Document:

Exhibit 10.2

 

RECEPTOS, INC.

 

2008 STOCK PLAN

 

1.                                      Purposes of the Plan.  The purposes of this Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to Employees, Directors and Consultants and to promote the success of the Company’s business.  The Plan permits the grant of Options and Restricted Stock as the Administrator may determine.

 

2.                                      Definitions.  As used herein, the following definitions shall apply:

 

(a)                                 “Administrator” means the Board or any of its Committees as shall be administering the Plan in accordance with Section 4 hereof.

 

(b)                                 “Applicable Laws” means the requirements relating to the administration of equity compensation plans 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 other country or jurisdiction where Awards are granted under the Plan.

 

(c)                                  “Award” means, individually or collectively, a grant under the Plan of Options or Restricted Stock.

 

(d)                                 “Award Agreement” means the written or electronic agreement setting forth the terms and provisions applicable to each Award granted under the Plan.  The Award Agreement is subject to the terms and conditions of the Plan.

 

(e)                                  “Board” means the Board of Directors of the Company.

 

(f)                                   “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 50% of the total voting power of the stock of the Company, except that any change in the ownership of the stock of the Company as a result of a private financing of the Company that is approved by the Board will not be considered a Change in Control; or

 

(ii)                                  Change in Effective Control of the Company.  If the Company has filed a registration statement declared effective pursuant to Section 12(g) of the Exchange Act with respect to any of the Company’s securities, 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 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 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(f)(iii), 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 shall not be deemed a Change in Control unless the transaction qualifies as a change in control event within the meaning of Section 409A of the Code, 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 shall 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 shall be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.

 

(g)                                  “Code” means the Internal Revenue Code of 1986, as amended.  Any reference to a section of the Code herein shall be a reference to any successor or amended section of the Code.

 

(h)                                 “Committee” means a committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board, or by the compensation committee of the Board, in accordance with Section 4 hereof.

 

(i)                                     “Common Stock” means the Common Stock of the Company.

 

(j)                                    “Company” means Receptos, Inc., a Delaware corporation.

 

(k)                                 “Consultant” means any person who is engaged by the Company or any Parent or Subsidiary to render consulting or advisory services to such entity.

 

(l)                                     “Director” means a member of the Board.

 

(m)                             “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code.

 

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(n)                                 “Employee” means any person, including officers and Directors, employed by the Company or any Parent or Subsidiary of the Company.  Neither service as a Director nor payment of a director’s fee by the Company shall be sufficient to constitute “employment” by the Company.

 

(o)                                 “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(p)                                 “Exchange Program” means a program under which (i) outstanding Options are surrendered or cancelled in exchange for Options of the same type (which may have lower  or higher exercise prices and different terms), Options of a different type, and/or cash, and/or (ii) the exercise price of an outstanding Option is reduced.  The terms and conditions of any Exchange Program shall be determined by the Administrator in its sole discretion.

 

(q)                                 “Fair Market Value” means, as of any date, the value of Common Stock determined as follows:

 

(i)                                     If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq Global Market, the Nasdaq Global Select Market or the Nasdaq Capital Market, its Fair Market Value shall be the closing sales price for such stock (or, if no closing sales price was reported on that date, as applicable, on the last trading date such closing sales price was reported) as quoted on such exchange or system on the day of determination, 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 shall be the mean between the high bid and low asked prices for the Common Stock on the day of determination (or, if no bids and asks were reported on that date, as applicable, on the last trading date such bids and asks were reported); or

 

(iii)                               In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator.

 

(r)                                    “Incentive Stock Option” means an Option that by its terms qualifies and is otherwise intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

 

(s)                                   “Nonstatutory Stock Option” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock Option.

 

(t)                                    “Option” means a stock option granted pursuant to the Plan.

 

(u)                                 “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

 

(v)                                 “Participant” means the holder of an outstanding Award.

 

(w)                               “Plan” means this 2008  Stock Plan.

 

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(x)                                 “Restricted Stock” means Shares issued pursuant to a Restricted Stock award under Section 7 of the Plan, or issued pursuant to the early exercise of an Option.

 

(y)                                 “Restricted Stock Purchase Agreement” means a written or electronic agreement between the Company and the Participant evidencing the terms and restrictions applying to Shares purchased under a Restricted Stock award.  The Restricted Stock Purchase Agreement is subject to the terms and conditions of the Plan and the notice of grant.

 

(z)                                  “Securities Act” means the Securities Act of 1933, as amended.

 

(aa)                          “Service Provider” means an Employee, Director or Consultant.

 

(bb)                          “Share” means a share of the Common Stock, as adjusted in accordance with Section 11 below.

 

(cc)                            “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.

 

3.                                      Stock Subject to the Plan.  Subject to the provisions of Section 11 of the Plan, the maximum aggregate number of Shares that may be subject to Awards and sold under the Plan is 850,000 Shares.  The Shares may be authorized but unissued, or reacquired Common Stock.

 

If an Award expires or becomes unexercisable without having been exercised in full, or is surrendered pursuant to an Exchange Program, the unpurchased Shares that were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated).  However, Shares that have actually been issued under the Plan, upon exercise of an Award, shall not be returned to the Plan and shall not become available for future distribution under the Plan, except that if unvested Shares of Restricted Stock are repurchased by the Company at their original purchase price, such Shares shall become available for future grant under the Plan.  Notwithstanding the foregoing and, subject to adjustment provided in Section 11, the maximum number of Shares that may be issued upon the exercise of Incentive Stock Options shall equal the aggregate Share number stated in the first paragraph of this Section, plus, to the extent allowable under Section 422 of the Code, any Shares that become available for issuance under the Plan under this second paragraph of this Section.

 

4.                                      Administration of the Plan.

 

(a)                                 Administrator.  The Plan shall be administered by the Board or a Committee appointed by the Board, which Committee shall be constituted to comply with Applicable Laws.

 

(b)                                 Powers of the Administrator.  Subject to the provisions of the Plan and, in the case of a Committee, the specific duties delegated by the Board to such Committee, and subject to the approval of any relevant authorities, the Administrator shall have the authority in its discretion:

 

(i)                                     to determine the Fair Market Value;

 

(ii)                                  to select the Service Providers to whom Awards may from time to time be granted hereunder;

 

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(iii)                               to determine the number of Shares to be covered by each such Award granted hereunder;

 

(iv)                              to approve forms of agreement for use under the Plan;

 

(v)                                 to determine the terms and conditions of any Award granted hereunder.  Such terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;

 

(vi)                              to institute an Exchange Program;

 

(vii)                           to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws;

 

(viii)                        to modify or amend each Award (subject to Section 19(c) of the Plan) including but not limited to the discretionary authority to extend the post-termination exercise period of Awards and to extend the maximum term of an Option (subject to Section 6(a) regarding Incentive Stock Options);

 

(ix)                              to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator;  and

 

(x)                                 to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan.

 

(c)                                  Effect of Administrator’s Decision.  All decisions, determinations and interpretations of the Administrator shall be final and binding on all Participants.

 

5.                                      Eligibility.  Nonstatutory Stock Options and Restricted Stock may be granted to Service Providers.  Incentive Stock Options may be granted only to Employees.

 

6.                                      Stock Options.

 

(a)                                 Term of Option.  The term of each Option shall be stated in the Award Agreement; provided, however, that the term shall be no more than ten (10) years from the date of grant thereof.  In the case of an Incentive Stock Option granted to a Participant who, at the time the Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Option shall be five (5) years from the date of grant or such shorter term as may be provided in the Award Agreement.

 

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(b)                                 Option Exercise Price and Consideration.

 

(i)                                     Exercise Price.  The per share exercise price for the Shares to be issued upon exercise of an Option shall be such price as is determined by the Administrator, but shall be subject to the following:

 

(A)                               In the case of an Incentive Stock Option

 

a)                                     granted to an Employee who, at the time of grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the exercise price shall be no less than one hundred and ten percent (110%) of the Fair Market Value per Share on the date of grant.

 

b)                                     granted to any other Employee, the per Share exercise price shall be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.

 

(B)                               In the case of a Nonstatutory Stock Option, the per Share exercise price shall be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.

 

(C)                               Notwithstanding the foregoing, Options may be granted with a per Share exercise price other than as required above in accordance with and pursuant to a transaction described in Section 424 of the Code.

 

(ii)                                  Forms of Consideration.  The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined at the time of grant).  Such consideration may consist of, without limitation, (1) cash, (2) check, (3) promissory note, to the extent permitted by Applicable Laws, (4) other Shares, provided that such Shares have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option shall be exercised and provided that accepting such Shares, in the sole discretion of the Administrator, shall not result in any adverse accounting consequences to the Company, (5) consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan, (6) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws, or (7) any combination of the foregoing methods of payment.  In making its determination as to the type of consideration to accept, the Administrator shall consider if acceptance of such consideration may be reasonably expected to benefit the Company.

 

(c)                                  Exercise of Option.

 

(i)                                     Procedure for Exercise; Rights as a Stockholder.  Any Option granted hereunder shall be exercisable according to the terms hereof at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement.  An Option may not be exercised for a fraction of a Share.

 

An Option shall be deemed exercised when the Company receives (i) written or electronic notice of exercise (in accordance with the Award Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is

 

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exercised, together with any applicable withholding taxes.  Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Award Agreement and the Plan.  Shares issued upon exercise of an Option shall be issued in the name of the Participant or, if requested by the Participant, in the name of the Participant and his or her spouse.  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), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Shares, notwithstanding the exercise of the Option.  The Company shall issue (or cause to be issued) such Shares promptly after the Option is exercised.  No adjustment shall be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 11 of the Plan.

 

Exercise of an Option in any manner shall result in a decrease in the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

 

(ii)                                  Termination of Relationship as a Service Provider.  If a Participant ceases to be a Service Provider, such Participant may exercise his or her Option within such period of time as is specified in the Award Agreement, to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of the Option as set forth in the Award Agreement).  In the absence of a specified time in the Award Agreement, the Option shall remain exercisable for three (3) months following the Participant’s termination.  Unless the Administrator provides otherwise, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan.  If, after termination, the Participant does not exercise his or her Option within the time specified by the Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

 

(iii)                               Disability of Participant.  If a Participant ceases to be a Service Provider as a result of the Participant’s Disability, the Participant may exercise his or her Option within such longer period of time as is specified in the Award Agreement, to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement).  In the absence of a specified time in the Award Agreement, the Option shall remain exercisable for twelve (12) months following the Participant’s termination.  Unless the Administrator provides otherwise, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan.  If, after termination, the Participant does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

 

(iv)                              Death of Participant.  If a Participant dies while a Service Provider, the Option may be exercised within such longer period of time as is specified in the Award Agreement, to the extent that the Option is vested on the date of death (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement) by the Participant’s designated beneficiary, provided such beneficiary has been designated prior to the Participant’s death in a form acceptable to the Administrator.  If no such beneficiary has been designated by the Participant, then such Option may be exercised by the personal representative of the Participant’s estate or by the person(s) to whom the Option is transferred pursuant to the Participant’s will or in accordance with

 

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the laws of descent and distribution.  In the absence of a specified time in the Award Agreement, the Option shall remain exercisable for twelve (12) months following the Participant’s termination.  If, at the time of death, the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan.  If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

 

(v)                                 Incentive Stock Option Limit.  Each Option shall be designated in the Award Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.  However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds one hundred thousand dollars ($100,000), such Options shall be treated as Nonstatutory Stock Options.  For purposes of this Section 6(c)(v), Incentive Stock Options shall be taken into account in the order in which they were granted.  The Fair Market Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted.

