify as an
ISO.




Option means an ISO or Non-Qualified Option granted under the Plan.




Participant means an Employee, director or consultant of the Company or an
Affiliate to whom one or more Stock Rights are granted under the Plan. As
used herein, “Participant” shall include “Participant’s Survivors” where the context
requires.



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Plan means this Archemix Corp. 2007 Employee, Director and Consultant Stock
Plan.




Shares means shares of the Common Stock as to which Stock Rights have been
or may be granted under the Plan or any shares of capital stock into which the
Shares are changed or for which they are exchanged within the provisions of
Paragraph 3 of the Plan. The Shares issued under the Plan may be authorized and
unissued shares or shares held by the Company in its treasury, or both.




Stock-Based Award means a grant by the Company under the Plan of an equity
award or an equity based award which is not an Option or a Stock Grant.




Stock Grant means a grant by the Company of Shares under the Plan.




Stock Right means a right to Shares or the value of Shares of the Company
granted pursuant to the Plan — an ISO, a Non-Qualified Option, a Stock Grant or a
Stock-Based Award.




Survivor means a deceased Participant’s legal representatives and/or any
person or persons who acquired the Participant’s rights to a Stock Right by will or
by the laws of descent and distribution.




	2.	 	PURPOSES OF THE PLAN.





     The Plan is intended to encourage ownership of Shares by Employees and directors of and
certain consultants to the Company and its Affiliates in order to attract and retain such people,
to induce them to work for the benefit of the Company or of an Affiliate and to provide additional
incentive for them to promote the success of the Company or of an Affiliate. The Plan provides for
the granting of ISOs, Non-Qualified Options, Stock Grants and Stock-Based Awards.




	3.	 	SHARES SUBJECT TO THE PLAN.





     (a) The number of Shares which may be issued from time to time pursuant to this Plan shall be
Six Million (6,000,000) Shares, or the equivalent of such number of Shares after the
Administrator, in its sole discretion, has interpreted the effect of any future stock split, stock
dividend, combination, recapitalization or similar transaction in accordance with Paragraph 24 of
the Plan.



     (b) Notwithstanding Subparagraph (a) above, on the first day of each fiscal year of the
Company during the period beginning in fiscal year 2009, and ending on the second day of fiscal
year 2017, the number of Shares that may be issued from time to time pursuant to the Plan, shall be
increased by an amount equal to the lesser of (i) 1,000,000 Shares, (ii) 4% of the number



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of outstanding shares of Common Stock on such date; and (iii) an amount determined by the Board.




     (c) If an Option ceases to be “outstanding”, in whole or in part (other than by exercise), or
if the Company shall reacquire (at not more than its original issuance price) any Shares issued
pursuant to a Stock Grant or Stock-Based Award, or if any Stock Right expires or is forfeited,
cancelled, or otherwise terminated or results in any Shares not being issued, the unissued Shares
which were subject to such Stock Right shall again be available for issuance from time to time
pursuant to this Plan. Notwithstanding the foregoing, if a Stock Right is exercised, in whole or
in part, by tender of Shares or if the Company’s tax withholding obligation is satisfied by
withholding Shares, the number of Shares deemed to have been issued under the Plan for purposes of
the limitation set forth in Paragraph 3(a) above shall be the number of Shares that were subject to
the Stock Right or portion thereof, and not the net number of Shares actually issued.




	4.	 	ADMINISTRATION OF THE PLAN.





     The Administrator of the Plan will be the Board of Directors, except to the extent the Board
of Directors delegates its authority to the Committee, in which case the Committee shall be the
Administrator. Subject to the provisions of the Plan, the Administrator is authorized to:




	 	a.	 	Interpret the provisions of the Plan and all Stock Rights and to make all rules
and determinations which it deems necessary or advisable for the administration of the
Plan;
	 
	 	b.	 	Determine which Employees, directors and consultants shall be granted Stock
Rights;
	 
	 	c.	 	Determine the number of Shares for which a Stock Right or Stock Rights shall be
granted, provided, however, that in no event shall Stock Rights with respect to more
than One Million (1,000,000) Shares be granted to any Participant in any fiscal year;
	 
	 	d.	 	Specify the terms and conditions upon which a Stock Right or Stock Rights may
be granted;
	 
	 	e.	 	Make changes to any outstanding Stock Right, including, without limitation, to
reduce or increase the exercise price or purchase price, accelerate the vesting
schedule or extend the expiration date, provided that no such change shall impair the
rights of a Participant under any grant previously made without such Participant’s
consent;
	 
	 	f.	 	Buy out for a payment in cash or Shares, a Stock Right previously granted
and/or cancel any such Stock Right and grant in substitution therefor other Stock
Rights, covering the same or a different number of Shares and having an exercise price
or




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	 	 	 	purchase price per share which may be lower or higher than the exercise price or
purchase price of the cancelled Stock Right, based on such terms and conditions as
the Administrator shall establish and the Participant shall accept; and
	 
	 	g.	 	Adopt any sub-plans applicable to residents of any specified jurisdiction as it
deems necessary or appropriate in order to comply with or take advantage of any tax or
other laws applicable to the Company or to Plan Participants or to otherwise facilitate
the administration of the Plan, which sub-plans may include additional restrictions or
conditions applicable to Stock Rights or Shares issuable pursuant to a Stock Right;




provided, however, that all such interpretations, rules, determinations, terms and conditions shall
be made and prescribed in the context of not causing any adverse tax consequences under Section
409A of the Code and preserving the tax status under Section 422 of the Code of those Options which
are designated as ISOs. Subject to the foregoing, the interpretation and construction by the
Administrator of any provisions of the Plan or of any Stock Right granted under it shall be final,
unless otherwise determined by the Board of Directors, if the Administrator is the Committee. In
addition, if the Administrator is the Committee, the Board of Directors may take any action under
the Plan that would otherwise be the responsibility of the Committee.