 

7.                                      Restricted Stock.

 

(a)                                 Rights to Purchase.  Restricted Stock may be issued either alone, in addition to, or in tandem with other awards granted under the Plan and/or cash awards made outside of the Plan.  After the Administrator determines that it shall offer Restricted Stock under the Plan, it shall advise the offeree in writing or electronically of the terms, conditions and restrictions related to the offer, including the number of Shares that such person shall be entitled to purchase, the price to be paid (if any), and the time within which such person must accept such offer.

 

(b)                                 Repurchase Option.  Unless the Administrator determines otherwise, the Restricted Stock Purchase Agreement shall grant the Company a repurchase option exercisable within ninety (90) days of the voluntary or involuntary termination of the purchaser’s service with the Company for any reason (including death or Disability).  Unless the Administrator provides otherwise, the purchase price for Shares repurchased pursuant to the Restricted Stock Purchase Agreement shall be the original price paid by the purchaser and may be paid by cancellation of any indebtedness of the purchaser to the Company.  The repurchase option shall lapse at such rate as the Administrator may determine.

 

(c)                                  Other Provisions.  The Restricted Stock Purchase Agreement shall contain such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Administrator in its sole discretion.

 

(d)                                 Rights as a Stockholder.  Once the Restricted Stock is purchased or otherwise issued, the purchaser shall have rights equivalent to those of a stockholder and shall be a stockholder when his or her purchase is entered upon the records of the duly authorized transfer agent of the Company.  No adjustment shall be made for a dividend or other right for which the record date is prior to the date the Restricted Stock is purchased or otherwise issued, except as provided in Section 11 of the Plan.

 

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8.                                      Tax Withholding.  Prior to the delivery of any Shares pursuant to an Award (or exercise thereof), the Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, local, foreign or other taxes (including the Participant’s FICA obligation) required to be withheld with respect to such Award (or exercise thereof).  The Administrator, in its sole discretion and pursuant to such procedures as it may specify from time to time, shall determine in what manner it shall allow a Participant to satisfy such tax withholding obligation and may permit the Participant to satisfy such tax withholding obligation, in whole or in part by one (1) or more of the following: (a) paying cash (or by check), (b) electing to have the Company withhold otherwise deliverable Shares having a Fair Market Value equal to the minimum amount statutorily required to be withheld, or (c) selling a sufficient number of such Shares otherwise deliverable to a Participant through such means as the Company may determine in its sole discretion (whether through a broker or otherwise) equal to the minimum amount statutorily required to be withheld.

 

9.                                      Limited Transferability of Awards.  Unless determined otherwise by the Administrator, Awards may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or the laws of descent and distribution, and may be exercised during the lifetime of the Participant, only by the Participant.

 

10.                               Leaves of Absence; Transfers.

 

(a)                                 Unless the Administrator provides otherwise, or except as otherwise required by Applicable Laws, vesting of Awards granted hereunder shall be suspended during any unpaid leave of absence.

 

(b)                                 A Service Provider shall not cease to be a Service Provider in the case of (i) any leave of absence approved by the Company, or (ii) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor.

 

(c)                                  For purposes of Incentive Stock Options, no such leave may exceed three (3) months, unless reemployment upon expiration of such leave is guaranteed by statute or contract.  If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then six (6) months following the first (1st) day of such leave, any Incentive Stock Option held by the Participant shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option.

 

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11.                               Adjustments; Dissolution or Liquidation; Merger or Change in Control.

 

(a)                                 Adjustments.  In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, shall adjust the number and class of Shares that may be delivered under the Plan and/or the number, class, and price of Shares covered by each outstanding Award.

 

(b)                                 Dissolution or Liquidation.  In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Participant as soon as practicable prior to the effective date of such proposed transaction.  To the extent it has not been previously exercised, an Award shall terminate immediately prior to the consummation of such proposed action.

 

(c)                                  Merger or Change in Control.  In the event of a merger or Change in Control, each outstanding Award shall be treated as the Administrator determines, including, without limitation, that each Award be assumed or an equivalent award substituted by the successor corporation or a Parent or Subsidiary of the successor corporation.  The Administrator shall not be required to treat all Awards similarly in the transaction.

 

Notwithstanding the foregoing, in the event of a Change in Control in which the successor corporation does not assume or substitute for the Award, the Participant shall fully vest in and have the right to exercise his or her outstanding Awards, including Shares as to which such Award would not otherwise be vested or exercisable, and restrictions on all of the Participant’s Restricted Stock shall lapse.  In addition, if an Award is not assumed or substituted in the event of a merger or Change in Control, the Administrator shall notify the Participant in writing or electronically that the Award shall be fully vested and exercisable for a period of time determined by the Administrator in its sole discretion, and any Award not assumed or substituted for shall terminate upon the expiration of such period for no consideration, unless otherwise determined by the Administrator.

 

For the purposes of this Section 11(c), the Award shall be considered assumed if, following the merger or Change in Control, the option or right confers the right to purchase or receive, for each Share subject to the Award immediately prior to the merger or Change in Control, the consideration (whether stock, cash, or other securities or property) received in the merger or Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Award, for each Share subject to the Award, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of common stock in the merger or Change in Control.

 

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12.                               Time of Granting Awards.  The date of grant of an Award shall, for all purposes, be the date on which the Administrator makes the determination granting such Award, or such later date as is determined by the Administrator.  Notice of the determination shall be given to each Service Provider to whom an Award is so granted within a reasonable time after the date of such grant.

 

13.                               No Effect on Employment or Service.  Neither the Plan nor any Award shall confer upon any participant any right with respect to continuing the Participant’s relationship as a Service Provider with the Company, nor shall it interfere in any way with his or her right or the Company’s right to terminate such relationship at any time, with or without cause, and with or without notice.

 

14.                               Conditions Upon Issuance of Shares.

 

(a)                                 Legal Compliance.  Shares shall not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance.

 

(b)                                 Investment Representations.  As a condition to the exercise of an Award, the Administrator may in its discretion require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares.

 

15.                               Inability to Obtain Authority.  The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

 

16.                               Reservation of Shares.  The Company, during the term of this Plan, shall at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

 

17.                               Stockholder Approval.  The Plan shall be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted.  Such stockholder approval shall be obtained in the degree and manner required under Applicable Laws.

 

18.                               Term of Plan.  Subject to stockholder approval in accordance with Section 17, the Plan shall become effective upon its adoption by the Board.  Unless sooner terminated under Section 19, it shall continue in effect for a term of ten (10) years from the later of (a) the effective date of the Plan, or (b) the earlier of the most recent Board or stockholder approval of an increase in the number of Shares reserved for issuance under the Plan.

 

19.                               Amendment and Termination of the Plan.

 

(a)                                 Amendment and Termination.  The Board may at any time amend, alter, suspend or terminate the Plan.

 

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(b)                                 Stockholder Approval.  The Board shall obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.

 

(c)                                  Effect of Amendment or Termination.  No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing (which may include e-mail) and signed by the Participant and the Company.  Termination of the Plan shall not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Options granted under the Plan prior to the date of such termination.

 

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APPENDIX A

 

TO

 

RECEPTOS, INC. 2008 STOCK PLAN

 

(for California residents only, to the extent required by 25102(o))

 

This Appendix A to the Receptos, Inc. 2008 Stock Plan shall apply only to  the Participants  who are residents of the State of California and who are receiving an Award under the Plan.  Capitalized terms contained herein shall have the same meanings given to them in the Plan, unless otherwise provided by this Appendix A.  Notwithstanding any provisions contained in the Plan to the contrary and to the extent required by Applicable Laws, the following terms shall apply to all Awards granted to residents of the State of California, until such time as the Administrator amends this Appendix A or the Administrator otherwise provides.

 

(a)                                                         The term of each Option shall be stated in the Award Agreement, provided, however, that the term shall be no more than ten (10) years from the date of grant thereof.

 

(b)                                                         Unless determined otherwise by the Administrator, Awards may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or the laws of descent and distribution, and may be exercised during the lifetime of the Participant, only by the Participant.  If the Administrator in its sole discretion makes an Award transferable, such Award may only be transferred (i) by will, (ii) by the laws of descent and distribution, (iii) to a revocable trust, or (iv) as permitted by Rule 701 of the Securities Act of 1933, as amended.

 

(c)                                                          If a Participant ceases to be a Service Provider, such Participant may exercise his or her Option within such period of time as specified in the Award Agreement, which shall not be less than thirty (30) days following the date of the Participant’s termination, to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of the Option as set forth in the Award Agreement).  In the absence of a specified time in the Award Agreement, the Option shall remain exercisable for three (3) months following the Participant’s termination.

 

(d)                                                         If a Participant ceases to be a Service Provider as a result of the Participant’s Disability, the Participant may exercise his or her Option within such period of time as specified in the Award Agreement, which shall not be less than six (6) months following the date of the Participant’s termination, to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement).  In the absence of a specified time in the Award Agreement, the Option shall remain exercisable for twelve (12) months following the Participant’s termination.

 

(e)                                                          If a Participant dies while a Service Provider, the Option may be exercised within such period of time as specified in the Award Agreement, which shall not be less than six (6) months following the date of the Participant’s death, to the extent the Option is vested on the date of death (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement) by the Participant’s designated beneficiary, personal representative, or by the person(s)

 

13

 

to whom the Option is transferred pursuant to the Participant’s will or in accordance with the laws of descent and distribution.  In the absence of a specified time in the Award Agreement, the Option shall remain exercisable for twelve (12) months following the Participant’s termination.

 

(f)                                                           No Award shall be granted to a resident of California more than ten (10) years after the earlier of the date of adoption of the Plan or the date the Plan is approved by the stockholders.

 

(g)                                                          In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, shall adjust the number and class of shares of common stock that may be delivered under the Plan and/or the number, class, and price of shares covered by each outstanding Option.  The Administrator shall also make such adjustments to the extent required by Section 25102(o) of the California Corporations Code.

 

(h)                                                         This Appendix A shall be deemed to be part of the Plan and the Administrator shall have the authority to amend this Appendix A in accordance with Section 19 of the Plan.

 

14

 

AMENDMENT TO THE

RECEPTOS, INC.