     To the extent permitted under applicable law, the Board of Directors or the Committee may
allocate all or any portion of its responsibilities and powers to any one or more of its members
and may delegate all or any portion of its responsibilities and powers to any other person selected
by it. The Board of Directors or the Committee may revoke any such allocation or delegation at any
time.




	5.	 	ELIGIBILITY FOR PARTICIPATION.





     The Administrator will, in its sole discretion, name the Participants in the Plan, provided,
however, that each Participant must be an Employee, director or consultant of the Company or of an
Affiliate at the time a Stock Right is granted. Notwithstanding the foregoing, the Administrator
may authorize the grant of a Stock Right to a person not then an Employee, director or consultant
of the Company or of an Affiliate; provided, however, that the actual grant of such Stock Right
shall be conditioned upon such person becoming eligible to become a Participant at or prior to the
time of the execution of the Agreement evidencing such Stock Right. ISOs may be granted only to
Employees. Non-Qualified Options, Stock Grants and Stock-Based Awards may be granted to any
Employee, director or consultant of the Company or an Affiliate. The granting of any Stock Right
to any individual shall neither entitle that individual to, nor disqualify him or her from,
participation in any other grant of Stock Rights.




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	6.	 	TERMS AND CONDITIONS OF OPTIONS.









     Each Option shall be set forth in writing in an Option Agreement, duly executed by the Company
and, to the extent required by law or requested by the Company, by the Participant. The
Administrator may provide that Options be granted subject to such terms and conditions, consistent
with the terms and conditions specifically required under this Plan, as the Administrator may deem
appropriate including, without limitation, subsequent approval by the shareholders of the Company
of this Plan or any amendments thereto. The Option Agreements shall be subject to at least the
following terms and conditions:




	 	a.	 	Non-Qualified Options: Each Option intended to be a Non-Qualified
Option shall be subject to the terms and conditions which the
Administrator determines to be appropriate and in the best interest of
the Company, subject to the following minimum standards for any such
Non-Qualified Option:






	 	i.	 	Option Price: Each Option Agreement shall
state the option price (per share) of the
Shares covered by each Option, which option
price shall be determined by the
Administrator but shall not be less than the
Fair Market Value per share of Common Stock.
	 
	 	ii.	 	Number of Shares: Each Option Agreement
shall state the number of Shares to which it
pertains.
	 
	 	iii.	 	Option Periods: Each Option Agreement shall
state the date or dates on which it first is
exercisable and the date after which it may
no longer be exercised, and may provide that
the Option rights accrue or become
exercisable in installments over a period of
months or years, or upon the occurrence of
certain conditions or the attainment of
stated goals or events.
	 
	 	iv.	 	Option Conditions: Exercise of any Option
may be conditioned upon the Participant’s
execution of a Share purchase agreement in
form satisfactory to the Administrator
providing for certain protections for the
Company and its other shareholders,
including requirements that:






	 	A.	 	The Participant’s or the
Participant’s Survivors’ right to sell or
transfer the Shares may be restricted; and
	 
	 	B.	 	The Participant or the
Participant’s Survivors may be required to
execute letters of investment intent and
must also acknowledge that the Shares will
bear legends noting any applicable
restrictions.






	 	b.	 	ISOs: Each Option intended to be an ISO shall be issued only to an
Employee and be subject to the following terms and conditions, with
such additional restrictions or changes as the Administrator
determines are appropriate but not in conflict with Section 422 of the
Code and relevant regulations and rulings of the Internal Revenue
Service:





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	 	i.	 	Minimum standards: The ISO shall meet the
minimum standards required of Non-Qualified
Options, as described in Paragraph 6(a)
above, except clause (i) thereunder.
	 
	 	ii.	 	Option Price: Immediately before the ISO is
granted, if the Participant owns, directly
or by reason of the applicable attribution
rules in Section 424(d) of the Code:






	 	A.	 	10% or less of the total combined
voting power of all classes of stock of the
Company or an Affiliate, the Option price
per share of the Shares covered by each ISO
shall not be less than 100% of the Fair
Market Value per share of the Shares on the
date of the grant of the Option; or
	 
	 	B.	 	More than 10% of the total combined
voting power of all classes of stock of the
Company or an Affiliate, the Option price
per share of the Shares covered by each ISO
shall not be less than 110% of the Fair
Market Value on the date of grant.






	 	iii.	 	Term of Option: For Participants who own:






	 	A.	 	10% or less of the total combined
voting power of all classes of stock of the
Company or an Affiliate, each ISO shall
terminate not more than ten years from the
date of the grant or at such earlier time as
the Option Agreement may provide; or
	 
	 	B.	 	More than 10% of the total combined
voting power of all classes of stock of the
Company or an Affiliate, each ISO shall
terminate not more than five years from the
date of the grant or at such earlier time as
the Option Agreement may provide.






	 	iv.	 	Limitation on Yearly Exercise: The Option
Agreements shall restrict the amount of ISOs
which may become exercisable in any calendar
year (under this or any other ISO plan of
the Company or an Affiliate) so that the
aggregate Fair Market Value (determined at
the time each ISO is granted) of the stock
with respect to which ISOs are exercisable
for the first time by the Participant in any
calendar year does not exceed $100,000.