2008 STOCK PLAN

(f/k/a Receptor Pharmaceuticals, Inc. 2008 Stock Plan)

 

This amendment amends the 2008 Stock Plan (the “Plan”) of Receptos, Inc., a Delaware corporation (the “Company”), as previously amended.  Unless otherwise specifically defined herein, each capitalized term used herein shall have the meaning afforded such term under the Plan.

 

W I T N E S S E T H:

 

WHEREAS, pursuant to a unanimous written consent of the Company’s Board of Directors (the “Board”) dated as of November 8, 2009, the Board determined it to be in the best interests of the Company to amend the Plan to increase the number of Shares that may be subject to Awards thereunder by 2,111,962 Shares;(1)

 

 

NOW, THEREFORE, be it resolved that the Plan is hereby amended as follows:

 

1.                                      Shares Subject to Plan.  Section 3 of the Plan shall be amended by replacing the first sentence of such section with the following:

 

“Subject to the provisions of Section 11 of the Plan, the maximum aggregate number of Shares that may be subject to Awards and sold under the Plan is 5,686,402 Shares.”

 

2.                                      Date of Amendment.  To record the adoption of this Amendment to the Plan by the Board as of November 8, 2009, and the approval by the stockholders of this Amendment effective as of November 8, 2009, the Company has caused its authorized officer to execute the same.

 

	
 
    	
RECEPTOS, INC.,
    
	
 
    	
a   Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Jim Schmidt
    
	
 
    	
Jim   Schmidt,
    
	
 
    	
Chief   Financial Officer
    

 

(1)                                 Prior to the effectiveness of this Amendment, the number of Shares that may be subject to Awards under the Plan was 3,574,440 Shares.

 

 

AMENDMENT TO THE

RECEPTOS, INC.

2008 STOCK PLAN

(f/k/a Receptor Pharmaceuticals, Inc. 2008 Stock Plan)

 

This amendment amends the 2008 Stock Plan (the “Plan”) of Receptos, Inc., a Delaware corporation (the “Company”), as previously amended.  Unless otherwise specifically defined herein, each capitalized term used herein shall have the meaning afforded such term under the Plan.

 

W I T N E S S E T H:

 

WHEREAS, pursuant to action by the Company’s Board of Directors (the “Board”) at a meeting held on June 29, 2011, the Board determined it to be in the best interests of the Company to amend the Plan to increase the number of Shares that may be subject to Awards thereunder by 1,152,139 Shares;(1)

 

 

NOW, THEREFORE, be it resolved that the Plan is hereby amended as follows:

 

1.                                      Shares Subject to Plan.  Section 3 of the Plan shall be amended by replacing the first sentence of such section with the following:

 

“Subject to the provisions of Section 11 of the Plan, the maximum aggregate number of Shares that may be subject to Awards and sold under the Plan is 6,838,541 Shares.”

 

2.                                      Date of Amendment.  To record the adoption of this Amendment to the Plan by the Board as of June 29, 2011, and the approval by the stockholders of this Amendment effective as of June 29, 2011, the Company has caused its authorized officer to execute the same.

 

	
 
    	
RECEPTOS, INC.,
    
	
 
    	
a   Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Jim Schmidt
    
	
 
    	
Jim   Schmidt,
    
	
 
    	
Chief   Financial Officer
    

 

(1)                                 Prior to the effectiveness of this Amendment, the number of Shares that may be subject to Awards under the Plan was 5,686,402 Shares.

 

 

AMENDMENT TO THE

RECEPTOS, INC.

2008 STOCK PLAN

(f/k/a Receptor Pharmaceuticals, Inc. 2008 Stock Plan)

 

This amendment amends the 2008 Stock Plan (the “Plan”) of Receptos, Inc., a Delaware corporation (the “Company”), as previously amended.  Unless otherwise specifically defined herein, each capitalized term used herein shall have the meaning afforded such term under the Plan.

 

W I T N E S S E T H:

 

WHEREAS, pursuant to action by the Company’s Board of Directors (the “Board”) at a meeting held January 25, 2012, the Board determined it to be in the best interests of the Company to amend the Plan to increase the number of Shares that may be subject to Awards thereunder by 1,100,000 Shares;(1)

 

NOW, THEREFORE, be it resolved that the Plan is hereby amended as follows:

 

1.                                      Shares Subject to Plan.  Section 3 of the Plan shall be amended by replacing the first sentence of such section with the following:

 

“Subject to the provisions of Section 11 of the Plan, the maximum aggregate number of Shares that may be subject to Awards and sold under the Plan is 7,938,541 Shares.”

 

2.                                      Date of Amendment.  To record the adoption of this Amendment to the Plan by the Board as of January 25, 2012, and the approval by the stockholders of this Amendment effective as of January 25, 2012, the Company has caused its authorized officer to execute the same.

 

	
 
    	
RECEPTOS, INC.,
    
	
 
    	
a   Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Jim Schmidt
    
	
 
    	
Jim   Schmidt
    
	
 
    	
VP   Finance & Administration
    

 

(1)                                 Prior to the effectiveness of this Amendment, the number of Shares that may be subject to Awards under the Plan was 6,838,541 Shares.

 

 

AMENDMENT TO THE

RECEPTOS, INC.

2008 STOCK PLAN

(f/k/a Receptor Pharmaceuticals, Inc. 2008 Stock Plan)

 

This amendment amends the 2008 Stock Plan (the “Plan”) of Receptos, Inc., a Delaware corporation (the “Company”), as previously amended.  Unless otherwise specifically defined herein, each capitalized term used herein shall have the meaning afforded such term under the Plan.

 

W I T N E S S E T H:

 

WHEREAS, pursuant to action by unanimous written consent effective as of February 15, 2013, the Company’s Board of Directors (the “Board”) determined it to be in the best interests of the Company to amend the Plan to increase the number of Shares that may be subject to Awards thereunder by 1,725,100 Shares;(1)

 

NOW, THEREFORE, be it resolved that the Plan is hereby amended as follows:

 

1.                                      Shares Subject to Plan.  Section 3 of the Plan shall be amended by replacing the first sentence of such section with the following:

 

“Subject to the provisions of Section 11 of the Plan, the maximum aggregate number of Shares that may be subject to Awards and sold under the Plan is 9,663,641 Shares.”

 

2.                                      Date of Amendment.  To record the adoption of this Amendment to the Plan by the Board as of February 15, 2013, and the approval by the stockholders of this Amendment effective as of February 15, 2013, the Company has caused its authorized officer to execute the same.

 

 

	
 
    	
RECEPTOS, INC.,
    
	
 
    	
a   Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   James Schmidt
    
	
 
    	
James   Schmidt
    
	
 
    	
VP   Finance & Administration
    

 

(1)                                 Prior to the effectiveness of this Amendment, the number of Shares that may be subject to Awards under the Plan was 7,938,541 Shares.

 

 

AMENDMENT TO THE

RECEPTOS, INC.

2008 STOCK PLAN

(f/k/a Receptor Pharmaceuticals, Inc. 2008 Stock Plan)

 

This amendment amends the 2008 Stock Plan (the “Plan”) of Receptos, Inc., a Delaware corporation (the “Company”), as previously amended.  Unless otherwise specifically defined herein, each capitalized term used herein shall have the meaning afforded such term under the Plan.

 

W I T N E S S E T H:

 

WHEREAS, pursuant to action by the Company’s Board of Directors (the “Board”) at a meeting held April 18, 2013, the Board determined it to be in the best interests of the Company to amend the Plan to increase the number of Shares that may be subject to Awards thereunder by 2,100,000 Shares;(1)

 

NOW, THEREFORE, be it resolved that the Plan is hereby amended as follows:

 

1.                                      Shares Subject to Plan.  Section 3 of the Plan shall be amended by replacing the first sentence of such section with the following:

 

“Subject to the provisions of Section 11 of the Plan, the maximum aggregate number of Shares that may be subject to Awards and sold under the Plan is 11,763,641 Shares.”

 

2.                                      Date of Amendment.  To record the adoption of this Amendment to the Plan by the Board as of April 18, 2013, and the approval by the stockholders of this Amendment effective as of April 18, 2013, the Company has caused its authorized officer to execute the same.

 

	
 
    	
RECEPTOS, INC.
    
	
 
    	
a   Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   James Schmidt
    
	
 
    	
James   Schmidt
    
	
 
    	
VP   Finance & Administration
    

 

(1)                                 Prior to the effectiveness of this Amendment, the number of Shares that may be subject to Awards under the Plan was 9,663,641 Shares.Exhibit 10.5

 

RECEPTOS, INC.

 

2013 STOCK INCENTIVE PLAN

 

(Adopted by the Board of Directors on April 18, 2018)
 (Approved by the Stockholders on April 18, 2018)

 

RECEPTOS, INC.

2013 STOCK INCENTIVE PLAN

 

 

Table of Contents

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
SECTION 1.   
    	
ESTABLISHMENT AND PURPOSE
    	
1
    
	
 
    	
 
    	
 
    
	
SECTION 2.   
    	
DEFINITIONS
    	
1
    
	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
“Affiliate”
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
“Award”
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(c)
    	
“Award Agreement”
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(d)
    	
“Board of Directors” or “Board”
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(e)
    	
“Cash-Based Award”
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(f)
    	
“Change in Control”
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(g)
    	
“Code”
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(h)
    	
“Committee”
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(i)
    	
“Company”
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(j)
    	
“Consultant”
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(k)
    	
“Employee”
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(l)
    	
“Exchange Act”
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(m)
    	
“Exercise Price”
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(n)
    	
“Fair Market Value”
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(o)
    	
“ISO”
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(p)
    	
“Nonstatutory Option”
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(q)
    	
“Option”
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(r)
    	
“Outside Director”
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(s)
    	
“Parent”
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(t)
    	
“Participant”
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(u)
    	
“Performance Based Award”
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(v)
    	
“Plan”
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(w)
    	
“Purchase Price”
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(x)
    	
“Restricted Share”
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(y)
    	
“SAR”
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(z)
    	
“Service”
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(aa)
    	
“Share”
    	
5
    

 

i

 

	
 
    	
(bb)
    	
“Stock”
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(cc)
    	
“Stock Unit”
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(dd)
    	
“Subsidiary”
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(ee)
    	
“Total and Permanent Disability”
    	
5
    
	
 
    	
 
    	
 
    
	
SECTION 3.  
    	
ADMINISTRATION
    	
5
    
	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Committee Composition
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
Committee for Non-Officer Grants
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(c)
    	
Committee Procedures
    	
6
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(d)
    	
Committee Responsibilities
    	
6
    
	
 
    	
 
    	
 
    
	
SECTION 4.   
    	
ELIGIBILITY
    	
7
    
	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
General Rule
    	
7
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
Ten-Percent Stockholders
    	
7
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(c)
    	
Attribution Rules
    	
7
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(d)
    	
Outstanding Stock
    	
7
    
	
 
    	
 
    	
 
    
	
SECTION 5.   
    	