	7.	 	TERMS AND CONDITIONS OF STOCK GRANTS.





     Each offer of a Stock Grant to a Participant shall state the date prior to which the Stock
Grant must be accepted by the Participant, and the principal terms of each Stock Grant shall be set
forth in an Agreement, duly executed by the Company and, to the extent required by law or requested
by the Company, by the Participant. The Agreement shall be in a form approved by



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the Administrator and shall contain terms and conditions which the Administrator determines to be
appropriate and in the best interest of the Company, subject to the following minimum standards:





	 	(a)	 	Each Agreement shall state the purchase price (per share), if any, of the
Shares covered by each Stock Grant, which purchase price shall be determined by the
Administrator but shall not be less than the minimum consideration required by the
Delaware General Corporation Law on the date of the grant of the Stock Grant;
	 
	 	(b)	 	Each Agreement shall state the number of Shares to which the Stock Grant
pertains; and
	 
	 	(c)	 	Each Agreement shall include the terms of any right of the Company to restrict
or reacquire the Shares subject to the Stock Grant, including the time and events upon
which such rights shall accrue and the purchase price therefor, if any.






	8.	 	TERMS AND CONDITIONS OF OTHER STOCK-BASED AWARDS.





     The Administrator shall have the right to grant other Stock-Based Awards based upon the Common
Stock having such terms and conditions as the Administrator may determine, including, without
limitation, the grant of Shares based upon certain conditions, the grant of securities convertible
into Shares and the grant of stock appreciation rights, phantom stock awards or stock units. The
principal terms of each Stock-Based Award shall be set forth in an Agreement, duly executed by the
Company and, to the extent required by law or requested by the Company, by the Participant. The
Agreement shall be in a form approved by the Administrator and shall contain terms and conditions
which the Administrator determines to be appropriate and in the best interest of the Company.



     The Company intends that the Plan and any Stock-Based Awards granted hereunder be exempt from
the application of Section 409A of the Code or meet the requirements of paragraphs (2), (3) and (4)
of subsection (a) of Section 409A of the Code (and any successor provisions of the Code) and the
regulations and other guidance issued thereunder (the “Requirements”), to the extent applicable,
and be operated in accordance with such Requirements so that any compensation deferred under any
Stock-Based Award (and applicable investment earnings) shall not be included in income under
Section 409A of the Code. Any ambiguities in the Plan shall be construed to effect the intent as
described in this Paragraph 8.




	9.	 	EXERCISE OF OPTIONS AND ISSUE OF SHARES.





     An Option (or any part or installment thereof) shall be exercised by giving written notice to
the Company or its designee, together with provision for payment of the full purchase price in
accordance with this Paragraph for the Shares as to which the Option is being exercised, and upon
compliance with any other condition(s) set forth in the Option Agreement. Such notice



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shall be signed by the person exercising the Option, shall state the number of Shares with respect
to which the Option is being exercised and shall contain any representation required by the Plan or
the Option Agreement. Payment of the purchase price for the Shares as to which such Option is
being exercised shall be made (a) in United States dollars in cash or by check, or (b) at the
discretion of the Administrator, through delivery of shares of Common Stock having a Fair Market
Value equal as of the date of the exercise to the cash exercise price of the Option and held for at
least six months, or (c) at the discretion of the Administrator, by having the Company retain from
the shares otherwise issuable upon exercise of the Option, a number of shares having a Fair Market
Value equal as of the date of exercise to the exercise price of the Option, or (d) at the
discretion of the Administrator, in accordance with a cashless exercise program established with a
securities brokerage firm, and approved by the Administrator, or (e) at the discretion of the
Administrator, by any combination of (a), (b), (c) and (d) above or (f) at the discretion of the
Administrator, payment of such other lawful consideration as the Administrator may determine.
Notwithstanding the foregoing, the Administrator shall accept only such payment on exercise of an
ISO as is permitted by Section 422 of the Code.




     The Company shall then reasonably promptly deliver the Shares as to which such Option was
exercised to the Participant (or to the Participant’s Survivors, as the case may be). In
determining what constitutes “reasonably promptly,” it is expressly understood that the issuance
and delivery of the Shares may be delayed by the Company in order to comply with any law or
regulation (including, without limitation, state securities or “blue sky” laws) which requires the
Company to take any action with respect to the Shares prior to their issuance. The Shares shall,
upon delivery, be fully paid, non-assessable Shares.



     The Administrator shall have the right to accelerate the date of exercise of any installment
of any Option; provided that the Administrator shall not accelerate the exercise date of any
installment of any Option granted to an Employee as an ISO (and not previously converted into a
Non-Qualified Option pursuant to Paragraph 27) without the prior approval of the Employee if such
acceleration would violate the annual vesting limitation contained in Section 422(d) of the Code,
as described in Paragraph 6(b)(iv).



     The Administrator may, in its discretion, amend any term or condition of an outstanding Option
provided (i) such term or condition as amended is permitted by the Plan, (ii) any such amendment
shall be made only with the consent of the Participant to whom the Option was granted, or in the
event of the death of the Participant, the Participant’s Survivors, if the amendment is adverse to
the Participant, and (iii) any such amendment of any Option shall be made only after the
Administrator determines whether such amendment would constitute a “modification” of any Option
which is an ISO (as that term is defined in Section 424(h) of the Code) or would cause any adverse
tax consequences for the holder of any Option including, but not limited to, pursuant to Section
409A of the Code.



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	10.	 	ACCEPTANCE OF STOCK GRANTS AND STOCK-BASED AWARDS AND ISSUE OF SHARES.





     A Stock Grant or Stock-Based Award (or any part or installment thereof) shall be accepted by
executing the applicable Agreement and delivering it to the Company or its designee, together with
provision for payment of the full purchase price, if any, in accordance with this Paragraph for the
Shares as to which such Stock Grant or Stock-Based Award is being accepted, and upon compliance
with any other conditions set forth in the applicable Agreement. Payment of the purchase price for
the Shares as to which such Stock Grant or Stock-Based Award is being accepted shall be made (a) in
United States dollars in cash or by check, or (b) at the discretion of the Administrator, through
delivery of shares of Common Stock held for at least six months and having a Fair Market Value
equal as of the date of acceptance of the Stock Grant or Stock Based-Award to the purchase price of
the Stock Grant or Stock-Based Award, or (c) at the discretion of the Administrator, by any
combination of (a) and (b) above; or (d) at the discretion of the Administrator, payment of such
other lawful consideration as the Administrator may determine.



     The Company shall then, if required by the applicable Agreement, reasonably promptly deliver
the Shares as to which such Stock Grant or Stock-Based Award was accepted to the Participant (or to
the Participant’s Survivors, as the case may be), subject to any escrow provision set forth in the
applicable Agreement. In determining what constitutes “reasonably promptly,” it is expressly
understood that the issuance and delivery of the Shares may be delayed by the Company in order to
comply with any law or regulation (including, without limitation, state securities or “blue sky”
laws) which requires the Company to take any action with respect to the Shares prior to their
issuance.



     The Administrator may, in its discretion, amend any term or condition of an outstanding Stock
Grant, Stock-Based Award or applicable Agreement provided (i) such term or condition as amended is
permitted by the Plan, (ii) any such amendment shall be made only with the consent of the
Participant to whom the Stock Grant or Stock-Based Award was made, if the amendment is adverse to
the Participant, and (iii) any such amendment shall be made only after the Administrator determines
whether such amendment would cause any adverse tax consequences to the Participant, including, but
not limited to, pursuant to Section 409A of the Code.




	11.	 	RIGHTS AS A SHAREHOLDER.





     No Participant to whom a Stock Right has been granted shall have rights as a shareholder with
respect to any Shares covered by such Stock Right, except after due exercise of the Option or
acceptance of the Stock Grant or as set forth in any Agreement, and tender of the full purchase
price, if any, for the Shares being purchased pursuant to such exercise or acceptance and
registration of the Shares in the Company’s share register in the name of the Participant.



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	12.	 	ASSIGNABILITY AND TRANSFERABILITY OF STOCK RIGHTS.





     By its terms, a Stock Right granted to a Participant shall not be transferable by the
Participant other than (i) by will or by the laws of descent and distribution, or (ii) as approved
by the Administrator in its discretion and set forth in the applicable Agreement. Notwithstanding
the foregoing, an ISO transferred except in compliance with clause (i) above shall no longer
qualify as an ISO. The designation of a beneficiary of a Stock Right by a Participant, with the
prior approval of the Administrator and in such form as the Administrator shall prescribe, shall
not be deemed a transfer prohibited by this Paragraph. Except as provided above, a Stock Right
shall only be exercisable or may only be accepted, during the Participant’s lifetime, by such
Participant (or by his or her legal representative) and shall not be assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Any attempted transfer, assignment, pledge,
hypothecation or other disposition of any Stock Right or of any rights granted thereunder contrary
to the provisions of this Plan, or the levy of any attachment or similar process upon a Stock
Right, shall be null and void.




	13.	 	EFFECT ON OPTIONS OF TERMINATION OF SERVICE OTHER THAN FOR CAUSE OR DEATH OR
DISABILITY.





     Except as otherwise provided in a Participant’s Option Agreement, in the event of a
termination of service (whether as an employee, director or consultant) with the Company or an
Affiliate before the Participant has exercised an Option, the following rules apply:




	 	a.	 	A Participant who ceases to be an employee, director or consultant of the
Company or of an Affiliate (for any reason other than termination for Cause,
Disability, or death for which events there are special rules in Paragraphs 14, 15, and
16, respectively), may exercise any Option granted to him or her to the extent that the
Option is exercisable on the date of such termination of service, but only within such
term as the Administrator has designated in a Participant’s Option Agreement.
	 
	 	b.	 	Except as provided in Subparagraph (c) below, or Paragraph 15 or 16, in no
event may an Option intended to be an ISO, be exercised later than three months after
the Participant’s termination of employment.
	 
	 	c.	 	The provisions of this Paragraph, and not the provisions of Paragraph 15 or 16,
shall apply to a Participant who subsequently becomes Disabled or dies after the
termination of employment, director status or consultancy; provided, however, in the
case of a Participant’s Disability or death within three months after the termination
of employment, director status or consultancy, the Participant or the Participant’s
Survivors may exercise the Option within one year after the date of the Participant’s
termination of service, but in no event after the date of expiration of the term of the
Option.