STOCK SUBJECT TO PLAN
    	
8
    
	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Basic Limitation
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
Section 162(m) Award   Limitation
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(c)
    	
Additional Shares
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(d)
    	
Substitution and Assumption of Awards
    	
9
    
	
 
    	
 
    	
 
    
	
SECTION 6.   
    	
RESTRICTED SHARES
    	
9
    
	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Restricted Share Award Agreement
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
Payment for Awards
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(c)
    	
Vesting
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(d)
    	
Voting and Dividend Rights
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(e)
    	
Restrictions on Transfer of   Shares
    	
10
    
	
 
    	
 
    	
 
    
	
SECTION 7.   
    	
TERMS AND CONDITIONS OF OPTIONS
    	
10
    
	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Stock Option Award Agreement
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
Number of Shares
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(c)
    	
Exercise Price
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(d)
    	
Withholding Taxes
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(e)
    	
Exercisability and Term
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(f)
    	
Exercise of Options
    	
11
    

 

ii

 

	
 
    	
(g)
    	
Effect of Change in Control
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(h)
    	
No Rights as a Stockholder
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(i)
    	
Modification, Extension and   Renewal of Options
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(j)
    	
Restrictions on Transfer of   Shares
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(k)
    	
Buyout Provisions
    	
11
    
	
 
    	
 
    	
 
    
	
SECTION 8.   
    	
PAYMENT FOR SHARES
    	
12
    
	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
General Rule
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
Surrender of Stock
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(c)
    	
Services Rendered
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(d)
    	
Cashless Exercise
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(e)
    	
Exercise/Pledge
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(f)
    	
Net Exercise
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(g)
    	
Promissory Note
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(h)
    	
Other Forms of Payment
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(i)
    	
Limitations under Applicable Law
    	
13
    
	
 
    	
 
    	
 
    
	
SECTION 9.   
    	
STOCK APPRECIATION RIGHTS
    	
13
    
	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
SAR Award Agreement
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
Number of Shares
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(c)
    	
Exercise Price
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(d)
    	
Exercisability and Term
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(e)
    	
Effect of Change in Control
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(f)
    	
Exercise of SARs
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(g)
    	
Modification or Assumption of   SARs
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(h)
    	
Buyout Provisions
    	
14
    
	
 
    	
 
    	
 
    
	
SECTION 10.   
    	
STOCK UNITS
    	
14
    
	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Stock Unit Award Agreement
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
Payment for Awards
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(c)
    	
Vesting Conditions
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(d)
    	
Voting and Dividend Rights
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(e)
    	
Form and Time of Settlement   of Stock Units
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(f)
    	
Death of Participant
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(g)
    	
Creditors’ Rights
    	
15
    

 

iii

 

	
SECTION 11.   
    	
CASH-BASED AWARDS
    	
15
    
	
 
    	
 
    	
 
    
	
SECTION 12.   
    	
ADJUSTMENT OF SHARES
    	
15
    
	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Adjustments
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
Dissolution or Liquidation
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(c)
    	
Reorganizations
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(d)
    	
Reservation of Rights
    	
16
    
	
 
    	
 
    	
 
    
	
SECTION 13.   
    	
DEFERRAL OF AWARDS
    	
17
    
	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Committee Powers
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
General Rules
    	
17
    
	
 
    	
 
    	
 
    
	
SECTION 14.   
    	
AWARDS UNDER OTHER PLANS
    	
18
    
	
 
    	
 
    	
 
    
	
SECTION 15.   
    	
PAYMENT OF DIRECTOR’S FEES IN SECURITIES
    	
18
    
	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Effective Date
    	
18
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
Elections to Receive NSOs, SARs,   Restricted Shares or Stock Units
    	
18
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(c)
    	
Number and Terms of NSOs, SARs,   Restricted Shares or Stock Units
    	
18
    
	
 
    	
 
    	
 
    
	
SECTION 16.   
    	
LEGAL AND REGULATORY REQUIREMENTS
    	
18
    
	
 
    	
 
    	
 
    
	
SECTION 17.   
    	
TAXES
    	
18
    
	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Withholding Taxes
    	
18
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
Share Withholding
    	
19
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(c)
    	
Section 409A
    	
19
    
	
 
    	
 
    	
 
    
	
SECTION 18.   
    	
TRANSFERABILITY
    	
19
    
	
 
    	
 
    	
 
    
	
SECTION 19.   
    	
PERFORMANCE BASED AWARDS
    	
19
    
	
 
    	
 
    	
 
    
	
SECTION 20.   
    	
NO EMPLOYMENT RIGHTS
    	
21
    
	
 
    	
 
    	
 
    
	
SECTION 21.   
    	
DURATION AND AMENDMENTS
    	
21
    
	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Term of the Plan
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
Right to Amend the Plan
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(c)
    	
Effect of Termination
    	
22
    
	
 
    	
 
    	
 
    
	
SECTION 22.   
    	
EXECUTION
    	
23
    

 

iv

 

RECEPTOS, INC.

 

2013 STOCK INCENTIVE PLAN

 

SECTION 1.  ESTABLISHMENT AND PURPOSE.

 

The Plan was adopted by the Board of Directors on April 18, 2018, and shall be effective immediately prior to the closing of the initial offering of Stock to the public pursuant to a registration statement filed by the Company with the Securities and Exchange Commission (the “Effective Date”). The purpose of the Plan is to promote the long-term success of the Company and the creation of stockholder value by (a) encouraging Employees, Outside Directors and Consultants to focus on critical long-range objectives, (b) encouraging the attraction and retention of Employees, Outside Directors and Consultants with exceptional qualifications and (c) linking Employees, Outside Directors and Consultants directly to stockholder interests through increased stock ownership. The Plan seeks to achieve this purpose by providing for Awards in the form of restricted shares, stock units, options (which may constitute incentive stock options or nonstatutory stock options), stock appreciation rights or cash-based awards.

 

SECTION 2.  DEFINITIONS.

 

(a)                                 “Affiliate” shall mean any entity other than a Subsidiary, if the Company and/or one or more Subsidiaries own not less than 50% of such entity.

 

(b)                                 “Award” shall mean any award of an Option, a SAR, a Restricted Share or a Stock Unit or a Cash-Based Award under the Plan.

 

(c)                                  “Award Agreement” shall mean the agreement between the Company and the recipient of an Award which contains the terms, conditions and restrictions pertaining to such Award.

 

(d)                                 “Board of Directors” or “Board” shall mean the Board of Directors of the Company, as constituted from time to time.

 

(e)                                  “Cash-Based Award” shall mean an Award that entitles the Participant to receive a cash-denominated payment.

 

(f)                                    “Change in Control” shall mean the occurrence of any of the following events:

 

(i)                                     A change in the composition of the Board of Directors occurs, as a result of which fewer than one-half of the incumbent directors are directors who either:

 

(A)                               Had been directors of the Company on the “look-back date” (as defined below) (the “original directors”); or

 

(B)                               Were elected, or nominated for election, to the Board of Directors with the affirmative votes of at least a majority of the aggregate of

 

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the original directors who were still in office at the time of the election or nomination and the directors whose election or nomination was previously so approved (the “continuing directors”);

 

provided, however, that for this purpose, the “original directors” and “continuing directors” shall not include any individual whose initial assumption of office occurred as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents, by or on behalf of a person other than the Board; or

 

(ii)                                  Any “person” (as defined below) who by the acquisition or aggregation of securities, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities ordinarily (and apart from rights accruing under special circumstances) having the right to vote at elections of directors (the “Base Capital Stock”); except that any change in the relative beneficial ownership of the Company’s securities by any person resulting solely from a reduction in the aggregate number of outstanding shares of Base Capital Stock, and any decrease thereafter in such person’s ownership of securities, shall be disregarded until such person increases in any manner, directly or indirectly, such person’s beneficial ownership of any securities of the Company; or

 

(iii)                               The consummation of a merger or consolidation of the Company or a Subsidiary of the Company with or into another entity or any other corporate reorganization, if persons who were not stockholders of the Company immediately prior to such merger, consolidation or other reorganization own immediately after such merger, consolidation or other reorganization 50% or more of the voting power of the outstanding securities of each of (A) the Company (or its successor) and (B) any direct or indirect parent corporation of the Company (or its successor); or

 

(iv)                              The sale, transfer or other disposition of all or substantially all of the Company’s assets.

 

For purposes of subsection (e)(i) above, the term “look-back” date shall mean the later of (1) the Effective Date or (2) the date 24 months prior to the date of the event that may constitute a Change in Control.

 

For purposes of subsection (e)(ii)) above, the term “person” shall have the same meaning as when used in Sections 13(d) and 14(d) of the Exchange Act but shall exclude (1) a trustee or other fiduciary holding securities under an employee benefit plan maintained by the Company or a Parent or Subsidiary and (2) a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the Stock.

 

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Any other provision of this Section 2(e) notwithstanding, a transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Company’s incorporation or 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, and a Change in Control shall not be deemed to occur if the Company files a registration statement with the United States Securities and Exchange Commission for the initial or secondary public offering of securities or debt of the Company to the public.

 

(g)                                 “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

(h)                                 “Committee” shall mean the Compensation Committee as designated by the Board of Directors, which is authorized to administer the Plan, as described in Section 3 hereof.

 

(i)                                    “Company” shall mean Receptos, Inc., a Delaware corporation.

 

(j)                                    “Consultant” shall mean a consultant or advisor who provides bona fide services to the Company, a Parent, a Subsidiary or an Affiliate as an independent contractor (not including service as a member of the Board of Directors) or a member of the board of directors of a Parent or a Subsidiary, in each case who is not an Employee.

 

(k)                                  “Employee” shall mean any individual who is a common-law employee of the Company, a Parent, a Subsidiary or an Affiliate.

 

(l)                                    “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

(m)                               “Exercise Price” shall mean, in the case of an Option, the amount for which one Share may be purchased upon exercise of such Option, as specified in the applicable Stock Option Agreement. “Exercise Price,” in the case of a SAR, shall mean an amount, as specified in the applicable SAR Agreement, which is subtracted from the Fair Market Value of one Share in determining the amount payable upon exercise of such SAR.

 

(n)                                 “Fair Market Value” with respect to a Share, shall mean the market price of one Share, determined by the Committee as follows:

 

(i)                                     If the Stock was traded over-the-counter on the date in question, then the Fair Market Value shall be equal to the last transaction price quoted for such date by the OTC Bulletin Board or, if not so quoted, shall be equal to the mean between the last reported representative bid and asked prices quoted for such date by the principal automated inter-dealer quotation system on which the Stock is quoted or, if the Stock is not quoted on any such system, by the Pink Quote system;

 

(ii)                                  If the Stock was traded on any established stock exchange (such as the New York Stock Exchange, The Nasdaq Global Market or The Nasdaq Global Select Market) or national market system on the date in question, then the Fair Market Value shall be equal to the closing price reported for such date by the applicable exchange or system; and

 

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(iii)                               If none of the foregoing provisions is applicable, then the Fair Market Value shall be determined by the Committee in good faith on such basis as it deems appropriate.

 

In all cases, the determination of Fair Market Value by the Committee shall be conclusive and binding on all persons.

 

(o)                                 “ISO” shall mean an employee incentive stock option described in Section 422 of the Code.

 

(p)                                 “Nonstatutory Option” or “NSO” shall mean an employee stock option that is not an ISO.

 

(q)                                 “Option” shall mean an ISO or Nonstatutory Option granted under the Plan and entitling the holder to purchase Shares.

 

(r)                                   “Outside Director” shall mean a member of the Board of Directors who is not a common-law employee of, or paid consultant to, the Company, a Parent or a Subsidiary.

 

(s)                                   “Parent” shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be a Parent commencing as of such date.

 

(t)                                    “Participant” shall mean  a person who holds an Award.

 

(u)                                 “Performance Based Award” shall mean any Restricted Share Award, Stock Unit Award or Cash-Based Award granted to a Participant that is intended to qualify as “performance-based compensation” under Section 162(m) of the Code.

 

(v)                                  “Plan” shall mean this 2013 Stock Incentive Plan of Receptos, Inc., as amended from time to time.

 

(w)                               “Purchase Price” shall mean the consideration for which one Share may be acquired under the Plan (other than upon exercise of an Option), as specified by the Committee.

 

(x)                                  “Restricted Share” shall mean a Share awarded under the Plan.

 

(y)                                  “SAR” shall mean a stock appreciation right granted under the Plan.

 

(z)                                   “Service” shall mean service as an Employee, Consultant or Outside Director, subject to such further limitations as may be set forth in the Plan or the applicable Award Agreement.  Service does not terminate when an Employee goes on a bona fide leave of absence, that was approved by the Company in writing, if the terms of the leave provide for continued Service crediting, or when continued Service crediting is required by applicable law.  However, for purposes of determining whether an Option is entitled to ISO status, an Employee’s employment will be treated as terminating three months after such Employee went on leave,

 

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unless such Employee’s right to return to active work is guaranteed by law or by a contract. Service terminates in any event when the approved leave ends, unless such Employee immediately returns to active work.  The Company determines which leaves of absence count toward Service, and when Service terminates for all purposes under the Plan.

 

(aa)                          “Share” shall mean one share of Stock, as adjusted in accordance with Section 12 (if applicable).

 

(bb)                          “Stock” shall mean the Common Stock of the Company.

 

(cc)                            “Stock Unit” shall mean a bookkeeping entry representing the Company’s obligation to deliver one Share (or distribute cash) on a future date in accordance with the provisions of a Stock Unit Award Agreement.

 

(dd)                          “Subsidiary” shall mean any corporation, if the Company and/or one or more other Subsidiaries own not less than 50% of the total combined voting power of all classes of outstanding stock of such corporation. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date.

 

(ee)                            “Total and Permanent Disability” shall mean any permanent and total disability as defined by Section 22(e)(3) of the Code.

 

SECTION 3.  ADMINISTRATION.

 

(a)                                 Committee Composition.  The Plan shall be administered by a Committee appointed by the Board, or by the Board acting as the Committee. The Committee shall consist of two or more directors of the Company. In addition, to the extent required by the Board, the composition of the Committee shall satisfy (i) such requirements as the Securities and Exchange Commission may establish for administrators acting under plans intended to qualify for exemption under Rule 16b-3 (or its successor) under the Exchange Act; and (ii) such requirements as the Internal Revenue Service may establish for outside directors acting under plans intended to qualify for exemption under Section 162(m)(4)(C) of the Code.

 

(b)                                 Committee for Non-Officer Grants.  The Board may also appoint one or more separate committees of the Board, each composed of one or more directors of the Company who need not satisfy the requirements of Section 3(a), who may administer the Plan with respect to Employees who are not considered officers or directors of the Company under Section 16 of the Exchange Act, may grant Awards under the Plan to such Employees and may determine all terms of such grants. Within the limitations of the preceding sentence, any reference in the Plan to the Committee shall include such committee or committees appointed pursuant to the preceding sentence. To the extent permitted by applicable laws, the Board of Directors may also authorize one or more officers of the Company to designate Employees, other than officers under Section 16 of the Exchange Act, to receive Awards and/or to determine the number of such Awards to be received by such persons; provided, however, that the Board of Directors shall specify the total number of Awards that such officers may so award.

 

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(c)                                  Committee Procedures.  The Board of Directors shall designate one of the members of the Committee as chairman. The Committee may hold meetings at such times and places as it shall determine. The acts of a majority of the Committee members present at meetings at which a quorum exists, or acts reduced to or approved in writing (including via email) by all Committee members, shall be valid acts of the Committee.

 

(d)                                 Committee Responsibilities.  Subject to the provisions of the Plan, the Committee shall have full authority and discretion to take the following actions:

 

(i)            To interpret the Plan and to apply its provisions;

 

(ii)           To adopt, amend or rescind rules, procedures and forms relating to the Plan;

 

(iii)          To adopt, amend or terminate sub-plans established for the purpose of satisfying applicable foreign laws including qualifying for preferred tax treatment under applicable foreign tax laws;

 

(iv)          To authorize any person to execute, on behalf of the Company, any instrument required to carry out the purposes of the Plan;

 

(v)           To determine when Awards are to be granted under the Plan;

 

(vi)          To select the Participants to whom Awards are to be granted;

 

(vii)         To determine the type of Award and number of Shares or amount of cash to be made subject to each Award;

 

(viii)        To prescribe the terms and conditions of each Award, including (without limitation) the Exercise Price and Purchase Price, and the vesting or duration of the Award (including accelerating the vesting of Awards, either at the time of the Award or thereafter, without the consent of the Participant), to determine whether an Option is to be classified as an ISO or as a Nonstatutory Option, and to specify the provisions of the agreement relating to such Award;

 

(ix)          To amend any outstanding Award Agreement, subject to applicable legal restrictions and to the consent of the Participant if the Participant’s rights or obligations would be materially impaired;

 

(x)           To prescribe the consideration for the grant of each Award or other right under the Plan and to determine the sufficiency of such consideration;

 

(xi)          To determine the disposition of each Award or other right under the Plan in the event of a Participant’s divorce or dissolution of marriage;

 

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(xii)         To determine whether Awards under the Plan will be granted in replacement of other grants under an incentive or other compensation plan of an acquired business;

 

(xiii)        To correct any defect, supply any omission, or reconcile any inconsistency in the Plan or any Award Agreement;

 

(xiv)        To establish or verify the extent of satisfaction of any performance goals or other conditions applicable to the grant, issuance, exercisability, vesting and/or ability to retain any Award; and

 

(xv)         To take any other actions deemed necessary or advisable for the administration of the Plan.

 

Subject to the requirements of applicable law, the Committee may designate persons other than members of the Committee to carry out its responsibilities and may prescribe such conditions and limitations as it may deem appropriate, except that the Committee may not delegate its authority with regard to the selection for participation of or the granting of Awards under the Plan to persons subject to Section 16 of the Exchange Act.  All decisions, interpretations and other actions of the Committee shall be final and binding on all Participants and all persons deriving their rights from a Participant.  No member of the Committee shall be liable for any action that he has taken or has failed to take in good faith with respect to the Plan or any Award under the Plan.

 

SECTION 4.  ELIGIBILITY.

 

(a)                                 General Rule.  Only Employees, Consultants and Outside Directors shall be eligible for the grant of Awards.  Only common-law employees of the Company, a Parent or a Subsidiary shall be eligible for the grant of ISOs.

 

(b)                                 Ten-Percent Stockholders.  An Employee who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company, a Parent or Subsidiary shall not be eligible for the grant of an ISO unless such grant satisfies the requirements of Section 422(c)(5) of the Code.

 

(c)                                  Attribution Rules.  For purposes of Section 4(c) above, in determining stock ownership, an Employee shall be deemed to own the stock owned, directly or indirectly, by or for such Employee’s brothers, sisters, spouse, ancestors and lineal descendants. Stock owned, directly or indirectly, by or for a corporation, partnership, estate or trust shall be deemed to be owned proportionately by or for its stockholders, partners or beneficiaries.

 

(d)                                 Outstanding Stock.  For purposes of Section 4(c) above, “outstanding stock” shall include all stock actually issued and outstanding immediately after the grant. “Outstanding stock” shall not include shares authorized for issuance under outstanding options held by the Employee or by any other person.

 

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SECTION 5.  STOCK SUBJECT TO PLAN.

 

(a)                                 Basic Limitation.  Shares offered under the Plan shall be authorized but unissued Shares or treasury Shares.  The aggregate number of Shares authorized for issuance as Awards under the Plan shall not exceed the sum of (x) 8,200,000 Shares(1), plus (y) the sum of the number of Shares subject to outstanding awards under the Company’s 2008 Stock Plan (the “Predecessor Plan”) on the Effective Date that are subsequently forfeited or terminated for any reason before being exercised or settled, plus the number of Shares subject to vesting restrictions under the Predecessor Plan on the Effective Date that are subsequently forfeited, plus the number of reserved Shares not issued or subject to outstanding grants under the Predecessor Plan on the Effective Date, plus (z) an annual increase on the first day of each fiscal year, for a period of not more than ten years, beginning on January 1, 2014, and ending on (and including) January 1, 2023, in an amount equal to the lesser of (i) four percent (4%) of the outstanding Shares on the last day of the immediately preceding fiscal or (ii) if the Board acts prior to the first day of the fiscal year, such lesser amount (including zero) that the Board determines for purposes of the annual increase for that fiscal year.  Notwithstanding the foregoing, the number of Shares that may be delivered in the aggregate pursuant to the exercise of ISOs granted under the Plan shall not exceed 60,000,000 Shares(2) plus, to the extent allowable under Section 422 of the Code and the Treasury Regulations promulgated thereunder, any Shares that become available for issuance under the Plan pursuant to Section 5(c).  The limitations of this Section 5(a) shall be subject to adjustment pursuant to Section 12. The number of Shares that are subject to Awards outstanding at any time under the Plan shall not exceed the number of Shares which then remain available for issuance under the Plan. The Company shall at all times reserve and keep available sufficient Shares to satisfy the requirements of the Plan.

 

(b)                                 Section 162(m) Award Limitation.  Notwithstanding any contrary provisions of the Plan, and subject to the provisions of Section 12, during any time when the transition period relief under Treasury Regulation Section 1.162-27(f)(2) has lapsed or does not apply, and with respect to any Option or SAR intended to qualify as “performance-based compensation” under Section 162(m) of the Code, no Participant eligible for an Award may receive Options or SARs under the Plan in any calendar year that relate to an aggregate of more than 10,000,000 Shares(3), and no more than two times this amount in the first year of employment.  To the extent required by Section 162(m) of the Code or the regulations thereunder, in applying the foregoing limitation with respect to a Participant, if any Option or SAR is canceled, the canceled Option or SAR shall continue to count against the maximum number of Shares with respect to which Options and SARs may be granted to the Participant.  For this purpose, the repricing of an Option or SAR shall be treated as the cancellation of the existing Option or SAR and the grant of a new Option or SAR.