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	 	d.	 	Notwithstanding anything herein to the contrary, if subsequent to a
Participant’s termination of employment, termination of director status or termination
of consultancy, but prior to the exercise of an Option, the Board of Directors
determines that, either prior or subsequent to the Participant’s termination, the
Participant engaged in conduct which would constitute Cause, then such Participant
shall forthwith cease to have any right to exercise any Option.
	 
	 	e.	 	A Participant to whom an Option has been granted under the Plan who is absent
from the Company or an Affiliate because of temporary disability (any disability other
than a Disability as defined in Paragraph 1 hereof), or who is on leave of absence for
any purpose, shall not, during the period of any such absence, be deemed, by virtue of
such absence alone, to have terminated such Participant’s employment, director status
or consultancy with the Company or with an Affiliate, except as the Administrator may
otherwise expressly provide; provided however that for ISOs any leave of absence
granted by the Administrator of greater than ninety days unless pursuant to a contract
or statute that guarantees the right to reemployment shall cause such ISO to become a
Non-Qualified Option.
	 
	 	f.	 	Except as required by law or as set forth in a Participant’s Option Agreement,
Options granted under the Plan shall not be affected by any change of a Participant’s
status within or among the Company and any Affiliates, so long as the Participant
continues to be an employee, director or consultant of the Company or any Affiliate.






	14.	 	EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR CAUSE.





     Except as otherwise provided in a Participant’s Option Agreement, the following rules apply if
the Participant’s service (whether as an employee, director or consultant) with the Company or an
Affiliate is terminated for Cause prior to the time that all his or her outstanding Options have
been exercised:




	 	a.	 	All outstanding and unexercised Options as of the time the Participant is
notified his or her service is terminated for Cause will immediately be forfeited.
	 
	 	b.	 	Cause is not limited to events which have occurred prior to a Participant’s
termination of service, nor is it necessary that the Administrator’s finding of Cause
occur prior to termination. If the Administrator determines, subsequent to a
Participant’s termination of service but prior to the exercise of an Option, that
either prior or subsequent to the Participant’s termination the Participant engaged in
conduct which would constitute Cause, then the right to exercise any Option is
forfeited.




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	15.	 	EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR DISABILITY.





     Except as otherwise provided in a Participant’s Option Agreement:




	 	a.	 	A Participant who ceases to be an employee, director or consultant of the
Company or of an Affiliate by reason of Disability may exercise any Option granted to
such Participant:






     (i) To the extent that the Option has become exercisable but has not been
exercised on the date of Disability; and




     (ii) In the event rights to exercise the Option accrue periodically, to the
extent of a pro rata portion through the date of Disability of any additional
vesting rights that would have accrued on the next vesting date had the Participant
not become Disabled. The proration shall be based upon the number of days accrued
in the current vesting period prior to the date of Disability.




	 	b.	 	A Disabled Participant may exercise such rights only within the period ending
one year after the date of the Participant’s Disability, notwithstanding that the
Participant might have been able to exercise the Option as to some or all of the Shares
on a later date if the Participant had not become Disabled and had continued to be an
employee, director or consultant or, if earlier, within the originally prescribed term
of the Option.
	 
	 	c.	 	The Administrator shall make the determination both of whether Disability has
occurred and the date of its occurrence (unless a procedure for such determination is
set forth in another agreement between the Company and such Participant, in which case
such procedure shall be used for such determination). If requested, the Participant
shall be examined by a physician selected or approved by the Administrator, the cost of
which examination shall be paid for by the Company.






	16.	 	EFFECT ON OPTIONS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.





     Except as otherwise provided in a Participant’s Option Agreement:




	 	a.	 	In the event of the death of a Participant while the Participant is an
employee, director or consultant of the Company or of an Affiliate, such Option may be
exercised by the Participant’s Survivors:






     (i) To the extent that the Option has become exercisable but has not been
exercised on the date of death; and




     (ii) In the event rights to exercise the Option accrue periodically, to the
extent of a pro rata portion through the date of death of any additional vesting



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rights that would have accrued on the next vesting date had the Participant not
died. The proration shall be based upon the number of days accrued in the current
vesting period prior to the Participant’s date of death.




	 	b.	 	If the Participant’s Survivors wish to exercise the Option, they must take all
necessary steps to exercise the Option within one year after the date of death of such
Participant, notwithstanding that the decedent might have been able to exercise the
Option as to some or all of the Shares on a later date if he or she had not died and
had continued to be an employee, director or consultant or, if earlier, within the
originally prescribed term of the Option.






	17.	 	EFFECT OF TERMINATION OF SERVICE ON UNACCEPTED STOCK GRANTS.





     In the event of a termination of service (whether as an employee, director or consultant) with
the Company or an Affiliate for any reason before the Participant has accepted a Stock Grant, such
offer shall terminate.



     For purposes of this Paragraph 17 and Paragraph 18 below, a Participant to whom a Stock Grant
has been offered and accepted under the Plan who is absent from work with the Company or with an
Affiliate because of temporary disability (any disability other than a Disability as defined in
Paragraph 1 hereof), or who is on leave of absence for any purpose, shall not, during the period of
any such absence, be deemed, by virtue of such absence alone, to have terminated such Participant’s
employment, director status or consultancy with the Company or with an Affiliate, except as the
Administrator may otherwise expressly provide.