 

(1)  Note:  For clarity, this is a pre-split number that will be adjusted proportionately to reflect the reverse stock split implemented by the Company in advance of the consummation of the Company’s IPO.

 

(2)  Note:  For clarity, this is a pre-split number that will be adjusted proportionately to reflect the reverse stock split implemented by the Company in advance of the consummation of the Company’s IPO.

 

(3)  Note:  For clarity, this is a pre-split number that will be adjusted proportionately to reflect the reverse stock split implemented by the Company in advance of the consummation of the Company’s IPO.

 

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(c)                                  Additional Shares.  If Restricted Shares or Shares issued upon the exercise of Options are forfeited, then such Shares shall again become available for Awards under the Plan. If Stock Units, Options or SARs are forfeited or terminate for any reason before being exercised or settled, or an Award is settled in cash without the delivery of Shares to the holder, then any Shares subject to the Award shall again become available for Awards under the Plan.  Only the number of Shares (if any) actually issued in settlement of Awards (and not forfeited) shall reduce the number available in Section 5(a) and the balance shall again become available for Awards under the Plan.  Any Shares withheld to satisfy the grant or exercise price or tax withholding obligation pursuant to any Award shall again become available for Awards under the Plan.  Notwithstanding the foregoing provisions of this Section 5(c), Shares that have actually been issued shall not again become available for Awards under the Plan, except for Shares that are forfeited and do not become vested.

 

(d)                                 Substitution and Assumption of Awards.  The Committee may make Awards under the Plan by assumption, substitution or replacement of stock options, stock appreciation rights, stock units or similar awards granted by another entity (including a Parent or Subsidiary), if such assumption, substitution or replacement is in connection with an asset acquisition, stock acquisition, merger, consolidation or similar transaction involving the Company (and/or its Parent or Subsidiary) and such other entity (and/or its affiliate).  The terms of such assumed, substituted or replaced Awards shall be as the Committee, in its discretion, determines is appropriate.  Any such substitute or assumed Awards shall not count against the Share limitation set forth in Section 5(a).

 

SECTION 6.  RESTRICTED SHARES.

 

(a)                                 Restricted Share Award Agreement. Each grant of Restricted Shares under the Plan shall be evidenced by a Restricted Share Award Agreement between the Participant and the Company.  Such Restricted Shares shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Restricted Share Award Agreements entered into under the Plan need not be identical.

 

(b)                                 Payment for Awards.  Restricted Shares may be sold or awarded under the Plan for such consideration as the Committee may determine, including (without limitation) cash, cash equivalents, full-recourse promissory notes, past services and future services.

 

(c)                                  Vesting.  Each Award of Restricted Shares may or may not be subject to vesting.  Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Restricted Share Award Agreement. A Restricted Share Award Agreement may provide for accelerated vesting in the event of the Participant’s death, disability or retirement or other events.  The Committee may determine, at the time of granting Restricted Shares or thereafter, that all or part of such Restricted Shares shall become vested in the event that a Change in Control occurs with respect to the Company.

 

(d)                                 Voting and Dividend Rights.  The holders of Restricted Shares awarded under the Plan shall have the same voting, dividend and other rights as the Company’s other stockholders. A Restricted Share Award Agreement, however, may require that the holders of Restricted Shares invest any cash dividends received in additional Restricted Shares.  Such additional

 

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Restricted Shares shall be subject to the same conditions and restrictions as the Award with respect to which the dividends were paid.

 

(e)                                  Restrictions on Transfer of Shares.  Restricted Shares shall be subject to such rights of repurchase, rights of first refusal or other restrictions as the Committee may determine. Such restrictions shall be set forth in the applicable Restricted Share Award Agreement and shall apply in addition to any general restrictions that may apply to all holders of Shares.

 

SECTION 7.  TERMS AND CONDITIONS OF OPTIONS.

 

(a)                                 Stock Option Award Agreement.  Each grant of an Option under the Plan shall be evidenced by a Stock Option Award Agreement between the Participant and the Company.  Such Option shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan and which the Committee deems appropriate for inclusion in a Stock Option Award Agreement. The Stock Option Award Agreement shall specify whether the Option is an ISO or an NSO. The provisions of the various Stock Option Award Agreements entered into under the Plan need not be identical.

 

(b)                                 Number of Shares.  Each Stock Option Award Agreement shall specify the number of Shares that are subject to the Option and shall provide for the adjustment of such number in accordance with Section 12.

 

(c)                                  Exercise Price.  Each Stock Option Award Agreement shall specify the Exercise Price. The Exercise Price of an ISO shall not be less than 100% of the Fair Market Value of a Share on the date of grant, except as otherwise provided in 4(c), and the Exercise Price of an NSO shall not be less 100% of the Fair Market Value of a Share on the date of grant.  Notwithstanding the foregoing, Options may be granted with an Exercise Price of less than 100% of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code.  Subject to the foregoing in this Section 7(c), the Exercise Price under any Option shall be determined by the Committee in its sole discretion. The Exercise Price shall be payable in one of the forms described in Section 8.

 

(d)                                 Withholding Taxes.  As a condition to the exercise of an Option, the Participant shall make such arrangements as the Committee may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with such exercise. The Participant shall also make such arrangements as the Committee may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with the disposition of Shares acquired by exercising an Option.

 

(e)                                  Exercisability and Term.  Each Stock Option Award Agreement shall specify the date when all or any installment of the Option is to become exercisable. The Stock Option Award Agreement shall also specify the term of the Option; provided that the term of an ISO shall in no event exceed 10 years from the date of grant (five years for ISOs granted to Employees described in Section 4(c)). A Stock Option Award Agreement may provide for accelerated exercisability in the event of the Participant’s death, disability, or retirement or other events and may provide for expiration prior to the end of its term in the event of the termination of the Participant’s Service. Options may be awarded in combination with SARs, and such an

 

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Award may provide that the Options will not be exercisable unless the related SARs are forfeited. Subject to the foregoing in this Section 7(e), the Committee at its sole discretion shall determine when all or any installment of an Option is to become exercisable and when an Option is to expire.

 

(f)                                    Exercise of Options.  Each Stock Option Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the Option following termination of the Participant’s Service with the Company and its Subsidiaries, and the right to exercise the Option of any executors or administrators of the Participant’s estate or any person who has acquired such Option(s) directly from the Participant by bequest or inheritance. Such provisions shall be determined in the sole discretion of the Committee, need not be uniform among all Options issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of Service.

 

(g)                                 Effect of Change in Control.  The Committee may determine, at the time of granting an Option or thereafter, that such Option shall become exercisable as to all or part of the Shares subject to such Option in the event that a Change in Control occurs with respect to the Company.

 

(h)                                 No Rights as a Stockholder.  A Participant shall have no rights as a stockholder with respect to any Shares covered by his Option until the date of the issuance of a stock certificate for such Shares. No adjustments shall be made, except as provided in Section 12.

 

(i)                                    Modification, Extension and Renewal of Options.  Within the limitations of the Plan, the Committee may modify, extend or renew outstanding options or may accept the cancellation of outstanding options (to the extent not previously exercised), whether or not granted hereunder, in return for the grant of new Options for the same or a different number of Shares and at the same or a different Exercise Price, or in return for the grant of a different Award for the same or a different number of Shares, without stockholder approval. The foregoing notwithstanding, no modification of an Option shall, without the consent of the Participant, materially impair his or her rights or obligations under such Option.

 

(j)                                    Restrictions on Transfer of Shares.  Any Shares issued upon exercise of an Option shall be subject to such special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Committee may determine. Such restrictions shall be set forth in the applicable Stock Option Award Agreement and shall apply in addition to any general restrictions that may apply to all holders of Shares.

 

(k)                                  Buyout Provisions.  The Committee may at any time (a) offer to buy out for a payment in cash or cash equivalents an Option previously granted or (b) authorize a Participant to elect to cash out an Option previously granted, in either case at such time and based upon such terms and conditions as the Committee shall establish.

 

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SECTION 8.  PAYMENT FOR SHARES.

 

(a)                                 General Rule.  The entire Exercise Price or Purchase Price of Shares issued under the Plan shall be payable in lawful money of the United States of America at the time when such Shares are purchased, except as provided in Section 8(b) through Section 8(h) below.

 

(b)                                 Surrender of Stock.  To the extent that a Stock Option Award Agreement so provides, payment may be made all or in part by surrendering, or attesting to the ownership of, Shares which have already been owned by the Participant or his representative.  Such Shares shall be valued at their Fair Market Value on the date when the new Shares are purchased under the Plan.  The Participant shall not surrender, or attest to the ownership of, Shares in payment of the Exercise Price if such action would cause the Company to recognize compensation expense (or additional compensation expense) with respect to the Option for financial reporting purposes.

 

(c)                                  Services Rendered.  At the discretion of the Committee, Shares may be awarded under the Plan in consideration of services rendered to the Company or a Subsidiary.  If Shares are awarded without the payment of a Purchase Price in cash, the Committee shall make a determination (at the time of the Award) of the value of the services rendered by the Participant and the sufficiency of the consideration to meet the requirements of Section 6(b).

 

(d)                                 Cashless Exercise.  To the extent that a Stock Option Award Agreement so provides, payment may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker to sell Shares and to deliver all or part of the sale proceeds to the Company in payment of the aggregate Exercise Price.

 

(e)                                  Exercise/Pledge.  To the extent that a Stock Option Award Agreement so provides, payment may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker or lender to pledge Shares, as security for a loan, and to deliver all or part of the loan proceeds to the Company in payment of the aggregate Exercise Price.

 

(f)                                    Net Exercise.  To the extent that a Stock Option Award Agreement so provides, by a “net exercise” arrangement pursuant to which the number of Shares issuable upon exercise of the Option shall be reduced by the largest whole number of Shares having an aggregate Fair Market Value that does not exceed the aggregate exercise price (plus tax withholdings, if applicable) and any remaining balance of the aggregate exercise price (and/or applicable tax withholdings) not satisfied by such reduction in the number of whole Shares to be issued shall be paid by the Optionee in cash other form of payment permitted under the Stock Option Agreement.

 

(g)                                 Promissory Note.  To the extent that a Stock Option Award Agreement or Restricted Share Award Agreement so provides, payment may be made all or in part by delivering (on a form prescribed by the Company) a full-recourse promissory note.

 

(h)                                 Other Forms of Payment.  To the extent that a Stock Option Award Agreement or Restricted Share Award Agreement so provides, payment may be made in any other form that is consistent with applicable laws, regulations and rules.

 

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(i)                                    Limitations under Applicable Law.  Notwithstanding anything herein or in a Stock Option Award Agreement or Restricted Share Award Agreement to the contrary, payment may not be made in any form that is unlawful, as determined by the Committee in its sole discretion.

 

SECTION 9.  STOCK APPRECIATION RIGHTS.

 

(a)                                 SAR Award Agreement.  Each grant of a SAR under the Plan shall be evidenced by a SAR Award Agreement between the Participant and the Company. Such SAR shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various SAR Award Agreements entered into under the Plan need not be identical.

 

(b)                                 Number of Shares.  Each SAR Award Agreement shall specify the number of Shares to which the SAR pertains and shall provide for the adjustment of such number in accordance with Section 12.

 

(c)                                  Exercise Price.  Each SAR Award Agreement shall specify the Exercise Price.  The Exercise Price of a SAR shall not be less than 100% of the Fair Market Value of a Share on the date of grant.  Notwithstanding the foregoing, SARs may be granted with an Exercise Price of less than 100% of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code.  Subject to the foregoing in this Section 9(c), the Exercise Price under any SAR shall be determined by the Committee in its sole discretion.

 

(d)                                 Exercisability and Term.  Each SAR Award Agreement shall specify the date when all or any installment of the SAR is to become exercisable.  The SAR Award Agreement shall also specify the term of the SAR.  A SAR Award Agreement may provide for accelerated exercisability in the event of the Participant’s death, disability or retirement or other events and may provide for expiration prior to the end of its term in the event of the termination of the Participant’s service.  SARs may be awarded in combination with Options, and such an Award may provide that the SARs will not be exercisable unless the related Options are forfeited.  A SAR may be included in an ISO only at the time of grant but may be included in an NSO at the time of grant or thereafter. A SAR granted under the Plan may provide that it will be exercisable only in the event of a Change in Control.

 

(e)                                  Effect of Change in Control.  The Committee may determine, at the time of granting a SAR or thereafter, that such SAR shall become fully exercisable as to all Common Shares subject to such SAR in the event that a Change in Control occurs with respect to the Company.

 

(f)                                    Exercise of SARs.  Upon exercise of a SAR, the Participant (or any person having the right to exercise the SAR after his or her death) shall receive from the Company (a) Shares, (b) cash or (c) a combination of Shares and cash, as the Committee shall determine. The amount of cash and/or the Fair Market Value of Shares received upon exercise of SARs shall, in the aggregate, be equal to the amount by which the Fair Market Value (on the date of surrender) of the Shares subject to the SARs exceeds the Exercise Price.

 

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(g)                                 Modification or Assumption of SARs.  Within the limitations of the Plan, the Committee may modify, extend or assume outstanding SARs or may accept the cancellation of outstanding SARs (whether granted by the Company or by another issuer) in return for the grant of new SARs for the same or a different number of shares and at the same or a different exercise price, or in return for the grant of a different Award for the same or a different number of Shares, without stockholder approval. The foregoing notwithstanding, no modification of a SAR shall, without the consent of the holder, materially impair his or her rights or obligations under such SAR.

 

(h)                                 Buyout Provisions.  The Committee may at any time (a) offer to buy out for a payment in cash or cash equivalents a SAR previously granted, or (b) authorize a Participant to elect to cash out a SAR previously granted, in either case at such time and based upon such terms and conditions as the Committee shall establish.

 

SECTION 10.  STOCK UNITS.

 

(a)                                 Stock Unit Award Agreement.  Each grant of Stock Units under the Plan shall be evidenced by a Stock Unit Award Agreement between the Participant and the Company. Such Stock Units shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Stock Unit Award Agreements entered into under the Plan need not be identical.

 

(b)                                 Payment for Awards.  To the extent that an Award is granted in the form of Stock Units, no cash consideration shall be required of the Award recipients.

 

(c)                                  Vesting Conditions.  Each Award of Stock Units may or may not be subject to vesting.  Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Stock Unit Award Agreement. A Stock Unit Award Agreement may provide for accelerated vesting in the event of the Participant’s death, disability or retirement or other events. The Committee may determine, at the time of granting Stock Units or thereafter, that all or part of such Stock Units shall become vested in the event that a Change in Control occurs with respect to the Company.

 

(d)                                 Voting and Dividend Rights.  The holders of Stock Units shall have no voting rights. Prior to settlement or forfeiture, any Stock Unit awarded under the Plan may, at the Committee’s discretion, carry with it a right to dividend equivalents.  Such right entitles the holder to be credited with an amount equal to all cash dividends paid on one Share while the Stock Unit is outstanding.  Dividend equivalents may be converted into additional Stock Units.  Settlement of dividend equivalents may be made in the form of cash, in the form of Shares, or in a combination of both.  Prior to distribution, any dividend equivalents which are not paid shall be subject to the same conditions and restrictions (including without limitation, any forfeiture conditions) as the Stock Units to which they attach.

 

(e)                                  Form and Time of Settlement of Stock Units.  Settlement of vested Stock Units may be made in the form of (a) cash, (b) Shares or (c) any combination of both, as determined by the Committee. The actual number of Stock Units eligible for settlement may be larger or smaller than the number included in the original Award, based on predetermined performance factors.

 

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Methods of converting Stock Units into cash may include (without limitation) a method based on the average Fair Market Value of Shares over a series of trading days.  A Stock Unit Award Agreement may provide that vested Stock Units may be settled in a lump sum or in installments.  A Stock Unit Award Agreement may provide that the distribution may occur or commence when all vesting conditions applicable to the Stock Units have been satisfied or have lapsed, or it may be deferred to any later date, subject to compliance with Section 409A of the Code.  The amount of a deferred distribution may be increased by an interest factor or by dividend equivalents.  Until an Award of Stock Units is settled, the number of such Stock Units shall be subject to adjustment pursuant to Section 12.

 

(f)                                    Death of Participant.  Any Stock Unit Award that becomes payable after the Participant’s death shall be distributed to the Participant’s beneficiary or beneficiaries.  Each recipient of a Stock Unit Award under the Plan shall designate one or more beneficiaries for this purpose by filing the prescribed form with the Company.  A beneficiary designation may be changed by filing the prescribed form with the Company at any time before the Participant’s death.  If no beneficiary was designated or if no designated beneficiary survives the Participant, then any Stock Units Award that becomes payable after the Participant’s death shall be distributed to the Participant’s estate.

 

(g)                                 Creditors’ Rights.  A holder of Stock Units shall have no rights other than those of a general creditor of the Company.  Stock Units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Stock Unit Award Agreement.

 

SECTION 11.  CASH-BASED AWARDS

 

The Committee may, in its sole discretion, grant Cash-Based Awards to any Participant in such number or amount and upon such terms, and subject to such conditions, as the Committee shall determine at the time of grant and specify in an applicable Award Agreement.  The Committee shall determine the maximum duration of the Cash-Based Award, the amount of cash which may be payable pursuant to the Cash-Based Award, the conditions upon which the Cash-Based Award shall become vested or payable, and such other provisions as the Committee shall determine.  Each Cash-Based Award shall specify a cash-denominated payment amount, formula or payment ranges as determined by the Committee.  Payment, if any, with respect to a Cash-Based Award shall be made in accordance with the terms of the Award and may be made in cash or in shares of Stock, as the Committee determines.

 

SECTION 12.  ADJUSTMENT OF SHARES.

 

(a)                                 Adjustments.  In the event of a subdivision of the outstanding Stock, a declaration of a dividend payable in Shares, a declaration of a dividend payable in a form other than Shares in an amount that has a material effect on the price of Shares, a combination or consolidation of the outstanding Stock (by reclassification or otherwise) into a lesser number of Shares, a recapitalization, a spin-off or a similar occurrence, the Committee shall make appropriate and equitable adjustments in:

 

(i)                                     The number of Shares available for future Awards under Section 5;

 

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(ii)                                  The limitations set forth in Sections 5(a) and (b) and Section 19;

 

(iii)                               The number of Shares covered by each outstanding Award; and

 

(iv)                              The Exercise Price under each outstanding Option and SAR.

 

(b)                                 Dissolution or Liquidation.  To the extent not previously exercised or settled, Options, SARs and Stock Units shall terminate immediately prior to the dissolution or liquidation of the Company.

 

(c)                                  Reorganizations.  In the event that the Company is a party to a merger or other reorganization, outstanding Awards shall be subject to the agreement of merger or reorganization. Subject to compliance with Section 409A of the Code, such agreement shall provide for:

 

(i)                                     The continuation of the outstanding Awards by the Company, if the Company is a surviving corporation;

 

(ii)                                  The assumption of the outstanding Awards by the surviving corporation or its parent or subsidiary;

 

(iii)                               The substitution by the surviving corporation or its parent or subsidiary of its own awards for the outstanding Awards;

 

(iv)                              Immediate vesting, exercisability and settlement of outstanding Awards  followed by the cancellation of such Awards upon or immediately prior to the effectiveness of such transaction; or

 

(v)                                 Settlement of the intrinsic value of the outstanding Awards (whether or not then vested or exercisable) in cash or cash equivalents or equity (including cash or equity subject to deferred vesting and delivery consistent with the vesting restrictions applicable to such Awards or the underlying Shares) followed by the cancellation of such Awards (and, for the avoidance of doubt, if as of the date of the occurrence of the transaction the Committee determines in good faith that no amount would have been attained upon the exercise of such Award or realization of the Participant’s rights, then such Award may be terminated by the Company without payment); in each case without the Participant’s consent.  Any acceleration of payment of an amount that is subject to section 409A of the Code will be delayed, if necessary, until the earliest time that such payment would be permissible under Section 409A without triggering any additional taxes applicable under Section 409A.

 

The Company will have no obligation to treat all Awards, all Awards held by a Participant, or all Awards of the same type, similarly.

 

(d)                                 Reservation of Rights.  Except as provided in this Section 12, a Participant shall have no rights by reason of any subdivision or consolidation of shares of stock of any class, the

 

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payment of any dividend or any other increase or decrease in the number of shares of stock of any class.  Any issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or Exercise Price of Shares subject to an Award. The grant of an Award pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, to merge or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or assets.  In the event of any change affecting the Shares or the Exercise Price of Shares subject to an Award, including a merger or other reorganization, for reasons of administrative convenience, the Company in its sole discretion may refuse to permit the exercise of any Award during a period of up to thirty (30) days prior to the occurrence of such event.

 

SECTION 13.  DEFERRAL OF AWARDS.

 

(a)                                 Committee Powers.  Subject to compliance with Section 409A of the Code, the Committee (in its sole discretion) may permit or require a Participant to:

 

(i)                                     Have cash that otherwise would be paid to such Participant as a result of the exercise of a SAR or the settlement of Stock Units credited to a deferred compensation account established for such Participant by the Committee as an entry on the Company’s books;

 

(ii)                                  Have Shares that otherwise would be delivered to such Participant as a result of the exercise of an Option or SAR converted into an equal number of Stock Units; or

 

(iii)                               Have Shares that otherwise would be delivered to such Participant as a result of the exercise of an Option or SAR or the settlement of Stock Units converted into amounts credited to a deferred compensation account established for such Participant by the Committee as an entry on the Company’s books. Such amounts shall be determined by reference to the Fair Market Value of such Shares as of the date when they otherwise would have been delivered to such Participant.