     In addition, for purposes of this Paragraph 17 and Paragraph 18 below, any change of
employment or other service within or among the Company and any Affiliates shall not be treated as
a termination of employment, director status or consultancy so long as the Participant continues to
be an employee, director or consultant of the Company or any Affiliate.




	18.	 	EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE OTHER THAN FOR CAUSE OR DEATH OR
DISABILITY.





     Except as otherwise provided in a Participant’s Stock Grant Agreement, in the event of a
termination of service (whether as an employee, director or consultant), other than termination for
Cause, Disability, or death for which events there are special rules in Paragraphs 19, 20, and 21,
respectively, before all forfeiture provisions or Company rights of repurchase shall have lapsed,
then the Company shall have the right to cancel or repurchase that number of Shares subject to a
Stock Grant as to which the Company’s forfeiture or repurchase rights have not lapsed.



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	19.	 	EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE FOR CAUSE.





     Except as otherwise provided in a Participant’s Stock Grant Agreement, the following rules
apply if the Participant’s service (whether as an employee, director or consultant) with the
Company or an Affiliate is terminated for Cause:




	 	a.	 	All Shares subject to any Stock Grant that remain subject to forfeiture
provisions or as to which the Company shall have a repurchase right shall be
immediately forfeited to the Company as of the time the Participant is notified his or
her service is terminated for Cause.
	 
	 	b.	 	Cause is not limited to events which have occurred prior to a Participant’s
termination of service, nor is it necessary that the Administrator’s finding of Cause
occur prior to termination. If the Administrator determines, subsequent to a
Participant’s termination of service, that either prior or subsequent to the
Participant’s termination the Participant engaged in conduct which would constitute
Cause, then the Company’s right to repurchase all of such Participant’s Shares shall
apply.






	20.	 	EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE FOR DISABILITY.





     Except as otherwise provided in a Participant’s Stock Grant Agreement, the following rules
apply if a Participant ceases to be an employee, director or consultant of the Company or of an
Affiliate by reason of Disability: to the extent the forfeiture provisions or the Company’s rights
of repurchase have not lapsed on the date of Disability, they shall be exercisable; provided,
however, that in the event such forfeiture provisions or rights of repurchase lapse periodically,
such provisions or rights shall lapse to the extent of a pro rata portion of the Shares subject to
such Stock Grant through the date of Disability as would have lapsed had the Participant not become
Disabled. The proration shall be based upon the number of days accrued prior to the date of
Disability.



     The Administrator shall make the determination both of whether Disability has occurred and the
date of its occurrence (unless a procedure for such determination is set forth in another agreement
between the Company and such Participant, in which case such procedure shall be used for such
determination). If requested, the Participant shall be examined by a physician selected or
approved by the Administrator, the cost of which examination shall be paid for by the Company.




	21.	 	EFFECT ON STOCK GRANTS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.





     Except as otherwise provided in a Participant’s Stock Grant Agreement, the following rules
apply in the event of the death of a Participant while the Participant is an employee,



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director or consultant of the Company or of an Affiliate: to the extent the forfeiture provisions
or the Company’s rights of repurchase have not lapsed on the date of death, they shall be
exercisable; provided, however, that in the event such forfeiture provisions or rights of
repurchase lapse periodically, such provisions or rights shall lapse to the extent of a pro rata
portion of the Shares subject to such Stock Grant through the date of death as would have lapsed
had the Participant not died. The proration shall be based upon the number of days accrued prior
to the Participant’s death.





	22.	 	PURCHASE FOR INVESTMENT.





     Unless the offering and sale of the Shares to be issued upon the particular exercise or
acceptance of a Stock Right shall have been effectively registered under the Securities Act of
1933, as now in force or hereafter amended (the “1933 Act”), the Company shall be under no
obligation to issue the Shares covered by such exercise unless and until the following conditions
have been fulfilled:




	 	a.	 	The person(s) who exercise(s) or accept(s) such Stock Right shall warrant to
the Company, prior to the receipt of such Shares, that such person(s) are acquiring
such Shares for their own respective accounts, for investment, and not with a view to,
or for sale in connection with, the distribution of any such Shares, in which event the
person(s) acquiring such Shares shall be bound by the provisions of the following
legend which shall be endorsed upon the certificate(s) evidencing their Shares issued
pursuant to such exercise or such grant:






	 	 	 	“The shares represented by this certificate have been taken for investment
and they may not be sold or otherwise transferred by any person, including a
pledgee, unless (1) either (a) a Registration Statement with respect to such
shares shall be effective under the Securities Act of 1933, as amended, or
(b) the Company shall have received an opinion of counsel satisfactory to it
that an exemption from registration under such Act is then available, and
(2) there shall have been compliance with all applicable state securities
laws.”






	 	b.	 	At the discretion of the Administrator, the Company shall have received an
opinion of its counsel that the Shares may be issued upon such particular exercise or
acceptance in compliance with the 1933 Act without registration thereunder.




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	23.	 	DISSOLUTION OR LIQUIDATION OF THE COMPANY.