 

(b)                                 General Rules.  A deferred compensation account established under this Section 13 may be credited with interest or other forms of investment return, as determined by the Committee. A Participant for whom such an account is established shall have no rights other than those of a general creditor of the Company. Such an account shall represent an unfunded and unsecured obligation of the Company and shall be subject to the terms and conditions of the applicable agreement between such Participant and the Company. If the deferral or conversion of Awards is permitted or required, the Committee (in its sole discretion) may establish rules, procedures and forms pertaining to such Awards, including (without limitation) the settlement of deferred compensation accounts established under this Section 13.

 

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SECTION 14.  AWARDS UNDER OTHER PLANS.

 

The Company may grant awards under other plans or programs. Such awards may be settled in the form of Shares issued under this Plan. Such Shares shall be treated for all purposes under the Plan like Shares issued in settlement of Stock Units and shall, when issued, reduce the number of Shares available under Section 5.

 

SECTION 15.  PAYMENT OF DIRECTOR’S FEES IN SECURITIES.

 

(a)                                 Effective Date.  No provision of this Section 15 shall be effective unless and until the Board has determined to implement such provision.

 

(b)                                 Elections to Receive NSOs, SARs, Restricted Shares or Stock Units.  An Outside Director may elect to receive his or her annual retainer payments and/or meeting fees from the Company in the form of cash, NSOs, SARs, Restricted Shares or Stock Units, or a combination thereof, as determined by the Board.  Alternatively, the Board may mandate payment in any of such alternative forms.  Such NSOs, SARs, Restricted Shares and Stock Units shall be issued under the Plan. An election under this Section 15 shall be filed with the Company on the prescribed form.

 

(c)                                  Number and Terms of NSOs, SARs, Restricted Shares or Stock Units.  The number of NSOs, SARs, Restricted Shares or Stock Units to be granted to Outside Directors in lieu of annual retainers and meeting fees that would otherwise be paid in cash shall be calculated in a manner determined by the Board. The terms of such NSOs, SARs, Restricted Shares or Stock Units shall also be determined by the Board.

 

SECTION 16.  LEGAL AND REGULATORY REQUIREMENTS.

 

Shares shall not be issued under the Plan unless the issuance and delivery of such Shares complies with (or is exempt from) all applicable requirements of law, including (without limitation) the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, state securities laws and regulations and the regulations of any stock exchange on which the Company’s securities may then be listed, and the Company has obtained the approval or favorable ruling from any governmental agency which the Company determines is necessary or advisable. The Company shall not be liable to a Participant or other persons as to: (a) the non-issuance or sale of Shares as to which the Company has not obtained from any regulatory body having jurisdiction the authority deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares under the Plan; and (b) any tax consequences expected, but not realized, by any Participant or other person due to the receipt, exercise or settlement of any Award granted under the Plan.

 

SECTION 17.  TAXES.

 

(a)                                 Withholding Taxes.  To the extent required by applicable federal, state, local or foreign law, a Participant or his or her successor shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise in connection with the

 

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Plan. The Company shall not be required to issue any Shares or make any cash payment under the Plan until such obligations are satisfied.

 

(b)                                 Share Withholding.  The Committee may permit a Participant to satisfy all or part of his or her withholding or income tax obligations by having the Company withhold all or a portion of any Shares that otherwise would be issued to him or her or by surrendering all or a portion of any Shares that he or she previously acquired. Such Shares shall be valued at their Fair Market Value on the date when taxes otherwise would be withheld in cash. In no event may a Participant have Shares withheld that would otherwise be issued to him or her in excess of the number necessary to satisfy the minimum legally required tax withholding.

 

(c)                                  Section 409A.  Each Award that provides for “nonqualified deferred compensation” within the meaning of Section 409A of the Code shall be subject to such additional rules and requirements as specified by the Committee from time to time in order to comply with Section 409A.  If any amount under such an Award is payable upon a “separation from service” (within the meaning of Section 409A) to a Participant who is then considered a “specified employee” (within the meaning of Section 409A), then no such payment shall be made prior to the date that is the earlier of (i) six months and one day after the Participant’s separation from service, or (ii) the Participant’s death, but only to the extent such delay is necessary to prevent such payment from being subject to interest, penalties and/or additional tax imposed pursuant to Section 409A.  In addition, the settlement of any such Award may not be accelerated except to the extent permitted by Section 409A.

 

SECTION 18.  TRANSFERABILITY.

 

Unless the agreement evidencing an Award (or an amendment thereto authorized by the Committee) expressly provides otherwise, no Award granted under this Plan, nor any interest in such Award, may be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise transferred in any manner (prior to the vesting and lapse of any and all restrictions applicable to Shares issued under such Award), other than by will or the laws of descent and distribution; provided, however, that an ISO may be transferred or assigned only to the extent consistent with Section 422 of the Code. Any purported assignment, transfer or encumbrance in violation of this Section 18 shall be void and unenforceable against the Company.

 

SECTION 19.  PERFORMANCE BASED AWARDS.

 

The number of Shares or other benefits granted, issued, retainable and/or vested under an Award may be made subject to the attainment of performance goals.  The Committee may utilize any performance criteria selected by it in its sole discretion to establish performance goals; provided, however, that in the case of any Performance Based Award, the following conditions shall apply:

 

(i)                                     The amount potentially available under a Performance Based Award shall be subject to the attainment of pre-established, objective performance goals relating to a specified period of service based on one or more of the following performance criteria: (a) cash flow, (b) earnings per share, (c) earnings before interest, taxes and amortization, (d) return on equity, (e)

 

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total stockholder return, (f) share price performance, (g) return on capital, (h) return on assets or net assets, (i) revenue, (j) income or net income, (k) operating income or net operating income, (l) operating profit or net operating profit, (m) operating margin or profit margin, (n) return on operating revenue, (o) return on invested capital, (p) market segment shares, (q) costs, (r) expenses, (s) initiation or completion of research activities, (t) initiation or completion of clinical studies or other development programs, (u) other milestones with respect to research activities or clinical studies or other development programs, (v) regulatory body approval for commercialization of a product, (w) implementation or completion of critical projects or (x) other milestones with respect to commercialization of a product (“Qualifying Performance Criteria”), any of which may be measured either individually, alternatively or in any combination, applied to either the Company as a whole or to a business unit or Subsidiary, either individually, alternatively or in any combination, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years’ results or to a designated comparison group or index, in each case as specified by the Committee in the Award;

 

(ii)                                  Unless specified otherwise by the Committee at the time the performance goals are established or otherwise within the time prescribed by Section 162(m) of the Code, the Committee shall appropriately adjust the method of evaluating performance under a Qualifying Performance Criteria for a performance period as follows: (i) to exclude asset write-downs, (ii) to exclude litigation or claim judgments or settlements, (iii) to exclude the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results, (iv) to exclude accruals for reorganization and restructuring programs, (v) to exclude any extraordinary nonrecurring items as determined under generally accepted accounting principles and/or described in managements’ discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders for the applicable year, (vi) to exclude the dilutive effects of acquisitions or joint ventures, (vii) to assume that any business divested by the Company achieved performance objectives at targeted levels during the balance of a performance period following such divestiture, (viii) to exclude the effect of any change in the outstanding shares of common stock of the Company by reason of any stock dividend or split, stock repurchase, reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to common stockholders other than regular cash dividends, (ix) to exclude the effects of stock based compensation and the award of bonuses under the Company’s bonus plans; and (x) to exclude costs incurred in connection with potential acquisitions or divestitures that are required to be expensed

 

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under generally accepted accounting principles, in each case in compliance with Section 162(m);

 

(iii)                               The Committee shall establish the applicable performance goals in writing and an objective method for determining the Award earned by a Participant if the goals are attained, while the outcome is substantially uncertain and not later than the 90th day of the performance period (but in no event after 25% of the period of service with respect to which the performance goals relate has elapsed), and shall determine and certify in writing, for each Participant, the extent to which the performance goals have been met prior to payment or vesting of the Award; and

 

(iv)                              The Committee may not in any event increase the amount of compensation payable under the Plan upon the attainment of the pre-established performance goals to a Participant who is a “covered employee” within the meaning of Section 162(m) of the Code.

 

(v)                                 The maximum aggregate number of Shares that may be subject to Performance Based Awards granted to a Participant in any calendar year is 10,000,000 Shares(4), and no more than two times this amount in the first year of employment (subject to adjustment under Section 12), and the maximum aggregate amount of cash that may be payable to a Participant under Performance Based Awards granted to a Participant in any calendar year that are Cash-Based Awards is $10,000,000.

 

SECTION 20.  NO EMPLOYMENT RIGHTS.

 

No provision of the Plan, nor any Award granted under the Plan, shall be construed to give any person any right to become, to be treated as, or to remain an Employee or Consultant. The Company and its Subsidiaries reserve the right to terminate any person’s Service at any time and for any reason, with or without notice.

 

SECTION 21.  DURATION AND AMENDMENTS.

 

(a)                                 Term of the Plan.  The Plan, as set forth herein, shall come into existence on the date of its adoption by the Board of Directors; provided, however, that no Award may be granted hereunder prior to the Effective Date.  The Board of Directors may suspend or terminate the Plan at any time.  No ISOs may be granted after the tenth anniversary of the earlier of (i) the date the Plan is adopted by the Board of Directors, or (ii) the date the Plan is approved the stockholders of the Company.

 

(b)                                 Right to Amend the Plan.  The Board of Directors may amend the Plan at any time and from time to time. Rights and obligations under any Award granted before amendment of the Plan shall not be materially impaired by such amendment, except with consent of the Participant.

 

(4)  Note:  For clarity, this is a pre-split number that will be adjusted proportionately to reflect the reverse stock split implemented by the Company in advance of the consummation of the Company’s IPO.

 

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An amendment of the Plan shall be subject to the approval of the Company’s stockholders only to the extent required by applicable laws, regulations or rules.

 

(c)                                  Effect of Termination.  No Awards shall be granted under the Plan after the termination thereof. The termination of the Plan shall not affect Awards previously granted under the Plan.

 

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SECTION 22.  EXECUTION.

 

To record the adoption of the Plan by the Board of Directors, the Company has caused its authorized officer to execute the same.

 

	
 
    	
RECEPTOS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
/s/ Faheem Hasnain
    
	
 
    	
 
    	
 
    
	
 
    	
Name
    	
Faheem Hasnain
    
	
 
    	
 
    	
 
    
	
 
    	
Title
    	
Chief Executive Officer
    

 

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