     Upon the dissolution or liquidation of the Company, all Options granted under this Plan which
as of such date shall not have been exercised and all Stock Grants and Stock-Based Awards which
have not been accepted will terminate and become null and void; provided, however, that if the
rights of a Participant or a Participant’s Survivors have not otherwise terminated and expired, the
Participant or the Participant’s Survivors will have the right immediately prior to such
dissolution or liquidation to exercise or accept any Stock Right to the extent that the Stock Right
is exercisable or subject to acceptance as of the date immediately prior to such dissolution or
liquidation. Upon the dissolution or liquidation of the Company, any outstanding Stock-Based
Awards shall immediately terminate unless otherwise determined by the Administrator or specifically
provided in the applicable Agreement.




	24.	 	ADJUSTMENTS.





     Upon the occurrence of any of the following events, a Participant’s rights with respect to any
Stock Right granted to him or her hereunder shall be adjusted as hereinafter provided, unless
otherwise specifically provided in a Participant’s Agreement:



     a. Stock Dividends and Stock Splits. If (i) the shares of Common Stock shall be
subdivided or combined into a greater or smaller number of shares or if the Company shall issue any
shares of Common Stock as a stock dividend on its outstanding Common Stock, or (ii) additional
shares or new or different shares or other securities of the Company or other non-cash assets are
distributed with respect to such shares of Common Stock, the number of shares of Common Stock
deliverable upon the exercise of an Option or acceptance of a Stock Grant shall be appropriately
increased or decreased proportionately, and appropriate adjustments shall be made including, in the
purchase price per share, to reflect such events. The number of Shares subject to the limitations
in Paragraphs 3 and 4(c) shall also be proportionately adjusted upon the occurrence of such events.



     b. Corporate Transactions. If the Company is to be consolidated with or acquired by
another entity in a merger, consolidation, or sale of all or substantially all of the Company’s
assets other than a transaction to merely change the state of incorporation (a “Corporate
Transaction”), the Administrator or the board of directors of any entity assuming the obligations
of the Company hereunder (the “Successor Board”), shall, as to outstanding Options, either (i) make
appropriate provision for the continuation of such Options by substituting on an equitable basis
for the Shares then subject to such Options either the consideration payable with respect to the
outstanding shares of Common Stock in connection with the Corporate Transaction or securities of
any successor or acquiring entity; or (ii) upon written notice to the Participants, provide that
such Options must be exercised (either (A) to the extent then exercisable or, (B) at the discretion
of the Administrator, any such Options being made fully exercisable for purposes of this
Subparagraph), within a specified number of days of the date of such notice, at the end of which
period such Options shall terminate; or (iii) terminate such Options in exchange for a cash payment
equal to the excess of the Fair Market Value of the Shares subject to such Options (either (A) to
the extent then exercisable or, (B) at the discretion of the Administrator, any such



17









 




Options being made fully exercisable for purposes of this Subparagraph) over the exercise price
thereof.




     With respect to outstanding Stock Grants, the Administrator or the Successor Board, shall
either (i) make appropriate provisions for the continuation of such Stock Grants on the same terms
and conditions by substituting on an equitable basis for the Shares then subject to such Stock
Grants either the consideration payable with respect to the outstanding Shares of Common Stock in
connection with the Corporate Transaction or securities of any successor or acquiring entity; or
(ii) terminate such Stock Grants in exchange for a cash payment equal to the excess of the Fair
Market Value of the Shares subject to such Stock Grants over the purchase price thereof, if any.
In addition, in the event of a Corporate Transaction, the Administrator may waive any or all
Company forfeiture or repurchase rights with respect to outstanding Stock Grants.



     c. Recapitalization or Reorganization. In the event of a recapitalization or
reorganization of the Company other than a Corporate Transaction pursuant to which securities of
the Company or of another corporation are issued with respect to the outstanding shares of Common
Stock, a Participant upon exercising an Option or accepting a Stock Grant after the
recapitalization or reorganization shall be entitled to receive for the purchase price paid upon
such exercise or acceptance of the number of replacement securities which would have been received
if such Option had been exercised or Stock Grant accepted prior to such recapitalization or
reorganization.



     d. Adjustments to Stock-Based Awards. Upon the happening of any of the events
described in Subparagraphs a, b or c above, any outstanding Stock-Based Award shall be
appropriately adjusted to reflect the events described in such Subparagraphs. The Administrator or
the Successor Board shall determine the specific adjustments to be made under this Paragraph 24,
including, but not limited to the effect if any, of a Change of Control and, subject to Paragraph
4, its determination shall be conclusive.



     e. Modification of Options. Notwithstanding the foregoing, any adjustments made
pursuant to Subparagraph a, b or c above with respect to Options shall be made only after the
Administrator determines whether such adjustments would constitute a “modification” of any ISO (as
that term is defined in Section 424(h) of the Code) or would cause any adverse tax consequences for
the holders of such Options, including, but not limited to, pursuant to Section 409A of the Code.
If the Administrator determines that such adjustments made with respect to Options would constitute
a modification or other adverse tax consequence, it may refrain from making such adjustments,
unless the holder of an Option specifically agrees in writing that such adjustment be made and such
writing indicates that the holder has full knowledge of the consequences of such “modification” on
his or her income tax treatment with respect to the Option. This paragraph shall not apply to the
acceleration of the vesting of any ISO that would cause any portion of the ISO to violate the
annual vesting limitation contained in Section 422(d) of the Code, as described in Paragraph
6b(iv).



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	25.	 	ISSUANCES OF SECURITIES.





     Except as expressly provided herein, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares subject to Stock
Rights. Except as expressly provided herein, no adjustments shall be made for dividends paid in
cash or in property (including without limitation, securities) of the Company prior to any issuance
of Shares pursuant to a Stock Right.




	26.	 	FRACTIONAL SHARES.





     No fractional shares shall be issued under the Plan and the person exercising a Stock Right
shall receive from the Company cash in lieu of such fractional shares equal to the Fair Market
Value thereof.




	27.	 	CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOs.





     The Administrator, at the written request of any Participant, may in its discretion take such
actions as may be necessary to convert such Participant’s ISOs (or any portions thereof) that have
not been exercised on the date of conversion into Non-Qualified Options at any time prior to the
expiration of such ISOs, regardless of whether the Participant is an employee of the Company or an
Affiliate at the time of such conversion. At the time of such conversion, the Administrator (with
the consent of the Participant) may impose such conditions on the exercise of the resulting
Non-Qualified Options as the Administrator in its discretion may determine, provided that such
conditions shall not be inconsistent with this Plan. Nothing in the Plan shall be deemed to give
any Participant the right to have such Participant’s ISOs converted into Non-Qualified Options, and
no such conversion shall occur until and unless the Administrator takes appropriate action. The
Administrator, with the consent of the Participant, may also terminate any portion of any ISO that
has not been exercised at the time of such conversion.




	28.	 	WITHHOLDING.





     In the event that any federal, state, or local income taxes, employment taxes, Federal
Insurance Contributions Act (“F.I.C.A.”) withholdings or other amounts are required by applicable
law or governmental regulation to be withheld from the Participant’s salary, wages or other
remuneration in connection with the exercise or acceptance of a Stock Right or in connection with a
Disqualifying Disposition (as defined in Paragraph 29) or upon the lapsing of any forfeiture
provision or right of repurchase or for any other reason required by law, the Company may withhold
from the Participant’s compensation, if any, or may require that the Participant advance in cash to
the Company, or to any Affiliate of the Company which employs or employed the Participant, the
statutory minimum amount of such withholdings unless a different withholding arrangement, including
the use of shares of the Company’s Common Stock



19









 




or a promissory note, is authorized by the Administrator (and permitted by law). For purposes
hereof, the fair market value of the shares withheld for purposes of payroll withholding shall be
determined in the manner set forth under the definition of Fair Market Value provided in Paragraph
1 above, as of the most recent practicable date prior to the date of exercise. If the fair market
value of the shares withheld is less than the amount of payroll withholdings required, the
Participant may be required to advance the difference in cash to the Company or the Affiliate
employer. The Administrator in its discretion may condition the exercise of an Option for less
than the then Fair Market Value on the Participant’s payment of such additional withholding.





	29.	 	NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.





     Each Employee who receives an ISO must agree to notify the Company in writing immediately
after the Employee makes a Disqualifying Disposition of any shares acquired pursuant to the
exercise of an ISO. A Disqualifying Disposition is defined in Section 424(c) of the Code and
includes any disposition (including any sale or gift) of such shares before the later of (a) two
years after the date the Employee was granted the ISO, or (b) one year after the date the Employee
acquired Shares by exercising the ISO, except as otherwise provided in Section 424(c) of the Code.
If the Employee has died before such stock is sold, these holding period requirements do not apply
and no Disqualifying Disposition can occur thereafter.




	30.	 	TERMINATION OF THE PLAN.





     The Plan will terminate on September 18, 2017, the date which is ten years from the earlier of
the date of its adoption by the Board of Directors and the date of its approval by the shareholders
of the Company. The Plan may be terminated at an earlier date by vote of the shareholders or the
Board of Directors of the Company; provided, however, that any such earlier termination shall not
affect any Agreements executed prior to the effective date of such termination.




	31.	 	AMENDMENT OF THE PLAN AND AGREEMENTS.





     The Plan may be amended by the shareholders of the Company. The Plan may also be amended by
the Administrator, including, without limitation, to the extent necessary to qualify any or all
outstanding Stock Rights granted under the Plan or Stock Rights to be granted under the Plan for
favorable federal income tax treatment as may be afforded incentive stock options under Section 422
of the Code (including deferral of taxation upon exercise), and to the extent necessary to qualify
the shares issuable upon exercise or acceptance of any outstanding Stock Rights granted, or Stock
Rights to be granted, under the Plan for listing on any national securities exchange or quotation
in any national automated quotation system of securities dealers. Any amendment approved by the
Administrator which the Administrator determines is of a scope that requires shareholder approval
shall be subject to obtaining such shareholder approval. Any modification or amendment of the Plan
shall not, without the consent of a Participant, adversely affect his or her rights under a Stock
Right previously granted to him or her. With the consent of



20









 




the Participant affected, the Administrator may amend outstanding Agreements in a manner which may
be adverse to the Participant but which is not inconsistent with the Plan. In the discretion of
the Administrator, outstanding Agreements may be amended by the Administrator in a manner which is
not adverse to the Participant.





	32.	 	EMPLOYMENT OR OTHER RELATIONSHIP.





     Nothing in this Plan or any Agreement shall be deemed to prevent the Company or an Affiliate
from terminating the employment, consultancy or director status of a Participant, nor to prevent a
Participant from terminating his or her own employment, consultancy or director status or to give
any Participant a right to be retained in employment or other service by the Company or any
Affiliate for any period of time.




	33.	 	GOVERNING LAW.





     This Plan shall be construed and enforced in accordance with the law of the State of Delaware.




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